File spoon-archives/marxism-thaxis.archive/marxism-thaxis_1997/marxism-thaxis.9710, message 382


Date: Sun, 26 Oct 1997 18:27:36 +0000
From: James Heartfield <James-AT-heartfield.demon.co.uk>
Subject: M-TH: value theory and the empirical economy


In message <l03102809b077db70aad6-AT-[166.84.250.86]>, Doug Henwood
<dhenwood-AT-panix.com> writes
>Bill, maybe you can answer me on this, since I can't get an answer out of
>Jerry. What does this sort of analysis 

>the under lying conception of value
>>theory

>tell you that the intelligent use of
>bourgeois statistics can't?
>
>Doug


Doug asks a good question. For a few years now I have run reading groups
on Capital Vol 1 (though not in an academic setting) and I have to say
that there is quite a gulf between Marx's value theory and an empirical
account of the economy. However, that is not so surprising since Marx
does not aim at an empirical account of the economy, but a theoretical
reconstruction of it. The question, then, is, is there any virtue in
Marx's theoretical reconstruction? The answer I think depends on what it
is you are after. Clearly there is no simple correspondence between
Marx's Capital - A Critique of Political Economy, and Capital in the
world. As Henryk Grossmann points out in The Law of Accumulation (Pluto,
1992) Marx makes a series of methodological assumptions, abstractions
from complex empirical conditions, so as to reconstruct capital
logically, from its simplest element, the commodity. That means that
there are several assumptions made in the course of Capital that one
would have to say were preposterous were one interested simply in an
empirical account. 

Such assumptions are the abstraction from supply and demand, the
assumption that commodities exchange at their value (Vol1) rather than
their price of production (not explained until Vol3), the reduction of
all labour to simple, unskilled labour in its value creating properties,
the reduction of capital to industrial capital (vol1), and the
subsequent abstraction from interest-bearing capital or rent-bearing
land (again not explained until chapter 3), the assumption of a uniform
turnover time (vol2), the assumption of a uniform rate of profit (vol3),
the abstraction from the impact of the world market.

Clearly, the conceptual account in Capital is not the same thing as the
an empirical account of the Capitalist economy. Indeed, one would have
to say that it was deficient in the respects outlined above. So, are
there any advantages in these methodological assumptions. Again, the
question is what are you looking for? Marx's Capital is not history or
journalism (both respectable endeavours on their own account, as Gerry
Levy alluded too, from another perspective, Marx was quite a mean
journalist, writing sarcastic reports of the City of London for the New
York Press) and does not tell the What? but the Why and the How?

In so far as it is plausible (I think it is), Capital's logical
reconstruction has these advantages over empiricism: 

* Marx distinguishes between the social *form* of production (value
production) and the technological production of use values. Such a
distinction, unless I am simply ignorant of the material, is a closed
book to bourgeois economics, and so there is no reason to suppose that
an interruption of the productive process is any more than a technical
question, or to reflect too deeply on the growing divergence between
capital accumulation and human development; 

* Marx shows that the antagonism between value creation and the creation
of material wealth has its origins in the two-fold character of the
commodity, and hence is an intrinsic, and not accidental or extraneous
aspect of Capital accumulation; 

* Marx shows that value, despite its expression as an exchange ratio
between commodities, and hence is an objective and not a subjective
relation (contrary to marginal utility theory); 

* Marx argues that money is not a mere convention, but a necessary
development of the value form, and hence must itself have value - a
contention that ought to be tested against the spectacular divergence of
money in circulation from Gold reserves; 

* Marx exposes the myth that each purchase is a sale, and hence supply
and demand must always be equal, showing that money divorces sale from
purchase; 

* Marx formulates a law of the money supply that is an interesting
reversal of the monetarist one, showing money supply to be the dependent
variable, while values and the velocity of exchanges are the independent
variables - something that Margaret Thatcher discovered practically,
when if she had been of a mind to, she could have anticipated by reading
Capital; 

* Marx shows that labour-power creates more value than is paid in wages
- surplus value - and so gives an account of the dynamic character of
value creation that is missing from neo-classical economics; 

* Marx differentiates between surplus value and the rate of profit,
explaining the illusion that profits are created in Nassau Senior's
'last hour'; 

* Marx shows that 'constant capital', such capital as is it not invested
in wages, creates no new value, but only transfers its value to the
final product; And further that the value enhancing impact of new
technology comes from the cheapening of the commodity labour-power, by
cheapening those commodities that make up wage goods, leading to a
relative increase in the share of value produced that falls to the
capitalist as 'surplus value' (the importance of this, again, is to show
the mismatch between value production and production per se, as relative
increases in surplus value are bounded by the length of the working day,
where production as such is not); 

* As against those theories that capital expansion finds its limitation
in the sphere of circulation (Sismondi) as a lack of markets for
additional products, Marx shows that capital accumulation creates its
own markets (vol2); 

* Marx (in vol3) explains that the formation of an average rate of
profit implies a redistribution of value between capitals, transferring
value produced in labour intensive industries to those in capital
intensive industries (that bears upon the redistribution of value from
the less developed world to the developed); 

* Marx shows that the origins of profit, interest and rent are to be
found in surplus value, as the only factor that will allow creation of
new value (and hence that the number of labourers productive of surplus
value sets a limit on profits, interest, rent etc); 

* Marx shows that the increase in the mass of profits (ie surplus value)
is expressed in a falling ratio of profit to capital (which, bearing in
mind that the empirical rate of profit differs from Marx's theoretical
reconstruction of it, is demonstrated in The Imperilled Economy, URPE,
1987, and in Aglietta's book on the US economy); 

* And Marx shows that there exist a number of counter-tendencies to the
falling rate of profit (greater mass of surplus value through increases
in labour productivity, devaluation of constant capital, mobilising idle
capital through credit etc) meaning that the falling rate of profit is
expressed as a tendency.

Now, because Marx's theory is a logical reconstruction and not an
empirical account it is open to the charge that the categories and
concepts of the system are self-serving, constructed to achieve the
results obtained. It is always possible to turn a theoretical system
into a dogma, by susbstituting the mental appropriation of the system
for an investigation of the real economy. There are many versions of the
objection that the system is self-serving (such as Bohm-Bawerk's attack
on the value/price of production distinction) and I do not intend to
answer them here, only to note the lingering suspicion that the sole
import of Marx's theory is to console Marxists that Capital will
collapse. Of course, any theoretical system is open to such a charge,
but I think it is sufficient to say here that anyone who thinks Marx
predicted the collapse of the capitalist system under the weight of its
own contradictions has misread him.

But what to make of his contribution? I suggest that Marx's theoretical
construction is a guide to empirical investigation. Not that the facts
should be made to fit the theory, but that insofar as the theoretical
reconstruction captures the underlying essence of the process of
accumulation, it directs us give more weight to certain trends
(overaccumulation, growth of unproductive labour, growth of speculative
capital) and less to others (realisation problems, political barriers,
currency speculations). Marx's theory of Capital is one of a radically
disequilibriating economy, that combines both constructive and
destructive tendencies, and that is historically relative. As such it is
no substitute for empirical research, but the best explanation of why
the economy behaves as it does, as well as being the best account I know
of the real character of social relations, their dynamic and their
contingency.

To take an example from Doug's book Wall Street (of which I am a fan), I
found it ambiguous on the relation of Wall Street to the real economy. I
read there asides to the effect that Wall Street is not simply parasitic
on an otherwise healthy economy, which seems right. But Marx's
discussion of speculative capital would lead to the conclusion that its
arose out of the limits to productive accumulation. Cart and Horse
judgements belong to the realm of theroetical reconstruction, I suggest.

As to the efficacy of value theory today, that seems a difficult
question. Marx was never simply an economist. Rather his interest in
Political Economy was both a critique of the best scientific expression
of the ideas of his own day, and a critique - not just of the economy,
narrowly understood, but of social relations in their totality. 

The problem is that Marx's critique is in part limited to the critique
of political economy, and serves to the extent that those categories
are, as he says real forms of social existence. Clearly the paucity of
economic thinking today qualifies the extent to whcih one can
appropriate real social conditions in categories that were developed by
classical economy, reappropriated by Marx, but then dropped by all
bourgeois thinkers. Clearly value has an objective existence outside of
its reflection in theory. However, with the falling away of economic
thinking (see Paul Ormerod, The End of Economics) Marx's theory of
capital loses its character as a critique of a living ideology. As such
it can become more like model-building than a critical-theoretical
account, as Marx's categories take on more of the character of
theoretical constructs, than real forms of social existence.

I have often thought that if Capital was re-written today it would have
a very different character. First, it could not take the critique of
political economy as its route into an account of social relations,
because PE is in effect a dead science. So what material would one
attack instead. Sociology, perhaps, would be a better expression of
bourgeois thinking in 1997. The passages on the form of value would seem
to be an excellent model for a critique of the reflexive-modernity
theories that are popular here, or the communications-theoretic model in
Germany. Development theory and anthropology seem to be important places
where people think about the world economy. In any event, it would be a
mistake to think that economics accounts for the totality of social
relations in the way that Marx was able to assume that Political Economy
approximated to those in his own day.

Fraternally
-- 
James Heartfield


     --- from list marxism-thaxis-AT-lists.village.virginia.edu ---

   

Driftline Main Page

 

Display software: ArchTracker © Malgosia Askanas, 2000-2005