Certain concepts developed in Marxian economics, especially those related to capital accumulation and the business cycle, have been fitted for use in capitalist systems; one such example is Joseph Schumpeter's notion of creative destruction.
One of Marx's early works, Critique of Political Economy, was mostly incorporated into Das Kapital, especially the beginning of volume 1.
In The Wealth of Nations (1776), Smith argued that the most important characteristic of a market economy was that it permitted a rapid growth in productive abilities.
Marx followed Smith by claiming that the most important beneficial economic consequence of capitalism was a rapid growth in productivity abilities.
Additionally, Marx noted in Theories of Surplus Value: "We see the great advance made by Adam Smith beyond the Physiocrats in the analysis of surplus-value and hence of capital.
This necessary labor is necessarily only a fraction of a full working day – the rest, surplus-labor, would be pocketed by the capitalist as profit.
Moreover, Marx argues that markets tend to obscure the social relationships and processes of production; he called this commodity fetishism.
"A propensity to crisis—what we would call business cycles—was not recognised as an inherent feature of capitalism by any other economist of Marx's time," observed Robert Heilbroner in The Worldly Philosophers, "although future events have certainly indicated his prediction of successive boom and crash.
Dialectics focuses on relation and change, and tries to avoid seeing the universe as composed of separate objects, each with essentially stable unchanging characteristics.
[13] Marx placed some restrictions on the validity of his value theory: he said that in order for it to hold, the commodity must not be a useless item; and it is not the actual amount of labour that went into producing a particular individual commodity that determines its value, but the amount of labour that a worker of average energy and ability, working with average intensity, using the prevailing techniques of the day, would need to produce it.
A formal statement of the law is: the value of a commodity is equal to the average socially necessary labour time required for its production.
Marx held that metallic money, such as gold, is a commodity, and its value is the labour time necessary to produce it (mine it, smelt it, etc.).
Marx argued that gold and silver are conventionally used as money because they embody a large amount of labour in a small, durable, form, which is convenient.
Paper money is, in this model, a representation of gold or silver, almost without value of its own but held in circulation by state decree.
(Capital, I, Chap III, section 2, part c.) Marx lists the elementary factors of production as: Some subjects of labour are available directly from Nature: uncaught fish, unmined coal, etc.
Coal for boilers, oil for wheels, and hay for draft horses are considered raw materials, not instruments of labour.
The labour theory of value was initially introduced by the classical economists Adam Smith and David Ricardo, but was further developed in Marx's work Capital.
[15] According to Marx, in capitalism, workers own their labor-power, but do not own the means of production through which they can actualize their labor power and generate use-values.
The second and third volumes of Das Kapital were edited by his close associate Friedrich Engels, based on Marx's notes.
"[33] Professor Jonathon Sperber says some elements, such as base and superstructure, exploitation of workers within the free market, and crises of capitalism (such as boom and bust cycles), remain salient today, albeit with contemporary updates, while others he sees as less relevant, such as the labor theory of value and the tendency of the rate of profit to fall.
[38][37] Such theorists as Marc Fleurbaey, Samuel Bowles,[39][40] David Gordon, John Roemer, Herbert Gintis, Jon Elster, and Adam Przeworski have adopted the techniques of neoclassical economics, including game theory and mathematical modeling, to demonstrate Marxian concepts such as exploitation and class conflict.
[41] The neo-Marxian approach integrated non-Marxist or "bourgeois" economics from the post-Keynesians like Joan Robinson and the neo-Ricardian school of Piero Sraffa.
Polish economists Michał Kalecki, Rosa Luxemburg, Henryk Grossman, Adam Przeworski, and Oskar Lange were influential in this school, particularly in developing theories of underconsumption.
Among the critics pointing out internal inconsistencies are former and current Marxian and/or Sraffian economists, such as Paul Sweezy,[42] Nobuo Okishio,[43] Ian Steedman,[44] John Roemer,[45] Gary Mongiovi,[46] and David Laibman,[47] who propose that the field be grounded in their correct versions of Marxian economics instead of in Marx's critique of political economy in the original form in which he presented and developed it in Capital.
[48] Proponents of the temporal single-system interpretation (TSSI) of Marx's value theory claim that the supposed inconsistencies are actually the result of misinterpretation; they argue that when Marx's theory is understood as "temporal" and "single-system," the alleged internal inconsistencies disappear.
In a recent survey of the debate, a proponent of the TSSI concludes that "the proofs of inconsistency are no longer defended; the entire case against Marx has been reduced to the interpretive issue.
Big business can maintain selling prices at high levels while still competing to cut costs, advertise and market their products.
However, competition is generally limited with a few large capital formations sharing various markets, with the exception of a few actual monopolies (such as the Bell System at the time).
Average earners see the pressures in drive for production destroy their human relationships, leading to wider alienation and hostility.
This was defined as "the difference between society's 'optimum' output available in a historically given natural and technological environment under conditions of planned 'optimal' utilization of all available productive resources, and some chosen 'optimal' volume of consumption.