The Fundamental Shift in Social Science by Marxist Analysis


Instead of looking at the transformation

G – M – G[1]

which remains caught in the sphere of consumption, thus fundamentally being concerned with matters of circulation, a Marxist perspective opens the view on circulation as an area fundamentally determined by (and depending on) the sphere of production. The basic process here is the transformation

M – G – M’

Circulation makes only sense, then, if it «realises» the increase of money, i.e. the surplus value as it had been produced during the process of actual production. In other words, the transformation of M to M’ takes place during the process of production.

From here, it is as well possible to clearly make out the contradiction that casues the general crisis of capitalism,

*  as crisis of exploitation I: «alienation», the «political crisis» in form of a «dissatisfied proletariat», translating into political apathy, racism, xenophobia, low turn outs in elections …

*  as crisis of exploitation II: the permanent over-accumulation of capital and the tendency of the profit rate to fall

*  as political crisis in terms of the fundamental contradiction (antagonism) between the classes (including «sub-classes»)

*  as political crisis as well in terms of a far-reaching contradiction – to some extent expressible as contradiction between bourgeois and citoyen.

Brief excursus – the fundamental contradiction

The fundamental contradiction of capitalism is the contradiction between social production of privately appropriated wealth.

This opposes the view of non-Marxist approaches that basically remain oriented along the line of consumption and subsequently within the sphere of circulation. It opposes as well those non-Marxist approaches that actually look at sphere of production and preach that different factors, namely raw materials, machinery, entrepreneurship and labour equally «produce» an added value. Those approaches overlook that it is only human labour, the application of the working power that has the characteristic of transferring more value into the final product than is necessary for its own reproduction.

In terms of economic theory the non-Marxist approaches are largely concerned with one of the following perspectives on the determination of prices of any final product:

*  factor theories

*  supply and demand as decisive factors, determining both the price of any good and as well the amount which is produced of any product.

The latter will be relevant not least for the analysis of the Keynesian approach to social policy and welfare state.

There a critique of a «charity approach to social justice» has to be discussed as well. Such an approach can be seen for example in Amitai Sen’s approach who builds his justice project on moral philosophy, not least strongly referring to Adam Smith.



Briefly explain the difference between surplus value and profit.

What is the formula for calculating

  1. the rate of the surplus value

  2. the profit rate


[1] Where G stands for Good and M for money; M’ means «more money».