Malthus vs Marx Essay Example | Topics and Well Written Essays - 1250 words

Malthus vs Marx - Essay Example Marx on his part argues that crises can also occur. However, they identify problem originating in different ways. Therefore, the essay will explain how each accounts for downturns in capitalist economies. It will go ahead and argue which explanation is more persuasive. To begin with, it is important to understand capitalism and its working in the society. Capitalism refers to an economic system characterized by corporate or private ownership of capital goods through investments that are determined through private decision, and through production, distribution, and the prices of goods that are determined majorly by competition in a free market (Frank 5). Elements of capitalism include production of goods or services for profit, means of production is owned privately, wage labor, and competitive markets. This system became dominant after feudalism diminished in the Western world. It is worth noting that the designation of this system is applied to different historical cases that vary i n geography, culture, time, and politics (Frank 9). Capitalism has many variants that bear the aforementioned characteristics though the degree of application of these characteristics may differ a little bit. The main forms of capitalism include state capitalism, free- market capitalism, mercantilism, corporate capitalism, and social market capitalism. Of particular interest to this essay is the production aspect of capitalism, especially as it has been the focus of Malthus and Marx’s arguments. Thomas Malthus is widely known for his theories on population. However, his contributions to political economy theories were equally significant. Malthus argument focused on production and its ability to meet the economic demand of a society. In developing his theories about political economy, he defended Sismondi’s views on general glut. Malthus argues about general glut, which means overproduction of goods, in his Surplus Theory (Hollander 12). According to him, the general g lut question may be general as well as particular, permanent or temporary as well. He argues that the concept of the general glut in a given society has a potential of presenting a problem (Buccholz 60). Malthus glut theory was based on insufficient aggregate demand that was analyzed through the existing patterns of expenditure among the three socio- economic classes. He assumed that capitalists would spend their income on basic needs since they will not have time and capacity to utilize all the goods and services at their disposal thus spending most of their income on the capital accumulation (Hollander 26). The property owners on their part would spend most of their income on personal services and luxury items such as culture and arts. Besides, he assumed that laborers would spend most their incomes if not all on basic needs necessary to maintain their basic subsistence level and would not have remaining money for savings. Malthus argued that the glut problem was because of high r ate of savings among the capitalists making the capital accumulation rate to be unsustainable. Therefore, demand for labor would increase in order to keep up with the capital growth. This may result to temporal labor shortage causing rise of wages or some newly invested capital may fail to find matching labor hence becoming idle (Buccholz 62). Eventually, this scenario would lead to an economic crisis. To him, overproduction of