Relationship of Economy and Politics According to Marx, Essay Example

Introduction

In recent years, political economic researchers’ realization of capitalism’s multiple failures has triggered a nostalgic approach towards the ideology of Marxism. According to some authors (Choonara 7), the economic collapse of the United States, as well as other leading countries has led to a great disbelief in the values and ideas of modern capitalism. The below essay is designed to reveal whether Marxist ideologies and theories can be applied on today’s political economic situation and whether or not they provide a real solution for the problems created by the increased power of financial institutions and globalization.

According to Harman (21), it is crucial to understand the concepts of Marx in order to fully grasp how the current political-economic system developed over the years. Further, in order to find the connection between political systems and capitalist approaches in the 21^st Century, there is a need for seeking the sources of global instability in Marxist ideas.

Review of Marx’s Critical Approach to International Political Economy

Marx concluded that social classes are based on the level of power attributed to them, and there is no way that in the capitalist world the borders of the classes can be crossed. According to Lebowitz, Marx did not critique all political economies, but simply the economy of capital in a political sense. Production is a tool that increases the power of the dominant classes. (Lebowitz 12)

The role of the working class and capital in the capitalist economy has been determined by Marx clearly and summarized by Lebowitz (27) The author (Lebowitz 40) states that according to Marx, capitalism changes social classes’ needs and when necessary, it creates new ones. He states that “the constant generation of new needs for commodities means that each new need becomes a new requirement to work, adds a new burden”. (39). That said, an organic, independent system is kept alive by keeping workers alive, pushing production and creating needs for production. It is interesting how Marx differentiates between people’s needs. According to Marx (1976), there are psychological, necessary and social needs attributed to workers.

As Choonara (26) states, “money makes the world go round”. This also indicates that there is a strong relationship between politics (national and international) and economies. While the author states that “Under capitalism economics appears to be separate from politics” (33), this is not the case. However, as there is no profit produced within the capitalist system without exploitation, workers’ struggle to increase the value of their labor is a source of political changes around the world. The process that drives the capitalist system and makes the statement (“money makes the world go round”) true is the circulation of capital.

Review of Capitalism – According to Marx

Marx’s theory of crisis (Clarke) states that crisis is necessary in political economic environments. Capitalism has its own tendency for crisis and collapse. This is the statement that triggered contemporary thinkers’ focus to be oriented towards Marxism again. Crisis is a part of the capitalist way of production. In a political sense, it is important to review Marx’s “The Modern Theory of Colonization” chapter within Capital. (Fine and Saad-Filho) This theory assumes that a capitalist production system can only exist if workers are economically dependent on the bourgeois class. (Lebowitz 14). This theory can be applied to current global economic situations: namely the economic colonization of developing countries. Exploiting cheap labor is only possible when people are economically dependent on the dominant class: creating “western” type of demand in the East makes this possible. When global multinational companies appear in developing countries, they start increasing consumption, the demand for capital, and engage labor into work: creating their own working class within the country.

As capitalism is a system based on production of commodities (Choonara 14), it is not a simple exchange method as such. It is more resembling to a network of connections and relationships, in which, politics play a great part. International politics determine the cultural, economic, industrial and commodity exchanges between nations, and economy is a tool of today’s globalization efforts. Politics have the ability to change a commodity’s exchange-value, even if they cannot alter its use-value. (Choonara 19)

Albritton (530) confirms that in a totally capitalist system “inputs are totally commodified, including labour”. This definition is true for the capitalist state. This also means that globalization’s main aim is to create a better exchange value for commodities compared to labor, therefore increasing profits.

Criticism of Marx’s Approach – Today’s International Political Economy

Today’s Marxist approaches towards political economy are gaining more attention, due to the contemporary issues surfacing on the global field. Many authors are trying to explain the long-lasting economic and global political crisis with Marx’s crisis theory. Indeed, the recession that lasted longer than anyone expected and the long-hauling power struggle between the global East and West are a result of rivalry on the economic and political field. While the Gulf Wars were predicting a long term political conflict between the East and West, the increased presence of American troops in the Middle East cannot be simply explained by political reasons. The war of defense clearly had economic and power-related motivations.

Lebowitz (51) states that Marx’ s Capital is one-sided. The author concludes that Marx (1976) does not take into consideration the constant change of needs and necessities. The need changes result in wage struggles between the working class and capitalists. There are, indeed two sides of the question. In a way, when people earn more, they consume more and their buying power increases. That also means increased need for production. However, – as the 2007 economic crisis demonstrated – there is a downside of increased consumption on a national and global scale.

Before examining the effects of globalization on international political economic environments, it is important to review Choonara’ s statement, (138) which concludes that globalization has no impact on power relations within the international economy. Unevenness still exists, despite several authors’ claims that globalization is able to erase inequality. Following the thought of Marx related to capitalist behavior, the author expands on the international scale, stating that “capitalists are happy to exploit workers wherever it is most convenient and profitable” (140), and trying to explain globalization with this effort of capitalist systems. Clearing further myths around globalization, he further states that the ability of working class to fight for their right is not affected by globalization, either. However, it is true that the conditions of working class have changed to the worse during the past few decades.

Reviewing the application of Marxist ideology on capitalist markets, several authors (Choonara,144, Rosenberg, 53, Rosenberg 144) conclude that capitalism is not a stagnant system, and it is influenced by several external and internal factors.

The dependence theory, based on Marx’s ideology on capitalism is the basis of most arguments stating that the current system is not maintainable, sustainable, therefore, the economic crisis of the 21^st Century was inevitable. While capitalism and developed countries presumed that under-developed countries were primitive and lack structures, they made a great mistake. Just like capitalists, they assumed that the countries did not have the tools, power and basis of agreement to represent their interest. Indeed, in the globalized world, there are emerging voices of country leaders claiming to work on ending the exploitation of the national state by economically developed countries or multinational corporations.

Class conflict develops from the power struggle based on different interests in capitalist worlds. This, translated to international political economies would mean that the working class is represented by under-developed countries, providing low cost labor and natural resources, while capitalists would be the countries involved in the exploitation of profits. This is the classical example of Marx’s class theory, which consists of the differentiation of two major classes: labor and capital.

Further, reviewing the relationship between politics and economies, it is important to note that Marx differentiated between the base of superstructure (economic system) and the superstructure (cultural and political system). The conflict of classes and economies, according to Marx lies in the lack of harmonization between the two systems. This idea also confirms the original statement of the study, namely that there is a strong correlation between politics and economies.

One more theory needs to be reviewed in order to understand the relationship between politics and economies. Clarke (72) states that political crises are triggered by economic troubles; mostly capitalist overproduction.

Relationship between International Rivalry and Capitalism

According to Weeks (223), the falling rate of profits can be explained through Marx’s ideas. The question of globalization, however, needs to be examined before using the Marxist and neo-Marxist approach to find out whether there is a real source of crisis and fallen profits in the capitalist system. Rivalry is a competition of states, ideologies and systems. The intervention of governments during the capitalist crisis of the 21^st Century (Weeks 224) can be indeed viewed as an attempt to restore the “fetishism of commodities” that started in the 21^st Century and has been supported since by governments, capitalists and organizations aiming to create more demand nationally and internationally.

Competition, according to Marx (Lebowitz, 206, Marx, 414) is “the world of markets, prices, profits, profit rates, interest, and rent.”. While Marx (414) applies this theory on the state level, it is simple to translate it to international political environments. The capital’s only way of growth is to drive down wages and drive prices of commodities (exchange value) up. This way, surplus is created and the space for growth is created. Globalization is one of the methods that is used by national states to drive down production costs (wages) and create a surplus. By international companies moving to countries where the cost of labor is lower than in the home country, this movement of capital production focusing on growth is supported. However, this capitalist tendency needs political support. Without the development of global markets, international trade agreements, the task would be much harder.

Once the main driver of growth within the capitalist system has been understood, it is now time to review the obstacles that stand in the way of globalization and the forces of international rivalry. While Western international companies discovered cheap labor markets, education and economic changes has triggered the development of a new competition. Developing countries’ dominant economic classes discovered that talent and skilled workers can be exploited locally by national companies, that way, they created a competition for Western multinational companies. Rivalry was created on the global economic level. However, to explain the fall of globalization by economic changes solely would be equivalent with over-simplifying the problem. Several international political and capitalist considerations are constantly influencing political decisions and economic agreements.

According to Marx, “a scientific analysis of competition is possible only if we can grasp the inner nature of capital, just as the apparent motions of the heavenly bodies are intelligible only to someone who is acquainted with their real motions, which are not perceptible to the senses”. It is important to note that above, Marx talks about the competition of individual capitals, therefore, in order to explain international rivalry of national states, they all need to be handled as a homogenous capitalist system that in the global world is trying to represent its self-interest. Marx also states that within competition, everything appears to be a reverse. Workers’ revolt can be easily understood as a revenge on capitalists, however, when there are national states on the stage of rivalry, it is hard to understand the connections. Monopolies do not exist on a global scale, however, organized political response is possible on a state level. This was clearly visible in the People’s Republic of China, when the country closed up for international economic forces and took its own route of development. Once the working class and labor force in the country was developed, it entered the international scene of rivalry and is today the fastest growing economy. Still, understanding the example of China on solely economic level is impossible. Political decisions and strong government control played a crucial part in the development of the situation. Choonara (20) confirms that competition is an important and crucial factor of capitalist economies. Further, the question of supply and demand seems to be left out of the ideology of Marx, according to some authors. Choonara (20) states that according to Marx, supply and demand do not determine exchange value, only cause fluctuations. This brings us to the Marxist assumption that capitalism is an independent system of production. If this was true, political decisions and competition would only cause fluctuation of surplus, profit and production, and the collapse would not be necessary. The collapse of the capitalist system was indeed not triggered by political decisions, but the inevitable over-production and lowering profits.

Rosenberg (12) approaches the question of state rivalry and competition from a more complex aspect. Indeed, general power has several segments: economic, military, ideological and generic. State policies determine all aspects or relations between nation states. By aiming for the balance of power (Rosenberg 12), a power struggle is created on an economic, political, ideological and military field. Power struggles do exist in the capitalist world, and they would exist if we lived in a fully globalized environment.

Rosenberg (57) also states that globalization triggered further economic competition and the rivalry of nation states. Neo-liberal policy shifts in the Global East were introduced by national governments and newly available regions were being exploited by multinational companies. This resulted in a competition of labor force as well as a rivalry of commodities. At the same time as multinational companies started exploiting labor force in under-developed countries, they also started creating new demand. This resulted in two types of capitalist competitions: one involving labor force (it was cheaper to get work done in these countries) and one relating to produce (the products of multinational companies created a competition for locally produced commodities).

Critical Analysis

The critical analysis of Marx’s theories on capital and economic forces has been attempted by several authors in the past. One of the main ideas (and the most relevant ones) of Marx is quoted by Choonara (68). According to the author, there is one clearly visible aspect of today’s political economies: the force to accumulate surplus. This idea has been examined and applied on today’s globalized political-economic world and proven true. However, there are some limitations to the application of Marx’s ideas on today’s economy, as well as advantages. These will be reviewed below.

Pros of the Marxist approach

While explaining international political economies through Marxist ideas of capital is a feasible solution, it requires some understanding of rivalry and competition. Marxist theory is indeed useful for explaining the economic crisis which is originated by the inevitable fall of profits, due to either increasing labor costs or lower price of commodities. The disappearance of profits triggered globalization, according to several authors quoted previously in the paper. Marx’s theory is based on value of labor, capital, commodities and the ability of the system to create surplus, it examines an abstract system that is easy to observe.

Cons of the Marxist approach

Indeed, a perfect capitalist system does not exist. A perfect capitalism would involve the lack of monopolies, unions and inequality of opportunities. This is clearly not the case when looking at international rivalry and political economies. There are indeed organizations that work on the international economic scale similarly to unions, and there are monopolies, government influence and lobbies. These are the factors that the theories of Marx do not take into consideration. Further, Marx does talk mostly about manual labor, while in the globalized, technologically empowered world, there is another type of work, which has a higher perceived value; knowledge-based production and commodities. When the authors talked about the competition created by developing countries for multinational companies with a capitalist approach, the basis of the argument was the increased level of education and the development of knowledge economies.

Brewer’s critical analysis

Brewer, like several authors attempting to explain current political-economic trends with Marxist theories approaches the question from the aspect of power. According to him, on the international scale, there are developed and under-developed countries. (272). While Western Europe and North America are industrialized and developed, the rest of the world is dependent on the powerful states. This might also suggest that in international political economies, there are dominant states and “working class states”. However, this is not completely true, as all states have their international political correlations and they do not exist in an empty space. As it has been confirmed before by Choonara (14), capitalism is a network of connections and relationships. This also means that political influence of international relations can and will always determine the rate of which dominant states are able to exploit the workforce and resources of developing countries. This, indeed, can be considered as a possible obstacle of globalization and a force that has an immediate impact on international economies.

In order to understand the Marxist approach of today’s economic and political events, it is important to review historical trends in globalization, in particular, the impact of these trends on power relations. The creation of international trade agreements, organizations and the World Bank seem to support the effort of representing the countries currently oppressed, by giving them opportunities to develop. However, critics of the European Union, World Bank and United Nations (Cammack) claim that these organizations are unable to successfully handle the crisis because they exist in a capitalist world.

Summary of Findings

The above review of literature and Marx’s ideology has revealed that the system of capitalism is dependent on state politics, however, there is no indication that the forces of capital are subsequently affected by political decisions. Indeed, this is true in the national level, as capital production is constant, and political environments, social movements and change can only create fluctuation in costs, labor, surplus and exchange value. The decisions, however, do not affect the whole system. The only reason why the engine of a capitalist system can “break” is over-production and the increase of labor cost. Over-production, and higher labor cost, however, can be influenced and triggered by political macro-economic decisions.

Implication

The review of the globalization theory by Rosenberg (42) puts Marx’s theory on capital into a contemporary context. The author states that interdependence exists in the global economy between capitalist systems. This interdependence is determined by international relations, social forces and power struggles, described by Marx.

Connection between modern IPE approaches and Marxism

Rosenberg (2005, p. 3) argues that “the age of globalization is over”. The author tries to explain the fall of globalization based on a Marxian conception of international and national politics: the socialization of the sovereign and transnational relations. Further, he states that “modern political sovereignty is not just fully compatible with transnational social relations: in Marx’s schema, modern political sovereignty is one of their key preconditions”. (19). This indicates that there is a strong connection between power relations, the political dominant forces and international economies. While power is not restricted to economic abilities and control over the masses or “working class” any more, it is still present on the international and national scale. Rosenberg (20) states that social power is a strong factor of a political economy. Further, he states that globalization is a result of the “geographical expansion” of social relations, based on the principles of capitalist competition. Through this expansion, the dominant class or group is able to increase and revolutionize production using technological developments as drivers. By introducing these developments at new locations, the globalization in the classical term takes place, new markets are created, demand is increased and production is supported by the growing demand for commodities.

Indeed, according to the Marxist approach, globalization is nothing more than the movement of capitalism from national to global scale. According to Marx, beyond a certain point, the development of the powers of production becomes a barrier for capital;; hence the capital relation a barrier for the development of the productive powers of labour.’. (Marx 749). This thesis suggests that as labor and demand are limited, globalization is the simple solution to overcome barriers. As globalization efforts are supported by national and international politics, the dominant classes, it is clearly true that there is a strong connection between international politics and economies.

The below example on a national state level does explain the connection between political decisions and capitalist economies. When a government decides that they increase the minimum hourly rate of workers as a part of a legislative action, this would increase the labor cost and exchange value of labor. Workers, however, would benefit from a higher level of buying power. This will result in an increased demand for commodities and production. Producing more with a lower surplus would eventually mean that profits disappear and companies have to drive down labor costs. According to Marx, this is what capitalist systems are aiming for. When under-developed countries open up for international trade, their labor markets become free to exploit. This creates a globalized force of political economy, which, in the Marxist sense, consists of capitalist states and exploited ones. While the capitalist state exploits the labor force of the developing country, it creates surplus and new market for the commodities it produces. At the same time, it creates a competition for local commodities, and the labor force of the developing country enters an international rivalry with the labor force of the developed country.

Conclusion

The authors have attempted to review the theories of Marxism in relation with emerging approaches trying to use the same ideology to explain the collapse of markets and economies in 2007. The reason for the approach was that almost all authors with a neo-Marxist approach to theories used the crisis to explain the imperfection of capitalist systems. It has been revealed that capitalism is not a stagnant, standalone system that is able to reproduce profits on its own. It is indeed influenced by political forces, as well as national state governments and state economies. It has also been noted that the definition of capitalism has been somewhat altered by contemporary authors. The classes and forces are no longer even and static, but they exist in a network that involves international politics, trade agreements, fiscal and monetary policies, as well as competition.

Next, the authors examined whether Marx’s dominant class theory can be applied to international politics; in terms of assigning some countries with the “working class” attributes and others with the “bourgeois” ones. Reviewing the related literature, the study has concluded that Marx’s theory of classes can be reflected on the international scale. However, the question of international rivalry still needed to be examined. Based on the related literature and the findings of authors claiming that globalization is over, (Rosenberg) it has been found that competition exists among national states. Exploited, under-developed countries have the power to get organized and create a competition for capitalists. This has happened in several countries, for example in India, where international firms founded by government or supported by local businesses are emerging, creating a boundary of expansion for truly capitalist states. However, Rosenberg also confirms that this competition is a multipolar system with several aspects of diplomacy, governmental, international, NGO and multinational forces present. This also means that

While the elevation of the proletariat, predicted by Marx has not come, the ideas of Marxism have been found relevant to examine the collapse of capitalist systems around the world.

Works Cited

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