The philosopher Tom Hickey cites the Professor Emeritus of Afro-American Studies: “In what follows, I propose to take as my text a famous statement from Marx’s A Contribution to the Critique of Political Economy ― a sort of preliminary sketch of Das Kapital ― and see what it can tell us about the capitalism of our day. I shall try to show you that Marx was fundamentally right about the direction in which capitalism would develop, but that because of his failure to anticipate three important features of the mature capitalist world, his optimism concerning the outcome of that development was misplaced. Along the way, I shall take a fruitful detour through the arid desert of financial accounting theory. Here is the famous passage, from the preface of the Contribution, published in 1859: ‘No social order ever disappears before all the productive forces for which there is room in it have been developed, and new, higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society.’”
It is pretty obvious that Marx’s description of Capitalism is sociological/historical/ philosophical. Marx claimed to do science but he was never more than a storyteller/ agenda-pusher and never understood how the economy works. More specifically, Marx never understood what profit is.#1, #2, #3 This he has in common with the rest of the economists.#4 Economics is a failed/fake science and Marx is an integral part of the mess: the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong.
From the most embarrassing failure in the history of modern science follows that all these incompetent sociological/historical/philosophical blatherers have to be buried for good at the Flat-Earth-Cemetery.
To make matters short here, the macroeconomic Profit Law is given as Q≡Yd+(I−S)+(G−T)+(X−M). In the elementary case of a production-consumption economy, this reduces to Q≡−S, i.e. the mirror image of household sector saving S is business sector loss −Q. The mirror image of household sector dissaving (-S) is business sector profit Q. The point to grasp is that profit for the business sector as a whole has NOTHING to do with exploitation or class struggle but with deficit spending. Because Marx did not understand how the economy works his sociological/historical/philosophical storytelling about Capitalism was and is proto-scientific BS. His prophecies about the future of Capitalism are on the same level as tea leaves reading.
Capitalism and Socialism are monetary economies and subject to the same fundamental laws. The macroeconomic Profit Law holds for the USA, the USEu, Russia, and China and it is absolutely independent of the ownership of the firms, or of the self-identification as capitalistic or socialistic, or of other subjective factors. The macroeconomic Profit Law consists of precisely measurable variables and is testable.
The reduced macroeconomic Profit Law Q≡(I−S)+(G−T) tells one that profit in the monetary economy is positive (i) if business sector investment I is greater than household sector saving S and (ii) if the State runs a deficit, i.e. (G−T)>0.
Case (i) is characteristic of early Capitalism and case (ii) is characteristic of late Capitalism. Currently, the so-called free-market economy is on the full life support of the State. The macroeconomic Profit Law boils down to Public Deficit = Private Profit and thus the Oligarchy’s financial wealth and public debt (currently $22 trillion) grow in lockstep. Capitalism will break down as soon as the sum of (i) and (ii) turns negative and NOT because the “material conditions of their existence have matured in the womb of the old society” or because of a social/political revolution.#5
Neither orthodox nor heterodox economists understand to this day how the economy works and what profit is. Robert Wolff maintains “… I remain persuaded that Karl Marx has something important to teach us about the world in which we live today.” Nothing could be further from the truth but this is forever beyond the horizon of stupid/corrupt storytellers like Robert Wolff, Tom Hickey, and the rest of failed/fake economists. These folks have NO future as scientists.
#1 Dear idiots, Marx got profit and exploitation wrong
#2 Karl Marx, fake scientist
#3 Proﬁt for Marxists
#4 The Profit Theory is False Since Adam Smith
#5 Mathematical Proof of the Breakdown of Capitalism
Related 'Who is really a scientist?' and 'Socialism and scientific incompetence' and 'Capitalism, poverty, exploitation, and cross-over exploitation' and 'No exploitation, no classes'. For details of the big picture see cross-references Profit and cross-references Accounting and cross-references Political Economics/Stupidity/Corruption and cross-references Paradigm Shift.