WRAPPING THINGS UP

In my haste to bring my short series of posts on Marx’s economic theory to an end, I am afraid I dropped the ball and forgot to complete one part of the argument. You will recall that Ricardo got stuck at the end of his life on the problem of explaining the very common situation in which different lines of production exhibited different proportions of labor indirectly and labor directly required in production. Marx believed that he had a solution to this problem but, as I explained, chose to wait until volume 3 before presenting it. Only after he had posed and solved the problem that the classical political economists had not even seen, namely explaining the origin of profit itself, could Marx returned to the question of what to do with Ricardo’s puzzle.

 

Marx’s solution was quite interesting. He argued that in a mature capitalist system it is the system as a whole and not simply individual lines of production or even individual factories that must be examined. In the general case in which different lines of production exhibit varying organic compositions of capital, to use Marx’s term, it is the entire capitalist system to which we must turn to identify the relationship between profit and surplus labor. In any particular line of production these two quantities may not be equal (or, to be more precise, proportional) but in the system as a whole they are equal, thereby establishing that capitalism as a system rests on the exploitation – which is to say the extraction of surplus value from – the working class.

 

Marc seems simply to have assumed that this was true; how could it be otherwise! But the modern mathematical economists who returned to Marx and Ricardo and brought their analytical tools to bear on those theories did attempt to prove Marx’s claim and they came up with a quite fascinating result. As Piero Sraffa had made clear in his foundational monograph, it is essential to distinguish between those commodities that are required directly or indirectly in the production of all other commodities – commodities which he called basics – and luxury commodities which may be required in their own production or even in the production of other luxury commodities but which are not required directly or indirectly in the production of all the commodities in the system. In the little model that I created in my book, Understanding Marx, I included a luxury sector which somewhat facetiously I identified as a sector devoted to the production of theology books – this is a nod to the religious pretensions of the early English capitalists.

 

Now, it seems that if there are no luxury goods being produced in an economy – or, what is pretty much the same thing, if the luxury goods sector is only a tiny part of the entire economy – then Marx is actually correct! Total profits in the system as a whole will indeed be equal to total surplus labor, for a suitable choice of numeraire.  This means that all of the profits are being poured back into the economy to expand the scale of production. “Accumulate! Accumulate! That is Moses and the prophets to the capitalists,” as Marx sardonically remarks at one point in Capital.

 

But how do we know that there is some balance in the size of the different lines of production that will, when the capitalists do their very best to reinvest, correctly use all of the physical surplus that is produced in each cycle of production? Well, Sraffa demonstrated that that is necessarily true. Indeed, things get a little bit more delicious than that. In the 20^th century, the great Hungarian – American mathematician John Von Neumann, proved an important theorem in growth economics concerning the maximum growth path for a capitalist economy and it is precisely when an economy is on that maximum growth path that Marx’s solution to Ricardo’s problem is correct.

 

I do not suppose many people find this as delightful a fact as I do, but it is one more way of seeing that despite using only, as Stalin said, addition, subtraction, multiplication, division, and the taking of averages, Marx was in fact a brilliant intuitive mathematical economist.

ODDS AND ENDS

Several very recent comments have raised questions about game theory and about Analytical Marxism.   Since I have written online an entire short book on the use of formal methods in political philosophy in which I talk at some length about game theory, I will simply point those who are interested to that book, which is archived at box.net, accessible via the link at the top of this page.  As for Analytical Marxism, I will refer those who are interested to the review I wrote of a book by the smartest and most interesting of that crew, Jon Elster, also available at box.net.

I feel a little bit like the over the hill lounge pianist noodling away at the piano and saying, every so often, "and then I wrote," before going into some old tune.

THE MYSTERY OF THE SENIOR MOMENT

 I have written before about what we old folks call a senior moment and in particular about my strange inability to remember the name of the great soprano Kathleen Battle. Last night, I lay in bed tossing and turning for more than an hour trying to remember a name that I simply could not come up with.  I could see the person in my mind. I knew that the person was a man. I knew he was American, that he was white, that he was pretty old, that he was short and funny looking, that he was a Harvard professor of law, that he spent summers on Martha's Vineyard, that he got bent out of shape when the folks on the Vineyard stopped inviting him to dinner parties after he came out for Trump, and I even remembered that he had been one of Trump's lawyers during the first impeachment. I knew his name was not Leo Durocher although I thought it was not too far off that but I just could not remember the name. Finally, I got up, went to my computer, and very quickly established that I was thinking of Alan Dershowitz.

Why on earth is it that I can remember all these things about a person and yet simply not be able to come up with his name? What special link in the brain is failing just for the name but not for everything else about him? That, I must confess, does not keep me up at night, but trying to remember "Alan Dershowitz" really did.

I DON'T KNOW MY OWN POWER

Two responses to my previous post require some extended discussion, but before I undertake that I do want to call attention to my extraordinary and unexpected influence over national affairs. No sooner do I put up a scathing comment on Paul Kosar and the idea of an Anglo-Saxon Caucus in the Republican party than Marjorie Taylor Greene announces that she is taking the idea down. Of course, skeptics may suppose that Kevin McCarthy's attack on the idea had some role to play in Greene's decision, but those who understand the power of the deep state will reject such superficial explanations.

A REPLY TO SOME COMMENTS

All right, at long last let me try to address some of many intelligent comments provoked by my multipart series on Marx. I have gone back in the comments section and collected up some of them, but by no means all. Even so, I want to try to respond to some of these.

 

Let me begin with a comment I was unable to locate but which, if my memory serves, was posted by LFC. He (is that correct?) notes that if at an early stage in the development of capitalism the ratio of embodied labor to direct labor is 100 to 1, at a later stage it may have grown to 1000 to 1, and that would seem to keep driving the profit rate down if profit really is the money form of the surplus value extracted from the direct labor inputs. This is exactly the inference Marx drew, which led him to postulate that there would be a tendency for the rate of profit to fall in capitalism. As it happens, Marx was wrong. My colleague at the University of Massachusetts, Sam Bowles, proved rather elegantly that in the sort of economy Marx was analyzing if a new more capital-intensive process of production were introduced by an innovative capitalist resulting in a momentary rise in that capitalist’s profit rate, the consequence when the system settle down into equilibrium would be a rise, not a fall, in the profit rate globally. He announced this result triumphantly to a class he was teaching, only to have one of the students point out that a Japanese economist named Okishio had proved it 10 years earlier. Sam was consequently reduced to publishing an article In the Cambridge Journal of Economics with the title “A New Proof of Okishio’s Theorem.”

 

The second comment came in the form of an email from Jerry Fresia.  He wrote:  "You write that by means of a long historical process workers who produce commodities are deprived of control over their work, their tools, and skills. What is interesting to me is that this exploitation (the correct term here?) is parallel to the alienation that will take place once the farmer, let us say, enters the factory. So apart from alienation in the factory, a farmer who produces corn as a commodity also suffers a type of market dehumanization.  Would it be correct to say that?"

 

This is a little complicated but the essential answer is yes. Under the pressure of market competition, the natural rhythms of farm work must give way to a sort of industrial farm production that one sees most clearly in the raising of chickens or pigs for market. It is my impression that some independent farmers to this day successfully resist the market pressures sufficiently to gain a genuine satisfaction from the activity of farming but I think they are rare as compared with the industrialization of food production that is characteristic of advanced capitalism.

 

Jamie Kelly, a philosophy professor at Vassar College, poses several questions into lengthy email messages.  Let me take up the first of them.  The second is too complicated for me to try to deal with in this post. Kelly first writes:  “If you abandon the centrality of the labor/labor-power distinction, does that mean you also give up on Marx's account of surplus value (i.e., it is the difference between the value labor produces, and the value of labour-power)? That would surrender a lot of the theoretical apparatus of Capital (e.g., his account of the working day, and maybe even his account of automation), but I don't see how surplus value can be cashed-out without relying on the labour theory of value.

 

To my mind, the key historical claim that Marx makes about the transition from feudalism to capitalism is the doctrine of double freedom: workers under capitalism are free in the sense of having the right to sell their labour power, and 'free' in the sense of having nothing to sell but their labour power. This undergirds both his claims about the exploitation of workers, and his explanation of the enormous productivity of capitalism. Do you think double freedom can be made sense of without the labour theory of value?

 

Marx leverages the labor/labor-power distinction so much throughout Capital, that I am having a hard time seeing how the working day, machinery and modern industry, or even primitive accumulation (i.e., the best parts of the book) can be salvaged without it.” 

 

There are several questions in this message, all turning on my rejection of The Labor Theory of Value. First, recall what I said early in my essay about the 19^th century meaning of the phrase “theory of value.” To Smith or Ricardo or Marx a theory of value was a theory of natural or long-term or equilibrium price, as we would say today. Marx’s theory of capitalism without The Labor Theory of Value is, many would say, like Hamlet without the Prince. Certainly that is the view of most contemporary writers who identify themselves as Marxists. But I think this is wrong. I do not think there is a single important and valuable element of Marx’s analysis and critique of capitalism that cannot survive scuttling a theory of natural price that turns out to be analytically incorrect. You can see this quite clearly in Kelly’s second paragraph where he talks about the “doctrine of double freedom.” The exploitation of the workers is grounded in their having lost everything but their bare ability to sell their labor and the mystification of capitalism that serves to rationalize it and justify it in the eyes of those who live within it is nicely captured by this notion of double freedom. Marx’s account of the working day, of machinery and modern industry, of primitive accumulation and much else, grounded in his extensive historical studies, nowhere makes essential use of The Labor Theory of Value. Whether you take to my rudimentary effort to develop an alternative analytical framework or not, I think that effort makes clear that one can talk meaningfully about the ways in which capitalism exploits labor quite independently of the particular analytical framework that Marx introduced to explain this phenomenon, which he correctly believed lay at the root of the structure of capitalism. When I hear Marxists insisting that there cannot be Marxism without The Labor Theory of Value, I sometimes think I am listening to Catholics saying it cannot be Christianity without the virgin birth or Shiite Muslims saying there cannot be Islam without the hidden Imam or Jews saying  you cannot be Jewish if you do not keep kosher. I am willing like Spinoza to be driven from the congregation if that is what it takes to follow what I believe to be the truth.

 

The frequent commentator who uses the nom de blog Marcel Proust, writes as follows:  “So far as I am aware, all economic systems more technologically advanced than that of hunters and gatherers -- perhaps excepting pastoralism -- depend fundamentally on the exploitation of someone. The only reason that I can understand for taking this to be Marx's key insight is that capitalism has successfully mystified itself, if I may engage in a huge bit of anthropomorphism and attribute agency to the system itself. Nearly everyone who is part of the system believes that one way or another, they are making free choices and therefore cannot possibly be exploited.” To which I need only say Amen. Marx could not agree more. What distinguishes capitalism from slavery or feudalism, the two earlier forms of economic organization about which Marx writes, is not the fact but the manner of exploitation as well as the accompanying mystification that is typical of capitalism.

 

Well, that is enough for today. I will go back and look again to see whether I can surface some other interesting comments.

 

 

 

 

YOU CAN'T MAKE THIS UP

 Paul Gosar, a Republican member of the House of Representatives from Arizona, whose paternal grandparents were Slovenian and whose maternal grandparents were Basque, is one of a number of Republicans who have formed a new political organization devoted to preserving the Anglo-Saxon heritage of the American Republic.

A MEDITATION

Before finally replying to some of the many interesting comments on my multipart Marx essay, I should like to say just a few words about why I find blogging an odd and in some ways unsatisfactory mode of communication. One of the criticisms of classical social contract theory, advanced by many commentators, is its treatment of the political community as a timeless assembly of mature and independent adults. There is some feeble effort to take account of subsequent generations, but they tend to be treated as no different from immigrants who enter the community and sign on to the commitments made in the original contract. But the truth, of course, is completely other. All of us live through a lifecycle starting with birth, moving from childhood to adulthood, then if we are fortunate to old age, and finally to death.

 

Everyone knows, even if the theory takes no account of it, that we are different as children from what we are as young adults, different as young adults from what we are in our maturity, and different again in old age. Readers of this blog have all noticed that I increasingly often make reference to my age, of which I am extremely aware, indeed in some ways obsessively so. I have spent the last 71 years in the classroom, as it were, first for five years as a student, then for 53 years as a teacher, and then for the past 13 years as a blogger, part-time teacher, YouTube lecturer, and always throughout my life as a writer.

 

As I have often remarked, I have spent most of my life in my head, but inevitably, properly, humanly, my relationship to the world around me has changed as the decades have gone by. As a young man I was energetic, enthusiastic, confrontational to authority wherever I could find it, forward-looking, and utterly wrapped up in the ideas in my head. As the years went by, and especially after I had children, I became supportive, generative, quasi-parental toward my students, for all that my published work continued to announce me as a radical, a man of the left, a critic of established authority.

 

When I was young, I scarcely noticed what was said about the books I published. I read very few of the reviews and did not have a strong sense of myself as a member of and participant in a scholarly community. My decision to resign from my Columbia professorship and move to the University of Massachusetts was, I finally came to realize, very strongly motivated by a desire to withdraw from the bustle of the Academy to a retreat where I could pursue my ideas untroubled.

 

Now that I am in my late 80s and compelled to acknowledge that my life is nearing its end, I think a great deal about those who have read my writings and have found something of value in them. It is important to me, in a way it never was before, to believe that something of what I have written will live after me.  I am eager to receive, as I do, confirmations that out there in the world somewhere are readers who have enjoyed my books, my articles, or even these blog posts. I am not quite like the Ancient Mariner who stoppeth one in three, but I am not too far off either.

 

But blogging by its structure and nature is almost completely insensitive to the natural rhythms of a human life. The posts appear as if by magic and linger on in cyberspace presumably forever. I cannot see the people to whom I imagine myself to be talking nor can they see me and, strangest of all, I cannot really tell where they are, how old they are, whether they are male or female, and who they are as people. I do not find this liberating, I find it unsettling. I would rather be sitting around a table teaching a class of 15 than posting little essays that are read perhaps by a thousand. That is why I have gone to such lengths, even taking weekly flights, to find a place where I can sit around that table yet again as I have so often in the past 66 years.

 

Well, if I am not the Ancient Mariner I am most certainly Mr. Chips.