Explain Marxian theory of value? | Marxian theory.

Marxian theory of Value

Karl Max developed systematically the labour theory of value. Actually the classical writers and Ricardo have developed the theory of value on the basis of labour power. But Marxian theory of value is an advanced from the earlier theories of value.

Explain Marxian theory of value?

The commodity has both the use value and the exchange value. In other words any commodity must have value in use to have exchange value. But both are not same. A thing may have value that is air has the value in use because it is very important for life but it does not have an exchange value. Air is freely available.

The utility of a commodity determines it's value. The utility of a commodity is created by labour. Whenever an individual is used in production he becomes a labour when commodities are exchange in the market, their value is determined by the cost of production. Thus according to Marx, labour theory is value explains the determination of value of a commodity on the basis of the amount of social labour time which is taken to produce it.

According to Marx, there were two main reasons of price variations-

(i) The different types of labour engaged in production of the commodity.

(ii) The variations in the utility of a commodity.

Cycle commodity-Money Commodity. Marx observe that in capitalist mode a production formula become


Here the capitalist goes to the market with money (M) to purchases labour power or commodity (C). He further sells the power of labour to the consumer and finally receives comparatively more money (M').

The different between M' and M is called surplus value, which is the income of the capitalist. It is also called profit. Actually this profit should be received by labour. But the capitalist exploit it. Thus the theory of surplus value explains the nature of exploitation in the capitalist society. The rail exploitation was given by the formula= S/V. Where S is surplus value and 'V' variables capital. The capitalists adopt the various methods to increase the surplus of value. 

First of all they will increase the number of working hours. By that way, they can get more hours of the surplus of labour. Secondly, they may diminish the number of hours to produce the workers substance. The capitalist may be also employ women and the children because they would require the less for their upkeep then the adults.

Thus from the above discussion, it can be seen that the Marxian theory of surplus value is based on the Ricardian theory of value and subsistence theory of wage. 

Marxian theory of economic development

Marxian theory of economics development was considered one of the most significant classical theory of development. His theory may be studies under following heads-

(1)Materialsistic (economic) interpretation of history:

An economic interpretation denotes that foundation and evolutionary cause of all social life materilism, Economic force determine the entire social, culture and legal and institutional structure of society. Under capitalist, the social structure consists of rich (exploiter) and poor. There are not to be any love and co-operation between these two classes. The class struggle between these two bring a change of material force of production and these, the society also change . According to Marxian theory the social evolution come through the following four stage-

(i) Primitive communism

(ii) Ancient slave stage

(iii) Feudalism

(iv) Capitalist (Capitalism)

(2) Capital crises

According to Marx after a certain levels, the profit of the capitalist start decline. In order to check the declining rate of profit capitalist as increase the degree of exploitation of workers by the way-

(i) Reducing their wage

(ii) Pro-longing the working day

(iii) Increasing their productivity by intra machine or cost saving device.

It takes the shape of over production but the demand in the market is very low. It creates crises in the economy. According to Marx, the ultimate case of all economic crises is the poverty and limited purchasing power of the people. It should be noted here that economics crisis does not continue forever and so revival start.

Evalution of Karl Marx

Marxian concept has been critised on several ground. The important points of criticism are mentioned below-

(i) Marx wrongly explain the effects of technical progress. He pointed out that technical progress creates unemployment but in the advance countries technical progress creates additional employment opportunities.

(ii) The assumption of Marx that capitalist would be replaced by communism, proved to be wrong. The economic history of the world tells us that the entire European countries are still under capitalism and there is no possibility of their transformation.

(iii) According to Schumpeter, Marx theory is static in nature. This is because he did not take into consideration the important dynamic elements in his analysis.

(iv) As Marxian theory of surplus value is derived from the labour theory of value. It follows that the moment the labour theory of value is over thrown. If labour does not create value, or if value can be created without labour then there is no profit that labour always creates surplus value.

(v) There is no historical proof for Marxian theory of industrial reserve army.

Thus from the above discussin it is clear to us that Marxian theory is an important source of inspiration to the humanity. Several modern economist have reformed his idea and increase its applicability.

The contribution of Karl Marx in the history of economic thought

Karl Marx is one of the few thinkers in the history of economic development who had a direct influence on hundred million people. His important conributions are mentioned below-

(i) Marxian theory of value

(ii) Marxian theory of surplus value

(iii) Marxian theory of development.

Marxian socialism different from Utopian socialism

Karl Marx was the founder of scientific socialism. “Scientific Socialism” is different from “Utopian socialism”.  Marx considered the Utopian socialism as dreamers who had no knowledge of the proletariat. As such the aim of scientific socialism was demostrate socialism as a necessary product of historical development.


*Karl Marx was born in Germany in May 5, 1818 and died in 1883.

* Karl Marx organized the international working men’s association called “The First International”.

* Both Marx and Engels wrote the “Communist Mainifesto” in 1848.

* Karl Marx was the author of the book “The poverty of Philodophy” in 1847.

* Karl Marx also publish the “Critique of political Economy” in 1859.

* As a economist Marx was a pupil of Ricardo. Marx developed his theory of surplus value from the Ricardian setup. It is also similar to the concept of “Net Product” developed by Physiocrates Quesney.

* The classical school is also known as Manchester school.

* Karl Marx regarded machinery as the product of past labour.

* Karl Marx was the author of the book “Capital” in 1867.

Scientific Socialism

Karl Marx is an important social thinker. His famous book “Das Kapital” which is known as the Bible of the socialism was written in 1867. He presented the process of growth and collapse of the capital economy. He shifted from “State socialism” to “Scientific Socialism”, the drawn of socialism in this system is the consequence of the evolutionary process. Through the capitalism itself took place of self freedom.

According to him, under capitalism there are always two groups of people, rich and poor. Thus there has always been a clash of interest between two classes. The outcome of this class struggle is the revolution which gives birth to new social order called socialism. Under the new social order, economic conditions of the working class are improved. In this way, capitalist class Collapse of capitalism leads to socialism scientific. Socialism explains clearly how the society changes according to the nature of exploitation.

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