A Reappraisal of Marxian Economics
Marx’s Economic Predictions
Marx and Modern Economics
“Is society a branch of physics?” asked the Abbé Mably, a minor nineteenth-century pamphleteer and philosophe. The absurd question serves very well to introduce a discussion of what modern economics is about and whether Karl Marx still has something to contribute to economic thought. For, essentially, economics has always answered Yes to the Abbé’s query. That is, it has always proceeded on the belief that there were enough regularities in the social process to enable a skilled observer to discover “laws” that described its movements, just as other laws described the motion of the planets in their orbits.
To be sure, economists have always recognized that there was a vast gulf between the unknowing planets and sentient human beings, and therefore they have never intended the laws to be as strict in the second case as in the first. Yet the gulf was not so wide as to destroy all similarity between the orderliness of the natural world and that of the social. For underneath the seeming disorder of the social universe, two processes could be discerned that imposed a degree of lawlike regularity on the events of economic society. One of these was the process of production itself—the actual technical sequences by which wheat became bread and grapes wine and iron ore steel. Although these sequences differed one from another, and although they changed over time with technological advance, nonetheless there seemed to be sufficient regularity, at least in the short run, so that we could talk of “laws” of production, such as diminishing returns or economies of scale or “coefficients of production” or “marginal elasticities of substitution”—all terms that describe the dependability of the productive element within the social universe.
The other order-bestowing element in the economic process concerned its human side, which is to say the behavior of workers and consumers and entrepreneurs. Clearly, this aspect of the underlying social orderliness could not be expected to demonstrate the same degree of invariance that is found in the physical world. Yet in the behavior of buyers and sellers there seemed to be a sufficient degree of repetitiveness so that we could talk of the “law” of supply and demand; and in the responses of consumers to changes in their incomes or of businessmen to changes in the interest rate other lawlike patterns emerged.
Thus from the very beginning, economists have striven for a picture of society in which the interaction of laws of production and behavior—production and behavior functions is the modern term—would describe the major economic events of the social system much as if it were a branch of physics. Moreover, by reducing the complexity of the real world to the simplicity of a “model” dominated by these two great functions, economists, like physicists, have sought to predict the path of motion of their system.
How successful has been this audacious intellectual effort? On the face of it, the achievement has been astonishing. Models of the economy are now so complex that …