1- The Business Cycle- capitalism will lead to booms and busts. This has never been fully solved in capitalist economies, even welfare states have periodic declines due to overproduction. Likewise more centralized, government run economies are less prone to such disasters. China, for instance, was among the least effected economy during the last two economic recessions, one regional (the East Asian Economic Crisis) and the more current world wide recession caused by the United State's trade imbalance. Likewise centralized, government run economies recover faster. And last, countries which went from government control of the means of production to capitalism, such as the USSR, experienced severe economic collapse and are now more susceptible to periodic recession. Note that Marx did not originate this theory but claimed that these cycles were intrinsic to capitalism and could not be fully ended through regulation, whereas Keynes claimed otherwise. Given the continued presence of current economic crashes in the era where government's will heavily regulate capitalism I would argue that the data shows Marx was more correct then Keynes.
2- The Law of Capital Accumulation- Perhaps the most solid, the law of capital accumulation and centralization states that over time capital will become more centralized and accumulate into ever larger financial institutions. We have seen this directly with the rise of international corporations.
3- Relative-Surplus Value- Along with classes, the emphasis of surplus value as a mechanism which distinguishes capitalism from previous modes of production was an original contribution of Karl Marx, one that has been vindicated over time in the form of "plus-sum" production in game theory models. Marx's argument was that capitalism generates wealth by having more produced at the end of the day, in terms of overall wealth, then at the beginning. This unique contribution has been demonstrated in theoretical economic models i.e. Game Theory. And another auxiliary claim of this proposed mechanism- that relative value will increase for the capitalist and decrease for other classes, even as absolute value increases, has likewise been vindicated by the historically unprecedented rise in inequality.
4- The Organic Composition Model: What I personally call the Mechanization of Capital states that machinery will replace human labor over time. Now at days almost all industrial production and effective agriculture is machine intense. And with emerging tools like the internet and robotics you can do more with less. You can be more productive, or just as productive, with fewer workers.
I would like an analysis, based on a scientific, as opposed to a political standard of Marx's prediction and theories in Capital based on quantifiable empirical data.
Evidence:
Marx claimed capital would centralize and accumulate over time, a claim which has been vindicated by several lines of empirical research and data:
http://www.endgame.org/primer-wealth.html
http://www.faculty.fairfield.edu/faculty/hodgson/Courses/so11/stratification/income&wealth.htm
http://query.nytimes.com/gst/abstract.html?res=9503EFD8153EE033A25753C3A9679C946697D6CF
Second, the relative value of wages would decline:
http://www.ufcw.org/issues/workers_and_the_economy/epiwages.cfm
http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_20080220se/
http://www.highbeam.com/doc/1G1-11824287.html
Third, Marx states that machines will replace human labor.
http://us-trade-policy.suite101.com/article.cfm/robots_are_replacing_workers
http://findarticles.com/p/articles/mi_m1TOK/is_6/ai_n25009527/
http://www.eric.ed.gov/ERICWebPortal/custom/portlets/recordDetails/detailmini.jsp?_nfpb=true&_&ERICExtSearch_SearchValue_0=ED246534&ERICExtSearch_SearchType_0=no&accno=ED246534
This is all current, positive evidence for Marx's predictions.
Also I think it is important to clear up some misconceptions with respect to Karl Marx's theories:
1- Marx's invented the labor theory of value.
The labor theory of value was actually pioneered by the famous economist David Ricardo, who established the cost of production as the primary determinant of prices in the long-run.
Quote:
David Ricardo (18 April 1772 – 11 September 1823) was an English political economist, often credited with systematizing economics, and was one of the most influential of the classical economists, along with Thomas Malthus and Adam Smith.[1]
2- Marx is idealizing labor and ignoring supply and demand.
Marx actually argues against the labor theory of value as a prescriptive similiar to how Darwin argued against social Darwinism. Marx simply notes that in irrational economic systems, like capitalism, labor is treated as the de facto standard of exchange. He is not saying this should be the case, he is arguing that it is the case, and in fact he heavily implies that the economic system should be based more on utility (use-value ) - what we tend to think of as supply and demand.
3- Marxism is all ideology, not science.
Quote:
It has become fashionable to think that Karl Marx was not mainly an economist but instead integrated various disciplines—economics, sociology, political science, history, and so on—into his philosophy. But Mark Blaug, a noted historian of economic thought, points out that Marx wrote “no more than a dozen pages on the concept of social class, the theory of the state, and the materialist conception of history” while he wrote “literally 10,000 pages on economics pure and simple.”1
http://www.econlib.org/library/Enc/bios/Marx.html
4- Marxism leads to dictatorships like the USSR and the PRC.
Actually it was Lenin's State and Revolution which broke radically from Marx on this question, without supplying any evidence for his arguments at all. Lenin's arguments are purely political and practical, whereas Marx's are scientific. Again, to borrow from Darwinism, it is like comparing the writings of Charles Darwin to social Darwinists like Herbert Spencer.
But you don't have to take my word for it. Just glance at Lenin's State and Revolution and Marx's Capital.
You should notice that Lenin's groundbreaking "book" is actually a pamphlet roughly fifty pages long, full mostly of insults against political opponents. Marx's magnum opus by contrast is roughly 2000 pages of technical economic arguments, observations and material evidence.
5- Marx failed to take into account progressive laws and legislations, he argued capitalism will get worse no matter what.
This is a major point of confusion. Marx did not argue that the predictions made in Capital were inevitable, but that they would occur unless there was political circumvention.
In other words, Marx argued that capitalism is a system. This system follows certain rules- naturally develops a certain way.
Now this means that you can alter the system artificially, say by democratic legislation which protects small businesses. But unless you alter it politically it will tend to develop in certain directions- for example- companies will get larger, more centralized and wealth will become more concentrated over time. An example of this is how corporations tend towards monopoly.
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That's a classic post hoc fallacy. When your economy collapses, then you sell government property to try to prop it up, thus privatizing and opening the door to capitalism, it makes no sense at all to say that the move to capitalism caused the collapse. In the 80s, the USSR was already dead. It just took a bit longer for the stink and rot to seep through to the surface.
Science is ultimately based on empirical observations. The fact is I do not consider the fall of the USSR to be post hoc because the reason for the collapse can be traced to specific capitalist reforms, which lead to hot money and the selling off of key Russian resources at greatly reduced value, as well as the partitioning of industries.
Simply put privatization lead directly to asset-stripping and capital flight. To quote Nobel Prize winning economist Joseph Stiglitz:
This was not an inevitable collapse but a direct consequence of privatization and market liberalization.
Very much so. In fact Marx has a very explicit quote as to why a credit crisis (which is exactly what the US faces) occurs under capitalism:
Hence, if there is a disturbance in this expansion or even in the normal flow of the reproduction process, credit also becomes scarce; it is more difficult to obtain commodities on credit. However, the demand for cash payment and the caution observed toward sales on credit are particularly characteristic of the phase of the industrial cycle following a crash. During the crisis itself, since everyone has products to sell, cannot sell them, and yet must sell them in order to meet payments, it is not the mass of idle and investment-seeking capital, but rather the mass of capital impeded in its reproduction process, that is greatest just when the shortage of credit is most acute (and therefore the rate of discount highest for banker’s credit). The capital already invested is then, indeed, idle in large quantities because the reproduction process is stagnant. Factories are closed, raw materials accumulate, finished products flood the market as commodities. Nothing is more erroneous, therefore, than to blame a scarcity of productive capital for such a condition. It is precisely at such times that there is a superabundance of productive capital, partly in relation to the normal, but temporarily reduced scale of reproduction, and partly in relation to the paralysed consumption.
Capital Vol. III Part V
Division of Profit into Interest and Profit of Enterprise. Interest-Bearing Capital
Chapter 30. Money-Capital and Real Capital.
I'm glad you asked this because this is an empirical prediction that can be tested directly against the facts. Consider for example how our trade deficit is fed directly by our credit system. In fact America's Total Debt Report (which measures public and private debt ) shows that our credit system has put us tens of trillions of dollars in debt. The underlying cause is trade deficit, the visible cause is a credit crunch. This is just as Marx would have predicted.
Marx notes specific condition under which credit contracts: "Credit is contracted 1) because this capital is idle, i.e., blocked in one of its phases of reproduction because it cannot complete its metamorphosis; 2) because confidence in the continuity of the reproduction process has been shaken; 3) because the demand for this commercial credit diminishes."
Regulations can of course help with this matter, but that of course is a move to a more socialist/government controlled economy.
Karl Popper (the founder of the falsification principle in science) said the same thing about natural selection, initially rejecting it as untestable because it was, in his opinion a tautology:
- page 11 -
I have come to the conclusion that Darwinism is not a testable scientific theory, but a metaphysical research programme—a possible framework for testable scientific theories. [Popper, 1976, p. 168]
It is clear that here Darwinism means natural selection, not evolution. Popper states this explicitly earlier in the same work:
. . . because I intend to argue that the theory of natural selection is not a testable scientific theory, but a metaphysical research programme; . . . [Popper, 1976, p. 151]
There are two points to be made here:
First, natural selection being untestable is not the same as evolution being untestable. Evolution, to the creationist, is any hypothesis about origins. Astrophysical theories about stellar evolution or the "Big Bang" cosmology or scientific geology or, for that matter, many facets of biological evolution are not based upon Darwinian natural selection.
Second, Popper later admitted that he was wrong!
The fact that the theory of natural selection is difficult to test has led some people, anti-Darwinists and even some great Darwinists, to claim that it is a tautology. . . . I mention this problem because I too belong among the culprits. Influenced by what these authorities say, I have in the past described the theory as "almost tautological," and I have tried to explain how the theory of natural selection could be untestable (as is a tautology) and yet of great scientific interest. My solution was that the doctrine of natural selection is a most successful metaphysical research programme. . . . [Popper, 1978, p. 344]
I have changed my mind about the testability and logical status of the theory of natural selection; and I am glad to have an opportunity to make a recantation. . . . [p. 345]
The theory of natural selection may be so formulated that it is far from tautological. In this case it is not only testable, but it turns out to be not strictly universally true. There seem to be exceptions, as with so many biological theories; and considering the random character of the variations on which natural selection operates, the occurrence of exceptions is not surprising. [p. 346]
I would say Marxism as a whole, as well as many of its underlying theories are very similar in their testability. Marxism may be difficult to test, but it is not impossible. And as the data amasses, as we accumulate social, economic and historical data it becomes increasingly testable.
For example we can empirically test claims such as whether or not relative wealth has become more concentrated or centralized over time in capitalist systems, as would be predicted in Marx's "General Law of Capitalist Accumulation" using macroeconomic data. And such data indeed bears out the claim. To quote Professor of Sociology at the University of California:
Table 1: Distribution of net worth and financial wealth in the United States, 1983-2004
Total Net Worth
Top 1 percent Next 19 percent Bottom 80 percent
1983 33.8% 47.5% 18.7%
1989 37.4% 46.2% 16.5%
1992 37.2% 46.6% 16.2%
1995 38.5% 45.4% 16.1%
1998 38.1% 45.3% 16.6%
2001 33.4% 51.0% 15.6%
2004 34.3% 50.3% 15.3%
Financial Wealth
Top 1 percent Next 19 percent Bottom 80 percent
1983 42.9% 48.4% 8.7%
1989 46.9% 46.5% 6.6%
1992 45.6% 46.7% 7.7%
1995 47.2% 45.9% 7.0%
1998 47.3% 43.6% 9.1%
2001 39.7% 51.5% 8.7%
2004 42.2% 50.3% 7.5%
This is a clear indication of an economic trend of increasing concentration of wealth among the top 1%, a class that would qualify as capitalist. Likewise the relative wealth of the under-classes, which are also the vast majority, has declined. I should note that the law of capitalist development, by definition, applies more strongly the more capitalist a system is.
Clearly social programs which negate capitalism will slow down, or could even reverse the trend as can be seen in say, Cuba or China, by wealth redistribution programs. But even then the economy tends to centralize, and Marx's law, as I noted, concerned capitalist development, not socialist.