# Okishio's theorem

Okishio's theorem is a theorem formulated by Japanese economist Nobuo Okishio. It has had a major impact on debates about Marx's theory of value. Intuitively, it can be understood as saying that if one capitalist raises his profits by introducing a new technique that cuts his costs, the collective or general rate of profit in society – for all capitalists – goes up.

Okishio [1961] establishes this theorem under the assumption that the real wage remains constant. Thus, the theorem isolates the effect of 'pure' innovation from any consequent changes in the wage.

For this reason the theorem, first proposed in 1961, excited great interest and controversy because, according to Okishio, it contradicts Marx's law of the tendency of the rate of profit to fall. Marx had claimed that the new general rate of profit, after a new technique has spread throughout the branch where it has been introduced, would be lower than before. In modern words, the capitalists would be caught in a rationality trap or prisoner's dilemma: that which is rational from the point of view of a single capitalist, turns out to be irrational for the system as a whole, for the collective of all capitalists. This result was widely understood, including by Marx himself, as establishing that capitalism contained inherent limits to its own success. Okishio's theorem was therefore received in the West as establishing that Marx's proof of this fundamental result was inconsistent.

More precisely, the theorem says that the general rate of profit in the economy as a whole will be higher if a new technique of production is introduced in which, at the prices prevailing at the time that the change is introduced, the unit cost of output in one industry is less than the pre-change unit cost. The theorem, as Okishio (1961:88) points out, does not apply to non-basic branches of industry.

The proof of the theorem may be most easily understood as an application of the Perron–Frobenius theorem. This latter theorem comes from a branch of linear algebra known as the theory of nonnegative matrices. A good source text for the basic theory is Seneta (1973). The statement of Okishio's theorem, and the controversies surrounding it, may however be understood intuitively without reference to, or in-depth knowledge of, the Perron–Frobenius theorem or the general theory of nonnegative matrices.

## The Sraffa model

The argument of Nobuo Okishio, a Japanese economist, is based on a Sraffa-model. The economy consists of two departments I and II, where I is the investments goods department (means of production) and II is the consumption goods department, where the consumption goods for workers are produced. The coefficients of production tell, how much of the several inputs is necessary to produce one unit of output of a given commodity ("production of commodities by means of commodities"). In the model below two outputs exist ${\displaystyle x_{1}}$, the quantity of investment goods, and ${\displaystyle x_{2}}$, the quantity of consumption goods.

The coefficients of production are defined as:

• ${\displaystyle a_{11}}$: quantity of investment goods necessary to produce one unit of investment goods.
• ${\displaystyle a_{21}}$: quantity of hours of labour necessary to produce one unit of investment goods.
• ${\displaystyle a_{12}}$: quantity of investment goods necessary to produce one unit of consumption goods.
• ${\displaystyle a_{22}}$: quantity of hours of labour necessary to produce one unit of consumption goods.

The worker receives a wage at a certain wage rate w (per unit of labour), which is defined by a certain quantity of consumption goods.

Thus:

• ${\displaystyle w\cdot a_{21}}$: quantity of consumption goods necessary to produce one unit of investment goods.
• ${\displaystyle w\cdot a_{22}}$: quantity of consumption goods necessary to produce one unit of consumption goods.

This table describes the economy:

 Investment goods used Consumption goods used Output Department I ${\displaystyle a_{11}x_{1}}$ ${\displaystyle a_{21}wx_{1}}$ ${\displaystyle x_{1}}$ Department II ${\displaystyle a_{12}x_{2}}$ ${\displaystyle a_{22}wx_{2}}$ ${\displaystyle x_{2}}$

This is equivalent to the following equations:

• ${\displaystyle (a_{11}x_{1}p_{1}+a_{21}wx_{1}p_{2})(1+r)=x_{1}p_{1}}$
• ${\displaystyle (a_{12}x_{2}p_{1}+a_{22}wx_{2}p_{2})(1+r)=x_{2}p_{2}}$
• ${\displaystyle p_{1}}$: price of investment good ${\displaystyle x_{1}}$
• ${\displaystyle p_{2}}$: price of consumption good ${\displaystyle x_{2}}$
• ${\displaystyle r}$: General rate of profit. Due to the tendency, described by Marx, of rates of profits to equalise between branches (here departments) a general rate of profit for the economy as a whole will be created.

In department I expenses for investment goods or for constant capital are:

• ${\displaystyle a_{11}x_{1}p_{1}}$ and for variable capital:
• ${\displaystyle a_{21}wx_{1}p_{2}}$.

In Department II expenses for constant capital are:

${\displaystyle a_{12}x_{2}p_{1}}$

and for variable capital:

${\displaystyle a_{22}wx_{2}p_{2}.}$

(The constant and variable capital of the economy as a whole is a weighted sum of these capitals of the two departments. See below for the relative magnitudes of the two departments which serve as weights for summing up constant and variable capitals.)

Now the following assumptions are made:

• ${\displaystyle p_{2}=1}$: The consumption good ${\displaystyle x_{2}}$ is to be the numéraire, the price of the consumption good ${\displaystyle p_{2}}$ is therefore set equal to 1.
• The real wage is assumed to be ${\displaystyle w=2p_{2}=2.}$
• Finally, the system of equations is normalised by setting the outputs ${\displaystyle x_{1}}$ und ${\displaystyle x_{2}}$ equal to 1, respectively.

Okishio, following some Marxist tradition, assumes a constant real wage rate equal to the value of labour power, that is the wage rate must allow to buy a basket of consumption goods necessary for workers to reproduce their labour power. So, in this example it is assumed that workers get two pieces of consumption goods per hour of labour in order to reproduce their labour power.

A technique of production is defined according to Sraffa by its coefficients of production. For a technique, for example, might be numerically specified by the following coefficients of production:

• ${\displaystyle a_{11}=0.8}$: quantity of investment goods necessary to produce one unit of investment goods.
• ${\displaystyle a_{21}=0.1}$: quantity of working hours necessary to produce one unit of investment goods.
• ${\displaystyle a_{12}=0.4}$: quantity of investment goods necessary to produce one unit of consumption goods.
• ${\displaystyle a_{22}=0.1}$: quantity of working hours necessary to produce one unit of consumption goods.

From this an equilibrium growth path can be computed. The price for the investment goods is computed as (not shown here): ${\displaystyle p_{1}=1.78}$, and the profit rate is: ${\displaystyle r=0.0961=9.61\%}$. The equilibrium system of equations then is:

• ${\displaystyle (0.8\cdot 1\cdot 1.78+0.1\cdot 2\cdot 1\cdot 1)\cdot (1+0.0961)=1\cdot 1.78}$
• ${\displaystyle (0.4\cdot 1\cdot 1.78+0.1\cdot 2\cdot 1\cdot 1)\cdot (1+0.0961)=1\cdot 1}$

## Introduction of technical progress

A single firm of department I is supposed to use the same technique of production as the department as a whole. So, the technique of production of this firm is described by the following:

${\displaystyle (a_{11}x_{1}p_{1}+a_{21}wx_{1}p_{2})(1+r)=x_{1}p_{1}}$
${\displaystyle =(0.8\cdot 1\cdot 1.78+0{,}1\cdot 2\cdot 1\cdot 1)\cdot (1+0.0961)=1\cdot 1.78}$

Now this firm introduces technical progress by introducing a technique, in which less working hours are needed to produce one unit of output, the respective production coefficient is reduced, say, by half from ${\displaystyle a_{21}=0.1}$ to ${\displaystyle a_{21}=0.05}$. This already increases the technical composition of capital, because to produce one unit of output (investment goods) only half as much of working hours are needed, while as much as before of investment goods are needed. In addition to this, it is assumed that the labour saving technique goes hand in hand with a higher productive consumption of investment goods, so that the respective production coefficient is increased from, say, ${\displaystyle a_{11}=0.8}$ to ${\displaystyle a_{11}=0.85}$.

This firm, after having adopted the new technique of production is now described by the following equation, keeping in mind that at first prices and the wage rate remain the same as long as only this one firm has changed its technique of production:

${\displaystyle =(0.85\cdot 1\cdot 1.78+0.05\cdot 2\cdot 1\cdot 1)\cdot (1+0.1036)=1\cdot 1.78}$

So this firm has increased its rate of profit from ${\displaystyle r=9{,}61\%}$ to ${\displaystyle 10{,}36\%}$. This accords with Marx's argument that firms introduce new techniques only if this raises the rate of profit.[1]

Marx expected, however, that if the new technique will have spread through the whole branch, that if it has been adopted by the other firms of the branch, the new equilibrium rate of profit not only for the pioneering firm will be again somewhat lower, but for the branch and the economy as a whole. The traditional reasoning is that only "living labour" can produce value, whereas constant capital, the expenses for investment goods, do not create value. The value of constant capital is only transferred to the final products. Because the new technique is labour-saving on the one hand, outlays for investment goods have been increased on the other, the rate of profit must finally be lower.

Let us assume, the new technique spreads through all of department I. Computing the new equilibrium rate of growth and the new price ${\displaystyle p_{2}}$ gives under the assumption that a new general rate of profit is established:

• ${\displaystyle (0.85\cdot 1\cdot 1.77+0.05\cdot 2\cdot 1\cdot 1)\cdot (1+0.1030)=1\cdot 1.77}$
• ${\displaystyle (0.4\cdot 1\cdot 1.77+0.1\cdot 2\cdot 1\cdot 1)\cdot (1+0.1030)=1\cdot 1}$

If the new technique is generally adopted inside department I, the new equilibrium general rate of profit is somewhat lower than the profit rate, the pioneering firm had at the beginning (${\displaystyle 10.36\%}$), but it is still higher than the old prevailing general rate of profit: ${\displaystyle 10.30\%}$ larger than ${\displaystyle 9.61\%}$.

## Result

Nobuo Okishio proved this generally, which can be interpreted as a refutation of Marx's law of the tendency of the rate of profit to fall. This proof has also been confirmed, if the model is extended to include not only circulating capital but also fixed capital. Mechanisation, defined as increased inputs of machinery per unit of output combined with the same or reduced amount of labour-input, necessarily lowers the maximum rate of profit.[2]

## Marxist responses

1) Some Marxists simply dropped the law of the tendency of the rate of profit to fall, claiming that there are enough other reasons to criticise capitalism, that the tendency for crises can be established without the law, so that it is not an essential feature of Marx's economic theory.

Others would say that the law helps to explain the recurrent cycle of crises, but cannot be used as a tool to explain the long term developments of the capitalist economy.

2) Others argued that Marx's law holds if one assumes a constant ‘’wage share’’ instead of a constant real wage ‘’rate’’. Then, the prisoner's dilemma works like this: The first firm to introduce technical progress by increasing its outlay for constant capital achieves an extra profit. But as soon as this new technique has spread through the branch and all firms have increased their outlays for constant capital also, workers adjust wages in proportion to the higher productivity of labour. The outlays for constant capital having increased, wages having been increased now also, this means that for all firms the rate of profit is lower.

However, Marx did not know the law of a constant wage share. Mathematically the rate of profit could always be stabilised by decreasing the wage share. In our example, for instance, the rise of the rate of profit goes hand in hand with a decrease of the wage share from ${\displaystyle 58.6\%}$ to ${\displaystyle 41.9\%}$, see computations below. However, a reduction in the wage share is not possible in neoclassical models due to the assumption that wages equal the marginal product of labour.

3) A third response is to reject the whole framework of the Sraffa-models, especially the comparative static method.[3] In a capitalist economy entrepreneurs do not wait until the economy has reached a new equilibrium path but the introduction of new production techniques is an ongoing process. Marx's law could be valid if an ever-larger portion of production is invested per working place instead of in new additional working places. Such an ongoing process cannot be described by the comparative static method of the Sraffa models.

According to Alfred Müller[4] the Okishio theorem could be true, if there was a coordination amongst capitalists for the whole economy, a centrally planned capitalist economy, which is a Contradictio in adjecto. In a capitalist economy, in which means of production are private property, economy-wide planning is not possible. The individual capitalists follow their individual interests and do not cooperate to achieve a general high rate of growth or rate of profit.

## The model in physical terms

### The dual system of equations

Up to now it was sufficient to describe only monetary variables. In order to expand the analysis to compute for instance the value of constant capital c, variable capital v und surplus value (or profit) s for the economy as whole or to compute the ratios between these magnitudes like rate of surplus value s/v or value composition of capital, it is necessary to know the relative size of one department with respect to the other. If both departments I (investment goods) and II (consumption goods) are to grow continuously in equilibrium there must be a certain proportion of size between these two departments. This proportion can be found by modelling continuous growth on the physical (or material) level in opposition to the monetary level.

In the equations above a general, for all branches, equal rate of profit was computed given

• certain technical conditions described by input-output coefficients
• a real wage defined by a certain basket of consumption goods to be consumed per hour of labour ${\displaystyle x_{2}}$

whereby a price had to be arbitrarily determined as numéraire. In this case the price ${\displaystyle p_{2}}$ for the consumption good ${\displaystyle x_{2}}$ was set equal to 1 (numéraire) and the price for the investment good ${\displaystyle x_{1}}$ was then computed. Thus, in money terms, the conditions for steady growth were established.

### The general equations

To establish this steady growth also in terms of the material level, the following must hold:

${\displaystyle (a_{11}x_{1}+Ka_{12}x_{2})(1+g)=x_{1}}$
${\displaystyle (a_{21}w\cdot x_{1}+Ka_{22}\cdot wx_{2})(1+g)=Kx_{2}}$

Thus, an additional magnitude K must be determined, which describes the relative size of the two branches I and II whereby I has a weight of 1 and department II has the weight of K.

If it is assumed that total profits are used for investment in order to produce more in the next period of production on the given technical level, then the rate of profit r is equal to the rate of growth g.

### Numerical examples

In the first numerical example with rate of profit ${\displaystyle r=9,61\%}$ we have:

${\displaystyle (0.8\cdot 1+0{,}2808\cdot 0.4\cdot 1)\cdot (1+0.0961)=1}$
${\displaystyle (0.1\cdot 2\cdot 1+0.2808\cdot 0.1\cdot 2\cdot 1)\cdot (1+0.0961)=0.2808\cdot 1}$

The weight of department II is ${\displaystyle K=0.2808}$.

For the second numerical example with rate of profit ${\displaystyle r=10.30\%}$ we get:

${\displaystyle (0.85\cdot 1+0.14154\cdot 0.4\cdot 1)\cdot (1+0.1030)=1}$
${\displaystyle (0.1\cdot 2\cdot 1+0.14154\cdot 0.05\cdot 2\cdot 1)(1+0.1030)=0.14154\cdot 1}$

Now, the weight of department II is ${\displaystyle K=0.14154}$. The rates of growth g are equal to the rates of profit r, respectively.

For the two numerical examples, respectively, in the first equation on the left hand side is the input of ${\displaystyle x_{1}}$ and in the second equation on the left hand side is the amount of input of ${\displaystyle x_{2}}$. On the right hand side of the first equations of the two numerical examples, respectively, is the output of one unit of ${\displaystyle x_{1}}$ and in the second equation of each example is the output of K units of ${\displaystyle x_{2}}$.

The input of ${\displaystyle x_{1}}$ multiplied by the price ${\displaystyle p_{1}}$ gives the monetary value of constant capital c. Multiplication of input ${\displaystyle x_{2}}$ with the set price ${\displaystyle p_{2}=1}$ gives the monetary value of variable capital v. One unit of output ${\displaystyle x_{1}}$ and K units of output ${\displaystyle x_{2}}$ multiplied by their prices ${\displaystyle p_{1}}$ and ${\displaystyle p_{2}}$ respectively gives total sales of the economy c + v + s.

Subtracting from total sales the value of constant capital plus variable capital (c + v) gives profits s.

Now the value composition of capital c/v, the rate of surplus value s/v, and the "wage share" v/(s + v) can be computed.

With the first example the wage share is ${\displaystyle 58.6\%}$ and with the second example ${\displaystyle 41.9\%}$. The rates of surplus value are, respectively, 0.706 and 1.389. The value composition of capital c/v is in the first example 6,34 and in the second 12.49. According to the formula

${\displaystyle {\text{Rate of profit }}p={{s \over v} \over {{c \over v}+1}}}$

for the two numerical examples rates of profit can be computed, giving ${\displaystyle 9.61\%}$ and ${\displaystyle 10.30\%}$, respectively. These are the same rates of profit as were computed directly in monetary terms.

### Comparative static analysis

The problem with these examples is that they are based on comparative statics. The comparison is between different economies each on an equilibrium growth path. Models of dis-equilibrium lead to other results. If capitalists raise the technical composition of capital because thereby the rate of profit is raised, this might lead to an ongoing process in which the economy has not enough time to reach a new equlibrium growth path. There is a continuing process of increasing the technical composition of capital to the detriment of job creation resulting at least on the labour market in stagnation. The law of the tendency of the rate of profit to fall nowadays usually is interpreted in terms of disequilibrium analysis, not the least in reaction to the Okishio critique.

## David Laibman and Okishio's theorem

Between 1999 and 2004, David Laibman, a Marxist economist, published at least nine pieces dealing with the Temporal single-system interpretation (TSSI) of Marx's value theory.[5] His ""The Okishio Theorem and Its Critics" was the first published response to the temporalist critique of Okishio's theorem. The theorem was widely thought to have disproved Karl Marx's law of the tendential fall in the rate of profit, but proponents of the TSSI claim that the Okishio theorem is false and that their work refutes it. Laibman argued that the theorem is true and that TSSI research does not refute it.

In his lead paper in a symposium carried in Research in Political Economy in 1999,[6] Laibman's key argument was that the falling rate of profit exhibited in Kliman (1996)[7] depended crucially on the paper's assumption that there is fixed capital which lasts forever. Laibman claimed that if there is any depreciation or premature scrapping of old, less productive, fixed capital: (1) productivity will increase, which will cause the temporally determined value rate of profit to rise; (2) this value rate of profit will therefore "converge toward" Okishio's material rate of profit; and thus (3) this value rate "is governed by" the material rate of profit.

These and other arguments were answered in Alan Freeman and Andrew Kliman's (2000) lead paper in a second symposium,[8] published the following year in the same journal. In his response, Laibman chose not to defend claims (1) through (3). He instead put forward a "Temporal-Value Profit-Rate Tracking Theorem" that he described as "propos[ing] that [the temporally determined value rate of profit] must eventually follow the trend of [Okishio's material rate of profit]" [9] The "Tracking Theorem" states, in part: "If the material rate [of profit] rises to an asymptote, the value rate either falls to an asymptote, or first falls and then rises to an asymptote permanently below the material rate"[10] Kliman argues that this statement "contradicts claims (1) through (3) as well as Laibman's characterization of the 'Tracking Theorem.' If the physical [i.e. material] rate of profit rises forever, while the value rate of profit falls forever, the value rate is certainly not following the trend of the physical [i.e. material] rate, not even eventually." [11]

In the same paper, Laibman claimed that Okishio's theorem was true, even though the path of the temporally determined value rate of profit can diverge forever from the path of Okishio's material rate of profit. He wrote, "If a viable technical change is made, and the real wage rate is constant, the new MATERIAL rate of profit must be higher than the old one. That is all that Okishio, or Roemer, or Foley, or I, or anyone else has ever claimed!" [12] In other words, proponents of the Okishio theorem have always been talking about how the rate of profit would behave only in the case in which input and output prices happened to be equal. Kliman and Freeman suggested that this statement of Laibman's was simply "an effort to absolve the physicalist tradition of error."[13] Okishio's theorem, they argued, has always been understood as a disproof of Marx's law of the tendential fall in the rate of profit, and Marx's law does not pertain to an imaginary special case in which input and output prices happen for some reason to be equal.

## Quotes

• Considered abstractly the rate of profit may remain the same, even though the price of the individual commodity may fall as a result of greater productiveness of labour and a simultaneous increase in the number of this cheaper commodity … The rate of profit could even rise if a rise in the rate of surplus-value were accompanied by a substantial reduction in the value of the elements of constant, and particularly of fixed, capital. But in reality, as we have seen, the rate of profit will fall in the long run. Karl Marx, Capital III, chapter 13. The last sentence is, however, not from Karl Marx but from Friedrich Engels.
• No capitalist ever voluntarily introduces a new method of production, no matter how much more productive it may be, and how much it may increase the rate of surplus-value, so long as it reduces the rate of profit. Yet every such new method of production cheapens the commodities. Hence, the capitalist sells them originally above their prices of production, or, perhaps, above their value. He pockets the difference between their costs of production and the market-prices of the same commodities produced at higher costs of production. He can do this, because the average labour-time required socially for the production of these latter commodities is higher than the labour-time required for the new methods of production. His method of production stands above the social average. But competition makes it general and subject to the general law. There follows a fall in the rate of profit — perhaps first in this sphere of production, and eventually it achieves a balance with the rest — which is, therefore, wholly independent of the will of the capitalist. Marx, Capital volume III, chapter 15.

## References

1. ^ Volume III of Capital, chapter 15: "No capitalist ever voluntarily introduces a new method of production, no matter how much more productive it may be, and how much it may increase the rate of surplus-value, so long as it reduces the rate of profit."
2. ^ Anwar Shaikh (1978): Political economy and capitalism: notes on Dobb's theory of crisis. Cambridge Journal of Economics, 1978, 2, 233-251. In this article is a reference to Bertram Schefold (1976): Different forms of technical progress. Economic Journal
3. ^ Andrew Kliman: The Okishio Theorem: An Obituary: AN OBITUARY
4. ^ Alfred Müller: Die Marxsche Konjunkturtheorie - Eine überakkumulationstheorietische Interpretation. PapyRossa Köln, 2009 (dissertation 1983), p. 160.
5. ^ David Laibman,
• "The Okishio Theorem and Its Critics: Historical Cost Vs. Replacement Cost," Research in Political Economy, Vol. 17, 1999, pp. 207–227;
• "The Profit Rate and Reproduction of Capital: A Rejoinder," Research in Political Economy, Vol. 17, 1999, pp. 249–254; *
• "Rhetoric and Substance in Value Theory," Science & Society, Fall 2000, pp. 310–332 (also in The New Value Controversy and the Foundations of Economics, ed. Alan Freeman, Andrew Kliman, and Julian Wells, Edward Elgar, 2004);
• "Two of Everything: A Response," Research in Political Economy, Vol. 18, 2000, pp. 269–278;
• "Numerology, Temporalism, and Profit Rate Trends," Research in Political Economy, Vol. 18, 2000, pp. 295–306;
• "Rising Material’ Vs. Falling Value’ Rates of Profit: Trial by Simulation," Capital and Class, No. 73, Spring 2001, pp. 79–96;
• "Temporalism and Textualism in Value Theory: Rejoinder [to comments by Guglielmo Carchedi and Fred Moseley]." Science & Society, 65:4 (Winter 2001–2002), pp. 528–533
• "The Un-Simple Analytics of Temporal Value Calculation," Political Economy: Review of Political Economy and Social Science (Athens, Greece), No. 10, (Spring 2002), pp. 5–16
6. ^ "Okishio and His Critics: Historical cost versus replacement cost," Research in Political Economy 17, 207–27.
7. ^ "A Value-theoretic Critique of the Okishio Theorem." In Freeman and Carchedi (eds.),Marx and Non-equilibrium Economics, 206–24.
8. ^ "Two Concepts of Value, Two Rates of Profit, Two Laws of Motion," Research in Political Economy 18, 243–67
9. ^ "Two of Everything: A response," Research in Political Economy 18, p. 275, emphasis in original.
10. ^ Laibman, ibid., p. 274, emphases added.
11. ^ Andrew Kliman, Reclaiming Marx's "Capital": A refutation of the Myth of Inconsistency, Lanham, MD: Lexington Books, 2007, p. 133.
12. ^ "Two of Everything: A response," Research in Political Economy 18, p. 275, emphases in original.
13. ^ Andrew Kliman and Alan Freeman, 2000, "Rejoinder to Duncan Foley and David Laibman, Research in Political Economy 18, p. 290.

## Literature

• Foley, D.(1986) Understanding Capital: Marx's Economic Theory. Harvard, US: Harvard University Press. ISBN 0674920880
• Freeman, A. (1996): Price, value and profit – a continuous, general, treatment in: Freeman, A. and Guglielmo Carchedi (eds.) Marx and non-equilibrium economics. Cheltenham, UK and Brookfield, US: Edward Elgar Online
• Okishio, N. (1961) "Technical Change and the Rate of Profit", Kobe University Economic Review, 7, 1961, pp. 85–99.
• Seneta, E. (1973) Non-negative Matrices – An Introduction to Theory and Applications. London: George Allen and Unwin
• Sraffa, P (1960) Production of Commodities by Means of Commodities: Prelude to a critique of economic theory, 1960. Cambridge: CUP.
• Steedman, I. (1977) Marx after Sraffa. London:Verso
Capitalist mode of production (Marxist theory)

In Karl Marx's critique of political economy and subsequent Marxian analyses, the capitalist mode of production refers to the systems of organizing production and distribution within capitalist societies. Private money-making in various forms (renting, banking, merchant trade, production for profit and so on) preceded the development of the capitalist mode of production as such. The capitalist mode of production proper, based on wage-labour and private ownership of the means of production and on industrial technology, began to grow rapidly in Western Europe from the Industrial Revolution, later extending to most of the world.The capitalist mode of production is characterized by private ownership of the means of production, extraction of surplus value by the owning class for the purpose of capital accumulation, wage-based labour and—at least as far as commodities are concerned—being market-based.

Criticisms of Marxism

Criticisms of Marxism have come from various political ideologies and academic disciplines. These include general criticisms that there is a lack of internal consistency, criticisms related to historical materialism, that it is a type of historical determinism, concerns about suppression of individual rights, the implementation of communism and economic criticisms that there is a distortion or absence of price signals and reduced incentives. In addition, empirical and epistemological concerns are raised.

Exchange value

In political economy and especially Marxian economics, exchange value (German: Tauschwert) refers to one of four major attributes of a commodity, i.e., an item or service produced for, and sold on the market. The other three aspects are use value, economic value, and price. Thus, a commodity has:

a value (note the link is to a non-Marxian definition of value);

a use value (or utility);

an exchange value;

a price (it could be an actual selling price or an imputed ideal price).These four concepts have a very long history in human thought, from Aristotle to David Ricardo, becoming ever more clearly distinguished as the development of commercial trade progressed but have largely disappeared as four distinct concepts in modern economics. This entry focuses on Marx's summation of the results of economic thought about exchange-value.

Exploitation of labour

Exploitation of labour (or labor) is the act of treating one's workers unfairly for one's own benefit. It is a social relationship based on an asymmetry in a power relationship between workers and their employers. When speaking about exploitation, there is a direct affiliation with consumption in social theory and traditionally this would label exploitation as unfairly taking advantage of another person because of his or her inferior position, giving the exploiter the power.

Karl Marx, who is considered the most classical and influential theorist of exploitation, did not share the same traditional account of exploitation. Marx's theory explicitly rejects the moral framing characteristic of the notion of exploitation and restricts the concept to the field of labour relations. In analyzing exploitation, many political economists are often stuck between the explanation of the exploitation of labour given by Marx and Adam Smith. .labours are exploited to the possible extent.

Index of contemporary philosophy articles

This is a list of articles in contemporary philosophy.

1926 in philosophy

1962 in philosophy

20th-century philosophy

A New Philosophy of Society: Assemblage Theory and Social Complexity

A New Refutation of Time

A. C. Grayling

A.P. Martinich

Abandonment (existentialism)

Abraham Edel

Abstract expressionism

Abstract labour and concrete labour

Accumulation by dispossession

Against His-Story, Against Leviathan

Alain de Benoist

Alain Etchegoyen

Alan Ross Anderson

Alan Soble

Alan Stout (philosopher)

Albert Camus

Albert Chernenko

Alberto Jori

Alberto Toscano

Albrecht Wellmer

Aldo Gargani

Alejandro Deustua

Alejandro Rozitchner

Alexander Bard

Alexandre Koyré

Alexandru Dragomir

Alexis Kagame

Alf Ross

Alfred I. Tauber

Alfred Jules Ayer

Alfred Jules Émile Fouillée

Allan Bloom

Alvin Plantinga

Anarchism

Anarchism and anarcho-capitalism

Anarchism and Friedrich Nietzsche

Anarchism in Israel

Anarchism in Russia

Anarchism in Spain

Anarchism in Sweden

Anarchism in the United States

Anarchism in Turkey

Anarchism: A Documentary History of Libertarian Ideas

Anarchist Studies

Anarcho-capitalism and minarchism

Anatoly Lunacharsky

Anders Nygren

André Malet (philosopher)

Andreas Speiser

Andrew Chignell

Anna-Teresa Tymieniecka

Anomalous monism

Anthony Gottlieb

Anti-consumerism

Anti-Dühring

Anti-Semite and Jew

Anti-statism

Antonio Gramsci

Antonio Negri

Arborescent

Arda Denkel

Aretaic turn

Armin Mohler

Arthur Danto

Artificial consciousness

Arvi Grotenfelt

Asa Kasher

Asiatic mode of production

Association for Logic, Language and Information

Attitude polarization

Aurel Kolnai

Australasian Journal of Philosophy

Avrum Stroll

Barrows Dunham

Bas van Fraassen

Base and superstructure

Being and Nothingness

Being in itself

Benedetto Croce

Berlin Circle

Bernard Bosanquet (philosopher)

Bernard Williams

Bert Mosselmans

Bertrand de Jouvenel

Between Past and Future

Black swan theory

Bob Hale (philosopher)

Boris Furlan

Boris Grushin

Bracha L. Ettinger

Bracketing (phenomenology)

Bronius Kuzmickas

Bryan Magee

Bureaucracy

C. S. Lewis

C. Stephen Evans

Capital accumulation

Capital, Volume I

Capitalist mode of production

Carl Gustav Hempel

Carlos Castrodeza

Ramsey sentence

Categories (Peirce)

Charles Morris, Baron Morris of Grasmere

Charles Parsons (philosopher)

Charles Taylor (philosopher)

Chicago school (mathematical analysis)

Chinese room

Christine Buci-Glucksmann

Christoph Schrempf

Clarence Irving Lewis

Claude Lefort

Claude Lévi-Strauss

Claudio Canaparo

Clive Bell

Cognitive map

Colin Howson

Colin McGinn

Commodification

Commodity (Marxism)

Confirmation holism

Connexive logic

Consensual living

Constant capital

Constantin Noica

Consumption of fixed capital

Contemporary philosophy

Contemporary Political Theory

Contemporary Pragmatism

Contingency, irony, and solidarity

Contrast theory of meaning

Contributions to Philosophy (From Enowning)

Cora Diamond

Cornel West

Critical pedagogy

Criticism of capitalism

Criticism of postmodernism

Criticisms of electoralism

Critique of Cynical Reason

Critique of Dialectical Reason

Critiques of Slavoj Žižek

Curt John Ducasse

Czesław Znamierowski

Daniel Dennett

Daniel Rynhold

Dariush Shayegan

Das Argument (journal)

Dasein

David Benatar

David Braine (philosopher)

David Chalmers

David Cockburn

David Kellogg Lewis

David Oswald Thomas

David Pearce (philosopher)

David Prall

David S. Oderberg

David Schmidtz

David Wong (philosopher)

Dean Zimmerman

Degenerated workers' state

Deleuze and Guattari

Delfim Santos

Democracy in Marxism

Democratic Rationalization

Denis Dutton

Dermot Moran

Dewitt H. Parker

Dialectica

Dieter Henrich

Differential and Absolute Ground Rent

Dimitrije Mitrinović

Dimitris Dimitrakos

Diogenes (journal)

Doctrine of internal relations

Dominant ideology

Dominik Gross

Donald Burt

Donald Davidson (philosopher)

Dorothy Emmet

Doxastic logic

Dual power

Dudley Knowles

Eckart Schütrumpf

Edith Wyschogrod

Edmund Gettier

Edward Bullough

Elaine Scarry

Eleutherius Winance

Elliott Sober

Émile Durkheim

Émile Meyerson

Emotivism

Epistemological anarchism

Eric Higgs (philosopher)

Erich Fromm

Erkenntnis

Ernest Gellner

Ernesto Garzón Valdés

Ernst Cassirer

Ernst Ehrlich

Ernst Gombrich

Ernst Nolte

Erwin Panofsky

Erwin Schrödinger

Esperanza Guisán

Ethical problems using children in clinical trials

Ethics Bowl

Étienne Balibar

Étienne Borne

Étienne Souriau

Eugen Rosenstock-Huessy

Exchange value

Exploitation

Exploitation theory

F. C. S. Schiller

Fact, Fiction, and Forecast

False consciousness

Falsifiability

Faux frais of production

Feng Youlan

Ferdinand Ebner

Fi Zilal al-Qur'an

Finance capitalism

Form of life (philosophy)

Francis Fukuyama

Frank R. Wallace

Frantz Fanon

Franz Rosenzweig

Fred Miller (philosopher)

Frederick C. Beiser

Frederick Copleston

Frederick Ferré

Frederick Suppe

Fredric Jameson

Freudo-Marxism

Friedrich Waismann

From Bakunin to Lacan

Future Primitive and Other Essays

G. E. M. Anscombe

Gabriel Nuchelmans

Gani Bobi

Gary Drescher

General intellect

Geneviève Fraisse

Geoffrey Hellman

Geoffrey Hunter (logician)

Georg Klaus

George Caffentzis

George Dickie (philosopher)

George Edward Moore

George H. Smith

George Santayana

Gettier problem

Gila Sher

Gilbert Harman

Giles Fraser

Gilles Deleuze

Giorgio Agamben

Giovanni Gentile

Giuseppe Peano

Gödel's ontological proof

Gopal Balakrishnan

Gordon Park Baker

Gottlob Frege

Graham Priest

Gray Dorsey

Gricean maxims

Günter Abel

Gustav Bergmann

Guy Debord

György Lukács

György Márkus

Hajime Tanabe

Han Yong-un

Hans Hahn

Hans Lipps

Hans Reichenbach

Hans Sluga

Harald K. Schjelderup

Hassan Kobeissi

Hegemony

Helen Longino

Hélène Cixous

Helene von Druskowitz

Henri Berr

Henri Lefebvre

Henry Corbin

Herbert Feigl

Herbert Marcuse

Heterophenomenology

Hilary Putnam

Historicity (philosophy)

History and Future of Justice

History of the Church–Turing thesis

Hossein Ziai

Howison Lectures in Philosophy

Hubert Damisch

Hubert Dreyfus

Hugh Mellor

Humana.Mente – Journal of Philosophical Studies

Huston Smith

Hypothetico-deductive model

I Heart Huckabees

I. A. Richards

Ideal observer theory

Idealistic Studies

Ideology

Igor Pribac

Illtyd Trethowan

Imperialism

In Defense of Anarchism

Indeterminacy of translation

Indexicality

Individualist anarchism

Information processing

Institutional cruelty

Instrumental rationality

Integral (spirituality)

Integral ecology

International Association for Philosophy of Law and Social Philosophy

International Journal of Žižek Studies

International Philosophical Quarterly

Interpellation (philosophy)

Introduction to Mathematical Philosophy

Irving Copi

Irving Singer

Isaiah Berlin

Ivan Aguéli

Ivan Sviták

Jaap Kruithof

Jack Copeland

Jack Russell Weinstein

Jacques Derrida

Jacques Lacan

Jacques Maritain

Jacques Rancière

James DiGiovanna

James E. Faulconer

James Franklin (philosopher)

James G. Lennox

James Griffin (philosopher)

James Gustafson

James M. Edie

Jamie Whyte

Janet Coleman

Jason Walter Brown

Jawaharlal Nehru

Jean-François Lyotard

Jean-Luc Nancy

Jean-Marc Ferry

Jean-Paul Sartre

Jean Baudrillard

Jean Clam

Jean Grenier

Jeff Malpas

Jens Staubrand

Jerry Fodor

Jerzy Perzanowski

Jesse Prinz

Jesús Mosterín

Joel J. Kupperman

Johannes Agnoli

John Corcoran (logician)

John Finnis

John Foster (philosopher)

John Greco (philosopher)

John Hospers

John Kekes

John L. Pollock

John McDowell

John N. Gray

John P. Burgess

John Rawls

John Searle

John von Neumann

John Weckert

John Wisdom

Jon Barwise

Jordi Pigem

José Ortega y Gasset

Josefina Ayerza

Joseph Beuys

Joseph de Torre

Joseph Henry Woodger

Joseph Hilbe

Joseph J. Spengler

Joseph Margolis

Joseph Runzo

Josiah Royce

Journal of Aesthetics and Art Criticism

Journal of Applied Non-Classical Logics

Journal of Logic, Language and Information

Journal of Philosophical Logic

Juan Manuel Guillén

Judith Butler

Juha Varto

Julia Kristeva

Jürgen Habermas

Jürgen Mittelstraß

Kancha Ilaiah

Kang Youwei

Karen J. Warren

Karl Ameriks

Karl Jaspers

Karl Loewenstein

Karl Menger

Karl Popper

Katarzyna Jaszczolt

Keiji Nishitani

Kit Fine

Konstantin Chkheidze

Konstanty Michalski

Krastyo Krastev

Krishna Chandra Bhattacharya

Kurt Almqvist

Kurt Baier

Kurt Gödel

Kurt Grelling

Kyle Stanford

L'existentialisme est un humanisme

Labor aristocracy

Lacan at the Scene

Larry Sanger

Latitudinarianism (philosophy)

Laughter (Bergson)

Laurence BonJour

Law of accumulation

Law of value

Lawrence Jarach

Leo Mikhailovich Lopatin

Leo Strauss

Leonardo Moledo

Leonidas Donskis

Les jeux sont faits

Lev Chernyi

Lewis Call

Lewis White Beck

Lila: An Inquiry into Morals

Linguistics and Philosophy

List of contributors to Marxist theory

Listen, Anarchist!

Ljubomir Cuculovski

Logic of information

Logica Universalis

Logical holism

Logical positivism

Logicomix

Logocentrism

Lorenzo Peña

Louis Althusser

Louis Pojman

Ludwig Wittgenstein

Luitzen Egbertus Jan Brouwer

Luxemburgism

Lwow-Warsaw School of Logic

Lynn Pasquerella

Mao Zedong

Marek Siemek

Mario Bunge

Mark de Bretton Platts

Mark Philp

Mark Sacks

Mark Vernon

Mark Wrathall

Marshall McLuhan

Martha Nussbaum

Martin Buber

Martin Heidegger

Martin Hollis (philosopher)

Marvin Minsky

Marx W. Wartofsky

Masakazu Nakai

Maurice Blanchot

Maurice De Wulf

Maurice Merleau-Ponty

Mauricio Suarez

Maxence Caron

Meera Nanda

Mental representation

Mereological nihilism

Michael Oakeshott

Michael Tye (philosopher)

Michel Foucault

Michel Foucault bibliography

Michel Onfray

Michel Serres

Milan Damnjanović (philosopher)

Minimum programme

Mirror stage

Mohandas Karamchand Gandhi

Monroe Beardsley

Moritz Geiger

Moritz Schlick

Morris Weitz

Murray Rothbard

Myth of Progress

Nassim Nicholas Taleb

Nathan Salmon

National-Anarchism

Nationalism and Culture

Ned Block

Nelson Goodman

Neocolonial Dependence

Neurophilosophy

New Foundations

New Libertarian Manifesto

New Sincerity

New Times (politics)

Nicholas Rescher

Nick Bostrom

Nicola Abbagnano

Nietzsche and Philosophy

Nina Karin Monsen

Noël Carroll

Non-politics

Non-voting

Norbert Bolz

Norbert Leser

Norman Malcolm

Norman Swartz

Norwood Russell Hanson

Notes on "Camp"

Now and After

Objet petit a

Oets Kolk Bouwsma

Okishio's theorem

Olaf Helmer

Olavo de Carvalho

Olga Hahn-Neurath

On Certainty

On Formally Undecidable Propositions of Principia Mathematica and Related Systems

OntoClean

Organic composition of capital

Oriental despotism

Original proof of Gödel's completeness theorem

Orlando J. Smith

Orthodox Trotskyism

Osvaldo Lira

Otto Bauer

Otto Neurath

Outline of anarchism

Overproduction

Oxford Literary Review

P. F. Strawson

Panait Cerna

Parametric determinism

Patricia Churchland

Paul Churchland

Paul de Man

Paul Grice

Paul Guyer

Paul Häberlin

Paul R. Patton

Paul Ricœur

Paul Virilio

Paulo Freire

Per Bauhn

Per Martin-Löf

Periyar E. V. Ramasamy

Permanent war economy

Peter Caws

Peter Geach

Peter Hacker

Peter Millican

Peter Simons

Peter Singer

Peter Steinberger

Philip Hallie

Philipp Frank

Philippe Lacoue-Labarthe

Philippe Nys

Phillip Cary

Philosophical interpretation of classical physics

Philosophical Investigations

Philosophical Investigations (journal)

Philosophy and Phenomenological Research

Philosophy and Real Politics

Philosophy and Social Hope

Philosophy and the Mirror of Nature

Philosophy in a New Key

Philosophy of artificial intelligence

Philosophy of dialogue

Philosophy of engineering

Philosophy of information

Philosophy of technology

Philotheus Boehner

Pieranna Garavaso

Pierre Bourdieu

Pierre Boutang

Piotr Chmielowski

Pirmin Stekeler-Weithofer

Pirsig's metaphysics of Quality

Plato and a Platypus Walk Into a Bar

Polish Logic

Popper's experiment

Post-anarchism

Post-colonial anarchism

Post-industrial society

Post-left anarchy

Post-Scarcity Anarchism

Post-structuralism

Postanalytic philosophy

Postmodern Christianity

Postmodern social construction of nature

Postmodernism

Postmodernism, or, the Cultural Logic of Late Capitalism

Pragmatic maxim

Praxis School

Prefigurative politics

Preintuitionism

Prices of production

Principia Ethica

Principia Mathematica

Productive forces

Proletarian internationalism

Proletarianization

Psychical distance

Psychoanalysis and Religion

R. G. Collingwood

Rabindranath Tagore

Rachida Triki

Ralph Johnson (philosopher)

Ralph Tyler Flewelling

Ramón Xirau

Randolph Clarke

Ranjana Khanna

Raphaël Enthoven

Rate of profit

Raymond Aron

Raymond Smullyan

Re.press

Recuperation (sociology)

Reflective disclosure

Reformism

Religion & Ethics Newsweekly

Religious interpretations of the Big Bang theory

Ren Jiyu

Rentier capitalism

Repressive hypothesis

Reproduction (economics)

Richard A. Macksey

Richard Rorty

Richard Schacht

Richard Tarnas

Richard von Mises

Richard Wollheim

Robert Audi

Robert Brandom

Robert Nozick

Robert Rowland Smith

Robert Stalnaker

Roberto Refinetti

Rodolfo Mondolfo

Roger Caillois

Roger Scruton

Roland Barthes

Rolf Sattler

Romanas Plečkaitis

Ronald Dworkin

Rosa Luxemburg

Rose Rand

Rüdiger Safranski

Rudolf Carnap

Rudolf Schottlaender

Ruling class

Ruth Barcan Marcus

Ryle's regress

Saint Genet

Sakae Osugi

Samuel Maximilian Rieser

Sanjaya Belatthaputta

Sathya Sai Baba

Saul Kripke

Sayyid al-Qimni

Scientific essentialism

Search for a Method

Semantic view of theories

Semeiotic

Sergio Panunzio

Simon Blackburn

Simple commodity production

Six Myths about the Good Life

Sketch for a Theory of the Emotions

Slavoj Žižek

Social conflict theory

Social ecology

Socially necessary labour time

South Park and Philosophy: You Know, I Learned Something Today

Spomenka Hribar

Sri Aurobindo

Stanisław Leśniewski

Stanley Sfekas

State monopoly capitalism

Stefan Pawlicki

Stephen David Ross

Stephen Laurence

Stephen Mulhall

Stephen Pepper

Stephen Toulmin

Steven Tainer

Stewart Shapiro

Subject of labor

Sun Yat-sen

Superprofit

Surplus product

Surplus value

Susan Haack

Susan Oyama

Susan Sontag

Susan Stebbing

Syed Ali Abbas Jallapuri

Taha Abdurrahman

Takiyyetin Mengüşoğlu

Tasos Zembylas

Technological determinism

Technological Somnambulism

Temporal single-system interpretation

Tendency of the rate of profit to fall

The Absence of the Book

The Birth of the Clinic

The Bounds of Sense

The Case for God

The Imaginary (Sartre)

The Logic of Scientific Discovery

The Myth of Sisyphus

The Philosophical Forum

The Royal Way

The Seminars of Jacques Lacan

The Sublime Object of Ideology

The Transcendence of the Ego

Theodor Lipps

Thierry de Duve

Third camp

Thomas Munro

Thomas Nagel

Thomas Samuel Kuhn

Thoralf Skolem

Three Worlds Theory

Tim Dean

Tom Polger

Tomonubu Imamichi

Tore Nordenstam

Toronto School of communication theory

Tractatus Logico-Philosophicus

Transformation problem

Transitional demand

Two Dogmas of Empiricism

Type physicalism

Ugo Spirito

Ultra-imperialism

Underconsumption

Unequal exchange

Universal class

Uri Gordon

Ursula Wolf

Use value

Vale (author)

Valentin Ferdinandovich Asmus

Valorisation

Value product

Vanja Sutlić

Verification theory

Verificationism

Vianney Décarie

Victor Kraft

Vienna Circle

Vincent F. Hendricks

Vittorio Hösle

Vojin Rakic

W. D. Ross

Wage labour

Walter Berns

Walter Terence Stace

Warren Shibles

Wendell Berry

Werner Hamacher

Werner Heisenberg

Werner Krieglstein

What Is Literature?

Whitny Braun

Why I Am Not a Christian

Wilfrid Sellars

Willard Van Orman Quine

Willem B. Drees

William Craig (philosopher)

William Fontaine

William Irwin Thompson

William James Lectures

William Kneale

William L. Rowe

William McNeill (philosopher)

William W. Tait

Wolfgang Smith

Wolfgang Stegmüller

Word and Object

Workerism

World communism

Xu Liangying

Yujian Zheng

Yves Brunsvick

Zen and the Art of Motorcycle Maintenance

Zeno Vendler

Zofia Zdybicka

Zollikon Seminars

Marxian class theory

Marxian class theory asserts that an individual’s position within a class hierarchy is determined by their role in the production process, and argues that political and ideological consciousness is determined by class position. A class is those who share common economic interests, are conscious of those interests, and engage in collective action which advances those interests. Within Marxian class theory, the structure of the production process forms the basis of class construction.

To Marx, a class is a group with intrinsic tendencies and interests that differ from those of other groups within society, the basis of a fundamental antagonism between such groups. For example, it is in the laborer's best interest to maximize wages and benefits and in the capitalist's best interest to maximize profit at the expense of such, leading to a contradiction within the capitalist system, even if the laborers and capitalists themselves are unaware of the clash of interests.

Marxian class theory has been open to a range of alternate positions, most notably from scholars such as E. P. Thompson and Mario Tronti. Both Thompson and Tronti suggest class consciousness within the production process precedes the formation of productive relationships. In this sense, Marxian class theory often relates to discussion over pre-existing class struggles.

Marxian economics

Marxian economics, or the Marxian school of economics, is a heterodox school of economic thought. Its foundations can be traced back to the critique of classical political economy in the research by Karl Marx and Friedrich Engels. Marxian economics comprises several different theories and includes multiple schools of thought, which are sometimes opposed to each other, and in many cases Marxian analysis is used to complement or supplement other economic approaches. Because one does not necessarily have to be politically Marxist to be economically Marxian, the two adjectives coexist in usage rather than being synonymous. They share a semantic field while also allowing connotative and denotative differences.

Marxian economics concerns itself variously with the analysis of crisis in capitalism, the role and distribution of the surplus product and surplus value in various types of economic systems, the nature and origin of economic value, the impact of class and class struggle on economic and political processes, and the process of economic evolution.

Marxian economics, particularly in academia, is distinguished from Marxism as a political ideology as well as the normative aspects of Marxist thought, with the view that Marx's original approach to understanding economics and economic development is intellectually independent from Marx's own advocacy of revolutionary socialism. Marxian economists do not lean entirely upon the works of Marx and other widely known Marxists, but draw from a range of Marxist and non-Marxist sources.Although the Marxian school is considered heterodox, ideas that have come out of Marxian economics have contributed to mainstream understanding of the global economy. Certain concepts developed in Marxian economics, especially those related to capital accumulation and the business cycle, have been fitted for use in capitalist systems (for instance, Joseph Schumpeter's notion of creative destruction).

Marx's magnum opus on political economy was Das Kapital (Capital: A Critique of Political Economy) in three volumes, of which only the first volume was published in his lifetime (1867); the others were published by Friedrich Engels from Marx's notes. One of Marx's early works, Critique of Political Economy, was mostly incorporated into Das Kapital, especially the beginning of volume 1. Marx's notes made in preparation for writing Das Kapital were published in 1939 under the title Grundrisse.

Neo-Ricardianism

The neo-Ricardian school is an economic school

that derives from the close reading and interpretation of David Ricardo by Piero Sraffa, and from Sraffa's critique of neo-classical economics as presented in his The Production of Commodities by Means of Commodities, and further developed by the neo-Ricardians in the course of the Cambridge capital controversy. It particularly disputes neo-classical theory of income distribution.

Prominent neo-Ricardians are usually held to include Pierangelo Garegnani, Krishna Bharadwaj, Luigi Pasinetti, Joan Robinson, John Eatwell, Fernando Vianello, Murray Milgate, Ian Steedman, Heinz D. Kurz, Neri Salvadori, Bertram Schefold, Fabio Petri, Massimo Pivetti, Franklin Serrano, Fabio Ravagnani, Roberto Ciccone, Sergio Parrinello, Alessandro Roncaglia, Maurice Dobb, Gilbert Abraham-Frois, Theodore Mariolis and Giorgio Gilibert.

The school partially overlaps with post-Keynesian and neo-Marxian economics.

Nobuo Okishio

Nobuo Okishio (置塩 信雄, January 2, 1927 – November 13, 2003) was a Japanese Marxian economist and emeritus professor of Kobe University. In 1979, he was elected President of the Japan Association of Economics and Econometrics, which is now called Japanese Economic Association.

Okishio studied mathematical economics under Kazuo Mizutani. In 1950 he graduated from Kobe University and later taught there. He soon began to doubt the premises and results of modern economics, and decided to search for alternatives by studying Marxian economics.

Okishio worked to clarify the logic of Karl Marx’s economic system, offering formal and mathematical proofs for many Marxian theorems. For example, in 1955, he gave the world's first proof of the “Marxian fundamental theorem”, as it was later named by Michio Morishima, which is the theory that the exploitation of surplus labor is the necessary condition for the existence of positive profit. Concerning Marx’s Falling Rate of Profit, Okishio considered that his famous theorem would not deny it.Okishio wrote many papers covering various important fields in modern and Marxian economics, for example value and price, accumulation theory, critical analysis of Keynesian economics, trade cycle theory and on the long run tendency of capitalistic economy. They were published in over twenty books and two hundred papers, almost all in Japanese. About thirty of his published papers have been translated in English, and much of these materials are collected in the book　 (Nobuo Okishio, Michael Kruger and Peter Flaschel, 1993).

Organic composition of capital

The organic composition of capital (OCC) is a concept created by Karl Marx in his critique of political economy and used in Marxian economics as a theoretical alternative to neo-classical concepts of factors of production, production functions, capital productivity and capital-output ratios. It is normally defined as the ratio of constant capital (capital invested in plant, equipment and materials) to variable capital (sum total of wages). The concept does not apply to all capital assets, only to capital invested in production (i.e. production capital). The neoclassical concept most similar to the increasing organic composition of capital is capital deepening.

Marx first referred to the idea in 1847

and discussed it in detail in Capital Vol. 1, chapter 25 ("The General law of Capitalist Accumulation"). In Capital Vol. 3 Marx demonstrates that the organic composition of capital decisively influences industrial profitability.

According to Marx, the OCC expresses the specific form which the capitalist mode of production gives to the relationship between means of production and labor power, determining the productivity of labor and the creation of a surplus product. This relationship has both technical and social aspects, reflecting the fact that simultaneously consumable use values and commercial exchange-values are being produced.

Marx calls this capital composition "organic", because it refers to the relationship between "living" and "dead" (or inert) elements in a capital investment. The "living element" is employed labour actively at work. The "dead" parts are the tools, materials and equipment worked with, which are the results of past labour (sometimes referred to as "dead labour").

Marx argues that a rising organic composition of capital is a necessary effect of capital accumulation and competition in the sphere of production, at least in the long term. This means that the share of constant capital in the total capital outlay increases, and that labor input per product unit declines.

Overaccumulation

Overaccumulation is one of the potential causes of the crisis of capital accumulation. A crisis of capital occurs due to what Karl Marx refers to as the internal contradictions inherent in the capitalist system which result in the reconfiguration of production. The contradiction in this situation is realized because of the condition of capitalism that requires the accumulation of capital through the continual reinvestment of surplus value.

Accumulation can reach a point where the reinvestment of capital no longer produces returns. When a market becomes flooded with capital, a massive devaluation occurs. This over-accumulation is a condition that occurs when surpluses of devalued capital and labor exist side by side with seemingly no way to bring them together. The inability to procure adequate value stems from a lack of demand.

The term "overaccumulation" is also used in a neoclassical context.

Perron–Frobenius theorem

In linear algebra, the Perron–Frobenius theorem, proved by Oskar Perron (1907) and Georg Frobenius (1912), asserts that a real square matrix with positive entries has a unique largest real eigenvalue and that the corresponding eigenvector can be chosen to have strictly positive components, and also asserts a similar statement for certain classes of nonnegative matrices. This theorem has important applications to probability theory (ergodicity of Markov chains); to the theory of dynamical systems (subshifts of finite type); to economics (Okishio's theorem, Hawkins–Simon condition);

to demography (Leslie population age distribution model);

to social networks (DeGroot learning process), to Internet search engines and even to ranking of football

teams. The first to discuss the ordering of players within tournaments using Perron–Frobenius eigenvectors is Edmund Landau.

Rate of exploitation

In Marxian economics, the rate of exploitation is the ratio of the total amount of unpaid labor done (surplus-value) to the total amount of wages paid (the value of labour power). The rate of exploitation is often also called the rate of surplus-value.

Rate of profit

In economics and finance, the profit rate is the relative profitability of an investment project, a capitalist enterprise or a whole capitalist economy. It is similar to the concept of rate of return on investment.

Socialization (Marxism)

In the theoretical works of Karl Marx and Friedrich Engels and subsequent Marxist writers, socialization (or the socialization of production) is the process of transforming the act of producing and distributing goods and services from a solitary to a social relationship and collective endeavor. With the development of capitalism, production becomes centralized in firms and increasingly mechanized in contrast to the pre-capitalist modes of production where the act of production was a largely solitary act performed by individuals. Socialization occurs due to centralization of capital in industries where there are increasing returns to scale and a deepening of the division of labor and the specialization in skills necessary for increasingly complex forms of production and value creation. Progressive socialization of the forces of production under capitalism eventually comes into conflict with the persistence of relations of production based on private property; this contradiction between socialized production and private appropriation of the social product forms the impetus for the socialization of property relations (socialism).In Marx's critique of political economy, as capitalism develops a contradiction emerges between the increasingly socialized act of production and the private ownership and appropriation of surplus value. Classical Marxist theory posits that this contradiction will intensify to a point where socialization of surplus value appropriation in the form of social ownership of the means of production will be necessitated, resulting in a transition from capitalism to socialism.

Technological determinism

Technological determinism is a reductionist theory that assumes that a society's technology determines the development of its social structure and cultural values. Technological determinism tries to understand how technology has had an impact on human action and thought. Changes in technology are the primary source for changes in society. The term is believed to have originated from Thorstein Veblen (1857–1929), an American sociologist and economist. The most radical technological determinist in the United States in the 20th century was most likely Clarence Ayres who was a follower of Thorstein Veblen and John Dewey. William Ogburn was also known for his radical technological determinism.

The first major elaboration of a technological determinist view of socioeconomic development came from the German philosopher and economist Karl Marx, who argued that changes in technology, and specifically productive technology, are the primary influence on human social relations and organizational structure, and that social relations and cultural practices ultimately revolve around the technological and economic base of a given society. Marx's position has become embedded in contemporary society, where the idea that fast-changing technologies alter human lives is all-pervasive.

Although many authors attribute a technologically determined view of human history to Marx's insights, not all Marxists are technological determinists, and some authors question the extent to which Marx himself was a determinist. Furthermore, there are multiple forms of technological determinism.

Temporal single-system interpretation

The temporal single-system interpretation (TSSI) of Karl Marx's value theory emerged in the early 1980s in response to renewed allegations that his theory was "riven with internal inconsistencies" and that it must therefore be rejected or corrected. The inconsistency allegations had been a prominent feature of Marxian economics and the debate surrounding it since the 1970s. Andrew Kliman argues that since internally inconsistent theories cannot possibly be right, the inconsistency charges serve to legitimate the suppression of Marx's critique of political economy and current-day research based upon it as well as the "correction" of Marx's inconsistencies.Proponents of the temporal-single system interpretation of Marx's value theory claim that the supposed inconsistencies are actually the result of misinterpretation; they argue that when Marx's theory is understood as "temporal" and "single-system", the internal inconsistencies disappear. In a recent survey of the debate, a proponent of the TSSI concludes that "the proofs of inconsistency are no longer defended; the entire case against Marx has been reduced to the interpretive issue".Critics of TSSI, including David Laibman (see Criticism section below), argue that Marx intended to present what they characterize as "a structurally consistent" model of value formation in a capitalist economy with competitive profit-rate equalization. They claim that Marx's formulations fail to do this, but also what they characterize as his fundamental insights can be revealed, and extended, by means of models and concepts that emerged after his time. Instead of trying to defend the consistency of Marx's original statements, non-TSSI Marxist theorists pursue what they characterize as ever-more effective versions of what they claim to be the core theory. They also claim that they believe that Marx himself would have done this.

Transformation problem

In 20th-century discussions of Karl Marx's economics, the transformation problem is the problem of finding a general rule by which to transform the "values" of commodities (based on their socially necessary labour content, according to his labour theory of value) into the "competitive prices" of the marketplace. This problem was first introduced by Marx in chapter 9 of the draft of volume 3 of Capital, where he also sketched a solution. The essential difficulty was this: given that Marx derived profit, in the form of surplus value, from direct labour inputs, and that the ratio of direct labour input to capital input varied widely between commodities, how could he reconcile this with the tendency toward an average rate of profit on all capital invested?

Use value

Use value (German: Gebrauchswert) or value in use is a concept in classical political economy and Marxian economics. It refers to the tangible features of a commodity (a tradeable object) which can satisfy some human requirement, want or need, or which serves a useful purpose. In Karl Marx's critique of political economy, any product has a labor-value and a use-value, and if it is traded as a commodity in markets, it additionally has an exchange value, most often expressed as a money-price.Marx acknowledges that commodities being traded also have a general utility, implied by the fact that people want them, but he argues that this by itself tells us nothing about the specific character of the economy in which they are produced and sold.

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