MIA: Encyclopedia of Marxism: Glossary of Terms




Economics is the science which deals with the objective quasi-natural laws and processes governing the production of commodities, their values and money.

The precursor of economics was political economy; economic science shed the name of political economy following the formulation independently by several different economists of the “marginal theory of utility” around 1871. Whereas political economy had dealt with value – the substrate underlying price, following the advice of the dominant positivist philosophy of the times, the economists eschewed the study of value in favour of the phenomena of price. The successful application of the mathematical methods of calculus to the new science led to its immediate adoption into the domain of natural science.

The marginalist application of mathematics to the decisions made by individuals rested on the concept of people weighing up the cost benefits of incremental changes in price of working hours.

Following the Wall Street Crash in October 1929 and the Great Depression, John Maynard Keynes’ critique of the marginalists, particularly in respect to the validity of the concept of marginal utility with respect to the determination of wages and the exclusion of government spending from the calculation of demand, Keynesian economics became the new dogma.

Keynesianism represented a partial retreat from the market-fundamentalist pseudo-science which has plunged the world into the horrors of war and depression.

Following the collapse of the Bretton Woods arrangements in 1968-73, Milton Friedman’s Monetarism became the fashion of the day, emphasising monetary as opposed to fiscal methods of macro-economic regulation. Friedman rejected the relevance of all economic models in the application of mathematics to social action. Reality had to be brought to heel by the firm and ruthless manipulation of the monetary levers.

By the mid-1980s, Monetarism was too blunt an instrument to deliver the goods and economists turned away from macroeconomics to microeconomics to get a grip on the processes unleashed by the growing complexity of modern social life. For here, the Chicago School which adopted the name of “political economy” returned by constructing a macroeconomic theory on the basis of models of microeconomic behaviour drawing on information systems theory, complexity and structural linguistics. The new school models the economy as millions of tiny computers with finite memory sending email messages to one another.

Like any branch of natural science, economics defends its borders and is careful not to step beyond them. Any active, however useful and however well it may meet human needs is “outside” the domain of their science if it is not delivered in the form of tradeable goods and services. Goodbye nations who are minor players in world trade; goodbye the environment.

All of these schools share some things in common: each of them express the alienated consciousness of their times, rendered as the human powers of material objects: the fetishism of commodities.

The result is a natural (i.e. non-human) science of human life.

“the existence of the things qua commodities, and the value-relation between the products of labour which stamps them as commodities, have absolutely no connection with their physical properties and with the material relations arising therefrom. There it is a definite social relation between men, that assumes, in their eyes, the fantastic form of a relation between things. ... This I call the Fetishism ... of commodities. ...

“The categories of bourgeois economy consist of such like forms. They are forms of thought expressing with social validity the conditions and relations of a definite, historically determined mode of production, viz., the production of commodities. The whole mystery of commodities, all the magic and necromancy that surrounds the products of labour as long as they take the form of commodities, vanishes therefore, so soon as we come to other forms of production. ...

“Political Economy has indeed analysed, however incompletely, value and its magnitude, and has discovered what lies beneath these forms. But it has never once asked the question why labour is represented by the value of its product and labour-time by the magnitude of that value. These formulae, which bear it stamped upon them in unmistakable letters that they belong to a state of society, in which the process of production has the mastery over man, instead of being controlled by him, such formulae appear to the bourgeois intellect to be as much a self-evident necessity imposed by Nature as productive labour itself.” [Capital Chapter 1]



1. In Russian Social-Democracy (early twentieth century): The newspaper Rabochaya Mysl (Workers' Thought) (1897-1902) and the magazine Rabocheye Dyelo (Workers' Cause) (1899-1902) were organs of the "economists."

In 1899 there appeared Credo, a manifesto of the "economists," which was drawn up by E.D. Kuskova. When Lenin, then in exile, received a copy of Credo, he wrote A Protest by Russian Social Democrats, in which he sharply criticized the programme of the economists. The "economists" theoretically limited the aspirations of the working class to an economic struggle for higher wages and better working conditions, asserting that further political struggle was the business of the liberal bourgeoisie. They denied the vanguard role of a party with the working class, considering that the party should merely observe the spontaneous process of the movement and register events.

In their deference to spontaneity in the working-class movement, the economists were against the importance of revolutionary theory and class-consciousness, and instead asserted that socialist ideology could arise out of the spontaneous movement. Since they were against instilling working class values in workers, Lenin explained, they then were in fact preaching for the continuation of instilling bourgeois values in workers.

Lenin's Iskra played a major part in polemics against "economism." By his book, What Is to be Done?, which appeared in March 1902, V. I. Lenin brought about a concrete ideological rout of "economism."