With Marxism, there are many possible vantage points from which one can discuss political economy.

Marxists have seen the political in the very sep­aration of civil society from the public arena (limiting rights and equality to the latter), the class process by which surplus value is “appropriated” under capitalism, the role of the state in managing the interests and affairs of capital, political (that is, state-backed) guarantees of property rights, revolutionary activity to alter the political institutions of capitalism, and the bargaining between labor and capital for control of the economic surplus.

Although these vantage points may supply political content to Marxian economics, the senses in which they do so are not obvious. Even the concept of class, certainly a mainstay of Marxian theory, is not obviously political. Classes can exist even in a society where individuals are disconnected, una­ware of common interests, and politically unorganized. Nevertheless, owners of capital may exist and hire those who sell their labor power. Further, production of value and surplus value can occur. In this kind of economy, politics would not be evident in the daily operation of class processes (though the state would have to underwrite private property rights). There would be no struggle for the surplus, no power bargaining between labor and capital, and no state intervention to control labor.

The use of the term “political economy” in Marxian theory does not directly refer us to studies of the relation between economics and politics. Instead, it connotes a way of thinking about the economy rooted in the method and theories of the classical economists, especially Adam Smith and David Ri­cardo. This method emphasizes the idea that a market economy operates according to laws rooted in the ongoing reproduction and expansion of a system of material interdependence between persons - a social division of labor (see Chapter 2). This process follows laws that the classical economists thought were independent of the wills and desires of persons.

The method briefly described here requires us to think about individual interests in a distinctive way. In the neoclassical theories, individuals have an interest in maximizing their well-being defined by their preference or­derings. The economy not only works to facilitate this process but, at least ideally, originates in order to facilitate it. Causation runs from individual interest, presumed given subjectively, to economic structure. For Marx, causation runs in the other direction. This makes individual interests a more complex subject. On one side, they refer to the individual. No one tells individuals what they want or what to do to achieve their ends. Initiative lies with the individual agent. In this respect, an economic order results from the unplanned and uncontrolled acts of individuals. Yet control must ulti­mately reside outside the individual (in the objective economic structure) if the structure is to dominate individual interest.

Thus the Marxian method poses a problem involving how we connect individual interest to social order. For our purposes, the solution to this problem has special importance since it will also be the basis for answering the following question: What is the relationship between individual material (or economic) interest, politics, and the agenda of the state?

In this chapter we attempt to draw out the links between politics and eco­nomics in Marxian theory. While recognizing that political economy can be conceived in different ways, we have chosen to focus on three strands of Marx­ian theory: revolutionary politics (the route suggested by Marx and Lenin); the politics of class compromise (Kautsky’s, and later the social democratic route); and Marxist state theory.