The book compares neoclassical and Marxian economics and points out that both the schools of thought seek to analyze how a capitalist society functions. The authors show that the neoclassical economics vindicates capitalism and prescribes policies that further the interest of the rich (giant capitalists), who own most of the non-human productive resources of the economy, whereas Marxian analysis yields the result that a capitalist society is exploitative and crisis-prone. Marxian economics also suggests that the class struggle inherent in a capitalist society will eventually transform it into an equal, just and humane socialist society. The book also presents Keynesian theory, which suggests measures that can counter at least some of the crises that Marx said a capitalist country is subject to. It discusses the current state of the capitalist world, the recent crises it was subject to and assesses the three theories in the light of these experiences. It recounts the current states of two important socialist states, namely, China and Cuba. It discusses the economic performance of Soviet Union since its birth and explains the reasons for its disintegration. It compares economic performances of the capitalist and the socialist states and assesses in the light of the experiences of these two blocs of countries which school of thought is more acceptable and closer to the truth.
Author(s): Chandana Ghosh, Ambar Nath Ghosh
Publisher: Palgrave Pivot
Year: 2019
Language: English
Pages: 202
Tags: Public Economics
Preface......Page 6
Contents......Page 8
List of Figures......Page 12
List of Tables......Page 13
Chapter 1: Introduction......Page 15
1.2 Capitalist, Socialist and Communist Societies......Page 16
1.3 Capitalism and Democracy......Page 18
1.4 Socialism: A Move to Form a Humane Society......Page 21
1.5 Conclusion......Page 22
References......Page 26
2.1 Introduction......Page 27
2.2 Theory of Consumer Behaviour......Page 28
2.2.1 Budget Equation of the Consumer......Page 29
2.2.2 Tastes and Preferences of the Consumer......Page 31
2.2.2.2 A Higher Indifference Curve Corresponds to a Higher Level of Utility......Page 34
2.2.2.3 Goods Consumed by Consumers Are Imperfect Substitutes......Page 35
2.2.3 Consumer’s Choice and Derivation of His Demand Functions......Page 36
2.2.3.1 Derivation of the Demand Functions of the Consumer......Page 38
2.2.3.2 Aggregate Demand Functions......Page 39
2.3 Neoclassical Theory of the Firm......Page 40
2.4 Markets of X and Y and Determination of Equilibrium Quantities of X and Y......Page 48
2.5 Welfare Economics: A Capitalist Economy Establishes Efficient Allocation of Resources......Page 52
2.6.1 Theory of Consumer Behaviour......Page 56
2.6.2 Theory of The Firm......Page 57
2.6.3 Theory of Perfectly Competitive Markets......Page 59
2.7 Motivation for the Neoclassical Definition of Optimal Allocation of Resources......Page 60
2.8 The Correct Definition of Optimal Allocation of Resources......Page 62
2.9 Conclusion......Page 64
A Note on How to Take Total Differential of a Function......Page 66
How to Represent an Equation in a Diagram (Roughly)......Page 68
3.1 Introduction......Page 70
3.2 Capitalism and Exploitation: Marx’s Theory of Surplus Value and Profit......Page 72
3.2.1 Commodity Fetishism......Page 74
3.2.2 Methods of Extraction of Surplus Value: Absolute Surplus Value and Relative Surplus Value......Page 75
3.2.3 Exploitation, Surplus Value and Profit......Page 77
3.3 Capitalism and Crisis......Page 79
3.3.1 The Crisis of Underconsumption or Overproduction......Page 80
3.3.1.1 Technological Progress and the Crisis of Underconsumption/Overproduction......Page 89
3.3.2 Disproportionality Crisis......Page 93
3.4 Performance of Capitalist Economies and Marx’s Crisis Theories......Page 96
3.4.1 Trade Cycles in a Capitalist Economy......Page 97
3.4.1.1 Marx’s Crisis Theories and Recessions in Capitalist Economies......Page 100
3.5.1 Transition from Feudalism to Capitalism: Primitive Accumulation......Page 101
3.5.2 Imperialism......Page 104
3.6 Conclusion......Page 105
References......Page 106
4.1 Introduction......Page 107
4.2 Keynesian Theory of Trade Cycles......Page 108
4.3.1 Fiscal Policy......Page 109
4.3.2 Monetary Policy......Page 113
Reference......Page 116
5.1 Introduction......Page 117
5.2 The Crises in the US, Europe and Japan......Page 120
5.2.1 Asset Price Bubble and Speculative Activities in the Asset Market......Page 122
5.2.2 Explanation of the Formation and Collapse of the House Price Bubble in the US......Page 126
5.2.3 Nexus Between the Global Financial Capital and the US Government and Fed......Page 129
5.3 Collapse of an Asset Price Bubble and Recession......Page 130
5.4.1 Unconventional Monetary Policy......Page 131
5.4.2 Conventional Monetary Policy......Page 132
5.4.2.1 Empirical Evidences Against Conventional Monetary Policy......Page 134
5.4.3 Appropriate Policies for Tackling Recession......Page 135
5.4.4 Inappropriate Policies Adopted in Recent Periods for Countering Recession......Page 136
5.4.5 Motivation for Keeping an Economy in a Desired Level of Recession Indefinitely in the Post-Crisis Period......Page 138
5.5 The Indian Scenario......Page 140
5.6 Fair Real Rate of Return on Savings, Inflation and Price Indexation of Wage Rates and Interest Rates......Page 142
5.6.1 What the Central Bank Can DO......Page 144
5.7 Economic Reforms and the Poor......Page 145
5.8 Conclusion......Page 146
References......Page 147
6.1 Introduction......Page 149
6.3 Formation of the Soviet Bloc......Page 150
6.4 The Spectacular Rise of the Soviet Union......Page 151
6.4.1 World War II and the Post-War Period......Page 154
6.5 The Fall of the Soviet Union......Page 155
6.5.1 The Model......Page 156
6.6 People’s Republic of China: Introduction......Page 160
6.7 China’s Growth Performance......Page 161
6.8 Foreign Trade in China......Page 167
6.9 Conclusion......Page 168
6.11 Socialism in Cuba and the Soviet Union......Page 170
6.12 Post-Soviet Cuban Economy......Page 172
6.13 Concluding Observations......Page 174
References......Page 175
7.1 Introduction......Page 176
7.2.1 Extraction of Labour at the Minimum Possible Price......Page 179
7.2.2 Extraction of Savings at the Minimum Possible Price......Page 182
7.2.3 Religion and Neoclassical Economics: The Two Instruments of Mass Hypnosis......Page 187
7.3 The Way Out of Capitalist Exploitation and Moving Towards Establishing Socialism......Page 189
7.4 The State of the Erstwhile Colonial Countries like India......Page 190
7.5 India Under the New Economic Policy (NEP)......Page 195
7.6 The Way Out......Page 197
References......Page 199
Index......Page 200
