9 - The Marxian alternative

Summary

In 1867 while Alfred Marshall the young mathematician was busy transcribing the basic theory of Mill and Ricardo into abstract mathematics there was published in Germany the first volume of Karl Marx's massive reconstruction of political economy – Das Kapital. Marx had been working his way through ‘the confounded ramifications of political economy’ in the British Museum Reading Room since 1850 and had already published (again in Germany) a substantial sample of his new theory, illustrating his distinctive methodological approach, in 1859 under the title: Zur Kritik der Politischen Oekonomie. Like both J. S. Mill and Marshall he was an innovative follower of Ricardo. Unlike Mill and Marshall he deliberately set out to replace the classical system of thought with a new integrated set of theories, concepts and analytical techniques – a new disciplinary matrix. However, he remained throughout his life outside (and virtually ignored by) the English-speaking community of economists and had little or no influence on the subsequent evolution of mainstream economic thought.

Yet Marxian economics descended directly from the English classical school. Marx shared the classical interest in growth and began, as Ricardo had done, by recognising value and income distribution as the key to understanding growth. He accepted Ricardo's labour-quantity theory of value and his theory of the falling rate of profit and snapped up his hints on technological unemployment.