In the abstractions of neoclassical economics, exchange is regarded as equivalent in and amongst all commodity markets, including the labor market. Consumers and producers have equivalent status as markets are paramount. The general structure of commodity exchange in terms of prices and relationships involving price is regarded as sufficient to characterize the whole economy. Buyers and sellers freely enter the frictionless frameworks of markets, armed with perfect rationality and perfect knowledge, respond to price signals generated by demand and supply schedules, to produce a general equilibrium. Note how this abstracted world operates – it tends toward equilibrium. As a consequence, neoclassical thought has privileged modeling (general equilibrium) of pricing and exchange, seeking mechanisms to obtain more efficient market operations on the assumption that the more efficient are markets the better will the economy perform.
So what does abstract capitalism look like when painted through this lens? Conventional economic texts see the world as now largely featuring a capitalist freeenterprise system. For example, Paul Samuelson's classic textbook economics portrays (Figure 1) the competitive price system of capitalism solving the basic economic problem of what to produce, how, and for whom in an elegantly simple manner. This was spotted by geographer, David Smith who in the fourth Dictionary of Human Geography reflected that the characterization is illustrative of how far the assumptions of neoclassical thought guide the construction of the world and the choice of words to anchor the world. Two groups of participants are recognized – the public (though acting in their own self interest do so without conflict) and business (government is left outside the framing); the public takes its income into the markets for consumer goods and services, expressing its preferences in the form of what Samuelson calls 'dollar votes', an implicit analogy with the electoral process so evoking the principles of democracy in support of free market mechanisms.
Such a characterization is far removed from the conclusions of Marxist political economy. In the neoclassical account the value of anything and everything is established through price, the commodity is innocent, and people in their specific geographical and historical contexts and circumstances do not figure. Equally there is no hint of sharp lines of difference around the rules of engagement in the capitalist market economy, what start up conditions might mean for the terms of participation, and how individual and social outcomes may diverge greatly.
Influences of Marxian Political Economy
In marked contrast to the idea of equilibrium, Marxist political economy stresses the dynamism of capitalism. The obvious question of course is where does the dynamic come from? This is where abstraction is especially helpful. The notion of a capitalist mode of production, is which a specific form of economic and social organization, conveys the idea that capitalism can be understood as involving particular behaviors in economic organization that have profit seeking as the main socially acceptable goal. While orthodox definitions pick up on any definition as being a construction of political and intellectual traditions, they rarely extend to considering the contextual or place laden shapings and the processual nature of theorizations about capitalism. Karl Marx's legacy was his abstraction of the key social relationships and interactions that were characterizing dramatic changes in the countryside and cities of mid nineteenthcentury Europe and Asia. This was a geographically bounded visioning (he spent most of his life in Germany and Great Britain). In that context he was able to comprehend both the internal relationships necessary to the circulation of capital and the contingent geographic reach of capitalist processes, at that time.
- Trying to Understand a Changing World
- Large Corporations, Political Regulation, Fordism, Mass Production, and Economies of Scale
- Geographies of Modern Capitalism
- Geographies of Early Capitalism
- Theoretical and Conceptual Ideas
- Capitalism and Division of Labor
- Toward an Inclusive Geography of Care and Caregiving
- Places and Spaces of Care and Caregiving