Introduction
The Marxist political economy, as developed by Karl Marx, is a distinct and independent philosophical branch of governmental policy that significantly diverges from traditional financial systems. Notably, traditional economics tends to concentrate on the resource allocation and study of markets, assuming that people act in their self-interest to optimize their well-being. On the other hand, the Marxist political economy perceives monetary growth as being shaped and regulated by the relations of production, mainly the correlation between employees and capitalists (Allan, 2019). In Marx’s view, such a relationship is characterized by exploitation, where capitalists extract surplus value from subordinates via their control over the means of manufacturing and distributing commodities and services. Marxist political economy pragmatically impacts societal members by analyzing the capitalist system extensively, making them understand ongoing financial and administrative struggles, thus improving their welfare.
Research Interest
The research topic is regarding why the Marxist political economy is not traditional economics but an independent philosophical branch of political economy, and the results could be of interest to scholars and researchers, students, activists and practitioners, and workers and trade unions. Political science, sociology, business, and philosophy students seeking to comprehend the workings of capitalist communities and the obstacles they encounter could be interested in studying Marxist political economy (Campbell, 2023). The Marxist political economy could benefit trade unions and employees, aiming to understand the labor movements’ shortcomings and design strategies for enhancing subordinates’ working conditions and salaries. The examination of exploitation and extraction of surplus value provided by the Marxist political economy can assist in solving the obstacles workers experience in capitalist societies and mobilize them towards collective action.
Scientific Relevance
Contribution to Knowledge Base/Scientific Progress
The research results could be scientifically relevant since the study significantly expands Venezuelian’s knowledge base concerning the political economy. The research offers a critical analysis of the Marxist political economy and how it deviates from traditional economics, highlighting its philosophical foundations and independent status (Allan, 2019). Therefore, the Marxist political economy results in scientific progress and expanding individual experience by providing distinct and critical viewpoints regarding the correlation between society and the economy and informing policies that facilitate social and economic justice.
Contribution to Interdisciplinary Knowledge Gains
In addition, the study findings could be scientifically admissible since the Marxist political economy offers a framework for interdisciplinary insights gains, as it draws on and integrates perspectives from multiple fields, such as philosophy, political science, sociology, economics, and history. The research results could be scientifically relevant as the Marxist political economy provides a comprehensive viewpoint concerning capitalism’s subject mode of production and concentrates on the relationship between political power and class struggle (Basu, 2022). Therefore, the research results can contribute to developing alternative approaches and models to studying political economy and economics and can challenge superior ideologies and assumptions regarding financial systems and society.
Argument and Hypothesis
The research’s primary argument is that the Marxist political economy is not traditional economics but an independent philosophical branch of the administrative financial system. The academic foundation of Marxist political economics offers a new perspective on the correlation between capitalism and governmental systems. Nevertheless, one hypothesis derived from the study argument is that the Marxist political economy operates grounded on multiple principles and assumptions contrasted to traditional economics due to its unique philosophical foundation concerning the capitalist system.
Theoretical Assumptions/Empirical Observations
The argument and the hypothesis are grounded on multiple theoretical assumptions and empirical observations. The research argument is based on the ideology that the political and economic systems are intertwined and that the correlation between them transforms the world where people stay. Moreover, such an idea is grounded on the empirical observation that the economic and political frameworks are interdependent and that changing one structure repeatedly leads to transitioning to the other methodology (Campbell, 2023). In addition, the argument follows the idea spearheaded by Karl Marx regarding the relationship between political and economic systems that is unique and distinct from the traditional economics perspective. Therefore, based on empirical observation, the Marxist political economy has a distinctive philosophical foundation regarding the capitalist system and the view on society, which is different from the classical economics viewpoints.
Research Main Part
Venezuela’s Case Study Using Marxist Exploitation Model to Explain Capitalism
Venezuela is one of the real-life case studies that address the issue of exploitation using the Marxian exploitation model. Hugo Chavez, a socialist president, ruled the country between 2004 and 2014, and the nation recorded a massive reduction in poverty and inequality (Basu, 2022). Government officials developed policies to redistribute wealth, including nationalizing particular industries, such as Owens-Illinois and Sidetur manufacturing plants, and increasing social spending to approximately $60 billion (Smart, 2020). Nevertheless, during the period, the government’s expansionary fiscal policy resulted in high inflation due to increased money supply and budget deficit. The foreign exchange shortage created challenges in importing commodities, such as medicine and food.
Venezuela’s capitalist oppression of workers can be analyzed using the Marxian exploitation model. From 2004 to 2014, the average nominal Wage escalated from $ 21 to $232 monthly (Smart, 2020). However, during that time, Venezuela’s inflation was relatively 20% yearly, resulting in a decline in salary value. The wage value declined from approximately $440 monthly in 2004 to nearly $265 in 2014 (Basu, 2022). The workers’ added value increased from $60 billion in 2004 to almost $210 in 2014, and the total wages escalated from $20 billion to $70 billion (Smart, 2020). Therefore, using the Marxian exploitation model, the estimated surplus value level generated by Venezuela’s workers during the period can be expressed as S=V-WS. The S is the surplus value generated by employees, V is the labor value, and WS is the total Wage paid to workers (Smart, 2020). Therefore, the surplus value (S=V-WS) is calculated as $210 billion minus $70 billion, which equals $140 billion. The surplus value created more profits for the capitalists under President Chavez’s support. Table 1 demonstrates the surplus value created by the employee labor worthiness despite capitalists paying them low wages. On the other hand, figure 1 illustrates the ruling class people’s oppression of Venezuela’s workers using the Marxist exploitation model.
Table 1: Surplus Value (Smart, 2020)
The Marxist Political Economy and Traditional Economics Assumptions Regarding Political and Economic Systems and How they Deviate
Traditional or neoclassical economics is a subfield of political economy that concentrates on studying how political systems and economics relate and impact each other. In addition, traditional economics focuses on the workings of the financial market status and the allocation of resources. Conventional economics is grounded on multiple core assumptions. One of the essential presumptions is that people act in their self-interest (Chakrabarti, 2021). The neoclassical system assumes that politicians, including Hugo Chavez, make decisions based on what is best for themselves. Therefore, consumers purchase commodities and services, such as food and medicine, they value most, and producers sell products for the highest price (Gao, 2022). In addition, traditional economics perceives markets as the core mechanism for coordinating remunerative activity. The labor value created by the workers in 2004 stood at $ 60 billion, and their total wage was $20 billion. As a result, Venezuelan officials developed policies engendering effective allocation of resources, thus reducing poverty among citizens.
Furthermore, another fundamental principle of traditional economics is that the state or the government plays a limited role in the economy. As a result, neoclassical economics views politicians as facilitators of economic tasks but not active participants. The Venezuelan state official’s mandate was restricted to establishing stable and predictable surroundings that reinforced remunerative activities, including safeguarding property rights and enforcing contracts (Campbell, 2023). Nevertheless, traditional economics presumes that the market monetary status inherently attains an optimal level if people have the freedom to pursue their self-interest, resulting in the effective allocation of resources. Neoclassical economics depends on various theories and models, such as supply and demand, which help determine the prices of products and services. For example, the wage rate value declined from $440 to $265, resulting in increased demand for food and medicine, with a low supply of commodities, meeting the interests of capitalists and not the citizens (Allan, 2019). The increased Vnezuela’s government issues, such as a decline in foreign exchange, resulted in increased inflation, causing massive unemployment.
On the other hand, the Marxist political economy profounded by Karl Marx significantly critiques the capitalist system and argues that the financial and state administrative systems are interdependent and interconnected. The approach highlights that the state is regulated by the ruling class (politicians), who deploy their authority and power to further their interests and control the working class (Gao, 2022). In addition, the Marxist political economy critiques the capitalist system for highly resulting in the massive exploitation of the common laborers (Chakrabarti, 2021). For example, in Venezuela’s case study, Hugo Chavez supported capitalists by exploiting common laborers. Even though the surplus value increased to $140 billion, which benefited the investors, the workers continued receiving low salaries of nearly $70 billion, causing an economic recession (Smart, 2020). The model emphasizes the essentiality of class struggle in modifying the political and economic systems, where politicians use their influence to maintain their positions. At the same time, typical workers grapple for a more equitable distribution of power and wealth.
The Marxist political economy is an alternative to traditional economics, which perceives financial development as a separate and unique framework that operates independently of the political system. The methodology offers a highly detailed comprehension of the relationship between the economic and political systems (Basu, 2022). At the same time, the Marxist economy critiques the neoclassical model for its narrow concentration on markets and its presumption that the financial framework inherently attains an optimal state. The Marxist political economy deviates from traditional economics in multiple ways grounded on fundamental assumptions and principles. One core concept of the approach is historical materialism, which spearheads that the mode of production determines societal development. The production method is transformed by how manufacturing means, such as capital and labor, are controlled and owned (Chakrabarti, 2021). In Venezuela’s case study, President Hugo Chavez and the capitalists possessed and regulated workforce and wealth distribution, causing a class struggle between citizens and politicians.
The Marxist political economy varies from neoclassical economics by proposing a diverse workforce theory of value, which asserts that the worthiness of a commodity or service is determined by the amount of work utilized in the production process. The model indicates that the massive exploitation of workers in a capitalist system by the ruling class individuals results in manufacturing surplus value used to generate revenue for politicians (Basu, 2022). For example, in the Venezuela case study in 2014, the worker labor value was $210 billion, while they were paid total wages of $70 billion, creating a surplus value of $140 billion, which merited politicians and investors (Smart, 2020). The investors, who the administrative officials support, oppress the employees by paying them lower wages compared to the value of their labor (Dolderer, Felber, & Teitscheid, 2021). Due to the surplus value offered by the workers, they create profits for the capitalist class. However, class struggles arise as the laborers (Venezuelan workers) challenge improved salaries, working conditions, and political representation (Pearse, 2021). The escalation of status quo inquiries results in social upheaval, eventually overthrowing the capitalist class and establishing a communist system.
Another fundamental principle of the Marxist political economy is that it views the state as an instrument of class power. In a capitalist system, state officials serve the interests of the capitalist class instead of promoting the workers’ preferences. Therefore, politicians play an essential central duty in sustaining the control and the power of the industrialists over the means of production and ensuring the wealth acquired is distributed in a manner that fulfills the investor’s interests (Desai, 2020). For example, in Venezuela’s case study, Hugo Chavez developed fiscal policies, including nationalizing the Sidetur steel manufacturing plant and increasing social spending to nearly $60 billion, making capitalists produce more medicine and food to sell to the citizens. (Smart, 2020) In addition, another fundamental assumption of Marxist political economy acknowledges the role played by ideology in transitioning the correlation between political and economic systems. The governmental representatives impose their values and ideas on the rest of the societal members, intending to exploit the workers and reinforce the control of the capitalist class. Even though there was financial growth in Venezuela, the natural capitalism instability resulted in the 2008 monetary crisis since the investors paid low wages to workers of $70 billion while they acquired a surplus value of $140 billion (Pearse, 2021). The systematic pursuit of profits in a capitalist system spearheaded by the ruling class results in an overproduction catastrophe, leading to unemployment and the deterioration of the living standards of the working class.
Another notable presumption of the Marxist political economy is that market mechanisms, including supply and demand, are inadequate to address capitalism issues. The Marxist political economy argues that while capitalists and the ruling class pursue revenue generation, capitalism results in the concentration of wealth to few people, spearheading increased widespread inequality and poverty (Chakrabarti, 2021). For example, in Venezuela’s case study, the owners of manufacturing companies, such as Owens-Illinois, continued to receive more profits, as the surplus value increased from $60 billion in 2004 to $140 in 2014 (Smart, 2020). The Marxist political economy demands radical solutions, including establishing a communist system to address the capitalist issues. Nevertheless, neoclassical economics and the Marxist political economy serve as distinct branches of political economy that have diverse viewpoints on the relationship between political and economic systems. The Marxist political economy is a theoretical framework that suggests that the failure of capitalism is due to the increment of inequality between common laborers and government rulers (Pearse, 2021). Such a view showcases that economics and politics are inseparable since the country’s administrative system officials determine the wealth distribution methods.
In contrast to traditional economics, the Marxist political economy spearheads that economic factors transform the nation’s political processes and vice versa. The Marxist model indicates that the community’s financial base substantially determines its constitutional and legal superstructures (Gao, 2022). In the capitalist system, the production method regarding how the manufacturing means are controlled, possessed, and utilized to produce commodities and services is privately owned, with the ruling class seeking to pursue high profits (Chakrabarti, 2021). Therefore, in the capitalist economy, the bourgeoisie regulates the production, aiming to exploit the proletariats by paying them lower wages than their labor value. For example, in Venezuela’s case study, in 2014, the total wages of workers stood at $70 billion, while the labor value was $210 billion (Smart, 2020). Investors typically influence the governmental processes to sustain their authority and regulate manufacturing resources and materials (Rioux, LeBaron, & Verovšek, 2020). As a result, the administrative representatives, including Hugo Chavez, serve the interests of the industrialists instead of meeting the demands of the working-class Venezuelans, causing unemployment and inequality.
Furthermore, the Marxist economy suggests that the correlation between political and financial frameworks is not static but dynamic and subject to change. The working-class struggle while fighting for improved salaries and political representation causes social upheaval, resulting in the establishment of communist or socialist systems (Pearse, 2021). In a communist structure, the means of production are publicly owned, and the manufacturing is geared toward the societal member’s needs instead of pursuing profit. For example, Hugo Chavez nationalized the Sidetur steel manufacturing plant to increase citizens’ wages. The working class fights the capitalist and ruling class to ensure they have job opportunities and are well-represented in the government to make them less vulnerable.
Neoclassical economics perceives the financial framework as a separate structure operating independently of the political system. The markets serve as the core mechanisms for coordinating monetary tasks. The traditional economics approach indicates that Venezuela’s economy inherently attains the optimal level when investors pursue their self-interests. The mandate of government officials, such as Hugo Chavez, is limited to creating a predictable and stable environment that reinforces economic activities, resulting in the escalation of inequalities and political misrepresentation of minority groups. Neoclassical economics supports the capitalist system that continues exploiting the working class as the administrative officials do not help transform the financial system (Chakrabarti, 2021). For instance, in 2004, the labor value created by Venezuelan employees was $60 billion, and their total wage was $20 billion, resulting in a surplus value of $40 billion, showcasing that capitalists continued to exploit common laborers (Smart, 2020). The static nature of governmental representatives makes the ruling class sustain their authority and control the working class. The Marxist political economy is an independent philosophical branch of political economy as the model suggests that markets are not neutral, and the political and social factors, including the distribution of power and wealth, modify it.
The Marxist Political Economy Philosophical Foundations and How they Differ from Traditional Economics
The philosophical foundations of the Marxist political economy are rooted in critiquing neoclassical economics and comprehending the correlations between political and financial power. Notably, Karl Marx introduced the Marxist political economy, which provides a unique viewpoint on society and economics that deviates from the traditional approach (Desai, 2020). The Marxist political economy is fundamentally concerned with comprehending capitalism’s development, origins, and functions as a social and historical system. The Marxist economy claims that the capitalist framework, a mode of production, emerged after the feudal era. The model is featured by labor exploitation, the concentration of authority and wealth to few investors, and the manufacturing of products for revenue generation than for usage (Pearse, 2021). For example, Hugo Chavez increased social spending to $60 billion in the Venezuela case study to support capitalists to continue manufacturing more food and medicine and record high profits (Smart, 2022). In contrast, traditional economics spearheads the capitalist ideological tool to oppress poor people by making government officials inactive, enabling individual selfishness and unfair business competition.
Capitalism is a naturally crisis-prone system characterized by cycles of financial booms and declines, ultimately resulting in the marginalization and impoverishment of the working class. The root cause of societal concerns includes increased contradictions among politicians needing to generate more profits, meet peoples’ needs, and maintain social stability (Desai, 2020). The Marxist political economy emphasizes the essentiality of social class in transforming financial relations and outcomes. Society is divided into two primary groups: the common laborers, who must work to survive, and the capitalist class, who owns the means of production. For instance, in 2014, Venezuelan workers accumulated a total wage of $ 70 billion, while investors acquired $ 140 billion in profit, causing unfair wealth distribution (Smart, 2020). Class division is the source of social disputes and struggles within capitalist societies, negatively affecting monetary growth. At the same time, traditional economics suggests that a community is a collection of households and individuals making rational decisions grounded on self-interest, and politicians have no power to regulate investors’ ventures (Pearse, 2021). The Marxist political economy emphasizes the essentiality of social change and political struggle to engender improved financial outcomes, improving the livelihood of communal members.
Research Findings
The Marxist political economy is grounded on independent philosophical foundations, including dialectics and materialism, that help make people comprehend the social, political, and financial forces shaping people’s history, distinguishing the model from traditional economics. Per the Marxist political economy, historical materialism holds that the societal monetary base, including the mode of production, determines the governmental and social superstructure of the community (Basu, 2022). Therefore, how people manufacture and distribute commodities, such as food and medicine, transitions into organizing their communal and public administrative institutions. In a capitalist society such as Venezuela, the relations of production are characterized by wage and labor exploitation by the capitalist class, which regulates and possesses the means of production (Dolderer et al., 2021). On the other hand, in traditional economics, the focus is on the individual and the choices that they make in the market. Neoclassical economists assume investors and politicians, including Hugo Chavez, act rationally in their self-interest and that the market mechanism, via the price system, allocates resources efficiently. The government-elected official’s duty is typically limited to ensuring that businesses operate efficiently without interference to promote financial growth.
The Marxist political economy concentrates on the essentiality of historical and social context in transforming economic growth. The monetary behavior of people is modified by the communal relations into which they are integrated. At the same time, another fundamental and unique philosophical concept that informs the Marxist political economy is dialectics, a method of inquiry of comprehending the conflicts within political, social, and financial phenomena (Rioux et al., 2020). The contradictions within the capitalist system are inherent, eventually resulting in a downfall when working-class people adopt a communalist framework while fighting for inequality in the distribution of wealth. Due to the indispensable support for the capitalist group, the politicians make it challenging for the workers to acquire technological and material resources, which government officials must avail to the societal members. The immense control and ownership of such resources limit the production of commodities and provision of services, creating a monopoly market where few ruling classes have much wealth accumulation.
Conclusion
The Marxist political economy is not traditional economics but an independent pholosoåphical branch of political economy because it critiques the neoclassical financial system approach of capitalism. Neoclassical economics perceives capitalism as an inherent concept governed by supply and demand laws, which merits societal members by encouraging innovation and monetary growth. Government officials are not actively protecting citizens from unfair competition, resulting in unemployment and market inequality. The Marxist political economy indicates that financial results are not determined independently by market forces but by other factors, including the role of state officials, class power, and the level of control by industrialists.
References
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