Marxian economics
Where does profit come from, and why is capitalism unequal and prone to crisis?
The 30-second version
Marx asked where profit comes from. His answer: from paying workers less than the value they create. That makes capitalism dynamic but unequal and crisis-prone. His predictions of revolution failed, but his questions about power and distribution never went away.
Big questions it works on
Go deeperKey ideas, thinkers, evidence and where it stands today
Key ideas
- Surplus value: profit comes from paying workers less than the value they create.
- Capital accumulates and concentrates in fewer hands.
- Class conflict over the division of income.
- Crises are built into the system, not caused by outside shocks.
Key thinkers
Karl Marx (Capital, vol. 1, 1867), Friedrich Engels; later Rosa Luxemburg, Michał Kalecki; today David Harvey, Anwar Shaikh
What it got right
Main criticisms
Evidence worth knowing
Soviet growth was fast in the 1950s and slowed sharply from the 1970s, which Hayek's argument about dispersed knowledge helps explain.
Where it stands today
Small presence in economics departments; larger in political economy, sociology and economic history.
Family line
Built on Ricardo's labour theory of value. Influenced Kalecki and, through him, the post-Keynesians.