The orthodox economics is squarely based on the institutions of individualism, economic rationality, private property and exchange (market economy). It is faced with six fundamental questions: (i) will the society organized on the principles of exchange (the market economy) stay composed or will it fall apart (the question of existence of equilibrium)?, (ii) will such an equilibrium be unique (a multiplicity of equilibria poses difficult and embarrassing questions)?, (iii) will such an equilibrium be robust (the question of stability of equilibrium)?, (iv) will such an economy (society) be efficient?, (v) will it grow or expand forever?, and (vi) will it be just? The Classical Economics answered these questions affirmatively and pleaded for the market economy based on the institution of private property and individualism. However, the economists like János Kornai deny any existence of equilibrium in the economy, and thus have no regard for the subsequent questions.
Karl Marx considered the Classical Economics an apologia in defense of the market economy, the system that is pro-capitalistic and anti-labourer. He answered all the questions (enumerated above) negatively. He concluded: the market driven economy - the capitalist economy - is digging its own grave. Ultimately, after having eroded its base from which it derives surplus value, it will collapse, giving rise to a new system, a socialist economy. Above all, he challenged the view that the capitalistic management of the economy could be just or fair, since it is based on the exploitation of the labour class. Thus, Marx challenged the entire structure of faith in the merits of the exchange economy and shattered all optimism regarding it. Marx also exhorted the labour class to unite and overthrow the capitalistic system, taking the management of it in its own hands and establish a socialist economy. A socialist economy is based on public ownership or independent cooperative ownership of the means of production, wherein production is carried out to directly produce use-value, usually, but not always, coordinated through economic planning and a system of accounting based on calculation-in-kind or labor-time. Socialist economists reject private ownership of resources and private management of productive activities.
Socialism is predicted by many economists to be the final stage of socio-economic development that would necessarily follow capitalism. Marx held that it would come through a revolt of the proletariat; Veblen held that the technocrats would take over the management of the system; Schumpeter held that the intelligentsia (intellectuals) would ultimately transform the capitalistic mode of production and distribution to a socialistic mode and a welfare state. Whether such a transition would really take place or not? This question is under debate. Ashok Rudra observes that the intelligentsia has become a member of the ruling coalition; this class has not acquired the position of power through any struggle with the other two pre-existing ruling classes (the Landlords' and the Industrialists') - it has been co-opted by the other two into the coalition (see Rudra, A. in EPW, Jan. 21 1989: 142-150), and thus one cannot expect from it any positive contribution to the society. Irrespective of spread of education to the mass, the intelligentsia will remain small in number and can be bribed (out of the surplus obtained by an exploitation of the proletariat) by the industrialist/business class. Mass education need not inculcate class consciouness among the proletariat, more so among the members of the middle class; it may effectively thwart class consciousness, provided that the educational system is properly designed (and indeed it is designed so consciously or subconsciously) by the ruling class (or its spokesmen in the establishment or academia) with that motive incognito.
|The Socialist Economists|
|Karl H. Marx||János Kornai|
|Mikhail Tugan-Baranovsky||Rosa Luxemburg|
|Paul A. Baran||Paul Sweezy|
|Piero Sraffa||Vladimir Lenin|
|Mao Zedong||E M S Namboodiripad|
|Jyotirindra Basu||Manabendra Nath Roy|