Миловидов В.А. Английский разговорный язык. Практическое пособие по развитию устной речи
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Ricardo's Principles of Political Economy (1817). But Marx went much further than his
predecessors. He turned his theory against this advocates of capitalism. Arguing that his theory
is supposed to explain the value of all commodities, Marx includes there also the commodity
that workers sell to capitalists for a wage. Marx called this commodity «labour power». This
move was imbued with strong political implications.
Labour power is the worker's capacity to produce commodities. The value of labor power
depends on the number of labour hours it takes society to produce a person who is fit for work
(to give him food, clothes, and shelter). Therefore, the worker's wage must correspond to this
number of hours. If five hours of labour are needed to maintain the worker's capacity to produce
commodities, and one labour hour is equal to one dollar, then the proper wage must be five
dollars a day.
But, if all goods and services are sold at prices that reflect their true value (corresponding to
labour hours), how can capitalists enjoy profits, which they really do?
The answer is as follows: the owners of the means of production use their privileged and
powerful position to exploit workers by making them work more hours than are necessary to
create the worker's labour power. Paying each of their workers five dollars a day, capitalists
make them work twelve, and even more, hours a day, thus producing «surplus value».
The mainstream economists argue this core idea of Marxism, showing that capitalists earn
profits not by exploiting workers, but by taking risks and organizing efficient production.
Even more politically biased is Marx's Economic and Philosophic Manuscripts of 1844, where
the author undertook to explain the general logic of the human history. The key role is played
here by his concept of alienation.
Marxists suppose that people by nature are free, creative beings. But the modern, industrialized
world does not allow man to realize his freedom and creativity, as this world is apparently
beyond our full control. The market economy – through the spontaneous laws of supply and
demand – blocks our ability to influence any of our individual and collective destinies.
Although workers produce things for the market, market forces control things; workers do not.
Workers are alienated from the things they produce, and work itself, loosing its creative
implications, becomes monotonous, and suitable for machines rather than free, creative people.
Eventually people themselves become robotlike machines that have lost touch with human
nature. Marxists propose then to abolish the market-based society and replace it with a
democratic, comprehensively planned society.
Marx called his theory «scientific socialism» to prove his assumptions that throughout the
course of human history, a profound struggle has developed between those who «have» and
those who «have not», the bourgeoisie and the proletariat. This struggle of classes is the law of
history, and eventually proletariat will win the battle.
A socialist revolution, say Marxists, is inevitable.
:
abolish – ,
advocate – ;
alienation –
apparent –
biased – ,
block – , , ,
bourgeoisie –
capacity – , ,
collapse –
comprehensive – ,
controversial – ,
core –
creativity – , «»
destiny – ,
disaster –
elaborate –
evident –
firm –
global – , ,
harmonious –
imbue –
implication – ,
inevitable –
inspire –
issue – ,
mainstream – (.: )
maintain –
Marxism –
monotonous –
namely –
overall – , ,
predecessor –
privileged –
profound – ,
proletariat –
robotlike –
root –
shelter – , ; ,
spontaneous –
so far – ,
labour theory of value –
take twice as long –
twice as valuable as– ,
competitive price –
twice the price –
physical input –
mid nineteenth century –
fit for work –
enjoy profits –
surplus value –
beyond control –
lose touch –
Exercise 8
Answer the questions:
1. What does one have to do in order to understand why Marxism inspired revolutions?
2. What theory is the core of Marxian economics?
3. How can the value of a commodity be measured, according to Capital?
4. What economic theories was Marxism based on?
5. How was the labour power value calculated?
6. How can a capitalist make a worker produce the «surplus value»?
7. What idea makes the key issue of Marxist historical concept?
8. How can free market block workers' creativity?
9. What is the Marxian way to democratic society?
10. What is the main law of history, in Marxists' opinion?
Marxists on the Parade
At last Mayday parade in the Soviet Union, after the tanks and the troops and the planes and
the missiles rolled by there came ten men dressed in black.
«Are they Spies?» asked Gorby.
«They are Marxist economists,» replies the KGB director, «imagine the havoc they will wreak
when we set them loose on the Americans.»
:
havoc – ,
missile –
spy –
troop – ,
wreak – ,
roll by –
set loose on – ()
Gorby – . Gorbatchev –
Neoclassical Economics
Neoclassical economics is the mainstream economics today.
In the nineteenth century, most Western economists accepted what is now called classical
theories of value and distribution. According to the classical value theory the value of a watch,
for example, depended on the costs involved in producing that watch. The aggregate product of
an economy was supposed to be distributed among different people or different social groups
according to the costs borne by those people and groups in producing this product. This
classical views had their roots in the ideas of Adam Smith, David Ricardo, John Stuart Mill and
Karl Marx.
In practice these theories did not always work, and it was noticed that prices in the market did
not necessarily reflect the value so described, as people were often ready to pay more than an
object was supposed to cost. So, the classical theory of value, according to which value was a
property of an product, was gradually substituted by theories in which value was reflecting the
relationship between the product and the person purchasing the product. This two-fold
relationship later came to be called supply and demand. This was a real breakthrough, and it is
known now as the Marginal Revolution in economics. The theories which developed from these
ideas later came to be called neoclassical economics.
The framework of the Marginal Revolution and the neoclassical economics is as follows.
Individuals, both buyers and producers, make choices at the margin. Buyers tend to maximize
their gains from getting goods up to a certain point where what they gain from an extra unit is
balanced by what they give up to obtain it. Thus they maximize and optimize «utility» – the
satisfaction which they get while consuming goods and services. In the same way workers
provide labour to employers by balancing the gains from offering the marginal unit of their
services (the wage they are supposed to get) with the the loss of leisure.
In the same way producers maximize profits by balancing the revenue they generate with the
cost of producing the marginal units of a product. They also hire workers up to the point where
the cost of additional hands is balanced by the value of output that those hands might
manufacture.
So, the neoclassical theories take economic agents into consideration. These agents optimize
their gains against all relevant constraints. In this context value results from the collision of
unlimited desires with constraints, or scarcity. The decision problems are reconciled in markets,
prices being the signals whether the conflicting desires can be reconciled.
At some price of refrigerators, for example, I want to buy a new refrigerator. At that same price
others may also want to buy refrigerators. But producers may not want to manufacture as many
refrigerators as all buyers want. So, this may lead us to «bid up» the price of refrigerators,
ousting out some buyers and encouraging some producers to produce more of the product we
want. The price changing, the imbalance between buy orders and sell orders is reduced. This is
how optimization under constraint and market interdependence lead to an economic
equilibrium. This is the neoclassical outlook.
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accept –
breakthrough – ,
collision –
constraint – ,
desire –
equilibrium –
framework – ,
gain – ;
gradually –
imbalance –
interdependence –
involve – , ,
leisure – ,
margin – ,
marginal – ,
maximize –
neoclassical –
optimize –
outlook – ,
property – ,
reconcile –
relevant – ,
scarcity –
signal –
substitute – ,
tend – , ,
utility – , ,
value theory –
two-fold –
came to be called –
Marginal Revolution – ( –
)
extra unit – ()
give up – ,
take into consideration –
economic agents – ,
in this context –
bid up –
oust out –
buy order –
sell order –
Exercise 9
Answer the questions:
1. What view did the economists in the XIXth century accept?
2. What did the value of a product depend on, in accord with the classical value theory?
3. How were products distributed, according to this theory?
4. Whose ideas did the classical theory have roots in?
5. Why didn't the classical theory work in practice?
6. What theories were the classical theories substituted by?
7. What is value, in the neoclassical view?
8. Where do buyers and sellers make their choices, according to the neoclassical view?
9. What is «utility», in the neoclassical sense of the word?
10. Who do neoclassical theories take into consideration?
Rational Expectations Theory
The theory of rational expectations is based on the assumption that in many economic
situations the outcome depends partly upon what people expect to happen. The value of a
currency, for example, depends to a great extent on what people expect that currency's rate of
depreciation to be. That is because people hurry to give up a currency that they expect to lose
value, thereby contributing to its depreciation. In the same way, the price of shares depends
partly on what the shares' buyers and sellers believe it to be in the future.
The relation between expectations and outcomes is two-fold. In forming their expectations,
people try to forecast what will actually occur, and the results of their forecasting, provided that
they were correct, help them form expectations for the future outcomes. There is continual
feedback from past outcomes to current expectations, as in recurrent situations the way the
future unfolds from the past tends to be stable, and people adjust their forecasts to conform to
this stable pattern.
The theory of rational expectations states that outcomes do not differ regularly from what people
expected them to be. Of course, sometimes people make forecasting errors, but those errors
will not persistently occur. The rational expectation theory thus provides a trustworthy basis for
some economic theories which have evident political implications. Those are the «random walk»
or «efficient markets» theory of securities prices, the theory of the dynamics of hyperinflations,
the «permanent income» and «life-cycle» theories of consumption, the theory of «tax
smoothing,» and the design of economic stabilization policies.
Traditionally economists believed that there was a positive relationship between people's
consumption and their current income. The rational expectation theory debates this issue
stating that people consume out of their «permanent income,» which can be defined as the level
of consumption that can be sustained while leaving wealth intact. This has changed the way
economists think about short-term stabilization policies, such as temporary tax cuts, designed to
stimulate the economy. Formerly economists believed that tax cuts would increase disposable
income, thus causing people to consume more. Now, in accord with the permanent income
model, it is believed that temporary tax cuts have little effect on consumption because people
are relating their consumption decision to their wealth, not their current disposable income.
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conform – ), )
continual – ,
contribute – , ,
current – ,
disposable –
dynamics –
error –
evident –
expect –
expectation –
feedback –
formerly – ,
happen –
hurry –
hyperinflation –
intact –
occur – ,
outcome – ,
partly –
persistently – ,
positive – ,
provided – ()
rational –
recurrent –
smoothing –
stabilization –
sustain – , )
temporary –
thereby –
traditionally –
trustworthy –
unfold – )
wealth – , ,
to a great extent –
rate of depreciation – ,
two-fold –
random walk – (
)
permanent income –
current income –
tax cuts –
in accord with –
Exercise 10
Answer the questions:
1. What assumption is the theory of rational expectations based on?
2. What does the value of a currency depend on, according to this theory?
3. What do the prices of shares depend on, in the context of this theory?
4. What is the relation between expectations and outcomes?
5. What does the rational expectation theory provide a trustworthy basis for?
6. What is people's consumption positively related to, in the traditional economics?
7. What is people's consumption related to, in the rational expectations theory context?
8. What did the traditional economics think about temporary tax cuts in relation to their effect on
consumption?
9. What sort of income are people relating their consumption decisions to?
10. What is permanent income?
3.
(Productive Forces)
Labour Force and Human Capital
Question: How many people does it take to make the economy work?
Answer: Only one, and it's me.
Proof:
The population of the United States is 180 million, but there are 64 million over 60 years of age,
leaving 116 million to do the work.
People under 21 total 59 million which leaves 57 million people to do the work.
Because of the 31 million government employees, there are only 26 million left to do the work.
Six million in the armed forces leave twenty million workers.
Deduct 17 million State, county, and city employees, and we are left with three million to do the
work.
There are 2,500,000 people in hospitals, asylums, and treatment facilities leaving half a million
workers.
However, 450,000 of these are bums or others who will not work, leaving 50,000 to do the work.
Now, it may interest you to know that there are 49,998 people in jail so that leaves just 2 people
to do all the work, and that is you and me, and I'm getting tired of doing everything myself!
:
total –
deduct –
asylum –
bum – ,
jail –
armed forces –
treatment facilities –
Exercise 1
Answer the questions:
1. What is the population of the USA?
2. How many elderly people who do not work live in the USA?
3. How many people serve in the army?
4. How many people are State, county, and city employees?