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Saturday, November 19, 2011

RICARDO'S PRINCIPLES A MINI-TUTORIAL CONCLUSION

It seems appropriate that I should bring this mini-tutorial to a close with a discussion of Ricardo's brief but extraordinary chapter on Machinery. His argument there, it seems to me, shows him at his very best, while also exhibiting the theoretical and ideological limitations of the Classical school to which Marx directed his most penetrating criticism. Ricardo's purpose in including the chapter is to correct a mistake of which, he says, he had previously been guilty. This in itself sets him off from the common run of theoreticians in a variety of disciplines these days, who think it a death blow ever to acknowledge that they have been mistaken.



The question at issue, Ricardo says in the first sentence of the chapter, is "the influence of machinery on the interests of the different classes of society." Take a moment to examine the phrasing of that question. I venture to suggest that there is not a single established economist in America today, including such liberal icons as Robert Reich and Paul Krugman, who could ever bring himself or herself to write a sentence in which appears the phrase "the interests of the different classes of society." Even to utter such a combination of words would be to elicit hysterical charges of "class warfare," and yet Ricardo writes the sentence with no suggestion that he intends to be provocative or to deviate from accepted norms of polite intellectual behavior. In this, as in many other ways, the mathematically sophisticated discourse of our modern professional economists exhibits a marked falling away from the understandings that the first Political Economists had achieved by the beginning of the nineteenth century. It is instructive in this regard to read Marx's discussion of those early figures in the three volume Theories of Surplus Value with which Capital concludes. Despite his strong disagreements with the best of them -- Quesney, Destutt de Tracy, Smith, Ricardo and the rest -- Marx is extremely respectful of them, and goes out of his way to acknowledge where they have been correct. This stands in striking contrast to his dismissive and mocking treatment of those whom he calls "vulgar economists," like Nassau Senior, for whom he has nothing but contempt.





One of the great advantages of the early Political Economists is that they are writing at the dawn of modern capitalism, and features of mature capitalism that today we take for granted are for them innovations that stand in stark contrast to what has gone before. The very novelty of markets, capitalist enterprises, wage labor, and the rapid introduction of machinery into spheres of production previously dominated by hand labor [or, in the original sense of the term, "manufacture"] prompts them to ask questions that might not occur with such urgency to those theorists who come along when these and other features of a mature capitalism have long since become the norm.





The early nineteenth century saw the rapid introduction of machinery in England, particularly in the textile industry. Power carders, spinners, and looms replaced the hand-operated devices that had for generations been used to turn linen, wool, and cotton into cloth. The introduction of the machinery had two consequences, both of which were devastating to a group of workers who had until then been among the most skilled and best paid in England. First of all, the machinery displaced thousands of weavers, who were thrown out of work and were suddenly destitute, for the purpose of introducing the machines, of course, was that one machine could do the work of many weavers. Second, the machinery replaced the skilled weavers with semi-skilled machine operators or tenders, many of whom were children as young as eight or nine. Weaving had been a skilled craft required a long apprenticeship and the possession of a valuable tools -- the looms and accompanying instruments of the weaving trade. Much of that skill was now internalized, as it were, in the power looms owned by the capitalists and located in factories, no longer in the crofts and cottages of the weavers. Instead of a years-long apprenticeship in the weaving craft, only a few weeks were required to train an unskilled boy or girl to tend a machine.





The workers threatened with redundancy by the new machines reacted swiftly and violently. "Luddites," they were called, after Ned Ludd, a weaver who was said [probably apocryphally] to have destroyed a weaving machine in the late seventeen hundreds. They threw wrenches into the machines, broke them up, and tried futilely to halt the mechanization of the cloth industry. The movement flourished between 1811 and 1816 before being put down by the police, which is to say in the years just preceding the writing and publication of the Principles.





Summarizing the view he previously held on this question, Ricardo writes: "As, then, it appeared to me that there would be the same demand for labour as before, and that wages would be no lower, I thought that the labouring class would, equally with the other classes, participate in the advantage, from the general cheapness of commodities arising from the use of machinery." But now, he says, he has concluded that he was wrong. "I am convinced, that the substitution of machinery for human labour, is often very injurious to the interests of the class of labourers. My mistake arose from the supposition, that whenever the net income of a society increased, its gross income would also increase; I now, however, see reason to be satisfied that the one fund, from which landlords and capitalists derive their revenue, may increase, while the other, that upon which the labouring class mainly depend, may diminish, and therefore it follows, if I am right, that the same cause which may increase the net revenue of the country, may at the same time render the population redundant, and deteriorate the condition of the labourer."





Ricardo defends this new position by working out an elaborate numerical example, which I shall not try to summarize. He draws from his example four conclusions. The first is that "the discovery, and useful application of machinery, always leads to an increase in the net produce of the country, although it may not, and will not, after an inconsiderable interval, increase the value of that net produce [as measured in units of embodied labor -- ed.]" This is actually a very interesting inference, because it is directly contrary to the claim by Marx that an increase in the ratio of Constant Capital ]machinery and such] to Variable Capital [labor] has a tendency to drive the profit rate down [the famous thesis of the Falling Rate of Profit.] For a very long time, a belief in The Tendency of the Rate of Profit to Fall was a touchstone of Marxist orthodoxy, separating the true believers from the Apologists for Capitalism [or the Petit Bourgeois Running Dogs of Imperialism, as I was once labeled by a Soviet journal, Literaturnaya Gazyetta.] However, in 1961, a Japanese economist, Nobuo Okishio, proved that under plausible theoretical conditions, a profitable labor-saving innovation by one capitalist would, when it had been adopted by all the other capitalists in that line of production, inevitably lead to a rise in the profit rate. [See my Autobiography for a nice story about Sam Bowles and Okishio's theorem.]





It is the Ricardo's third conclusion that is especially noteworthy. Writing, keep in mind, at the very time of the height of the Luddite uprising, he says: "the opinion entertained by the labouring class, that the employment of machinery is frequently detrimental to their interests, is not founded on prejudice and error, but is conformable to the correct principles of political economy."





There is a good deal more in the eleven pages of the little chapter on Machinery, but I think this is enough to display the quality and integrity of Ricardo's mind. The theoretical precision of his analysis in the Principles marks a dramatic improvement over that of Smith, as Smith's analysis marked an advance over that of his predecessors.





Before taking leave of Ricardo, let me spend a moment suggesting some further reading for those seriously interested in gaining a deeper understanding of the classical school of Smith, Ricardo, and Marx. The first thing to do, of course, is to read the entire Principles [and, if you have the energy for it, Smith's Wealth of Nations as well.] Naturally, I urge you to read Das Kapital. I prefer the older translation by Aveling and Moore, carried out under the watchful eye of Engels, to the newer Fowkes translation, which is actually more accurate, but loses the extraordinary literary brilliance of the original.





Once you have those under your belt, it is time to move on to the modern mathematical treatment of the thought of Ricardo and Marx. I am, I realize, a voice crying in the wilderness here, but I genuinely believe that the world-wide theoretical engagement by mathematical economists with Marx in the 1960's, 70's, and 80's was exciting and very important. I still believe that it had the potential to create a viable competitor to the standard neo-classical orthodoxy taught in the "best" universities in the United states and abroad.





Some of the key names in this movement are, first and foremost, Piero Sraffa, then Michio Morishima, Luigi Pasinetti, Andras Brody, Gilbert Abraham-Frois and Edmond Berrebi, and -- for a different but brilliant approach -- John Roemer. You will need a command of Linear Algebra to master all but the Sraffa, but then, Linear Algebra is basically second year undergraduate math, so it ought not to be too demanding.





I hope this mini-tutorial has had the effect of encouraging you to read Ricardo in the original. He is one of the great thinkers of the discipline of Economics, a worthy successor to Smith and predecessor of Marx.

5 comments:

Chris said...

Professor,
Have you read any of Lukacs or Rosa Luxembourg.

I've often heard the latter stands as a good follower to Capital Vol I-III.

Also, Ben Fine and Chris Harman are two individuals who argue Marxist economics are still just as paramount today as 19th century industrial capitalism.

Don Schneier said...

In honor of a book about Lucretius winning a National Book Award: How did Marx' dissertation advocacy of Epicurean 'swerve' influence his critique of Capitalism? For example, did he discern in Capitalist theory the legacy of Democritus, i. e. of rectilinear Atomism?

Robert Paul Wolff said...

I have in fact not read either Lukacs or Luxembourg, I am afraid. I am not at all knowledgeable about post-Marx Marxism.

It is so long ago that I read Marx's doctoral dissertation that I am afraid I cannot recall what he has to say about the doctrine of the swerve [does everyone know what that doctrine is, by the way?]. And it is just about sixty years since I studied Lucretius in Henry Bugbee's course on Hellenistic Philosophy at Harvard. Good grief, that is a long time ago.,

Chris said...

Professor I must admit I'm quite shocked to hear you've neglected all the Imperialist Theorist!

Oh well I suppose....

Robert Paul Wolff said...

Chris, that is just the tip of the iceberg of the books I have not read. I do not for a moment mean to suggest that one ought not to read those books, needless to say. I am not really a scholar, as that term is commonly understood. I read those books that I am for some mysterious reason drawn to read, and usually I read them very intensely. I also tend to remember what I have read [perhaps because of the way in which I have read it], so I give the impression of being very well-read.