Karl Marx known as the father of Communism is a philosopher known for his lasting contribution to the rise of the proletariat by means of revolution and establishment of egalitarian Communism all the over the world. However his ideas have miserably failed and doomsday examples are the defunct Soviet Union and the market friendly, autocratic China. Even Cuba which had the vestiges of Communism is veering towards capitalism.
The poverty of Philosophy begins by what constitutes value? Value of an artifact is defined by its productive capacity and its value to be transacted as a commodity that will earn profit. Value is identified purely in economic and materialistic terms. Marx points out that this is the root problem of a bourgeoisie capitalist society.
Marx again espouses that production is based on the division of labor. Let’s take an example: in an operation theater in a labor room there are nurses and doctors tending to a lady in the last stages of pregnancy. From a Marxian point of view, the division of labor into nurses and doctors and is based on an unjust remuneration and falsified division of labor. In capitalist societies, value and division of labor is based on the level of skill. A skilled white collared worker will be eligible for higher remuneration.
Again Marx goes on to say that production leads to exchange and exchange is marketable. A marketable product implies that there is the earning of profit. Communist societies which have emulated to equalize production with zero profits have failed miserably. It is also wrong to assume that profits are entirely shared by the Capitalists and the workers are exploited. For example engineers in the software industry earn a staggering sum as wages.
Again Marx brings out the erroneous view that the exchange value of a product falls as supply increases while the demand remains the same. In a capitalist system exchange value is determined by price. The price mechanism brings demand and supply to equilibrium. Marx is true when he advocates that exchange value with scarcity. It is true that human needs are unlimited where as the means to satisfy them are scarce. Communist societies which have sought to eliminate profits became corrupted by a gargantuan bureaucracy.
Marx is right when he says that the force that acts as an intermediary between exchange value and supply is price. Price mechanism sets in balance the forces of demand and supply. However in Capitalist societies prices can be manipulated by the producers. Let’s take an example of oil producing countries like the OPEC. In order to raise prices they regulate the supply of oil. Monopolistic manipulation of prices is a flaw in Capitalist societies.
The consumer determines the utility of the product. This is only partly true and applies only to affluent consumers. The market says that the consumer is the king. Today with the spread of transnational corporations and the resurgence of the global economy, the choice of the consumer is endless. Marx is true when he says that a consumer’s freedom lies in the social position he or she occupies. For example I can’t even dream of buying a BMW. Marketable value is the corner stone of the economic structure of a society.
Exchange value is determined by two sources: from scarcity and from the quantity of labor required to produce them. It’s a fact that resources are scarce and economics puts the resources to the best use of production. I would like to disagree with Marx when he says that exchange value is determined by the quantity of labor required to produce them. For example: a sweeper in a school might spend more hours of work than the principal but will be paid lower wages. In a way to make it blunt, it makes a capitalist society is an ugly fang.
Next Marx goes on to say that wages and profit have an inverse ratio. But that it is not true in Capitalist societies. Greater the profit, the greater will be the wages dished out to workers.
Next Marx treats labor as a value and not as a commodity. Marxian idealism is not practicable in an economic system. Labor is given wages according to the skills possessed by them. Greater the skill, greater will be the wages. It is classic to point out that why did people from East Germany try to escape to West Germany? The unification of Germany signified a death knell for Communism.
Next Marx tells how to determine equality in production? How can institutional structures in a society be revamped? The argument by Marx is specious. For example an engineer in an automobile plant would be paid more than an ordinary worker.
Next Marx questions how money became sovereign value of exchange? Again Marx goes on to say that money is not determined by labor time. With regard to money there is universal consensus that it is a medium of exchange. Again the level of skill possessed by a worker determines the wages he or she will earn.
Next Marx goes on to say that the workers will rise up and there will be a revolution which will ensure in the setting up of a just and egalitarian society. Marx’s prophecy bears the bells of Cassandra.