Re: [OPE-L] Jacques Gouverneur's new text on Marxist economics

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Thu Feb 03 2005 - 03:22:05 EST

At 5:24 PM -0500 2/2/05, Gerald_A_Levy@MSN.COM wrote:
>  > Very quickly: how do these alternative textbooks explain the
>>  phenomenon of profit? Michele Naples cowrote an important article
>>  about incoherence of explanations offered in mainstream textbooks. In
>>  Understanding Capital Foley presents an important comparison between
>>  neo classical and Marx's explanation of profit. Alfredo and Ben
>>  Fine's Marx's Capital presents a direct critique of several non
>>  Marxist explanations. I think this is the way to go. Certainly the
>>  most stimulating for analytical class discussion. How does Gouverneur
>>  approach this problem? Bowles and Edwards?
>Hi Rakesh:
>At the time, both B&E were part of the Social Structures of Accumulation
>(SSA) school.  B has moved away from SSA since; I'm not sure what E's
>current perspective is.  The ground work for the examination of profit is
>presented in Ch. 2 -- "The Surplus Product: Command and Conflict".
>Profit is then introduced in Ch. 6 -- "Capitalism and Other Economic
>Systems".  In that section profit is defined as "the form of the surplus
>product in a capitalist economic system; they are what is left over,
>out of sales revenues, after wages, the costs of materials used up, and
>wear and tear on machines have been paid." (2nd ed., 104)

This seems to define profit, not explain it. That residual could then
be explained as a reward for the supply of entrepreneurial skill, for
the absorption of risk, for waiting, etc. Or is there something left
over after that? Why?

>They go on
>in Chapter 8 to explain profit, and especially the profit rate, in much
>greater depth.  While their formula for the determinants of the profit rate
>is rather long, I found that it was useful as a way of getting students to
>think strategically about various ways in which capitalists can attempt
>to increase the profit rate and how workers are affected and can respond.
>Note the emphasis on the surplus product rather than surplus _value_.

Yes indeed. As if capitalists are interested in only the quantity and
not the value of the things that their money profit can command.

>The single biggest shortcoming from a learning perspective with B&E
>was that it presented their perspective with barely a reference to
>mainstream theory.

Yes, I think it is impossible to teach without such engagement.

>   This means that instructors have to fill in the gaps,
>so to speak, by at least briefly presenting  and critiquing mainstream
>perspectives.  I felt that this was suitable, though, given the context in
>which I assigned this book -- for a course in Basic Economics taught at
>a "Labor College" where the course was a terminal course.  Green &
>Sutcliffe explained and engaged marginalism more (but still relatively
>briefly)  than B&E had.

I have this book, so I shall look it up.

>   Another alternative at the time -- which I
>think is also out-of-print -- was Richard D. Wolff and Stephen A.
>Resnick _Economics:  Marxian Versus Neoclassical_ (The John
>Hopkins University Press, 1987).  This book presented _much_
>more mainstream theory but  I decided not to adopt this text because
>I thought that students would be confused by the organization of the text.
>Perhaps some others on the list had experience assigning W&R?

I think this is a very helpful book because it is inherently critical
of the mainstream alternative. So is Ranganayakamma, Saad-Filho and
Fine, and Foley. I don't think it's an accident that the texts which
are interested in the critique of mainstream theory are also the
truest to Marx.

>>  And Green and Sutcliffe in their appropriately named book?
>Green and Sutcliffe had  (have?) a surplus approach perspective.  Profit
>is explained at various points in the book,  including the short section
>from Ch. 1 titled "The economists' dispute about profits" (pp. 11-12).
>After briefly outlining and criticizing the perspective of the
>"pro-capitalist economists", they present an alternative view. They
>begin by highlighting production and how the class relationship is
>an unequal power relation.  They continue:
>         "Thus capitalism contains two main spheres of relationships:
>           production and exchange.  This leads to an altogether different
>          explanation of the origins of profits.  In the conventional view,
>          described above,  profits originate in market or exchange
>          relations.  In the alternative view,  which derives mainly from
>          the theoretical  writing of Karl Marx,  profits depend on the
>          successful functioning  of both spheres in unity with each other.
>          In the labour process  workers must produce commodities
>          which are worth more than the  labour-power and  material
>          inputs which went into producing them;

But this does not explain why risk or waiting or entpreneurial skill
did not go into producing them.

>  in other words the
>          productivity of labour must be sufficiently high.
>          Then the  commodities must be sold on the market at a price
>          equivalent to their  worth.  The profit must be realized.
>             In the first part of the process profit is only potential; it is
>          only when the second part is fulfilled that profit becomes real,
>          that is,  converted into money.  Both parts are absolutely
>          essential.  Profit  can not be realized in the market out of thin
>          air;  it must first of  all  have been produced potentially in the
>          production or labour  process. Yet equally, if the potential profit
>          fails to be realized because of  the failure of the market, then it
>          evaporates.  And capitalists will not go on producing commodities
>          on which they cannot realize profits."
>Note that the word "value" is not mentioned above.  Putting aside the
>assertion about how the productivity of labour must be "sufficiently
>high"  which excludes the possibility of additional potential profit being
>created by additional labor time / worker (i.e. thru the production of
>absolute surplus value), *what is wrong with the above*?

It is simply not specific enough. How does profit arise out of
production? What is the relation between production and circulation?

There is a helpful book by Obransky (sp?) Profit Theory and Capitalism.


>  At the
>very least -- it seems to me -- it can serve as a credible introduction
>to the subject (recalling again that this was near the beginning of their
>In solidarity, Jerry

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