"The basic problem of the economy is scarcity, if there were no scarcity there would be no need for economic science."
The father of political economy
Adam Smith was born in 1723 in Scotland. His father, judge and customs officer, died at birth. His mother raised him at Kilcardy. At the age of fourteen he entered the University of Glasgow, where he made contact with Francis Hutcheson, who had also been a professor at David Hume. Hutcheson had a great influence on Smith and owes him in large part his ideas on political freedom.
In 1740, Adam Smith won a scholarship to Oxford, spending the following years at Balliol College. Oxford was in decline and, although he received little formal education, he made good use of his time and read a great deal.
In 1747 he returned to Kilcardy and, shortly thereafter, began teaching at the University of Edinburgh. A few years later he was appointed Professor of Logic at the University of Glasgow, moving to the Chair of Moral Philosophy when it became vacant in 1752.
His classes in Glasgow led to one of his main works, The Theory of Moral Sentiments, which was published in 1759. This book was very successful and ended up in the hands of Charles Townshend, the politician, who was so impressed that he offered to Adam Smith as tutor to the young Duke of Buccleuch. Smith accepted the offer, resigned from his professorship in 1764, beginning a great journey around Europe with the Duke.
In Toulouse he developed part of his Glasgow conferences; This was the beginning of his main work, An Inquiry into the Nature and Causes of the Wealth of Nations. He returned to Britain in 1766, retiring to Kilcardy to review and finish his work. It was finally published in 1776, and earned him great fame. The book was essentially a study of wealth creation. In itself it represented nothing new, since the issue had already worried Mercantilists and Physiocrats, but, while the former believed that wealth derived from a favorable trade balance and the latter from the land, Smith argued that wealth it came from work.
It started with the celebrated job description that increases wealth because it increases the skill of the workforce, saves time, and allows the use of mechanical devices. The limits of the division of labor are determined by the size of the market and the "capital stock."
He developed the problem of economic growth in his famous Book IV, in which Smith advanced the thesis that freedom within a society would lead to the maximum wealth possible. In many ways, the argument is based on The Theory of Moral Sentiments, because the social harmony it expounded depended, in many ways, on the delicate balance of man's conflicting motives. The quest to satisfy self-interest would benefit the whole of society and be limited by self-interest in others. Producers try to obtain the maximum benefit, but to do so, they must produce the goods that the community wants. Furthermore, they must produce them in the right quantities, otherwise an excess would lead to a profit and a low price,while too small an offer would lead to an increase in the price and ultimately an increase in the offer.
The delicate mechanism of the "invisible hand" also came into play in the production factors market, ensuring harmony whenever the factors sought the maximum possible income. The right goods would be produced at the right prices, and the community as a whole would obtain as much wealth as possible while free competition prevailed; however, if free competition were restricted, the "invisible hand" would cease to function and society would bear the consequences.
The book's immediate success was due to its brilliant systematization of economic thought around the central concept of markets, and the intellectual justification it provided to new industrialists who were interested in ridding Britain of mercantilist controls.
In a short time, The Wealth of Nations entered the shelves of politicians and economists providing the code of economic behavior that served Britain for most of the next century, and whose brilliant prospects were only tempered by the gloomy predictions of the reverend Thomas Malthus and David Ricardo. Adam Smith "persuaded his own generation and ruled the next."
Political Economy: science that deals with the development of social relations of production. Study the economic laws that govern the production, distribution, exchange and consumption of material goods in human society, at the various stages of its development. Political economy is a historical science. It reveals the conditions and causes of the origin, evolution and change of some social forms of production for others, more progressive. Political economy borders on the fundamental economic and political interests of men, of the various classes of society and, in antagonistic class formations, is the field of an acute class struggle.
This is why there is not and cannot be a single political economy for all classes. There are the bourgeois political economy, the proletarian political economy, and the political economy of the middle classes: of the petty bourgeoisie. As the relations of production are relations between men and are formed in the process of production of material goods, the political economy studies and unravels the laws that preside over the development of such relations in close connection and reciprocal action with the productive forces., forces that, in unity with the relations of production, constitute the mode of production (see) of a certain economic-social formation (see).
Political economy emerged at the time of the slave regime as a science dealing with the administration of the domestic treasury. This initial meaning is due to the name of science, derived from the Greek words "politeia" and "oïkonomia" ("politeia": social organization; "oïkos": house, estate; and "nomos": law). Political economy began to develop as an independent science when the capitalist mode of production was born. That period corresponds to the first attempts to theoretically interpret and elucidate various phenomena of capitalism.
In the 16th-18th centuries, the current of economic thought and political economy known as Mercantilism arose and developed (see). Mercantilists, focusing their attention on the superficial phenomena of the economic life of society, attributed a decisive meaning to the sphere of circulation, to commerce, to money, as the sole source of wealth.
In the period when the capitalist mode of production was formed (see), when the bourgeoisie was still an ascending class and played a progressive role in the fight against feudalism, when the contradictions between the bourgeoisie and the proletariat had not yet developed, the classical or scientific bourgeois political economy arose and was structured.
Its founders, W. Petty (see), A. Smith (see) and D. Ricardo (see), initiated the scientific investigation of the capitalist mode of production, made many important discoveries in elucidating the laws that govern social production and the distribution of material goods. However, the bourgeois limitation and the insufficient development of capitalism prevented the classics of bourgeois political economy from discovering the exploitative essence and historically transitory character of capitalism, exposing its antagonistic contradictions. From the moment the class struggle of the proletariat began to threaten the existence of capitalism, classical bourgeois political economy gave way to the vulgar, that is, unscientific, political economy that has dominated the capitalist world to the present.
The economy is born from the time man realizes that he cannot get everything he wants. Objective or Marxist definition: (It comes from Federico Engels) It is the science that studies the production, distribution, change and consumption of material goods that satisfy human needs.
Subjective or Marginalist Definition: (Lionel Robbins).
It is the science that is in charge of the study of the satisfaction of human needs, through goods, which, being scarce, have alternative uses among which one must choose.
The basic problem of the economy is scarcity, if there were no scarcity there would be no need for economic science.
Economic science is a science, due to its objectivity and the use of the scientific method. Objective: The economist analyzes economic phenomena as it happens, without adding their season. It is a social science because it studies man in his social environment and acts directly where society.
Adam Smith wrote the "Wealth of Nations" in 1776. The economy is divided into two major branches Microeconomics; that arises in 1776 with Adam Smith and his book. It is the one that studies the decisions of households, companies and how they interact with the market. Macroeconomy; It is the one that studies the great aggregates of the economy, it emerged in 1936 with the book "General Theory on Occupation, Interest and Money" John Mayart kesnay eg unemployment, globalization, etc.
Economic facts and acts: as we know, men want a large slice of the economic cake with the best flavor, best pasta, quality, etc. Unfortunately, we cannot obtain everything that we want in the quantities that we desire, attitudes and means are required to obtain the satisfactory ones, we can classify them as economic acts and facts.
Economic fact: They are those that are related to activities that men develop not in isolation, but as members of human groups, which allows us to characterize them as social. // They are those that the same men deploy in their efforts to try to be means of satisfaction that they cannot obtain for free.
The economic facts of producing, distributing, and consuming occur spontaneously without men really being aware of what they do or of the various processes that they involve. But when man becomes aware of his needs and how to satisfy them, he is in the presence of an economic act.
Economic act: man's conscious acts to satisfy his needs.
Once the man is aware of his needs, he faces a problem: how is he going to do it? And it is in the presence of an economic problem the basic problems of society are: what is going to be produced? How is it going to be produced? (What resources do we have) How much will it be produced? Who will it be produced for?
An economic activity is the sum of economic acts.
Subjectivist Current: says that the basic thing is the idea and from there the matter develops.
Characteristics:
- It is based on the principles of formal logic (identity, principle of non - contradiction and excluded third). Follow an inductive method (particular - general). It is based on a subjective theory of value, which is founded on the concept of marginal utility. It is based on idealism. Consider many phenomena as dice.
Neoliberalism
Political and economic system that proclaims a return to the laws of the market. He affirms that the economy must pass into the hands of private initiative to modernize or reduce the size of the state. The latter must be replaced by the market, with which the government has a minimal intervention: maintaining order and security, guaranteeing political and civil rights, orienting foreign policy towards opening borders and creating attractive conditions for foreign capital investment. With the fall of socialist regimes in the late 1980s and early 1990s, the old ideas of liberalism revived; the idea that a deployment (of ideas) of individual forces, without the brake of the state, will lead to the collective well-being or common good reappeared.
Under this regime, everything becomes merchandise, including health and education services that are subject to the laws of supply and demand.
Its representative is Milton Friedman with his book "The Neoclassicism".
Characteristics:
1. Opposition to collectivism.
2. The search for personal interest at the risk of the product - consumer.
3. Look for the priority of personal interest.
4. It is based on the term Lezzefer (let do, let pass).
5. Ban monopolies.
6. Strength is regulated by Lezzefer.
7. Union and end for society (represents inequality).
8. Automation.
Elements of credit
Loan.- It is the physical or moral delivery of a good for a certain amount of money that one person makes to another.
Term.- is the time that exists between the delivery of a good and its return.
Trust.- It is the belief that the good or the money will be delivered in terms of the provisions.
Credit Functions
Apply capital.- Capital can be used in a more productive way so that it is not idle.
Aid for production and trade.- The Credit helps so that both merchants and industrialists have the possibility of having a sum of money available at the best time.
It influences the fixing of the price in the market.- As there are more investments in the market, the supply and demand of the goods and, consequently, their price, are modified.
Credit Titles
It is the document necessary to exercise the right set forth in them and classified into:
Bills of Exchange.- Document where a drawer orders the drawee to pay a sum of money to a third person called beneficiary.
Promissory note.- It is the unconditional promise to pay a sum of money.
Check.- The bank is obliged to receive money from the account holder and to pay the checks that it issues with its balance.
Bank System
The banking system of a country is the set of institutions and public and private organizations that are dedicated to the exercise of banking and all the functions of which they are inherent, that is, the banking system is the set of banks and auxiliary organizations.
Central Banking and Multiple Banking
The Central Bank is the base of the entire banking system of a nation, it is in charge of applying all the measures of a monetary and credit policy necessary for the proper functioning of the national economy. In the case of Mexico, the central bank is Banco de México.
Central Banking Functions
• It is the only one that can issue banknotes (it has a monopoly on money issuance)
• It regulates circulating money
• It combats inflation
• It administers public debt
• It is in charge of issuing interest rates for banks that operate in the country.
• Sets the legal reserve.
• Manages the country's monetary reserves.
• Government financial representative before other international financial organizations.
Multiple banking became necessary because the banking system carries out short-term operations, that is, multiple banks have savings, deposits, financial, mortgage, fiduciary and capitalization departments. This allows you to capture more resources from the public.
Stock exchange and brokerage houses
Stock Exchange: Institution generally of private capital organized as a corporation, which finances its activities with its own capital resources and with income that it obtains from the registry of securities and from the participation of broker commissions.
Brokerage Firms: They are private institutions linked to banks or the main financial groups in the country that operate through a concession from the federal government and whose main purpose is to assist the stock exchange in the negotiation of various types of securities.
Crisis theories
Monetarist theory
The inflationary behaviors of the economy implies: the irrational use of the productive factors, distortions in the distribution of income, stimuli to speculative investment, discouraging productive investment. These factors lead to currency devaluation and ultimately to crisis.
Shumpeterian theory
This is the model of the interpretation of cycles through technological innovations expressed by Joseph Shumpeter, for him, the real cause of the cyclical and critical nature of the capitalist economy lies in technological innovation. It starts from the neo-classical concept of the balance that supposes full use of the productive resources. When there is an imbalance, entrepreneurs have no incentive to innovate. Economic growth occurs simply because the population grows and capital increases but without real innovations, but if at a certain moment the entrepreneurs decide to make technological innovations in order to obtain greater profits, it causes an imbalance and in the short term there is an increase in the demand for productive equipment, which stimulates production and creates overproduction,which causes a drop in prices and profits, precipitating crises, that is, the boom lasts a short period, as long as innovation lasts.
Keynesian theory
This Economic model interprets the economic cycle through the relationship between investment and consumption, so the possibility of economic growth depends fundamentally on new investments, which in turn are conditioned by:
• The marginal efficiency of capital or expected profit of new investments that depends on the price of raw materials and the expected return of the capitalist.
• The interest rate. If there is a high interest rate in banks, investors are not interested in making new investments, so they prefer to have their money in the bank.
This theory affirms that when income increases, a smaller portion is destined for consumption and more for savings, which changes the forecasts of the capitalists, since they expect demand to increase as a consequence of the increase in income.
Marxist theory
Crises for Marx arise as a possibility since individual producers exchange the products of their labor with each other through a developed market where there is the mediation of the currency or general equivalent.
This means that crises are manifested in market economies where exchange exists, when there are difficulties for exchange, the crisis arises. The crisis occurs because certain goods are not sold on the market at the given time and there is overproduction in relation to solvent demand. This crisis is called overproduction or overconsumption.
The Economic Process
It is the path that human beings travel to satisfy their needs, it begins with production and ends with consumption.
Production
It is the activity directed to the elaboration or manufacture of goods and / or services.
Distribution
Activity that makes the goods and services produced available to consumers in the precise quantity and time.
The company
Definition
The production unit in the economic system (company), has as its main objective the maximization of profits. The main function of the company is to adequately combine the elements of production, that is, they employ labor, providing them with the equipment and also work instruments, to proceed with the preparation of inputs.
In the case of companies in the tertiary sector, the result of the production process is not tangible, that is, they are services.
When the factors of production are articulated in the most adequate way, they result in a good or service, we will call this the production function, which explains the functional relationship between the quantity of the product obtained and the quantities of the various elements necessary to obtain it.
Productivity
It is the coefficient of dividing the quantity of product by the quantity of the factor used (labor, land, capital).
Legal Framework of the Company
Every company or mercantile society is a group of individuals who pursue profit and who are recognized and protected by law, this is known as Legal Personality.
Species and Classification of Companies
• Company in collective name.
• Simple limited partnership.
• Limited liability company.
• Anonymous society.
• Limited partnership for shares.
• Cooperative Society.
Legal personality of companies
Every mercantile company has a legal personality different from the natural persons that comprise it, said personality derives from the fulfillment of the requirements that the law itself establishes for the constitution of companies, these requirements are:
• Adoption of any of the forms provided for in the first article of the law, the fact of complying with this requirement gives the company a commercial character.
• Constitution of the company in a public deed before a notary, any modification to the articles of incorporation must also be done in the same way.
• Registration of the Company in the commercial register. The latter is the requirement that really gives society its personality a space in my mind. For a moment it navigated the definition and the utility that what we call "economic policy" has for theory and countries in its conduct. Without a doubt a widely complex and difficult term not only when debating about it but also when designing and executing it.
Now in a reading by the economist Richard Musgrave who has works on theories of the public sector, the latter being responsible for the management and monitoring of economic policy, the aforementioned author points out among the importance of the organization the following: 1) a public sector that is responsible for providing social assets; 2) a public sector that guarantees income distribution and 3) a public sector that consolidates and guides macroeconomic stability.
All this making clear that the market by itself is not regulated and that an efficient and effective public sector contributes to the conduct of that market. Now, for a public sector to transmit confidence to society that its economic policy is aimed at solely social and non-partisan and individualistic objectives, it must always present a coherent and consistent program over time, as well as generating projects where the final objective is to satisfy collective needs while safeguarding social welfare, which is the ultimate goal of all economic policy.
Political economy, science of the social laws of economic activity
The object of political economy is therefore the social laws of production and distribution. Political economy is concerned with the study of social laws regarding the creation of goods and the way in which these are made available to consumers, that is, to men who, with the help of these goods, satisfy their individual needs and Collective. Human activity is constantly repeated and that is why we speak of production processes and the distribution of the economic process.
In the economic process certain more or less stable relationships are established between men, that is, certain social relationships, social relationships are a defined type of constant reaction (that is to say that is constantly repeated) of some men with others, through an activity of a given type. relations can be established between citizens, rulers and ruled, political and economic power etc.
Concepts
- Way of production.- Way of obtaining the material goods necessary to man for productive and personal consumption. The mode of production constitutes the unity of the productive forces and the relations of production, the change in the mode of production causes changes in the social regime, and serves as the basis for the development of the productive forces and the relations of production, of all production social.Economic-social training.- Human society in a certain phase of its historical development characterized by the mode of production and by the political and legal superstructure, by the forms of social consciousness, one and the other determined by said mode of production. The concept of social economic formation is due to Marxism and constitutes the cornerstone of the materialist conception of history,provides the key to explain the course and development of social relations between men in the process of production, distribution and consumption of material goods. Economic structure.- Class society ordering; set of social relations of production corresponding to a certain degree of development of material productive forces. Productive forces.- Instruments of production through which material goods are produced: men, who set in motion the instruments of production and carry out production of material goods, thanks to a certain experience and work habits. The productive forces, that is, the means of production, (instruments, machines, apparatus, raw materials, etc.) and the labor force of man,they are always absolutely necessary elements of work. The life of society depends on the productive forces at its disposal and the modes of production in which it is used. Hence the importance of PLANNING the productive forces, that only socialism can achieve its best fruits. Production relations.- Set of economic relations established between men, regardless of their conscience and their will, in the production process., change, distribution, and consumption of material goods. The relations of production correspond to a necessary part of any mode of production, social production can only occur when men come together to work together, to establish an exchange of activities.Base-superstructure.- The mode of production, that is,the productive forces and the relations of production, constitute the economic base, the foundation of society, with the changes of base, they change more or less rapidly, the superstructures that is, the political regime, religion, philosophy, morality, science etc.
Political economy
1.- Define the concept of social productive force
The social productive forces are formed by the means of production and, first of all, the work instruments created and built by society, on the one hand and on the other the men who produce material goods.
It is precisely men who, thanks to their production experience, perfect, invent machines and expand their own scientific knowledge.
The productive forces constitute the most dynamic element of production; they are continually modified because men not only continually hone the tools of work, but they accumulate productive experience.
It is that social product that becomes a collective product of different members who participate in the manipulation of materials to different degrees, either far or near the subject. With this we see that in order to be productive it is not necessary to be a part of the process but rather to be an organ of the collective worker or to fulfill any function. It is also that force capable of being part of a production process and that can generate a good.
2.-What is the relationship between the social productive forces and the natural productive forces?
The relationship occurs because the productivity of work depends on the natural conditions and the environment in which they are carried out. The external physical conditions are divided into two: natural wealth in the midst of subsistence and natural wealth in the midst of work, natural products form part of the natural basis of the social division of labor and promote man because of the multiform conditions is the which are to satisfy their needs as well as the need to socially direct the natural force, economize it and appropriate it on a large scale for the work of man.
4.-What is the difference of real subordination of the work process under capital with respect to formal subordination
In the same way that the production of surplus value can be considered as a material expression of the formal subsumption of labor in capital, the production of relative surplus value can be estimated as the real subsumption of labor in capital. Be that as it may, the two forms of surplus value, the absolute and relative, if one wants to consider each one for itself as separate existences (and absolute surplus value always precedes the relative one) correspond to the two separate forms of subsumption of capital or two separate capitalist forms of production, of which the former is always the precursor of the latter, although the more developed the latter may in turn form the basis for the introduction of the former into new branches of production.Therefore the difference between labor formally subsumed into capital and the preceding way of employing labor is more clearly revealed when the volume of capital employed by the capitalist increases.
5.- What do we call specifically capitalist mode of production?
Specifically capitalist production ceases to be a simple means of producing relative surplus value. It now becomes the general, socially dominant form of the production process. As a particular method for the production of relative surplus value, it only operates: first, as it seizes industries that until then were only formally subordinated to capital, that is, in its propagation; second, as changes in production methods continually revolutionize industries that have already fallen into orbit.
If the worker needs all his time to produce the means of subsistence necessary for the sustenance of himself and his offspring, he will have no time left to work for free for the benefit of third parties. Without a certain degree of productivity at work, there will be no such time available for the worker; Without this excess time there will be no surplus labor, and therefore no capitalist class. A certain high level of labor productivity, then, is generally a condition for the existence of capitalist production, as well as of all previous modes of production in which a part of society worked not only for itself, but also for everyone else.
6.- Explain the difference between the value of labor power and wages
If we look at the case of the capitalist, we see that he wants to obtain precisely the greatest possible amount of work for the least possible amount of money. Therefore, from a practical point of view, he is only interested in the difference between the price of labor power and the value created by its operation. But he tries to buy all the merchandise at the lowest possible price and that is why, in all cases, he believes he finds the reason for his profit in the simple trickery of buying below value and selling above it. Hence it does not dawn on him that if there really were such a thing as the value of labor and he actually paid that value, there would be no capital, his money would not be transformed into capital.
The effective movement of wages shows phenomena that seem to demonstrate that the value of labor power is not paid but that of its function, labor itself. We can reduce. these phenomena to two great classes. First: variation of salary when the extension of the working day varies. It is as if the conclusion was reached that the value of the machine is not paid but that of its operation, since it costs more to rent a machine for a week than for a day. Second: the individual difference between the wages of various workers who perform the same function. This individual difference is also found, but without illusions, in the system of slavery, in which the labor force itself is frankly and openly sold. Only the advantage of an above-average workforce,or the disadvantage of another that is below that average, in the slave system falls on the slave owner.
7.- Why is it incorrect to speak of the value of labor power
Because in reality, what is due is not paid, and the worker in a workday deducts his salary in less than the time established by the capitalist so that the rest of the workday generates a surplus value.
8.- What is the difference in work by time and in piecework wages?
Time salary under capitalism refers for example: when the capitalist pays the worker 10 dollars a day, and the worker works 10 hours; then, the average price of one hour of work will be 1 dollar. If the workday is extended to 12 hours, the price of the hour of work will be reduced to 83 cents.
The time wage constitutes in the hands of the capitalist a means to intensify the exploitation of the workers. While the piece rate or piece rate is the form of wage whose magnitude depends on the quantity of products manufactured or pieces manufactured by the worker in a given unit of time.
To set the payment rates for each piece, the following is taken into consideration:
a) the salary for time based on a day.
b) The number of pieces that the most skillful and strongest worker can manufacture in one day.
Time salary: increase in surplus value by increasing the working day.
Piecework salary: this type of salary allows the quality of work to be monitored through the product. The capitalist pays for the product of regular and superior quality. Poor quality product is not paid. This form of salary increases the intensity of the worker's work, since he strives to do more in order to earn more money.
9.- Define the concept of social reproduction
Society cannot stop producing since the cessation of the production of material goods would cause its extinction. For this reason, the process of production of material goods must be continuous, that is, it must repeat the same phases each time. This process of production of goods that is constantly and continuously repeated is called social reproduction.
10.- What does Marx understand by simple reproduction?
The reproduction process is carried out in any society. Under capitalism, the motive for reproduction is the greed of capitalists to obtain surplus value.
In the process of capitalist reproduction, the surplus-value that the capitalist owns is produced. If the capitalist uses all the surplus value for his personal needs, it is a simple reproduction. Suppose a capitalist has anticipated a capital of $ 200,000 (160,000 of constant capital and 40,000 of variable capital). If the share of surplus value is 100%, production would import $ 240,000 in the event that all the constant capital enters the value of the product (160,000c + 40,000v + 40,000p = 240,000). These $ 240,000 consist of the anticipated $ 200,000 and the $ 40,000 of surplus value originated.
Since in simple reproduction all surplus value is used for the personal consumption of the capitalist and his family, the production phases will be carried out the following year on the same scale. The same will happen in the following years.
11.-What is capital accumulation?
In the first phase of the development of capitalism the capitalist used all surplus value in his personal needs. The capitalist then exploited a small number of workers and sometimes worked himself. But when the capitalist companies were enlarged and the employer began to exploit hundreds and thousands of workers. Suppose a capitalist employs 1,000 workers, to whom he pays 2 million dollars each year. The workers produce for capital 2 million of surplus value per year. Now the employer no longer uses all the surplus value to satisfy his personal needs, but only a part of it. The part of the capital gain is spent on increasing production, to acquire more machines and raw materials, to hire more labor. In this case it is an accumulation of capital.
12.-Explain the theory of abstinence
Marx pointed out that the capitalist reduces his needs by "lending" the worker the instruments of labor instead of eating himself the steam engines, the railways, the fertilizers, etc.
It is the torturing sacrifice of the capitalist.
However, it is known that this theory only tries to justify capitalism and capitalist exploitation. In reality the accumulation of capital and the amount of said accumulation do not depend on the abstention of the capitalist but on the exploitation of the workers.
13.-What do you understand by organic composition of capital?
Marx called the organic composition of capital the ratio between cc and v, that is, the composition of capital according to value, since it is determined by the technical composition of capital and reflects the changes that this undergoes.
Therefore, the organic composition of capital is the ratio c: v. For example if the capital is 800c + 200v, the organic composition will be 4: 1.
The organic composition of capital only changes under the influence of changes that occur in the technical composition.
With the development of capitalism and the increase of capital, the accumulation of capital unceasingly increases its organic composition.
The growth of the organic composition of capital is demonstrated by the fact that with the development of production the quantity of raw materials, machines, instruments increases more than the quantity of work used in said production. For example, if the organic composition of capital was at the beginning of 1: 1, it subsequently became 2: 1, 3: 1, etc.
14.- Explain how the industrial reserve army is produced
The displacement of the workers from the production process leads to the capitalist countries forming armies of the unemployed.
The main cause of the formation of the industrial reserve army is the increase in the organic composition of capital, since as variable capital decreases relatively, it results in a progressive reduction in the rate of incorporation of labor into the economy. production; as a consequence the number of workers who cannot find application to their work increases. A part of the working class is "surplus" with respect to the demands for capital accumulation. In addition there are other factors that contribute to the growth of forced unemployment such as:
a) prolonging the working day and increasing the intensity of work. Capitalists take advantage of the existence of the army of the unemployed and force those who have jobs to work for 2, for 3, etc., this increases the industrial reserve army.
b) The dissemination of the work of women and minors. In such a case, the use of technical resources and the simplification of labor processes makes it easier to incorporate women and children into production, whose work is paid cheaper, leaving the adult workers unemployed.
c) The ruin of small producers. As capital accumulation occurs, the ruin of small-scale peasant producers and artisans intensifies, which will swell the ranks of the army of the unemployed.
Note: Capitalism needs the industrial reserve army, labor to use it and thus increase the exploitation of the working class (increasing labor intensity).
Money theory
The MDM form is the form of commercial exchange.
The DMD´ form is the most developed form of capitalism.
It appears as a means of payment fictitious money, the banknotes only contain a nominal value but not a real value. Accumulation means and world money are: the dollar and gold in remote cases other currencies.
The price of gold is a function of merchandise, gold can be a means of payment but not necessarily circulation. Central banking is born and supports all banknotes based on the amount of gold.
The function of the central bank so that the DMD function can be given is that the circulation is agile. You are not interested in the means of payment, you are interested in the means of circulation. Operation of the circulation medium, reproduction implies profitability. By devaluing the currency, it may affect or benefit some producers.
Currency crises:
• Depends on production, when it increases and the rest remains constant • Autonomous does not depend on production (inflation) inflation is resolved when production increases. They are recurring since financial services and commerce do not produce.
As the process of capitalist reproduction takes a cyclical and upward spiral shape, continually expanding. The process of capitalism involves a process of production, it is divided into a process of work and valorization, the basic purpose is to value the value, it becomes a central basic goal to value the value. In the circulation process there is a change in DMD´ and surplus value is realized, the work process is created and crystallizes in the exchange (circulation) and then there is a consumption process. So there is talk of a process of reproduction.
The capitalist has two ways left:
1. Reinvest the same amount in the process of simple reproduction2. It uses its surplus to reinvest twice to buy twice the means of production and labor power, that's when it becomes capital, transforming the valuation process into a cyclical process.
The credit accompanies the process of reproduction and value valorization. The accumulation implies a hoarding until a quantity is collected and its plant is expanded.
• Circulation medium.- It is one that is used to drive or speed up the economy.
• Payment method.- It is the one that is used as a medium of exchange, the one that makes exchange possible in a capitalist society, such as money.
• World money.- It is the general equivalent applicable to all merchandise as a medium of exchange, since the general equivalent is the equivalent value of all merchandise on the market.
What is a work process.- The work process is an abstract work that creates use values through concrete work, it is a transforming activity. In the abstract process values and values of change are created by means of abstract work, wasting of social energy. The elements of the work process are the division of labor and cooperation, the purpose of which is to increase productivity and value valorization, making work a simple activity, and with the help of machines even easier, and therefore accepting Child and female labor, here the worker becomes very susceptible to exploitation, since his activity can be carried out by anyone.
What is the process of valorization.- It occurs when in the working day, in a part of it called the necessary working day, the worker produces a value equivalent to the value of his labor force, but during the same working day there is a time of excess work that is called excess work where it creates more value for the capitalist for free. The elements that comprise it are the creation of value and the purpose is to create exchange goods for the accumulation of capital.
Constant capital and variable capital.
Constant capital, it is called that because its value remains constant during the production process, is the capital invested in means of production.
Variable capital is the capital invested in the labor force, labor is what gives value to commodities.
Concepts
- Monetary crisis.- They affect the entire economy, a devaluation occurs first, it is when the monetary circulation increases and there are no reserves to support it., that of Marx is a very good monetary theory. Monetary System.- This depends on the world market. However, each country has its own system which must be guaranteed by the economic reserves they have. Devaluation.- It is when the advent of a monetary crisis, is what the state regularly does is devalue its currency, which means the reduce their ability to exchange, purchase and therefore of value against other world currencies.
Most of the texts that speak of Marx's theory of value, both its defenders and its detractors, lack the wealth of detail, rigor, and order present in Marx's text. Confusion, darkness and speculation predominate in those texts. My method of exposition is different because I follow Marx's text directly, I speak with his words, and I do not skip the necessary steps in the evolution of reasoning.
I accompany the reader throughout the text, I reduce the route, and I indicate the logical, philosophical, anthropological and phenomenological aspects present in its different parts. If the reader carefully and rigorously studies my work, then he will be able to study Marx's text directly with relative ease. According to Marx himself, the most difficult part of Capital is in its first chapter, that is, in the exposition of the transformation of merchandise into money. And this is what this work is about.
Exchange value
Appearing. Marx's elaboration of the concept of exchange value is divided into two phases: first he exposes how the exchange value appears at first sight, and then he exposes how it appears when we see it more closely.
And on closer inspection, Marx shows us that exchange value is a mode of expression or phenomenal form. Later I will explain what is a mode of expression or phenomenal form.
First phase. The exchange value appears first as the proportion by which the use values of one type are exchanged for those of another. But as this proportion varies with time and place, an exchange value intrinsic to the merchandise appears as a contradiction in the adjective. Let's illustrate this idea. It is about imagining a market where silk is exchanged for wheat, iron for paper, gold for shoes, etc. But regarding the proportion in which these use values are exchanged, the following occurs: in one place 1 meter of silk is exchanged for 2 kilos of wheat, but in another place 1 meter of silk is exchanged for 3 kilos of wheat; Today 1 meter of silk is exchanged for 2 kilos of wheat, but tomorrow in the same place 1 meter of silk is exchanged for 1 kilo of wheat.As the change value of 1 meter of silk changes with place and with time, thinking that this silk meter has an intrinsic change value appears as a contradiction in the adjective.
Since experience tells us that exchange value is a pure external relationship between use values, it has nothing to do with immanent or intrinsic properties. This is what the exchange value looks like at first glance.
Investigations into the Nature and Cause of the Wealth of Nations by Adam Smith.
Introduction and Plan of the Work
The annual work of each nation is the fund from which all the supply of necessary and convenient things for life is derived that the nation consumes annually, and which always consist of the immediate product of that work, or what is bought with said product to other nations.
Consequently, the nation will be better or worse equipped with everything necessary and comfortable that it is capable of obtaining according to the greater or lesser proportion than that product, or what is bought with it, save with respect to the number of people who consume it. In any nation, that proportion depends on two different circumstances; first, of the skill, dexterity and judgment with which the work is usually carried out; and second, of the ratio between the number of those who are employed in a useful job and those who are not.
Whatever the soil, climate or territorial extension of any particular nation, the abundance or scarcity of its annual supply always depends, in each particular case, on these two circumstances. Furthermore, the abundance or scarcity of this supply seems to depend more on the first circumstance than on the second.
Among the wild nations of hunters and fishermen, every person capable of work is engaged in more or less useful work, and seeks to achieve, to the best of his ability, the necessary and convenient things of life for himself or for those members from your family or tribe who are too old, or too young, or too weak to go hunting or fishing. Yet these nations are so miserably poor that out of sheer necessity they are compelled, or believe that they are sometimes compelled to kill and sometimes abandon their children, the elderly, or those with prolonged illness, to starve or to be devoured by wild animals.
By contrast, in civilized and prosperous nations, many people do not work at all, and many consume the production of ten times and often one hundred times more work than most of the employed; and yet the production of the total labor of society is so great that all are often provided in abundance, and a worker, even of the lowest and poorest class, if frugal and laborious, can enjoy a number of things. necessary and comfortable for life much greater than any savage can achieve.
The causes of this progress in the productive capacity of work and the way in which its product is distributed naturally among the different classes and conditions of man in society, are the subject of the First Book of this investigation. Whatever the state of ability, dexterity, and judgment with which labor is applied in any nation, the abundance or scarcity of its annual product must depend, as long as that state lasts, on the proportion between the number of those who are annually engaged in useful work and those who are not. The number of useful and productive workers, as will be seen later, is everywhere in proportion to the amount of capital intended to employ them, and to the particular way in which that amount is employed.
Book Two, thus, deals with the nature of capital, how it gradually accumulates, and the different amounts of labor it sets in motion according to the different ways in which it is employed. Nations acceptably advanced in terms of skill, dexterity, and judgment in the application of labor have followed very different plans for conducting or directing it, and not all of these plans have been equally favorable for increasing their output.
The politics of some nations has greatly stimulated work in the field; that of others, work in cities. Almost no nation has treated all activities fairly and impartially. Since the fall of the Roman Empire, Europe's policy has been more favorable to the arts, manufacturing and commerce, activities of the cities, than to agriculture, the work of the countryside.
The circumstances that seem to have introduced and encouraged that policy are explained in the Third Book. Those different plans were probably established due to private interests and prejudices of some particular estates, without any consideration or anticipation of their consequences on the general welfare of society; however, they have given rise to very different theories of political economy, some of which magnify the importance of activities carried out in cities and others that of those carried out in the countryside.
Such theories have exerted considerable influence, not only on the opinions of enlightened people but also on the public conduct of princes and sovereign states. I have tried, in Book Four, to explain these theories in the most complete and precise way, and also the most important effects that they have produced in different times and nations.
The purpose of the first four books of this work is to explain what the income of the population as a whole has consisted of, or what has been the nature of the funds that in different nations and times have provided their annual consumption.
The Fifth and last Book deals with the income of the sovereign or the state. In this book I try to show, first of all, what are the necessary expenses of the state, which of these expenses should be borne by society as a whole and which only by a specific part or by particular members of it; secondly, what are the various methods by which the entire society can be made to contribute to meeting the payments that correspond to the society as a whole, and what are the main advantages and disadvantages of each of those methods; and, third and last, what are the reasons and causes that have led almost all modern states to mortgage a fraction of their income, or to contract debts, and what have been the effects of such debts on real wealth,which is the annual product of the land and the work of society.
By the way, do you know who Adam Smith, the author of this definition, was? He is considered nothing less than the father of economic science and founder of the so-called classical school. He was born in Scotland in 1725 and died in 1790. For a long time he held the chair of Philosophy at the University of Edinburgh, but above all he is known for the work to which he dedicated 12 years of his life, The Wealth of Nations. Published in 1776, it is considered the foundation of the modern economy, because it defends the principle of division of labor and freedom of trade. Smith believed that the satisfaction of one's individual interest, limited by that of others, is the best means of achieving the greatest benefit for the greatest number of people. However, Smith supported state intervention in the areas of justice, education,health and all those companies that private initiative was unable to tackle.
Bibliography
Improvement in Productive Powers of Labor.
Nature, Accumulation and Employment of Stock.
The Wealth of Nations - Adam Smith Introduction and Plan of the Work (1776).
Adam Smith Biography - Published in the newspaper La Nación (Costa Rica). Author: Marta Castegnaro.
Adam Smith Biography - Biography written by Julio H. Cole. Also available in word format for printing. (Link to your personal page).
Biography of Adam Smith - Dolmen Editions through his Art page. History presents a brief biography of Smith.
