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Views of Marx and Keynes John Keynes and Karl Marx are two of the most
influential and notorious economists of our time. Their views on the economy are
very different. Marx was a radical communist while Keynes was a Capitalist and a
brilliant intellectual. Their views stem from their upbringing. Marx was born
into a Jewish, middle class family and Keynes was born into a comfortable
English social class that considered itself born to rule. Their writings brought
their beliefs about the economy lead them into the public eye. Marx wrote the
“Communist Manifesto” and “Das Kapital”. Both writings sought social upheaval
and attacked the capitalist system. Keynes’ writings include “The Economic
Consequences of the Peace” and “The General Theory” which revolutionized the way
the world thinks about economic problems
. Marx and Keynes’ views were and remain
widely acknowledged to economists throughout the world through their writings.
John Keynes thought there was no necessity for public or government ownership.
Instead, he believed that government action was essential. Rather than
government ownership, Keynes supported private ownership of the means of
production. Karl Marx identified private productive property as the real source
of evil. He believed that possession of economic resources gave power to the
owners who then oppressed the workers, who have only their labor to sell. He
believed that ownership of capital forces human beings into unequal
relationships as capitalists and laborers. Marx concluded that envy, greed and
personal ego are direct outcomes of private property. Keynes dwelt on the
overall economy rather than individual markets. He did not direct his attention
to what should be produced and how, but did speculate about the possibility that
relative scarcity would cease to be a problem. Keynes considered that one day
the world would be free from its fixation with want. Marx was far more candid on
this issue of resource allocation.
The increasing misery and unemployment for
workers, and falling profits for capitalists meant to Marx that the system had
to be destroyed. Marx believed that something had to be done to prevent workers
from being exploited, dehumanized and alienated from their work. John Keynes
believed that the failure to provide full employment and the arbitrary and
inequitable distribution of wealth and incomes were the outstanding faults in
the economic system. He believed that there is social and psychological
justification for significant inequalities of incomes and wealth. They can be
justified because there are valuable activities that require the motive of money
making and the environment of private wealth ownership. Keynes argued that some
inequality is necessary to provide sufficient incentives to entrepreneurs to
undertake investment. Karl Marx was critical of capitalism and thought that
under capitalism, inequalities would only worsen. He believed that inequalities
would result in an increase in unemployment. Marx was however, very supportive
of communism.
He believed that income distinctions would disappear and goods and
services would be distributed according to need if there were pure communism.
Marx summed up his views by saying that economic life would be governed by the
rule “from each according to his abilities; to each according to his needs.”
John Keynes believed that government action is essential to stabilize an
unstable economy, end economic recessions and depressions, and produce full
employment. He recognized that his solution to the unemployment problem of the
1930’s would come as a shock to those who believed in a laissez-faire economy.
Keynes rejected a laissez-faire economy because market based economies do not
produce full employment immediately; he said there will always be unemployment.
He believed there was an inherent weakness in the market system. To overcome
this he believed that government action was essential. He said the government
should monitor the economy, and introduce policies that run counter to the trade
cycle. He fundamentally believed that the government’s role was to fine-tune the
economy. Marx believed there was no role for the government. He said that
capitalist governments do not serve the interests of the whole population. Marx
wanted private property to be eliminated and for a socialist government to come
into existence. In the transformation from a capitalist government to a
socialist one, Marx recognized that there would be government ownership of the
means of production early on. But as the focus went on social commitment, rather
than the idea of self-importance, there would be less need for central control.
He believed that the government would “whither away” as communism-replaced
socialism. Marx’s ideal community would then emerge: a community of
self-governing human beings living in harmony. Keynes believed that adding to
government functions was necessary to avoid the eradication of the economic
system, therefore allowing the individual to display initiative and flourish.
Keynes’ focus lay with groups of individuals in the economy. He focused on a way
to achieve full employment of labor. He said the level of activity in the
economy was crucial to the amount of employment. Keynes believed that private
investors played a decisive role by their decisions to add or to postpone
investment. He said this was the reason why the market economy was unstable.
Keynes viewed private investment as being volatile. He was aware that investor’s
plans could change quickly. He saw aggregate demand as being a reflection of
investor’s decisions. He believed that the right of individuals to work could be
protected if government spent money to maintain aggregate demand whenever
private investment was low. Marx believed that the role of the individual in
society was of fundamental importance. He presented a communist society as being
a paradise on earth where individuals can break free of restrictions imposed by
the division of labor.
He ultimately saw it as being freedom for the individual.
Marx believed that individuals were trapped within social classes. He saw the
workers and the capitalists being opposed to each other in the production
process. He firmly believed that their differences and divisions could not be
reconciled. Marx believed that suffering and conflict took place because the
ruling class had power over the rest of society. The ruling class power depended
on private productive property and if there were communism, the conflict would
subside because private property would end. Marx believed that communism
represented individual freedom and equality and under communism, human conflict
would cease. Keynes’ views that government action is essential to produce full
employment have been applied in Australia recently with the government’s job
network, which has tried to create jobs for the unemployed. Keynes believed that
the government should have a key role in the economy. The Australian government
is improving its economic performance and is creating a new tax system through
the GST.
Marx and Keynes views on ownership, resource allocation, income
distribution, and their views on the role of individuals and government in the
economy have gained them worldwide acclaim from capitalists and communists.
Their views have been disputed and praised by economists for over 180 years.
Marx’s “Communist Manifesto”, about the need for workers to overthrow their
rulers, resulted in him not being able to enter Europe again. Keynes, however,
was praised by capitalists and was allowed to preach his economic theories
throughout the world. Both Marx and Keynes were essential to developing what
today is our economic system.
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