Marxism and Neo-Marxism
Marx's Theory of Capital
However, there are problems inherent in capitalist production- particularly class struggle, overproduction and underproduction.
Class struggle relates to the exploitation of workers inherent in the capitalist system. Capitalism requires profit and profit is achieved through capitalist exploitation of workers. Exploitation is operationalized as surplus labor / necessary labor. Even considering the buying and selling of labor power is done fairly, the worker is still exploited through capitalist requirements for surplus value. Surplus value is made up of relative surplus value and absolute surplus value. Relative surplus value is value arising from shortening the time necessary to produce, but keeping the working day constant. Absolute surplus value is value arising from increasing the time of production by extending the working day. Either way, capitalist surplus value requires labor to work more than necessary to produce. In short, worker/capitalist conflict is inherent in capitalism.
Capitalism also tends towards either overproduction or underproduction. When capitalists face stagnating markets, they must either externalize costs or expand into new markets (Harvey 2010). Overproduction and underproduction is the result of these mechanisms. Overproduction is the result of competitive pressures to devalue labor. Capitalist accumulation is facilitated by increased exploitation and production. As such, capitalism tends to produce more than social consumption capacities. Capitalism also tends toward underproduction. Underproduction results from capitalist exploitation of environmental resources. Capitalism requires expanding markets and society must continuously increase its production and consumption capacities, depleting natural resources. Additionally, to stimulate profits, capitalists will externalize costs and pollute the environment, eventually destroying the environment in which it is embedded (a.k.a., ecological rift). In short, capitalism destroys the social and environmental conditions necessary for the system to be reproduced.
In order to perpetuate capitalist relations despite its inherent contradictions, the capitalist superstructure provides support for the economic base. The superstructure is the cultural, legal, ideological, religious and political relations in society. There is a reciprocal relationship between the base and the superstructure- they support each other. For example, property does not exist without a legal concept and property is not necessary for the economic relations of capitalist relations. In conclusion, according to Marxist theory, the political superstructure provides support for the economic base.
Capitalist Power Blocs
Poulantzas (1973) answers this question by claiming the state becomes reflective of the economic base through power blocs. According to Poulantzas (1973), a power bloc is made up of an alliance between several class factions. Class factions are different segments of capital. Examples of different class factions are the landed class and the merchant class. Several class fractions can politically mobilize to form a power bloc necessary to influence public policy in such a way to reproduce capitalist relations.
The Fiscal Crisis of the State
Social Structures of Accumulation
The Politics of Public Policy
The Development of Welfare Policy
State Structure and Increased Inequality
Public policy and the development of state structure is problematic, as it can be used as a tool for business elites to achieve their interests (Woods and Morris 2007), or it can drift from its original purpose (Hacker and Pierson 2010). According to Woods and Morris (2007), state structures helped unify business and exclude opposition groups. Like Woods and Morris (2007), Hacker and Pierson (2010) find organized interests shape public policy. However, whereas Woods and Morris (2007) examine the politics underlying NAFTA, Hacker and Pierson (2010) examine the politics underlying increased social inequality. According to Hacker and Pierson (2010), increased inequality is the result of changes in: (1) financial markets, (2) corporate governance, (3) industrial relations and (4) taxation. Although policy to increase equality was enacted, because of changes caused by corporate actions, policy drift occurred.
According to the politics of public policy research, welfare policy was degraded through long, purposeful corporate actions. Like Gramsci (1971), research finds hegemony is a key factor influencing social outcomes. Corporations have the power to implement long-term efforts to guide public perceptions and change public opinion from strongly supporting welfare policy, to opposing it. For example, Quadagno (1998) finds public confidence in social security has declined as a result of a long, successful strategy by right-wing opponents. Elites perpetuated "the perversity thesis" which popularized the claim that welfare is a policy which creates incentives for individuals to not be productive members of society (Somers and Block 2005). In short, by influencing ideology, corporations were able to roll-back welfare reforms.
In addition, deregulation and public-private partnerships have been able to shift New Deal policy away from focus on the welfare of citizens and towards emphasis on economic growth. For example, Molotch (1998) found HUD was co-opted by capitalist growth machines. HUD now works through private partnerships which decide where and how to build, resulting in increased inequality (Molotch 1998). In conclusion, although social welfare policies were implemented following World War II, due to capitalist efforts, welfare policies have eroded, increasing social inequality.
Neoliberalism and the State
Drawing from Poulantzas and the social structures of accumulation framework, public policy research demonstrates how neoliberalism is a historical ideological structure which emerged to support capital accumulation (Prechel and Harms 2007). According to Prechel and Harms (2007), neoliberalism is an ideology which emerged out of the interests of a historically contingent power bloc. During the decay-exploration social structures of accumulation transition, the power bloc politically mobilized to implement neoliberal policy in order to better accumulate capital.
Public policy research demonstrates how neoliberalism and the state has facilitated the development of the global financial real estate market which contributed to the recent global financial crisis (Gotham 2006). According to Gotham (2006), the state shapes global capital flows; specifically, influenced by neoliberal ideology, the state facilitated the financialization of local real estate through the expansion of mortgage-backed securities and real estate investment trusts (REITs). In an attempt to stimulate capital accumulation, decision makers aimed to de-localized property and place local real estate into the global financial market. Although this increased the power of the economic elite, neoliberal policy has not been effective at revitalizing capital accumulation (Harvey 2007). Influenced by neoliberalism, public policy provided support for the development of REITs and mortgage-backed securities which eventually resulted in the 2007-2008 global financial crisis. In short, capitalist hegemony influences state policy in such a way that increases capitalist power at the extreme detriment of others around the world.
Gotham, Kevin. 2006. “The Secondary Circuit of Capital Reconsidered: Globalization and the U.S. Real Estate Crisis.” American Journal of Sociology 112:231–275.
Gramsci, Antonio. 1971. Selections from Prison Notebooks. New York, NY: International Publishers.
Hacker, Jacob and Paul Pierson. 2010. “Winner-Take-All Politics: Public Policy, Political Organization, and the Precipitous Rise of Top Incomes in the United States.” Politics and Society 38:152–204.
Harvey, David. 2007. A Brief History of Neoliberalism. Cambridge, MA: Oxford University Press.
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Harvey, David. 2012. Rebel Cities: From the Right to the City to the Urban Revolution. New York, NY: Verso.
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Mizruchi, Mark. 2013. The Fracturing of the American Corporate Elite. Cambridge, MA: Harvard University Press.
Molotch, Harvey. 1998. “Urban America.” Pp. 53–71 in Social Policy and the Conservative Agenda, edited by Clarence Y.H. Lo and Michael Schwarz. Malden, MA: Blackwell.
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Panitch, Leo and Martijn Konings. 2009. “Myths of Neoliberal Deregulation.” New Left Review 57:67–83.
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Prechel, Harland and John Harms. 2007. “Politics and Neoliberalism: Theory and Ideology.” Pp. 3–17 in Politics and Neoliberalism: Structure, Process and Outcome: Research in Political Sociology, Vol. 16, edited by Harland Prechel. Oxford, UK: Elsevier.
Quadagno, Jill. 1998. “Social Security Policy and the Entitlement Debate: The New American Exceptionalism.” Pp. 95–117 in Social Policy and the Conservative Agenda, edited by Clarence Y.H. Lo and Michael Schwarz. Malden, MA: Blackwell.
Somers, Margaret and Fred Block. 2005. “From Poverty to Perversity: Ideas, Markets, and Institutions over 200 Years of Welfare Debate.” American Sociological Review 70:260–287.
Woods, Tim and Theresa Morris. 2007. “Fast Tracking Trade Policy: State Structures and NGO Influence During the NAFTA Negotiations.” Pp. 177–204 in Politics and Globalization: Research in Political Sociology, Vol. 15, edited by Harland Prechel. Oxford, UK: Elsevier.