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Karl Marx

The famous economist, philosopher, and historian

Who is Karl Marx?

Karl Marx is a well-studied and well-cited economist. He lived between 1818 and 1883, but his ideas still exist in society today. In addition to being an economist, he was also a well-known philosopher and historian. He’s been a prominent voice in the debate against capitalism, writing the famous books The Communist Manifesto and Das Kapital and inspiring many global political communist movements around the world.

 

Karl Marx

 

Marx believed that the capitalist system created a class struggle that oppressed the working class, created a poor quality of life, and was an ineffective way to structure society. He believed that the tensions between the worker and the capitalist owners would create an antagonistic environment that would eventually lead to the rise of socialism and the destruction of capitalist political and social structures. His ideas are often controversial, with brutal dictators and authoritarian regimes throughout human history often citing them.

 

Summary

  • Karl Marx is a well-studied and well-cited economist. Marx believed that in a capitalist system, society would inevitably divide themselves into two classes: (1) the business owners and (2) the workers.
  • He’s been a prominent voice in the debate against capitalism, writing the famous books The Communist Manifesto and Das Kapital and inspiring many communist movements around the world.
  • Marx’s analysis centered around the social cost of giving up the value and ownership of one’s own labor to the owners.

 

Understanding Marx’s Theories Through Behavioral Economics

Marx’s theories can be interpreted through many different lenses –  philosophical and historical, as well as economic. For our purposes here, we will look at how it plays in behavioral economics.

Marx believed that in a capitalist system, society would inevitably divide themselves into two classes – the business owners and the workers. The workers would produce the material goods and conduct all the labor, while the owners would reap all the financial and social benefits.

Marx’s analysis centered around the social cost of giving up the value and ownership of one’s own labor to the owners. He further explored what that would ultimately mean for society at large and the purpose of life for those working as the means of production in factories and other outfits. He would often explore and analyze what would drive the workers if they did not own their own labor.

Behavioral economics attempts to, among other things, determine whether the economic theory of profit maximization and capitalist gains are overall indicative of what people do or want. In many ways, Marx argues against profit maximization and the capitalist economic system. He believes in many socialist ideas and principles that seek to return the benefits and fruits of labor to the individual.

Marx believes that the ideal system is not one that seeks to maximize a behavioral economic system that promotes maximum profit and productivity, but rather one that empowers the worker and returns control of their lives to them. He believed that the allocation of capital created the social-economic system in which we live our lives. Also, he proposed that by allowing a massive allocation of capital that was skewered to one end of society, it could define how society is constructed, and society would end up with a negative social system and behaviors.

 

Marx’s Influence and Going Forward

Karl Marx remains a strong social voice in society today. Many believe that his style of communist socialism would greatly benefit capitalist countries. However, his ideas are greatly controversial. His critics often point out the loss of freedoms and overall oppression that can be seen in countries that adopted Marxist-style policies.

Critics also point to the fact that capitalist societies are seeing a greater prosperous outcome for a larger number of people than communist countries, with their higher standard of living and greater incubation for entrepreneurship. Without the financial incentives of ownership, it can be hard to inspire individuals to take risks and develop ideas. It can stifle business growth and would generally make a communist country less competitive in the market of new goods and services than a capitalist counterpart.

However controversial his ideas were, Marx remains a prominent and influential figure in today’s modern-day political and economic landscape.

 

Additional Resources

CFI offers the Certified Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful:

  • Economic Justice
  • Keynesian Economic Theory
  • Marxian Economics
  • Socialism vs Capitalism

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