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Marxian economics (Karl Marx, Das Kapital)
1867· Theory or school
Experts disagreeEconomists or investors genuinely disagree.
Karl Marx's theory that capitalism profits by paying workers less than the value they create, breeding inequality, crises and, he predicted, revolution.
See it on the Money & Finance map →How it works
Marx (1818–1883), a German exile in London, published Das Kapital's first volume in 1867, after The Communist Manifesto (1848) with Friedrich Engels. Taking the labor theory of value from Smith and Ricardo, he argued profit is 'surplus value': the part of workers' output that owners keep. Competition drives owners to mechanize and accumulate, concentrating capital and causing recurring crises of overproduction. He predicted workers in industrial nations would overthrow capitalism; revolutions came instead in largely agrarian Russia and China.
Why it matters
It shaped 20th-century politics, from the Soviet Union to China and North Korea. Most economists reject its value theory, but it still frames debates on labor, capital and inequality.
Facts, rules and data
Marx's published works and letters. Mainstream economics dropped the labor theory of value after the 1870s marginal revolution, and centrally planned economies mostly stagnated or turned to markets.
Debates and risks
Scholars disagree on how much of Marx's analysis, of crises, business concentration and labor's share of income, holds up apart from his failed predictions and the regimes that claimed him.
Connections (2)
▸Marxian economics (Karl Marx, Das Kapital) centers its critique on Income and wealth inequalityFact, law or data
The connection
Marx saw inequality as built into capitalism: owners keep the surplus workers produce, reinvest it, and capital concentrates while wages lag. Modern economists rarely use his value theory, but Thomas Piketty's Capital in the Twenty-First Century (2013) revived a related question: does wealth grow faster than the economy?
When and why
Marx in London, 1867; Piketty in Paris, 2013, with a 2014 English translation that became a bestseller.
How we know
Marx's texts make inequality central; Piketty's long tax-record series found returns on capital usually exceeding growth, though he rejects much of Marx.
Debates and risks
Whether labor's falling share of income reflects capital's bargaining power, technology or globalization is debated.
▸Marxian economics (Karl Marx, Das Kapital) critiqued the classical ideas of Adam Smith and The Wealth of Nations (1776)Fact, law or data
The connection
Marx took the labor theory of value from Smith and Ricardo, the 'classical' economists, and turned it into a critique: if labor creates value, profit must come from unpaid labor. Where Smith saw the division of labor and markets enriching everyone, Marx saw them alienating workers and concentrating wealth in owners' hands.
When and why
Marx studied Smith and Ricardo in Paris and London from the 1840s to the 1860s; his Theories of Surplus Value examines them at length.
How we know
Das Kapital is subtitled 'A Critique of Political Economy', and it engages Smith repeatedly, by name.
Debates and risks
Scholars argue whether Smith's own worry that repetitive factory work dulls workers anticipated Marx's idea of alienation.