ILRLE 344 10-31_Notes - 10/31/07 K. Marx (1818-83) F....

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10/31/07 K. Marx (1818-83) F. Engels (1820-95) Why wages are equal to subsistence? Marx: Agrees with Iron Law of Wages Doesn’t believe in Malthusian population theory His explanation: Industrial Reserve Army - most investment from profit will go to variable capitol. Variable capitol goes up but wages don’t go up because of technological improvements. Over time more and more workers loose their jobs because of technology and they form the industrial reserve army. The quality of workers is the same (skill level). When wages fund increases, workers can demand a wage increase but manager says that he can now replace you with the industrial reserve army (who will work for subsistence). Wages won’t be bidded up. Wages can only increase if there is such a boom in the economy that the industrial reserve army is depleted to 0. Technological change is endogenous. If wages are bid up above subsistence, managers have more incentive to replace technological change. Change lays off workers and the industrial army is built up again. (cycle) Industrial Reserve Army is key to everything. There is no surplus value without it. Falling rate of profit - Replacement of labor by machine (capitalist are always in competition with each other) Accumulation of capitol is the winner in capitalism. They will always develop the most efficient and capitol intensive means of production. With the implementation of machines, capitalists are driving up the capitol to labor ratio. Problem: if labor is given more machinery to work with, they will be more productive How capitalist fight profit: (profits will fall over time) 1) Speed up production process or expand the working day 2) Industrial reserve army is so big that you can drive wages to below a non-sociably expectable wage rate 3) Use foreign trade (cheap raw material and cheap food) This reduces coast of living and you can drive down necessary labor. (lower nominal wages) - in a way imperialism can be good. Profit falling over time leads to a stationary state – Richardo Marx (more violent and “fun”) - Simple commodity production – consume goods, sells goods for more goods (purpose of production is consumption) there should not be overproduction. Marx says that there
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is no surprise that there isn’t business cycles. Workers produce to consume. Not like this is capitalism. Capitalist are not interested in consumption they are interested in production. Capitolist drive the economy by investment. Don’t care about consumption (production accumulation investment). This would be a crisis of overproduction (business cycles as we know it today) Marx- every business cycle will be worst than the previous one. As more and more substitution of labor for capitol, small capitalist are outrun by monopolies, the industrial reserve army increase substantially. There will be a mass revolt by the proletariat that will take over the capitols. READ BOYERS PAPER ON THE COMMUNIST MANIFESTO
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This note was uploaded on 02/20/2009 for the course ILRLE 3440 taught by Professor Boyerg during the Fall '08 term at Cornell University (Engineering School).

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ILRLE 344 10-31_Notes - 10/31/07 K. Marx (1818-83) F....

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