Historical transformations of knowledge in political economy: minimally necessary information

By Fazal Rahman, Ph.D.                  March 1, 2016

Knowledge and understanding of political economy are fundamental to understanding the nature, processes, and developments of any politico-economic and social systems, including capitalism, imperialism, socialism, and communism. After Marx, Engels, and Lenin, the most comprehensive, truthful, and in-depth works on this and related subjects were published by the Soviet political economists and social scientists, who had done thorough studies in these areas and had integrated and incorporated the contemporary data, information, and developments into their publications (see for example, 1, 2, 3, 4). Soviet philosophers and sociologists had also made such contributions in the closely related, intertwined, and important areas of philosophy and sociology (example, 4). After the capitalist counter-revolution and restoration of capitalism in Russia and other former Soviet republics, along with socialism, such works and their authors have also disappeared from the literary and intellectual horizons. Overwhelming majority of American and European “leftists”, “socialists”, and even “Marxists”, were always astoundingly ignorant of such works, and had very limited acquaintance with even the voluminous writings of Marx, Engels, and Lenin. And yet, they have no hesitation in passing wholesale, contentless, and empty judgments on the nature of the politico-economic system of the former USSR and other former socialist countries, which they brand as “state capitalist”, parroting some of the equally ignoramus and/or biased leftist stars, like Noam Chomsky, Richard Wolff, Howard Zinn, and Stephen Resnick, some of whom have written sharp and accurate empirical and factual critiques of American capitalism and imperialism, but integrated them in erroneous, flawed, biased, ineffective, and solutionless theoretical frameworks (see my critique in this regard, 5).  Criticism and identification of the existing problems, no matter how accurate, are only of limited use at best, if effective and feasible solutions are not proposed.  Solutions of such macro-level politico-economic and social problems also require accurate theoretical framework and foundations.  These and other such writers lack such theoretical framework and foundations, and not only fail to propose any effective and feasible solutions, but preach against those discovered by the founders of Marxism-Leninism-the only effective, necessary, and feasible solutions- the implementation of which had resulted in successful socialist revolutions in Russia, China, Eastern Europe, Cuba, Vietnam and other countries.   Their betrayals and capitalist counterrevolutions in Russia and China-the former giants of socialism-also led to the betrayals and capitalist counterrevolutions in most other former socialist countries.  It is beyond the scope of this brief article to identify and analyze the nature and causes and the transient successes of these betrayals and capitalist counterrevolutions.

Among the various brands of “socialism” in the US, the “pure” “socialists” are the most illusion-infected of all. Without having any experience, knowledge, or imagination of what it takes to bring about the real socialist revolutions and defend and build socialism, in face of powerful internal and external forces of capitalism and imperialism, in an international environment dominated by the vastly superior military, economic, and political forces of imperialism, and being ignorant of or ignoring the great politico-economic, scientific, technological, social, cultural, educational and other achievements of the former USSR and other socialist countries-which made unprecedented and unparalleled advances in social justice, equality, and satisfaction of human needs for all members of society-these incredibly conceited “pure socialists” have no hesitation in condemning them as not having been socialist, and instead having been state capitalists! Obviously, these bizarre “pure socialists” have some subjective, idealistic, and illusory notions of what socialism or a socialist ought to be, and brand anyone or any socialist revolution or system that does not correspond to that, as not being socialist. A more extreme solipsism is hardly imaginable. And yet, in this ocean of leftist ignoramuses, they dominate the leftist literary and intellectual scene! Some of their most celebrated stars, like Chomsky, get away with grotesque slanders of communism and Lenin, even engaging in the infinity of absurdity by claiming that Lenin had destroyed socialism in Russia, without even offering any concrete data, information, evidence, or arguments in support of such empty assertions (Example, 6, 7.  He had also asserted that in an email to me). The followers internalize and reproduce these parrotly, unquestioningly and uncritically, as most of them do not have any background to compare them with the actual facts.

With few exceptions, the American leftists are hopelessly and self-defeatingly divided, chaotic, eclectic, conceited, pretentious, and frozen into various molds of their individual boundaries or petty little impotent organizations. The endless and repetitious writings and interviews of their leaders become stale and blasé, in the absence of any revolutionary actions.  Because of fundamental flaws in their theoretical foundations, most of these leaders are incapable of proposing any effective revolutionary strategy or tactics.  Being financially well off in the class-divided society of advanced capitalism, it is questionable whether they even want real socialist revolutions that would lead to the development of a classless society.  As such, they are no threat to the system, which easily ignores and tolerates them, its leaders presenting this as evidence of democracy and freedom. In the aftermath of the betrayal of socialism in the USSR, even the Communist Party of US has become dominated by opportunist and reformist leadership. Among other things, it has been trying to act as Obama’s tail.

The following questions are relevant in this regard.

1. Can one be a real socialist without in-depth knowledge of the political economy of capitalism and socialism?

In my opinion, the answer to this question is “Yes”. If one has the basic class consciousness and understanding of the nature of the problems of social injustice; inequality; pollution and destruction of nature and human nature; wars, militarism, and conflicts etc., and of socialism as the solution to these problems, one can be a real socialist and has the potential to become a socialist leader, by acquiring in-depth knowledge in these areas.

2. Can one be a socialist leader without an in-depth knowledge of the political economy and philosophy of socialism and capitalism?

The answer to this question has to be a definite “No”, for self-evident reasons. Many American pseudo-socialists have been able to elevate themselves into leadership positions, without such knowledge. Chris Hedges is a good example of that.

3. Can one pass accurate judgments on the nature of politico-economic systems of countries, where socialist revolutions have occurred and socialism is being built and defended, without having in-depth knowledge of their political economies and of political economy and philosophy of socialism and capitalism?

The answer to this question also has be a definite “No”. No one like that is qualified to do that. And yet, in the US, there is no dearth of such unqualified “socialists” of various brands.

Of course, there are a few, who obviously have in-depth knowledge of political economy, but choose to label that of the former USSR as state capitalism. Samir Amin, Paul Sweezy, and Charles Bettelheim are examples of such political economists. Their assertions have been specifically and effectively refuted by others, e.g., Albert Szymanski (8). Richard Wolff, and Stephen Resnick are more recent examples of such political economists. I have refuted and exposed the flaws of their assertions in one of my articles (5).

Following is a brief summary of the historical evolution and transformations of knowledge in political economy, which has been extracted from a Soviet publication, “A Dictionary of Political Economy” (3). This summary is written in British English, many words of which have different spellings from the American English.

Political Economy, science which studies the social relations that evolve between people in the process of the production, ,distribution, exchange and consumption of the material benefits. Political economy is a component of Marxism-Leninism. It appeared as a science during the emergence of the capitalist mode of production. Its name comes from the Greek words politicos -state, social, and aikonomia– managing the household economy (from oikos – house, household, and nómos – the law). Political economy has always been a class science. Its representatives have always expressed the interests and ideology of a definite class and have tried to justify the economic policy corresponding to its interests and protecting them. The first systematic attempt to understand the economic phenomena of the nascent capitalist system and to justify the state’s economic policy was mercantilism, which expressed the interests of the bourgeoisie, above all the commercial bourgeoisie. However, the mercantilists limited themselves to analysing the process of circulation and thus failed to disclose the inner laws of the capitalist mode of production. Representatives of classical bourgeois political economy (see Political Economy, Classical Bourgeois), William Petty, F. Quesnay, Adam Smith and David Ricardo shifted their analysis from the sphere of circulation to the sphere of production. The greatest contribution of this school was the theory of labour value. Quesnay, who headed the school of physiocrats, was the first to attempt to portray the process of social reproduction as an integral system. Classical bourgeois political economy was progressive because it defended the interests of the bourgeoisie in the period when it was an ascending class and the bearer of more progressive social relations than those existing under feudalism. The internal contradictions of the capitalist system were just evolving and could not fully reveal themselves. Limited by the narrow framework of bourgeois views, the representatives of this school were unable to grasp the historically transient character of capitalism, to delve into the mystery of surplus value, or to reveal the dual nature of labour. As capitalism developed and its inner contradictions heightened, and as the antagonisms between wage labour and capital grew, bourgeois political economy lost its scientific character. Classical political economy was replaced by vulgar bourgeois political economy. Its representatives – Malthus, Say, Bastiat and others neglected the internal laws of the capitalist mode of production, and attempted to gloss over its contradictions and create a semblance of “harmony” of class interests. The interests of the urban and rural petty bourgeoisie were defended by petty- bourgeois political economy, represented by Sismondi and Proudhon. While criticising the contradictions of the capitalist system, they did not see the way out, and called for a return to outdated, archaic economic forms. Karl Marx and Frederick Engels revolutionised political economy, as well as all the social sciences. They created a genuinely scientific, proletarian political economy, gave concrete proof of the historically transient character of the capitalist mode of production, revealed the laws of its development and proved that it would be inevitably replaced by the communist mode of production. They comprehensively substantiated the mission assigned to the proletariat by history as the grave-digger of capitalism and builder of the new, communist society. Marxism embraced, revised and creatively developed all the best created in social thought prior to its emergence, producing a consummate theory. The political economy of Marx and Engels consistently expresses the interests of the working class which coincide with the vital interests of all working people and the progressive development of the productive forces.

This enables it to combine strict scientific approach and consistent Party commitment. Capital, the central Marxist work of political economy, comprehensively explained the immanent laws of development of the capitalist mode of production. Based on his theory of the dual character of labour creating a commodity, Marx disclosed the inner contradictions of the capitalist system. A great achievement of Marxist political economy is the theory of surplus value, which helped to show the inner processes of capitalist production, tearing off the shroud veiling the secret of capitalist exploitation. Marxism did not limit itself to a comprehensive explanation of the system of economic categories and laws of the capitalist mode of production. It created political economy in the broad sense as a science of the conditions and forms in which production and exchange are carried out in various societies, and how products are distributed (see Frederick Engels, Anti-Dühring, pp. 180-81). Marx and Engels elaborated the basic provisions of the political economy of the primitive communal, slave-owning, and feudal modes of production, revealed the laws governing the transition from capitalism to socialism, and formulated several fundamental provisions of the political economy of socialism. The method of political economy is the sum total of the methods of cognising production relations and reproducing them in a system of economic categories and scientific laws. The method of Marxist- Leninist political economy is dialectical materialism, which studies the general laws governing the development of nature, society, and human thought. Research into production relations also makes use of more concrete methods, such as analysis and synthesis, induction and deduction, the unity of the historical and logical, and qualitative and quantitative approaches. The development of a genuinely scientific method of studying production relations was a component of the revolution wrought by Marx and Engels in political economy. The serious flaws in bourgeois political economy, such as subjectivism, anti-historicism, and the primacy of exchange and consumption over production, were all overcome. The new stage in the development of proletarian political economy is associated with Lenin (see Lenin, Vladimir Ilyich). He creatively developed and enriched the general theory of political economy and made an important contribution to the development of the political economy of the capitalist mode of production by his theory of monopoly capitalism (see Imperialism), revealing its economic essence and principal features, and determining the nature and historical place of state-monopoly capitalism as the comprehensive material preparation for socialism. Having ascertained the specific action of the law of the uneven economic and political development of capitalism in the age of imperialism, Lenin inferred that socialism can initially triumph in several or even one individual country. He made a great contribution to Marxist economic theory by creating the fundamentals of the political economy of socialism. Lenin formulated a comprehensive theory of the period of transition from capitalism to socialism and developed a theory of the two phases of the communist socio-economic formation, making a scientific prediction of developed socialism. In the context of the world’s division into two systems and the heightening of the internal contradictions of capitalism, the crisis of bourgeois political economy is deepening. Bourgeois political economy has abandoned its traditional concepts of the advantages of unfettered free competition and is looking for ways to save capitalism from crises and unemployment via state regulation of the capitalist economy. The first to suggest that state regulation of the economy could be a means of overcoming the contradictions of the capitalist mode of production was Keynes (see Keynesianism). A widespread theory of modern bourgeois political economy is that of transformation of capitalism, including the theories of stages of economic growth (Walt Rostow), “uniform industrial society” (Raymond Aron), “new industrial society” (John Galbraith), and “post- industrial society” (Daniel Bell) (See Theory of Industrial Society). While recognising that the contradictions of capitalism do exist, these bourgeois economists are trying to depict modern bourgeois society as non-capitalist. A profound crisis of bourgeois political economy found its reflection in the theory of convergence, which maintains that the two systems, capitalism and socialism, are gradually becoming more and more alike. While it neglects the profound roots of the economic systems, above all of the fact who owns the means of production, and has moved research to the sphere of technological laws and external economic forms, modern bourgeois political economy is trying to disguise the antagonistic contradictions of capitalism and to find means to preserve it. The profound changes that have occurred in the socio-economic sphere today have confirmed the validity of Marxist-Leninist political economy and made it necessary to develop it further. Being a creative science, it is constantly developing, and being enriched with new theoretical propositions and conclusions. The documents of the CPSU and the fraternal Marxist-Leninist parties, and works by Marxist researchers have formulated new fundamental tenets for the economy of developed socialist society, for the system of economic laws of socialism and for the mechanism of their purposeful utilisation. They have worked out a theory of the effectiveness of socialist production and planned economic management, and devised a theory of the world socialist economy and socialist economic integration, which has led to the creation of a political economy of socialism. The theory of the general crisis of capitalism, has been further developed, too. In the socialist countries, political economy is coming to play a greater role in scientifically substantiating economic policy and improving the mechanism and methods of economic activities and management.

Political Economy, Classical Bourgeois, a progressive trend in bourgeois economic thought which arose in the period of the establishment of the capitalist mode of production and the undeveloped class struggle of the proletariat. It protected the interests of the industrial bourgeoisie in its struggle against feudalism, and reached its highest development in Britain which at that time was the most developed capitalist country. Its outstanding representatives were William Petty, Adam Smith and David Ricardo, while in France there were Pierre Boisguillebert and the physiocrats, and Simonde de Sismondi in Switzerland. Marx wrote that “by classical Political Economy, I understand that economy which, since the time of W. Petty, has investigated the real relations of production in bourgeois society” (Karl Marx, Capital, Vol. I, p. 85). Classical bourgeois political economy is one of the sources of Marxism. What lent distinction to its representatives was that they laid the foundation of the labour theory of value, and made the first attempts to examine certain forms of surplus value and to study capitalist reproduction. For this they used a new method, i.e., to penetrate the heart of the matter by using abstract scientific concepts. At the same time their method was, however, unhistoric and metaphysical. Recognising capitalism as an eternal and natural form of production, classical bourgeois political economy viewed the economic categories of capitalism as eternal and natural, which changed only quantitatively. It failed to realise that economic categories expressed the relations of social production, and that under capitalism these relations are fetishised and represent the social properties of things. A major achievement of classical bourgeois political economy was the discovery of the labour theory of value. Its theorists established that the value of a product is determined by the labour required for its manufacture. They noticed that the value of a certain commodity is inversely proportional to labour productivity. But they failed to study the character of labour creating these commodities, as they also failed to investigate why a product of labour assumes a form of commodity, and confined themselves to an analysis of the magnitude of value. Although maintaining that the magnitude of value is determined by necessary labour, classical bourgeois political economy could not scientifically validate this conclusion since it lacked the qualitative characteristic of value as an expression of production relations in commodity production. For the same reason the bourgeois classical economists could never produce a form of value, i. e., exchange value, from the analysis of a commodity. They considered the form of value as something external and remote from the nature of a commodity. As they failed to study the form of value, bourgeois economists could not understand the essence and functions of money. While believing correctly that the labour theory of value represents the point of departure in analysing capitalism, Ricardo tried to reduce all the most important economic categories to this common basis. Thus, considering that wages and profits were two parts of value created by labour, and noting the opposite directions of their movement, Ricardo in fact pointed to the opposite interests of the capitalists and workers. Classical bourgeois political economy could not, however, provide a scientific explanation for the way profit was appropriated from the viewpoint of the labour theory of value, since it believed that the worker sells his labour, not his labour power. While equalising surplus value and profits, Ricardo could not resolve the contradiction between the law of value and the tendency to obtain equal profits from equal amounts of capital. Classical bourgeois political economy laid the corner stone for the analysis of capital. Karl Marx called the economic table drawn up by the leading physiocrat François Quesnay the result of an idea of genius. This was the first attempt to schematically present the process of reproduction by using abstract scientific notions. While discussing the structure of capital, the representatives of classical political economy noticed the difference between fixed and circulating capital. They could not, however, see in capital the expression of production relations. They associated capital with its physical forms such as money, means of production, and commodities. For the same reason they could not explain why the commodities possessed by a capitalist are capital, and are income when owned by worker. While erroneously believing that the value of the social product completely disintegrates into incomes (Adam Smith’s thesis), classical political economy obscured the way to an understanding of capitalist reproduction. The advocates of classical bourgeois political economy pointed to certain contradictions of capitalism. Thus, Sismondi criticised capitalism from the petty bourgeois viewpoint; he put forward the idea of the working masses’ impoverishment and maintained that economic crises were inevitable under capitalism. However, Sismondi, a typical representative of romanticism in the economic science, failed to understand the reason for these contradictions and the ways to resolve them. He tried to turn the wheel of history backwards, to small-scale production. The bourgeoisie’s winning of political power amid the aggravation of the class struggle of the proletariat “sounded the knell of scientific bourgeois economy” (Karl Marx, Capital, Vol. I, p. 25). Apart from the scientific elements, classical bourgeois political economy also contained vulgar elements, as the theorists did not always try to look behind the surface of thing in bourgeois society so as to gain greater insight. Among such, for instance, were their notions that wages are the price of labour, and that rent is a godsend, etc. These vulgar elements magnified into vulgar bourgeois political economy whose purpose was to provide a foundation for the struggle against the working-class movement. The decay of classical political economy was accelerated by the fact that the Utopian Socialists (see Utopian Socialism), being the first spokesmen of the working people’s interests, tried to turn the labour theory of value against the bourgeoisie by advancing the slogan that the working people had the right to the whole product of their labour and that society had to be transformed to achieve this goal. Modern bourgeois economists try to bury in silence the achievements of classical bourgeois political economy in developing the labour theory of value by highlighting its vulgar elements. Some critics try to oppose classical bourgeois theory to the ideas of Marx by claiming that its representatives did not write anything about the contradictions of capitalism or the worsening of the working people’s living standards. Others, on the contrary, believe that Marx borrowed the labour theory of value from Ricardo, and criticise Marx in the same way as vulgar economists once criticised Ricardo. At the same time there are several economists who advocate a “neoclassical synthesis” which combines modern methods of the microeconomic analysis of national product and income with the principles of classical bourgeois political economy. However, here again its vulgar elements are involved. To a certain extent, all these trends testify to the crisis of modern bourgeois political economy, which has turned to classical bourgeois theory in the search for the means of struggle against Marxism-Leninism.

Political Economy, Petty-Bourgeois, a trend of bourgeois political economy reflecting the ideology of the intermediary class of capitalist society – the petty bourgeoisie. It appeared at the beginning of the 19th century following the extensive proletarianisation of the petty bourgeoisie engendered by the industrial revolution of the end of the 18th and beginning of the 19th centuries. Its founders are the Swiss economist Simonde de Sismondi (main work Nouveaux Principes d’economie politique – 1819) and the French economist Pierre Joseph Proudhon (Système des contradictions economiques ou philosophie de la misere – 1846). The dual social and economic nature of the petty bourgeoisie, which on the one hand, like the working class, is exploited and impoverished by big business, and on the other is a class possessing private property, predetermines the dual character of petty-bourgeois political economy. It both criticises those manifestations of capitalism which directly clash with the interests of the petty bourgeoisie (commercial and banking capital, high concentration of capital and private land ownership, capitalist monopolies, economic crises, etc.) and, on the other, defends the general foundations of the capitalist economy (private ownership of the means of production, free enterprise, etc.), although it is they that give birth to big monopoly capital, which exploits and even ruins it. It is this duality of petty-bourgeois political economy which prevents it from revealing the socio-economic essence and the real means of resolving the contradictions of capitalism. The methodology of petty-bourgeois political economy is also dual and eclectic. As ideologists of a socially unstable class, petty-bourgeois economists see the foundation of the historical process not in the development of the social mode of production, but in the moral ideals of “good”, “justice”, etc., which they interpret in a petty-bourgeois way. They use the ethical method, which instead of a scientific analysis of the objective laws of social development utilises an ethical appraisal of them from the standpoint of petty-bourgeois interests – in fact the essence of “economic romanticism”. Side by side with it, the contradictions between the interests of the small and big business cause those expounding this trend to interpret several socio economic processes from the materialist position, although not going beyond metaphysical materialism. Big business exploits the petty bourgeoisie, primarily in the sphere of circulation. Therefore capital is usually identified with the forms which it assumes in the sphere of circulation, i. e., with commercial and loan (usurious) capital, while the content of the process of exploitation is treated as a non-equivalent exchange, ensuing from deviations from the law of value. For the same reason the sphere of circulation is treated as the subject matter of political economy, and the exchange conception becomes its method. The idealisation of commodity relations, which are treated as “just”, ‘equivalent”, etc., are typical of petty-bourgeois economy. Petty-bourgeois political economy is utopian because it criticises capitalism from the standpoint of the obsolete forms of economic relations, and advocates the restoration of petty-bourgeois relations which are incompatible with present-day level of the productive forces of society. Marx and Engels singled out two main currents of petty-bourgeois political economy. The first tries to restore “the old means of production and of exchange, and with them the old property relations, and the old society” (K. Marx, F. Engels, Collected Works, Vol. 6, pp. 509-10). Associated with this current are the theories of the liberal Narodniks in 19th-century Russia, and the modern theories of African, Asian, Indian, etc., “socialism” which extol the communal organisation of agriculture, the development of the petty handicraft industry, original and national socio-economic development, and a third road – neither capitalist nor communist – way of social development. Those espousing this current deny the objective necessity of a high level of development of productive forces and socialisation of production on socialist basis as the objective and necessary conditions of socialism. The second current aspires “to cramping the modern means of production and of exchange, within the framework of the old property relations that have been, and were bound to be, exploded by those means” (K. Marx, F. Engels, Collected Works, Vol. 6, p. 510). An example is the theory of “democratic socialism” in the developed capitalist countries, which presents socialism as a certain “mixed economy”, which com bines social and private ownership of the means of production, free enterprise, competition, and the economic regulation by the bourgeois state ostensibly to ensure “universal welfare”. The ideas of this theory about some kind of “fraternity” of workers and capitalists as the foundation of socialism, about the development of the socialist structure within the capitalist system, the denial of the necessity of class struggle, socialist revolution and the dictatorship of the working class as necessary conditions for the victory of socialism are the modern modification of the ideas of 19th- century petty-bourgeois socialism. Among the revisionist forms of this current is the conception of market socialism (see Theory of Market Socialism) which in the final analysis undermines the economic and political pillars of socialism, replaces the planned socialist economy by chaotic market relations and creates conditions for restoring capitalism. In today’s world imperialism tries to use both currents against the revolutionary working-class and national liberation movements. To extend its social base, the bourgeoisie tries to cloak several economic theories of big business in a petty-bourgeois form (such as economic conceptions of fascism with its ideology of the elimination of “percentage slavery”, theories of people’s capitalism, democratisation of capital, neo-liberalism, Keynesianism, human capital, monopoly competition, etc.). The contradictory position of the petty bourgeoisie in modern capitalism and its vacillations between the working class and bourgeoisie predetermine the dual social orientation of modern conceptions of petty-bourgeois political economy. On the one hand, this involves the extolling of reformist ways to resolve the contradictions of the capitalist mode of production, conciliation with imperialism and a reactionary Utopian search for a “third road” of social development, and on the other, at times sharp, although not always consistent criticism of the most odious manifestations of the contradictions of contemporary imperialism, especially in the concepts of the petty-bourgeois wing of “radical political economy” and the New Left, which, however, do not advance any positive programme to eliminate these contradictions. The true interests of the petty bourgeoisie should be directed towards securing its alliance with the revolutionary working class in the struggle to eliminate all forms of exploitation of man by man and to build a socialist society. Marx, Engels and Lenin provided a profoundly scientific and critical analysis of petty-bourgeois political economy in their works.

Political Economy, Vulgar Bourgeois, unscientific political economy, whose principal objective is to provide an overt apologia for capitalism; in the l830s it replaced classical bourgeois political economy (see Political Economy, Classical Bourgeois) as a result of the radical change in the social role of the bourgeoisie: from a progressive class combatting feudalism it had become a reactionary class, whose sole interest was to maintain its domination. It prevails to this day. The theorists of vulgar political economy confine themselves to describing the outer appearance of economic processes, as they are unable to scientifically analyse the laws of social development. The theory seeks to interpret the economic phenomena that are on the surface and adjust them to the practice of capitalist enterprise. The triumph of vulgar political economy signified the emergence of a crisis in bourgeois political economy. The vulgarisation of political economy is a long and contradictory process of the degradation of bourgeois economic science. Four stages can be determined:

1) Emergence of vulgar political economy alongside and in the struggle against the classical school (late 18th and early 19th centuries). Its representatives were Thomas Robert Malthus in Britain and Jean Baptiste Say in France.

2) Its domination of bourgeois economic literature and evolution in the stage of Free Competition (1830s- 1 870s). Representatives: John Stuart Mill, John Ramsay McCulloch, Nassau William Senior, Alfred Marshall (all in Britain).

3) Vulgar political economy of the imperialist stage (l870s-l920s). Representatives: Karl Bücher, Gustav von Schmoller, and Werner Sombart in Germany; John Bates Clark in the USA; Carl Menger and Eugen Böhm-Bawerk in Austria, and Pyotr Struve in Russia.

4) Bourgeois political economy of the epoch of the general crisis of capitalism (from the 1920s to the present), represented by greatly varying trends in the developed capitalist countries. Vulgar political economy emerged as a result of the isolation and systematisation of unscientific elements in the theory of classical bourgeois political economy by those who tried to use them to refute the scientific discoveries f the classical school. For example, in regard to the theory of value and surplus value, vulgar economists do not recognize that the value of a commodity is determined by the labour required to produce it, and that profit is the embodiment of that unpaid labour of wage labourers which the capitalist has appropriated without compensation. To explain the sources of commodity value and profit, they suggest “factors of production”- labour, land and capital (see Theory of Factors of Production). This approach conceals the real source of value and surplus value and thus negates the fact that the working class is exploited by the capitalists. The vulgar nature of these economic theories is heightened as capitalism enters its highest and last stage – the stage of imperialism, and as ideas of scientific socialism spread among workers, and mass working-class parties appear. In this setting, alongside the methods of economic apologetics, applied in their old or modified forms, the non-economic form of vulgarisation of bourgeois political economy becomes increasingly widespread, and eventually prevails; phenomena, which are in fact outside the sphere of the economy, are cited to explain economic processes that take place under capitalism. Examples are the psychological (Austria, Britain and the USA), social and legal, new historical, biological (neo-Malthusianism), sociological (see Institutionalism), and other schools and trends. As the general crisis of capitalism set in and the world’s first socialist state appeared as a result of the Great October Socialist Revolution in Russia, thus proving the transitory nature of capitalism, the apologetical myth that the capitalist system would exist for ever collapsed. Bourgeois political economy was now vulgarised through the invention of unscientific concepts about the nature and historical trends of development in the capitalist and the socialist economies and through the elaboration of apologetical theories of state- monopoly regulation of the capitalist economy. In the 1 920s, bourgeois-reformist theories of “neo-capitalism” made their appearance (concepts of people’s capitalism, full employment, general welfare, etc.). Their emergence testified to the fact that in the new conditions bourgeois economists had to recognise the existence of acute conflicts and grave crisis processes in the capitalist economy. However, they tried to say these phenomena were accidental, and therefore remediable within the framework of capitalism. After World War 11, the contradictions inherent in capitalism became unprecedentedly acute. The formation of the world socialist system and its dynamic evolution, the new level attained by the working-class movement in the industrialised capitalist countries, and the collapse of the colonial system under the blows of the national liberation movement wrought important changes in the forms of capitalism’s ideological defences; this was expressed in the wide spread of vulgar concepts, e. g., the “transformation of capitalism” (see Theories of Transformation of Capitalism) into a kind of a non- capitalist system (the theories of consumer society, stages of economic growth, of industrial, post-industrial, post-capitalist, technetronic, super-industrial, post-civilised, programmed, post-bourgeois society, etc.). It all testified to the bankruptcy of bourgeois ideology, which is looking for more sophisticated ways to defend capitalism, because it is no longer in a position to cavalierly deny that tremendous social and economic changes are taking place in the world. What is vulgar and apologetical about the above theories is that they describe contemporary state-monopoly capitalism as a system in which, thanks to the impact of certain factors, capitalism has evolved, or is evolving, into a kind of a non-capitalist organisation of society. The theories of the convergence, hybridisation, etc., of capitalism and socialism comprise a special group of concepts in the trend of vulgar political economy (see Theory of Convergence). As the world socialist system wins new positions, and socialist ideas become more attractive to the working people in the capitalist countries, while the antagonistic contradictions inherent in the world capitalist system are heightening during the third stage of its general crisis, vulgar political economy dons a pseudo-socialist and pseudo-Marxist attire. Real socialism is counterposed by alternative concepts of market, “democratic”, and humane varieties of socialism, all of which amount to a sophisticated form of defending the capitalist system The neo-classical trend in bourgeois political economy and Keynesianism are also currents of vulgar political economy; their main purpose is to find a mechanism through which the capitalist economy can be regulated. Attempts by proponents of these theories to ameliorate the capitalist economy have all failed. Some bourgeois economists tried to find a way out of the impasse by the so-called “neo-classical synthesis”- a blend of neo-Keynesian and neo-classical concepts of reproduction aimed at “synthesising” the regulating role of the bourgeois state and the spontaneous self-regulation of capitalist reproduction through the market. The world economic crisis of 1974-75, however, proved that this variety of vulgar concepts of capitalist reproduction is utterly inconsistent. Another concept, that of “zero growth”, and a monetary theory emerged in its place, each of them offering its own highly impracticable recipe for stimulating the capitalist economy. At the same time, some bourgeois economists strongly insisted on introducing direct state planning into the capitalist economy (John K. Gaibraith); of course, this is futile, because private capitalist ownership of the means of production, capitalist competition and the aggravation of inherent class antagonisms in the capitalist economic system preclude economic planning in the interests of the working people on the national scale. Vulgar bourgeois economists are trying to adjust the apologetical dogmas of bourgeois political economy to the ongoing course of the world revolutionary process, of the aggravated general crisis of capitalism.

Reformism, in political economy, a school of vulgar bourgeois and petty- bourgeois economic thought which claims that a series of reforms can eliminate the antagonistic contradictions of capitalism, turn it into manageable economy, into a society where social justice reigns (bourgeois reformism), or ensure, within the framework of the bourgeois social system, that the latter will evolve into socialism (social reformism in the working-class movement). Reformism in bourgeois economics dates back to the time when the deeply rooted antagonisms of the capitalist way of production became obvious, and the bourgeoisie was forced by the working- class movement to compromise and make reforms (such as the introduction of legal limits to the working day) to preserve its rule. The founding father of bourgeois reformism in political economy was John Stuart Mill, the 19th century British economist. He “tried to harmonise the Political Economy of capital with the claims, no longer to be ignored, of the proletariat” (Karl Marx, Capital, Vol. I, p. 25). Reformist trade unionist ideology emerged in the early stages of the working-class movement when it was spontaneous and could not go beyond the struggle to improve the conditions of the working class within the capitalist system. Since the advent of Marxism, the bourgeoisie has employed reformism in the working-class movement to combat the surging revolutionary movement of the proletariat. In unmasking the essence of reformism in the period of imperialism, Lenin revealed the inseparable links between bourgeois and social- democratic reformism. “Reformism versus socialist revolution -is the formula of the modern, ‘advanced’, educated bourgeoisie” (V. I. Lenin, Collected Works, Vol. 17, p. 229). In the era of the general crisis of capitalism reformism pervades all basic schools of bourgeois economic thought. This is a result of the extreme intensification of the principal contradiction of capitalist society, the development of state- monopoly capitalism, the formation of the world socialist economic system, and the sharper struggle by the international working class allied with other working people against monopoly oppression and capitalist exploitation. The bourgeoisie who fear that the class struggle will be transformed into a mass revolutionary movement, have to resort to social manoeuvring on an unprecedented scale, to introduce partial reforms to keep the masses under their ideological and political control. Reformism in economics is a manifestation of the necessity of state intervention in the capitalist economy because, in particular, the market mechanism of automatic regulation has ceased to work. Since the 1930s the theoretical foundation of reformism has been Keynesianism and subsequent theories of state-monopoly regulation. The strengthening of reformism today is chiefly attributable to the fact that the building of real socialism in the USSR and other socialist countries and the non-capitalist orientation of many newly-free countries have forever ended the myth that capitalism is eternal. In this context, non-proletarian socio-economic thought tries to vindicate capitalism by exploring the conceptions of transformation of capitalism (see Theory of Transformation of Capitalism), of its “evolutionary transformation” into “neo-capitalism” (theories of organised capitalism, people’s capitalism, democratisation of capital, managerial revolution, etc.) and even into non-capitalism (Theory of Market Socialism, the theory of consumer society, Theory of Industrial Society, theories of post-industrial, technetronic, and post-bourgeois societies, “democratic socialism”, “national socialism” etc.). Their advocates reject socialist revolution, socialism, and communism as the historical future of the social development of the world, and instead postulate some “third way” which is in fact the further development of state-monopoly capitalism in the context of the scientific and technological revolution. While bourgeois reformism, which criticises individual vices of capitalist society advocates the rectification, evolution and improvement of capitalism, reformism in the working-class movement puts forward opportunist concepts of capitalism that will peacefully evolve into socialism (see Opportunism; Revisionism). The admission, essentially declarative, of the need to replace capitalism by socialism is a specific feature of right-wing socialist reformism, which is, in class terms, a petty- bourgeois school of socio-economic thought which is dominant in the socialist and Social-Democratic parties of the Socialist International. This social reformism (labourism in Britain, reformist socialism in France, Austromarxism, etc.) glosses over the conflicts of capitalism and equates the growth of the public sector in the economy of the imperialist countries to growth of social property; presuming that the state is “above classes”, it proclaims that state-monopoly regulation of the capitalist economy is socialist or, at least, leads to socialism; it represents state-monopoly capitalism as a “mixed economy” which develops in the direction of democratic and humane socialism. The technological revolution is said to lead, without class struggle or socialist revolution, to the gradual elimination of socio-economic inequality, to a society of “equal opportunity” and universal prosperity. History shows, however, that wherever reformist Social-Democratic parties have been in power, nothing has been done to crack the foundations of capitalism. A left wing is evolving in the reformist social-democratic movement which, in the context of the heightened contradictions of capitalism and under the pressure of revolutionary working class demands, gradually abandons anti-communist approaches inherent in reformism, making conditions ripe for joint action by communists and socialists against monopoly capital, for peace, democracy, and socialism. The revolutionary working-class movement and Marxist-Leninist political economy favour the struggle of the working class for economic reforms aimed at improving its labour conditions under capitalism; but they are against reformist illusions and reconciliation with the bourgeoisie, against opportunism. Communists see reforms as creating better conditions for the struggle of the working people, led by the proletariat, for the revolutionary overthrow of bourgeois power and the building of socialist society.

Relations of Production, social relations among people evolving irrespective of their will and consciousness, i. e., objectively, in the process of the production, distribution, exchange and consumption of material wealth. They are the social form of production through which people appropriate the objects of nature. In their unity with the productive forces, relations of production form a historically de fined mode of production. The totality of the production relations of a given mode of production are the economic base of society that determines the emergence and functioning of a corresponding superstructure. The mode of production is highlighted by the productive forces whose changes lead to corresponding changes in the relations of production both during the transition from one mode of production to another and within each of them. However, relations of production are not passive in relation to the productive forces, but actively promote their development by accelerating or slowing them down. In all pre-socialist socio-economic formations production relations initially stimulated the development of the productive forces, but then, at a certain stage, they became fetters on the latter’s growth and were abolished by a social revolution or were replaced by other, more progressive relations of production. It is only with the transition to the communist mode of production, in particular to socialism as its first phase, that it becomes possible to maintain the correspondence between the productive forces and relations of production in a conscious, consistent and dynamic way. This does not exclude contradictions between them, but these contradictions are not antagonistic and are resolved in a planned way within the frame work of the given mode of production. Marxism-Leninism was the first theory to provide a scientific analysis of production relations and their place in social life. The dialectic of the interaction of the two aspects of the mode of production is revealed in the law of correspondence of relations of production to the nature and level of development of the productive forces. Each historically distinct mode of production has its own totality of production relations forming a single, integral system. The essence of a given mode of production and the basis of its economic system is formed by relations of the ownership of the means of production. They characterise the way, specific to a given system in which direct producers are linked to the means of production, and the social form of appropriation of material and spiritual benefits. The relations of ownership of the means of production determine the social structure of a given society and the objective aim of the development of production, as well as the nature of all other production relations. Public ownership of the means of production is the base of the economic system of the communist mode of production. It expresses the direct combination of associated producers with the social means of production, excludes the exploitation of man by man, and subordinates the development of production to the interest of the well-being and free, all-round development of all members of society. Socialist ownership of the means of production takes the forms of state (belonging to all the people) and collective farm- and-cooperative property, which explains why two friendly classes exist in the social structure of socialist society – the working class and the cooperative (collective-farm) peasantry. In the first phase of communism, the property which trade unions and other social organisations need to implement their statutory objectives is also socialist property. The system of production relations also includes relations of distribution, exchange and consumption. Alongside the relations which are specific to a given mode of production, there are relations which are typical of all socio-economic formations (e. g. division of la bour, cooperation) or several modes of production (e.g. commodity-money relations). However, they do not determine the socio-economic nature of a given system, but on the contrary are wholly determined by it. For instance, commodity- money relations under socialism have a new, socialist content. In any society, relations of production are manifested as economic (material) interests. These are by their nature objective and dependent on one’s position within the system of social production. Consequently, each mode of production has its own, special system of economic interests. Under socialism this system is marked by unity, harmony between the vital interests of society, classes, production collectives and each worker, and the leading role of general economic interests (those of the whole people). Objectivity is the common feature of production relations in all socio-economic formations. At the same time, in pre-communist modes of production they evolve without the producers being aware of the fact, and function spontaneously. The communist mode of production involves a fundamentally different, planned way in which the entire system of production relations functions. Society is enabled to foresee the results of joint efforts and to manage the development of social production, as well as improve its production relations via knowledge of the objective laws and tendencies. This represents a qualitatively new stage in the people’s dominance of both the elements and social relations. The improvement of socialist relations of production and their law-governed evolution into communist relations of production is an objective process of building communism.

Relative Deterioration of the Condition of the Proletariat, deterioration of the condition of the proletariat compared to the enrichment of the bourgeoisie. Like the absolute deterioration of the condition of the proletariat, it is a direct consequence of the operation of the basic economic law of capitalism and of the general law of capitalist accumulation. The declining working class’s share in the national income and the increase in the rate of surplus value as a result of the exploitation of the workers, in the aggregate social product and in the national wealth are the concrete indicators characterising the relative deterioration of the proletariat’s condition. Lenin pointed out that in capitalist society there is “the relative impoverishment of the workers, i. e., the diminution of their share in the national income…. The workers’ comparative share in capitalist society, which is fast growing rich, is dwindling because the millionaires are becoming ever richer” (V. I. Lenin, Collected Works, Vol. 18, p. 436). Thus, the working class’s share of the national income of Britain fell from 42.7 per cent in 1891 to 26 per cent in 1963. In the United States the working class accounted for 39.3 per cent of the national income in 1909 and only 24.4 per cent in 1965. Capitalist apologists using all sorts of falsifying methods try to conceal actual profits of the capitalists and thus reduce on paper their share in the national income. At the same time, when determining the share of the working class in the national income, they do not take into account the taxes workers pay on their wages. Their wages are taken together with the salary of highly paid civil servants and managerial staff and with incomes of other hired workers. Thus the share of the proletariat in the national income is considerably exaggerated. Bourgeois economists claim that “incomes revolution” has recently taken place in the capitalist countries (see Theory of Revolution in Incomes) in other words, the incomes of the workers and capitalists are equalised. However, facts irrefutably prove that under modern capitalism the gap between the living standards of the capitalist class and that of the proletariat becomes wider and wider, The relative deterioration of the position of the proletariat is the most important factor in the aggravation of class contradictions in capitalist society.


1. Kozlov, G. A. (1977). Political Economy: Capitalism. Moscow: Progress Publishers.
2. Kozlov, G. A. (1977). Political Economy: Socialism. Moscow: Progress Publishers.
3. Volkov, M. I. (Editor). (English translation 1985). A Dictionary of Political Economy. Moscow: Progress Publishers.
4. Malinin, V. A., N. I. Sorokoumskaya, V. N. Yermolayeva, and T. F. Latynskaya. (1974). The Fundamentals of Marxist-Leninist Philosophy. Moscow: Progress Publishers.
5. Rahman, F. https://imperialismandthethirdworld.wordpress.com/2015/08/17/brief-partial-and-necessary-critical-reviews-of-some-of-the-stars-of-american-left-michael-hardt-antonio-negri-richard-wolff-stephen-resnick-noam-chomsky-and-chris-hedges-by-fazal-rahman-phd/
6. Chomsky, N. http://www.chomsky.info/interviews/20130312.htm
7. Chomsky, N. https://www.youtube.com/watch?v=QrT5xtDSDBo
8. Szymanski, A. (1979). Is the red flag flying? The political economy of the Soviet Union today. London: Zed Press.

Brief Bio

Dr. Fazal Rahman is an interdisciplinary researcher and writer, with background in many areas of biological and social sciences. He has lived and worked in many countries, like Pakistan, Brazil, USA, Lebanon, and Zambia, as a scientist and head of research and development programs and centers. He has done in-depth and extensive studies on Marxism, Leninism, phenomenology, existentialism, political economy of capitalism and socialism, political economy of US and former USSR, technocracy, psychology, mass psychology, epigenetics, and genetics, etc.


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