Re: [OPE-L] Capital in General

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Oct 23 2005 - 11:16:03 EDT

On Sun, 23 Oct 2005 09:55:28 -0400
  Fred Moseley <fmoseley@MTHOLYOKE.EDU> wrote:
> On Thu, 20 Oct 2005, Rakesh Bhandari wrote:
>> > I do not mean to minimize the importance of capitalism's tendency toward
>> > crises.  I have devoted a lot of years to Marx's crisis theory, especially
>> > the falling rate of profit as applied to the US economy.  However, I have
>> > come to realize that the three volumes of Capital are generally at a
>> > higher level of abstraction than crises.  "Crises and the world market"
>> > was the 6th book in Marx's original 6-book plan.  Capital was only the
>> > first book.  Capital provides the basis for a more concrete theory of
>> > crises, but such a theory is not presented in the three volumes.  Before
>> > concrete crises can be analyzed, the production and distribution of
>> > surplus-value must be explained.  These fundamental questions are
>> > explained in Capital on the basis of the assumption that capitalism is
>> > "functioning normally", i.e. that S = D and price = value or = price of
>> > production.
>> >
>> > Comradely,
>> > Fred
>> I am quite worried about Fred's change of heart, seemingly away from
>> Mattick's interpretation of Capital as primarily a theory of crisis
>> and rupture (I know that Fred had said that if American capitalism
>> does not enter a Great Depression by the early 2000s, he would
>> consider Marx invalidated, but it seems that he is now simply
>> redefining what Marx actually did set out to do in order to maintain
>> allegiance to him). We have the critique of Say's Law at the
>> beginning, then the misery of the working class,  disproportionality
>> theory in the second volume (as Andrew T underlined), and FROP theory
>> in the third volume. I can't see how this work can be pressed into
>> the mould of an explanation of surplus value on the unrelaxed
>> assumption that S always equals D.
>> In fact, this idea that Marx never really got beyond S=D in his
>> theoretical work only opens him to the charge that he was a prisoner
>> of Say's Law. This is a concession to Keynes' lumping of him into his
>> idiosyncratic definition of classical economics. As Bernice Shoul
>> showed, Marx only makes provisional use of Say's Law in order to
>> discover a deeper source of crises, the shortage of surplus value in
>> the realm of production. Marx was however a thorough going critic of
>> Say's Law and Keynes only "rediscovered" much of Marx's criticism.
> Rakesh,
> Assuming that S = D for certain theoretical purposes is not the same as
> "being a prisoner to Say's Law".  According to Say's Law, S must = D
> ALWAYS AND OF NECESSITY in the real world.  According to Marx, "nothing
> could be more foolish".  Marx assumed S = D in his theory, in order to
> explain the production of surplus-value and the distribution of
> surplus-value "in its pure form".  But Marx clearly recognized that in
> the real world S is almost never = D, thereby rejecting Say's Law.

> I remember Mattick emphasizing that there is a great distance between
> Marx's abstract theory in Capital and concrete reality.  He himself closed
> one of those big gaps with his extension of Marx's basic theory of
> capitalism to the effects of government intervention on the rate of profit
> (which is not considered at all in Captial).
> And it was from Mattick that I learned the crucial aspect of Marx's method
> that I have been emphasizing - the determination of the total
> surplus-value prior to its distribution (and also from David Yaffe, who
> was following Mattick on this point).  This principle was the basis for
> Mattick's critique of Baran and Sweeay's Monopoly Capital - that
> monopolies affect only the distribution of surplus-value, not the total
> amount of surplus-value.
> Rakesh, let me make a more modest claim, without trying to decide whether
> or not "Capital is primarily a theory of crisis and rupture".  I argue
> that, in Marx's theory of the production of surplus-value in Volume 1 and
> in his theory of the distribution of surplus-value in Volume 3, Marx
> assumed that the circulation of capital "proceeds normally".  In Volume 1,
> this means price = value.  In Volume 3, it means price = price of
> producton.  In both cases, it is assumed that S = D.

Fred, as I understand Mattick's argument, Marx was interested in the
deepest explanation for why circulation would not proceed smoothly,
for why S would not equal D. To be sure, disproportionality of which
underconsumptionism is but a form could be one reason. But the
redistribution of capital could overcome such problems in the
realization of circulation of value. Marx was ultimately--and by
ultimately I mean that his preceding arguments and discoveries
are meant to prepare the ground--interested in showing how
a shortage of surplus value even on the assumption that s had
equalled d would choke further capitalist production and thus
produce a crisis of realization. Marx was thus not a prisoner of Say's Law
but the most throrough going of critics, in fact a much more
profound one than Keynes whose vision did not transcend
the surface of the circulation of capital.
But Marx is at all times building up not to an analysis of capitalism
on the assumption of smooth circulation but to an analysis of
crisis and rupture--the law of motion and disturbance of capital.
At any rate, this is how I learned to read Marx from Mattick whose
emphases seem different from yours at present, no?

Yours, Rakesh

ps the most abstract basis ofcrisis theory of the third volume is all
but spelled out in many different places in the first volume. We are told
how capital both aims at the production of surplus value and drains
variable capital relative to total capital from the system. This is presented
as a contradiction in the first volume.

> There are also the elements in Capital that you have emphasized, that have
> to do with crises:  the critique of Say's Law, the likely
> disproportionality in reproduction, etc.  But these are separate from
> Marx's general theory of the production of surplus-value in Vol. 1 and
> from his general theory of the distribution of surplus-value in Vol. 3
> (including his theory of prices of production, with equal rates of
> profit), in which Marx assumes capitalism "in its pure shape".
> Rakesh, do you agree or disagree with this more modest claim?
> Comradely,

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