Marxist and Neoclassical Theory

I’m reading Rick Wolff and Steve Resnick’s Contending Economic Theories, which compares Marxist, Keynesian, and Neoclassical economic theories.  Wolff and Resnick are very familiar with the theories – they’ve done scholarly work contributing to the field of Marxist economic theory, and they’ve taught (mostly) neoclassical economics at the University of Massachusetts – Amherst for decades.  They are well informed and the book is easy to read.

Recently the book has made me ponder the use of economic theories in those day to day small-talk conversations.  Two years ago, while speaking with a group of friends about the recent news that paid internships for college students/grads were disappearing, a friend gave a short lesson in supply and demand to explain the change.

In retrospect, I’m now realizing that he was applying one economic theory, Neoclassical, and to add to the conversation I didn’t need to argue against his interpretation, but rather I could also add another perspective – the Marxist one.

Now, Marxism has never denied the effects of supply and demand, but rather seeks to go beyond it.  What happens when supply and demand are in equilibrium?  Why do they balance at that point?  What else is at play?

How I Could Have Responded:  Clearly supply and demand are part of it, but I don’t think they are the whole story.  There are some clear winners and some clear losers in this scenario.  Employers are getting labor for free (something they normally need to pay for, and something that is required to keep their business running), and the workers (interns) are getting nothing in return.  Class struggle also play a part in this change.  Employers needed to decide to shift from paid to unpaid interns.  That didn’t just happen magically.  If there were social taboos against not paying interns that’s something that could prevent the shift.  If there was legislation requiring interns to be paid a certain amount that could also stop the shift.  There are a whole world of forces out there beyond supply and demand that go into shaping our world.  Politics, laws, cultural norms, and class struggle are among these forces, and are clearly all influenced by each other.  So it’s fine to look at this as an effect of supply and demand, but be aware that there are other factors at play too, and some of them may even be more useful in explaining this change.

Wolff and Resnick call this approach to causation “overdeterminism”  – everything is effected by everything else.  They use it the way many other Marxist use “Dialectics”.  In fact, they introduce overdeterminism as a new more accurate term for dialectics.  Whichever word you use, it gives Marxism a clear advantage as a theory.  It makes it very flexible to use for understanding complex situations.  Instead of the caricature of Marxism where everything boils down to economic (and sometimes technological) determinism, this approach to causation allows for theorists to move between politics, science, culture, economics and more the way Marxists have often done.  Neoclassical economic theory has nothing to say about literature, while Marxism is a staple of critical literary theory – this is because Marxists have traditionally been excited by other fields of study and ready to blend and mix them with what they already know,  making the range and scope and ultimately the understanding of Marxists more broad, more deep, and more complete.


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Marxism Today is podcast series designed for beginners and newbies to Marxist theory. The podcast will introduce you to certain topics and ideas central to Marxism and it will show you how Marxist theory can be applied to specific issues in order to understand them.
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2 Responses to Marxist and Neoclassical Theory

  1. allan harris says:

    Supply and demand set the temporary market price of a commodity. When they temporarily balance, the market price is the “natural” price (Adam Smith) or real value of the commodity. Supply and demand never really balance. There is a constant oscillation of market price above and below the real or natural price of the commodity.

    As Adam Smith, David Ricardo and Marx all showed, the real value of a commodity is the necessary labor time required to produce the commodity.

    An intern is a commodity which is offered for sale. The intern sells herself to the employer who buys the intern for a certain period of time. If there is an over supply of interns and the demand remains the same, then the price of interns will be reduced. Once the price is reduced low enough then college students will stop selling themselves until the price again rises.

    This is the neo-classical, supply and demand analysis, but it works only in the magical world of the free market. The free market analysis makes sense only if college interns have the freedom to withdraw their commodity long enough to force employers to accept higher prices. There are two reasons college students don’t have this freedom. First, society demands that young people get a college degree and a post-graduate degree if they want to get a decent paying job. So, young people are flooding the college market, where they buy a college education. Second, employers tell them they need an internship to get experience before starting a job.

    College students don’t have the choice of not going to college (unless they want to flip burgers for a living) and they don’t have the choice of not applying for an internship. The intern market is not a free market for the buyers (colleges and businesses), the buyers control the market. The interns, however, are forced to compete with each other in a free market among themselves.

    What is changing is that the internship is becoming a commodity which the student is forced to purchase from the employers, thus, the student is forced to work for free, is forced to become a slave.

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