whateverfloats
Seriously guys, how do you falsify it?
Okay, before we begin we have to look into what we mean by "falsify". In Science this usually means that you try to stick to parsimony and avoid any
ad hoc hypothesis. In other words, you can argue that any theory is "non-falsifiable" if you don't put in rules like "you can't make extra assumptions" or "the theory that makes the least
necessary assumptions, while remaining coherent is preferred". This is the case because you can justify any theory if you are allowed to make an infinite amount of assumptions, or stop making sense/including data.
Remember science is about parsimony and coherence.
That is what is meant by marginal utility is
unfalsifiable. The marginalist is allowed to exclude data and make up an infinite amount of assumptions, even spiritual and metaphysical assumptions like absolute free will.
Marxism is different because it makes predictions that can be directly tested. Predictions like:
1- The economy will centralize over time.
Thus
If the economy becomes less centralized, that would be a point against Marxism. The Marxist at this point could try to explain this failure of the theory, i.e. make an assumption to preserve coherence but this would make it weaker then any theory that didn't do this. Luckily there is a wealth of data which shows that the economy has become more centralized over time, particularly in the forms of economic institutions like the IMF/World Bank/WTO, international banks, and international corporations.
Wal-Mart's effects on local stores in particular illustrates this point.
2- The relative value of wages will decrease over time i.e. labor will become more efficient, and thus, more expendable.
This point would be disproven if wages, as a percentage of a nation's GDP, increased. However as I noted earlier, wages have actually decreased as a percentage of the US GDP.
Quote:
Wages, meanwhile, have fallen from 51.8 percent of GDP in 1960 to 45.6 percent in 2006.
http://www.kff.org/insurance/snapshot/chcm012808oth.cfm
This can also be ascertained, less directly, by looking at the value of wealth held by the lower classes (who's income primarily comes in the form of wages) vs the higher classes, who attain a greater portion of their income through stocks, bonds and general company ownership:
Quote:
Table 1: Distribution of net worth and financial wealth in the United States, 1983-2007
Total Net Worth
Top 1 percent Next 19 percent Bottom 80 percent
1983 33.8% 47.5% 18.7%
1989 37.4% 46.2% 16.5%
1992 37.2% 46.6% 16.2%
1995 38.5% 45.4% 16.1%
1998 38.1% 45.3% 16.6%
2001 33.4% 51.0% 15.6%
2004 34.3% 50.3% 15.3%
2007 34.6% 50.5% 15.0%
Financial Wealth
Top 1 percent Next 19 percent Bottom 80 percent
1983 42.9% 48.4% 8.7%
1989 46.9% 46.5% 6.6%
1992 45.6% 46.7% 7.7%
1995 47.2% 45.9% 7.0%
1998 47.3% 43.6% 9.1%
2001 39.7% 51.5% 8.7%
2004 42.2% 50.3% 7.5%
2007 42.7% 50.3% 7.0%
Quote:
Table 3: Share of wealth held by the Bottom 99% and Top 1% in the United States, 1922-2007.
Bottom 99 percent Top 1 percent
1922 63.3% 36.7%
1929 55.8% 44.2%
1933 66.7% 33.3%
1939 63.6% 36.4%
1945 70.2% 29.8%
1949 72.9% 27.1%
1953 68.8% 31.2%
1962 68.2% 31.8%
1965 65.6% 34.4%
1969 68.9% 31.1%
1972 70.9% 29.1%
1976 80.1% 19.9%
1979 79.5% 20.5%
1981 75.2% 24.8%
1983 69.1% 30.9%
1986 68.1% 31.9%
1989 64.3% 35.7%
1992 62.8% 37.2%
1995 61.5% 38.5%
1998 61.9% 38.1%
2001 66.6% 33.4%
2004 65.7% 34.3%
2007 65.4% 34.6%
Quote:
Table 5a: Concentration of stock ownership in the United States, 2001-2007
Percent of all stock owned:
Wealth class 2001 2004 2007
Top 1% 33.5% 36.7% 38.3%
Next 19% 55.8% 53.9% 52.8%
Bottom 80% 10.7% 9.4% 8.9%
Table 5b: Amount of stock owned by various wealth classes in the U.S., 2007
Percent of households owning stocks worth:
Wealth class $0 (no stocks) $1-$10,000 More than $10,000
Top 1% 7.4% 4.2% 88.4%
95-99% 7.8% 2.7% 89.5%
90-95% 13.2% 5.4% 81.4%
80-90% 17.9% 10.9% 71.2%
60-80% 34.6% 18.3% 47.1%
40-60% 52.3% 25.6% 22.1%
20-40% 69.7% 21.6% 8.7%
Bottom 20% 84.7% 14.3% 2.0%
TOTAL 50.9% 17.5% 31.6%
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
This is basic economic logic- the more efficient the overall economy, the less workers you need (because each worker is now more efficient) and the less you need to pay them (since the employer has more leverage). That means the people who dependent on wages will see a gradual decrease in income, the people who depend on stocks and bonds will see an increase in income.
The only way to reverse this trend is by
artificially managing the economy- increasing minimum wage, progressive taxation, etc.
If this trend generally changed without government intervention, then that would help falsify Marxist theory.
3- The organic composition model, simply put, machinery replaces human labor over time. I hardly need to explain how this is proven, though the presence of the jobless recovery in recent years should serve as confirmation:
http://abcnews.go.com/ThisWeek/Politics/story?id=7966402&page=1&page=1
Quote:
Krugman has been one of the most vocal opponents of the stimulus package the president signed in February, long arguing the $787 billion price tag was inadequate to lift the country out of recession.
"The last two recessions were both followed by prolonged jobless recoveries when industrial production and GDP rose, but the unemployment rate continued to rise," he said, "We're almost certainly headed for another patch like that this time around which means that we need the economic support more than ever."
This is very complimentary with point 2- the more machines you have to replace people, the more efficiently you can use labor, the less workers you need (and the less you need to pay them consequently. )
The alternative to this is often called the "theory of compensation" that is, the idea that "new frontier jobs" are always created as machinery is implemented. The problem with this reasoning is three-fold:
1- It is idealistic to presume that for every job taken by a machine, exactly 1 new job is created. If 1,000 jobs are lost due to technological advance, it would be an amazing coincidence if 1,000 new jobs are magically created the next day. The idea that even more jobs are created then taken however would conflict with the data- the relative value of wages declining, and the existence of jobless recoveries.
2- This is the idea that the machine, within a line of production actually creates more jobs. The "well you need someone to make the machine" argument. The problem with this is that it goes against the very logic of the economy- if it takes 2 jobs to make a machine that replaces 1 job- you end up spending more money on the machine then you get for replacing the worker. In other words, machines that regularly employ more people in a line of production then they replace will not be adopted by industry. The only exception to this would be if the machine ends up displacing more jobs in the long-term.
3- The idea of "frontier jobs" or new markets opened by machines, or opening naturally which will attract the organic labor (humans). The problem with this is much like 1, it is based on an idealization that requires many assumptions and coincidences. For example, even if a new market opens, why can't machines be put into the new market? If we find a new type of commodity X, wouldn't it be more efficient to start with factory based, assembly line production, rather then resort to crafting each new product individually by hand? If a new market opens in say China, is it more efficient to use the machines we already have, or literally go back to pre-industrial modes of production? Basically the assumption is you cannot extend machine production to new markets.
If this was reversed, say machines stopped evolving, or we somehow lost the technology to make machines, or human evolution naturally just went into a hyperactive state that surpassed machines Marx's theory would become less relevant to real life economics.
Of course, artificial methods could reverse the above. Remember Marx's theory applies to capitalist development, not socialistic intervention.
4- The cost of production.
Simply put, this is a Ricardo-Marxist axiom that unless you regularly pay for the cost of production you cannot maintain an economy. A business that does not pay its expenses will go under. A society that never pays for its debt will see economic collapse.
This may seem untestable like gravity or natural selection, but it could be disproven if there is a bizarre change of physical laws, though that would have to be the case regularly for it to disprove the law.
Note that marginalism doesn't even have a theory regarding some of the above aspects of economy, so one could argue that not only is it less parsimonious, it is also less cohesive given the full range of empirical data.