Re: [OPE-L] Say's Law

From: Fred Moseley (fmoseley@MTHOLYOKE.EDU)
Date: Fri Nov 04 2005 - 11:35:49 EST

On Tue, 25 Oct 2005, Rakesh Bhandari wrote:

> Yes but what begins as an assumption
> comes to be considered for all practical purposes an attribute
> of reality unless one shows herself why the assumption is untenable
> In your present reading of Marx he seems to have never got
> around to relaxing the S=D assumption in his reconstruction
> of the concrete, for his principal aim was
> the explanation of the source and forms of surplus value, and
> that exposition required the strict assumption of S equaling D.
>  Marx is thus made *de facto* a prisoner of
> Say's Law, and the Keynesians will all be too happy
> to lump Marx in with the rest of the classical economists.
> But as Andrew T rightly suggested, Marx did attempt to show the
> barriers to S equalling D in the reproduction schema, and Marx's
> assumption of supply creating its own demand was necessary to show
> that even on this assumption, a shortage of surplus value would
> obtain that would then manifest itself as an excess of commodities
> on the market. This then led him to consider how accumulation
> could at times more or less solve the realization problem and how
> at other times it would not. That is, Marx did not believe that
> capitalism was haunted by a permanent underconsumption crisis.
> Its periodicity had to be explained.
> Marx's principal aim was thus not the explanation of surplus
> value as such and its mediated forms but the laying bare
> of the economic laws of motion of capital, i.e. the tendency
> towards crisis and catastrophe. He was not a static thinker
> a la equilibrium economics but a dynamic thinker of positive
> feedback and dialectical change. Even Raymond Boudon
> would agree with that, I think!
> As I suggested, you seem to have moved away from Mattick's
> interpretation of the aims and argument of
> Marx's magnum opus in your own recent interpretative work. Is that a
> fair characterization?
> I am worried about this because I thought you were the only
> major economist who followed Mattick.

Rakesh, I do not think the question is either/or
(either production-distribution of surplus-value OR crises), nor even a
matter of priorities (which is more important), but rather a matter of
which comes first in a theory based on the method of levels of
abstraction.  I certainly agree, as I have said in recent posts, that
Marx showed in Capital that "Say's law is absurd" and that the
equilibrium conditions of reproduction are satisfied "only by chance",
etc.  I also agree with you that his theory of the falling rate of profit
is based on the assumption that S = D and yet shows how a shortage of
surplus-value and a realization problem results.  However, his theory of
the production and distribution of surplus-value assumes no realization

I do not think I have "moved away from Mattick" at all.  As I have said,
I learned from Mattick the crucial methodological assumption of the
determination of the total surplus-value prior to its distribution.
But I agree that my emphasis at the present time is somewhat different from
Mattick's.  Right now, I am emphasizing more Marx's theory of the
distribution of surplus-value in Volume 3, and especially the
"transformation problem", partly because the recent publication of the
entire Manuscript of 1861-63 has made possible a better understanding of
Marx's theory of the distribution of surplus-value in Volume 3.  I think I
have something new to offer on these issues.  But this does not mean that
I disagree with Mattick's emphasis on the falling rate of profit and crises
and the "limits of the mixed economy', etc., nor do I think that these
subjects are any less important.  I don't consider myself a "major
economist", but I definitely consider myself a follower of Mattick.


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