If we compare the Marx’s theory with the actual happenings, especially after ‘Disintegration of Russia’, it becomes clear that the variables which Marx ignored became important in future development of the economy. Let us analyse those variables.
1. Marx ignored the importance of intellectual labour (i.e., technocrats) and only concentrated on physical labour. With the commencement of’ New Economy’ the share of wages in total cost of production has declined to less than 12% and increasing demand is generated for skilled manpower.
Technology and means of production has become extremely complicated, thereby shifting the major decision making powers to technocrats. In the ‘New Economy’, capital is abundant but skilled manpower is scarce. This fact was not taken into account by Marx.
2. Marx underestimated the ability of capitalistic economy to adjust itself to exogenous factors. If democracy is functioning effectively, then government gets immediate feedback of its policies which makes adjustment, fairly easy.
This creates flexibility in the capitalistic economy. In case of socialistic economy with state control on every activity, feed-back of wrong policies is very difficult to come by. This creates rigidity in the socialistic economy. This was the reason for the breakdown of USSR and Russian re-orientation towards market mechanism.
3. Most of one country which adopted socialist set-up like Russia, China, and Cuba were feudal societies, which did not have mature capitalistic economy as predicted by Marx.
4. Most of the underdeveloped countries, whose leaders were influenced by the Marxian theories tried to implement the positive characteristics of capitalistic and socialistic economies.
They opted for mixed economy and coexistence of market mechanism and state planning frame-work. In most of the countries which opted for mixed economy are redefining the role of planning mechanism. India, after 1991 is given bigger role to market mechanism and has decreased the role of state planning
Karl Marx over-estimated the ability of state to regulate the economic activities of the country. As a result economies having socialistic and mixed economy set up are trying to give major role to market mechanism.