by Several people have raised important questions about the materials of the first several parts of this extended essay and I thought it would be helpful to address some of them before continuing.Marx built on the foundation of classical economics and provided a critique of the assumptions, upon which he built his own approach. Here Professor Wolff pauses to discuss the major assumptions of classical economics, which Marx then addressed in his work. While Professor Wolff sticks to examining classical assumptions, it may be useful to point out that Marx and Keynes played a similar role with respect to classical and neoclassical economics respectively. See Marxism and Keynesianism at Wikipedia. (Note that Keynes called what is now known as neoclassical economics "classical economics.")Marx and
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Several people have raised important questions about the materials of the first several parts of this extended essay and I thought it would be helpful to address some of them before continuing.
Marx built on the foundation of classical economics and provided a critique of the assumptions, upon which he built his own approach. Here Professor Wolff pauses to discuss the major assumptions of classical economics, which Marx then addressed in his work.
While Professor Wolff sticks to examining classical assumptions, it may be useful to point out that Marx and Keynes played a similar role with respect to classical and neoclassical economics respectively. See Marxism and Keynesianism at Wikipedia. (Note that Keynes called what is now known as neoclassical economics "classical economics.")
Marx and Keynes agreed that capitalism is subject to crisis owing to the nature of the system, which they each attempted to explain in different ways. Marx argued for an overhaul of the system by vastly increasing the role of the state through public ownership of the means of production instead of individuals exercising property right, or at least public ownership of the commanding heights. He also held the evolutionary direction of capitalism was toward socialism. Conversely, Keynes held that capitalism could be reformed by increasing the role of the state using fiscal policy. Keynesians would also have the state involved in natural monopoly either as commons (public property) or regulation, as well as other aspects of asymmetry that disrupt natural market forces.
The present Western system is synthesis of Keynesianism and neoclassical economics — the bastard Keynesianism of Paul Samuelson with strong overtones of the Chicago School and Milton Friedman's monetarism. The present Chinese system is a synthesis of Marxism and Western economics "with Chinese characteristics."
The qualifier "Chinese characteristics" is important in that the Chinese hold that China is a civilizational state with a unique history and therefore the economic system of China is not directly exportable. One the other hand, the key of assumption of the Western world view is that human nature is universal and that the Western approach is therefore natural and universally applicable.
The Philosopher's StoneINTERMISSION
Robert Paul Wolff | Professor Emeritus, University of Massachusetts Amherst