In The 1983 Nobel Prize in Economics: Neoclassical Economics and Marxism,
Stephen Resnick and Richard Wolff analyze the methodological distinction
between neoclassicism and Marxism, and offer the later perspective as an
alternative to the former. Whereas neoclassicists view the natural pursuit of
self-interest as the primary determinant of economic behavior, Marxists
introduce the concepts of class and class exploitation, and in doing so, seek
to emphasize the influence of the dynamic set of human relations that we
encounter in shaping economic outcomes. Marx’s critique of classical economics
raises the concern that the capitalist system was designed to ignore questions
of class and class conflict in order to protect the interests of the dominant
class. Whereas Marx promoted the idea that capitalism would lead to a social
revolution, Resnick and Wolff argue simply that the capitalist “repression of
class consciousness and class analysis [should] be broken” so as to maximize
“justice, equality and freedom” (Resnick 1984: 43) Nevertheless, analysis of
Resnick and Wolff’s contributions can serve as a warning to modern capitalistic
societies to tamper the effects of unbridled capitalism to protect the greater
good while minimizing its negative impact on society’s less fortunate.
Resnick and Wolff argue that neoclassicists found their
analysis on a belief in a universal human nature to which all people and their
activities are reducible to and definable by. Among this conception of a
universal human nature is the belief that people possess an unyielding drive to
utilize natural resources to maximize consumption, and that they by their
nature are capable of creating those products necessary for their consumptive
enjoyment. (Resnick 1984: 35) One’s personal economic failings are described as
resulting from their human nature and their own choices. (Resnick 1984: 36)
Neoclassicism then proceeds to consider internal issues of market flow and
formulates its theories in response to questions of what and how goods should
be produced. (Resnick 1984: 35) Proceeding on the assumptions that all people
have the same productive capacities and will seek activities which maximize
their self interest, neoclassicists have sought to quantify and formalize an
economic defense of capitalism. (Resnick 1984: 36)
Marxists, on the other hand, are presented as approaching
their analysis from a different perspective, believing that people’s productive
capacities are not universal functions of human nature, but rather limited by
one’s socio-political happenstance. Unlike neoclassicism, Marxism posits no
single factor such as human nature which defines the “essence” of economic
phenomena, and rather, starts its analysis with a belief that humans in their
relations are not reducible to automatons (Resnick 1984: 41). Marxists make the
argument that the question of “class,” or the distribution of resources is
notably missing from the ambit of neoclassical analysis (Resnick 1984: 41).
Whereas neoclassicism produces an environment in which social inequality can
arise and prosper, Marxists “see and seek to change” the society they view as
bedeviled by class conflict and exploitation (Resnick 1984: 42). It is clear
that while neoclassicists see the influence of human nature as affording them
the ability to set concrete rules of economic behavior in the market, a Marxist
analysis provides insight into the social problems that such a rigid operation
of the market produces.
A critical review of pure neoclassicism demonstrates the
limitations of its capitalist construct and its propensity to potentiate class
conflict by protecting and advancing the interests of the dominant class. By
proceeding on the basis that all human beings have certain indisputable innate
productive abilities, neoclassicism attempts to gloss over the influence of
human relations and of one’s social, political and historical surroundings. In
modern society, capitalism has brought about varying degrees of social
inequality in almost all corners of the globe. A prime example is the situation
in modern-day South Africa, where, the end of apartheid in the 1990s ushered in
a capitalist economic system that has served to benefit the already well-off
few, at the expense of millions of South Africans who remain entangled in a web
of poverty. (WSWS 2004: 1) While neoclassicist policies may have succeeded in
its founder’s efforts to reduce poverty overall, it seems that capitalism has
only encouraged the widening of inequality. Although Marx would believe a
social revolution is the only way to fully free the working class, the modern
predomination of neoclassical economics has produced a world in which countries
that fail to participate in the free market are shunned by the international
community. In the absence of total revolution, if countries such as South
Africa endeavor to improve the lot of the poor, they should consider a dynamic
and pragmatic approach that takes into account the class structure of society
and attempts to combine capitalistic principles with an underlying
acknowledgement of class differences and an effort to reduce class disparity.
As Resnick and Wolff would argue, the transformation must first begin with an
end to the “repression of class consciousness and class analysis” under
capitalism and the establishment of policies which serve to “add class analysis
and class changes” to the political agenda (Resnick 1984: 43).
In Resnick and Wolff’s critique of neoclassical economics,
they emphasize the influence of class structure and class conflict in
determining socio-economic outcomes, and present Marxism as offering a salient
methodological alternative to neoclassical economic policy. The idea that all
people are endowed by their natures to promote their self interest and vie for
greater access to consumption ignores the limitations placed by virtue of one’s
relative position within a social hierarchy. It seems that by treating class
structure as an exogenous constant, the neoclassical model only serves to
perpetuate class conflict and exploitation. The failings of unfettered capitalism
in producing desirable economic outcomes is evidenced by the case of
post-Apartheid South Africa, where capitalism has only perpetuated social
inequality and has jeopardized the success of the economic system. Whereas Marx
would argue that only social revolution can eliminate inequality and to create
a sustainable economic system, Resnick and Wolff believe the repression of
class consciousness to ultimately be the greatest threat to the attainment of
social justice, equality and freedom in a capitalist society. As such,
well-intentioned policy makers should seek to advance pragmatic economic
policies that encourage competition while serving to reduce the disparity in
its rewards. The Marxist perspective as outlined by Resnick and Wolff
demonstrates that capitalism cannot function in a vacuum.
Works Cited:
Resnick, Stephen A., and Richard D. Wolff. "The 1983
Nobel Prize in Economics:
Neoclassical Economics and
Marxism." Monthly Review (1984): 29-46.
"United Nations report highlights growing inequality in
South Africa." World Socialist
Website. International
Committee of the Fourth International, 21 May 2004. Web. 23 Sept. 2009. <
http://www.wsws.org/articles/2004/may2004/safr-m21.shtml>. [cited in text as
WSWS].
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