44 A History of Modern Political Economy
sytaffel
The history of modern political economy traces back to the works of Adam Smith and Dave Ricardo, who writing in the 18th and 19th Century outlined a model which was broadly supportive of the developments of economic markets and free trade, and was based upon a labour theory of value, which suggested that the value of the goods and commodities produced is directly related to the amount of labour which goes into making that product. Smith and Ricardo’s work was taken up in the mid 19th century by Karl Marx who in 1867 published Capital: Critique of Political Economy, which functioned as a critique of the emergent political economy of capitalism during the industrial revolution. Marx’s major contentions are worth exploring here, as his work remains a foundation for studies of PE, and the basic concepts and categories he proposed are still commonly employed within media studies today, almost 150 years after he devised them.
Marx begins Capital by identifying the commodity – a material entity which can be bought or sold – as the basic unit on which capitalist economies are built, and then proceeds to distinguish between the use-value and exchange value of a commodity. Whereas use-value relates to the value inherent in the way that a good is used, be it to feed someone, provide primary resources for manufacturing or provide information or entertainment to someone, exchange value refers to the fluctuating value which is attached to those goods. Indeed, during the time of the industrial revolution when Marx was writing, the spatial distribution of goods and markets meant that financial speculators were able to amass vast sums (by the standards of the period) by purchasing goods in one location and moving them to another location before selling them at greatly increased prices. Whilst the use-value of these goods remained constant – they would be used in the same way in both areas – their exchange-value varied considerably, allowing a particular privileged class of people (those with the financial resources to buy large quantities of goods and transport them to another city) to exploit the productive labour of others (those who actually produced the goods in the first place) in order to further entrench their wealth. This is a crucial point, as it reveals that Marx’s approach to political economy reveals ways that capitalism is dependent upon a system whereby the productive labour of one social group is exploited by another, wealthier class who effectively own the means of production and can further entrench their elite financial status through financial speculation which the working class who create the commodities themselves cannot participate in. Pivotal to Marx’s work then, were the social relations between different classes within the emergent capitalist society of which he was a part, and the ways in which privileged classes, which he terms the bourgeoisie, exploit the labour of the working classes,