Forty-five years ago, I began an intensive study of the economic theories of Karl Marx to which I devoted much of the next 15 years. I was moved by a vision or insight into Marx’s theories that involved me in learning advanced linear algebra, reading a good deal of mathematical economics, studying economic history, and bringing to bear the insights of literary criticism that I had picked up more from my marriage to a distinguished literary scholar than from formal study. The result was a complex integrated reading of volume 1 of Capital that found expression in two books and a number of lengthy journal articles. The core of that reading is the conviction that Marx chose the extraordinary language he uses in the first seven or eight chapters of volume 1 of Capital in an attempt to fuse his formal analysis of capitalist economics with a philosophical understanding of the mystifications of capitalist institutions and practices.
In the four decades and more since that time, I have on
several occasions devoted some or all of a course to Marx’s theories, but I
have never actually laid out my full-scale interpretation of
Marx. It is my impression, not based on any systematic far-reaching survey of
the literature, needless to say, that no one else has ever sought to combine
mathematical economics and literary theory in this fashion in order to
understand Capital.
I figure once in my life I should lay the whole thing out before a class and see what kind of response I get. Well, I am 88 and as they say, not getting any younger, so I have decided that that is exactly what I am going to do in the course I will start teaching on August 15.
I have played Beethoven’s Opus 59 quartets, I have owned an apartment in Paris, I have been on a safari to Botswana, I have been arrested in an anti-apartheid demonstration. This pretty much completes my bucket list.
11 comments:
How cool, Professor Wolff! If only I were a UNC philosophy student...
Have you read William Clare Robert's recent book, "Marx's Inferno?" It argues that volume one of "Capital" is modeled after Dante's "Inferno." Very interesting book; would recommend checking it out.
I haven't read Marx's Inferno myself, but I've mentioned it here before. I'm pretty sure RPW hasn't read it.
Here are some reviews. The first gives a (somewhat critical) summary of each chapter.
https://link.springer.com/article/10.1057/s41296-017-0126-y
https://repositorio.ul.pt/bitstream/10451/28341/1/Raekstad_Marx%20Inferno.pdf
The debate between david harvey and wc roberts, referred to in the second reference, is here:
https://www.jacobinmag.com/2017/03/david-harvey-marxs-inferno-review-capital-grundrisse/
https://www.jacobinmag.com/2017/03/marxs-inferno-capital-david-harvey-response/
I was encouraged by someone to ignore the historical evidence that Marxism always fails and to actually study it from the ground up, which I started to do as an educational exercise and very soon found an error. It turns out that others have found exactly the same error (the error is in the first bolded part below). To wit (bold mine):
Thus, Marx defined the rate of profit as \((S/(C+V))\), which is equivalent to the rate of exploitation divided by the organic composition of \(\textrm{capital} + 1\). This last proposition has been referred to by Jon Elster as the “fundamental equation of Marxian economics” (Elster 1986: 67).
Marx’s analysis of the rate of profit seems to entail that labor-intensive industries will be more profitable than industries that rely to a greater extent on constant capital. But this conclusion is clearly empirically false (Böhm-Bawerk 1898), and moreover incompatible with Marx’s assumption of a competitive economy in which investments will adjust so as to equalize the rate of profit between industries (Arnold 1990: Ch. 3; Buchanan 1985: Ch. 3). Marx himself recognized this fact, and sought to address it in the third volume of Capital by dropping the assumption of volume 1 that value and price are equivalent, and showing instead how value can be transformed into price through some more complicated process. Whether Marx’s attempted solution to this “transformation problem” was successful, however, is a matter of great controversy (Arnold 1990: Ch. 3; Samuelson 1971; Kliman 2007).
Then, to my surprise, is followed by this (bold mine):
Marx’s theory of exploitation appears to presuppose that labor is the source of all value. But the labor theory of value to which Marx and early classical economists subscribed is subject to a number of apparently insurmountable difficulties, and has largely been abandoned by economists in the wake of the marginalist revolution of the 1870s. The most obvious difficulty stems from the fact that labor is heterogeneous. Some labor is skilled, some labor is unskilled, and there does not appear to be any satisfactory way of reducing the former to the latter and thereby establishing a single standard of measure for the value of commodities. Moreover, the labor theory of value appears to be unable to account for the economic value of commodities such as land and raw materials that are not and could not be produced by any human labor. Finally, and perhaps most fatally, Marx’s assumption that labor has the unique power to create surplus value is entirely ungrounded. As Robert Paul Wolff has argued, Marx’s focus on labor appears to be entirely arbitrary. A formally identical theory of value could be constructed with any commodity taking the place of labor, and thus a “corn theory of value” would be just as legitimate, and just as unhelpful, as Marx’s labor theory of value (Wolff 1981). Therefore, if, as some have alleged, Marx’s theory of exploitation is dependent on the truth of the labor theory of value, then a rejection of the labor theory of value should entail a rejection of Marx’s theory of exploitation as well (Nozick 1974; Arnold 1990).
It's a really interesting article for those who are interested in the debate as I am, so here is the source:
Exploitation - Stanford Encyclopedia of Philosophy
@ Ahmed Fares
As you likely already know, Prof Wolff thinks that Marx was right on exploitation (though not right on the LTV as he set it out).
Richard Wolff, a Marxist economist, is a likable fellow. I watch a lot of his YouTube videos. In one video, he offers as proof that Marxism works by saying that the Soviet economy was one of the fastest growing economies in the earlier part of the 20th century. So I decided to do some research on that. It's true that the growth was there, but it was actually the capitalist growth that the results were measuring because the Soviets were doing Solow "catch-up" growth to where the capitalist economies had grown to. A few quotes:
be 2nd fastest growing economy of the 20th century
The source for this claim is this graph, which shows that the Soviet economy was the 2nd fastest growing, beaten only by Japan, from 1928 to 1970 in terms of GDP per capita.
Small and recently disrupted economies generally grow faster than developed countries as they ‘catch up’. For example, following a major war countries may experience rapid growth as soldiers return home and restart their previously productive jobs. Looking at the period of the Soviet not marred by cycles of war, crisis and famine shows rather unremarkable growth.
Part of this early rapid growth is spurred by being able to take advantage of developed economies’ technology and capital. For example, in 1924 there were 1,000 tractors in the Soviet Union, but by 1934 there were over 200,000.
This is a remarkable success for the USSR, but they did not do it alone:
This technology, however, did not spring from the Russian soil; it came almost entirely from the United States. Through the mid-thirties, most of the tractors in the Soviet Union were of American manufacture or copied from American designs. When copied, they were manufactured in plants designed, built, and operated under American guidance. And, in some cases, Americans guided the Russians in the use of tractors. The United States, in short, played a most significant role in bringing the tractor to the Soviet Union.
Once these ‘easy’ gains in growth were made, the Soviets would find themselves incapable of matching the economic growth of the United States and Western powers, as they entered into a period known as the Era of Stagnation.
source with graphs: Soviet Union: Facts and Fictions (Part 1: The Economy)
LFC,
Thank you for the clarification.
On the classical economists and Marx.. Smith argues that the 'natural price' of a commodity is largely determined by the price of the labour that goes into it. However, it is clear that this theory presupposes a relatively constant *background* demand for the commodity in question, around which which everyday demand fluctuates. This cannot be taken for granted in an era of technological change. (Think of the current value of an eighties Mac or a video-cassette.) Thus Smith (without perhaps fully realising it) is proposing a *conditionalized' version of the LtV. IF * background demand is constant* THEN the natural price of a commodity is roughly proportional to the price of the labour that go goes into it (with due allowances for the profits of the investor and, in some cases, rent). If there *isn't* a reasonably constant background demand then there is no such thing as a commodity's 'natural price'.
I am a bit tentative about this , since it is a subject that I am only getting into, but simplifying somewhat, it seems to me that for Smith the natural price or value of a commodity is an EFFECT whereas for Marx it is a CAUSE. Or perhaps better, for Smith it is the explanandum whereas for Marx it is the explanans. A big step backwards in my view., and a step backwards from a political point of view, since it obscures the way that political measures, (such as minimum wage laws and welfare state) can affect the price labour (or of various kinds of labour) and hence the 'natural price' of commodities.
I haven't studied Marx's economics, I haven't even really properly studied mainstream economics 101, and I am abashed. About some of that. Linear algebra, fascinating stuff.
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