[OPE-L:242] MegaPost Part III of III

Alan Freeman (100042.617@compuserve.com)
Wed, 11 Oct 1995 09:58:16 -0700

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Part II: Comments on Jerry's original and present proposal

Minimalist Summary

1) Marx's order of Enquiry is a better starting point than
his order of Presentation

2) The logical sequence to follow is as Iwao suggests to
begin with fundamental principles

3) To extend Marx's analysis we have to defend his concepts,
above all against his 'correctors'

Detailed argument of Part II

I have staked out my own general approach so that people
know, as it were, where I am coming from. Actually, I have no
desire to impose this approach on the group. If the group has
other ideas, as long as they don't actually lead backwards,
then I am very happy to do what I can, reserving my
differences. Let me make three points concerning Jerry's
proposal, which I hope will be clearer on the basis of the
preamble above:

1) Order of Enquiry versus order of Presentation

2) Logical sequence

3) 'Furthering and extending' versus 'defending'

1) Order of Enquiry versus order of Presentation

I am very sympathetic to Jerry's desire to obtain a
systematic and comprehensive listing of subjects to be
discussed. I am not sure it can be done; but I understand why
he wants to do it and I think it is a magnificent enterprise.

However, I fear it is too ambitious and I am unconvinced the
Plans are the correct place to start. The reasons for this
was explained by Marx himself: the 'order of enquiry' is
different from the 'order of presentation'.

I now realise that I have been insufficiently clear in the
past in explaining my interest in Volume II and its relation
to the 'second draft of Capital' and Marx's account of
reproduction. John Ernst mailed me in response to my first
efforts in this direction on the question of the Plans and
explained his long interest in them, which he has
demonstrated on this list.

Actually, however, the importance of the second draft of
Capital (the Economic Manuscripts of 1861-1863, now available
in English as part of the L&W collected works) is *not* its
relation to the plans issue, which is an order of
presentation issue. Its importance is its relation to the
order of enquiry.

On this I think there is the utmost confusion in Twentieth
Century Marxism. Because Volume II has been turned into the
foundation of the rest of Marxism, people have entirely
missed a vital historical question which is the order in
which the different books of Capital were *written*, which
was necessarily quite distinct from the order in which they
*appear* in the plan. I think a method of enquiry ordered
around the Plan risks perpetuating this confusion.

Marx wrote Volume IV first. It was during his second draft of
Capital, when he came to address the question of Machinery
and Relative Surplus Value. At that point in his enquiry, the
question he had been addressing was 'how does money become
capital'? (that's the actual title of the whole section
preceding TSV in the manuscripts). In this enquiry he reached
'the production process of Capital'. This then branched off
into, first Absolute Surplus Value, and then Relative Surplus

At this point what he had to address was 'how does surplus
value become Capital?' Now if you think about it, this is the
crux of everything. In Simple Reproduction, surplus value
does not become Capital. Surplus Value is consumed. Simple
Reproduction therefore has no past and no future. It cannot
accumulate, and there is no indiciation in it, as itself, to
show how capital could have accumulated in the past to give
rise to it. Simple Reproduction is therefore a pure
abstraction, and cannot possibly, logically, correspond to
any real stage of capitalism or even serve as the basis to
model any real stage of capitalism. This is why it is so
absurd to use it as the basis for a definition of either
value or price as they are found in capitalism

With Relative Surplus Value we necessarily have, side by
side, both Accumulation and Technical Progress. This brings
is to the heart and life-force of Capital, namely self-
expanding value; value which not only recreates itself but
adds to itself. This is the process which Marx wished to

At this *precise* point he launched into the Theories of
Surplus Value. And in this process he created all the
fundamental concepts and constructs which formed the basis of
Volume III, namely the tendency of the rate of profit to
equalise, its tendency to fall, crisis, rent, the division of
surplus value into profit of enterprise and profit of
supervision, commercial profit, banking profits and interest,
the formation of revenues and hence of money capital, and so

Roughly speaking, Volume III in its rough form was written
next, and Volume I next. Volume II took him the rest of his
life, and was never finished. You only have to look at the
chronology and Engels' introduction to Volume II to see this.
The manuscripts for Volume II were taken from all over the
place, and the key fragments date from as late as 1878,
*three years before Marx's death*!

Thus the order of *writing*, as opposed to the order of
*presentation*, was this:

IV -> III->I-> (break)->II(unfinished)

-very far from the order of the Plan in any variant. Moreover
the central unfinished kernel of the work is not at all, as
is commonly supposed, Marx's theory of price, but his theory
of *reproduction*.

My simple contention is that we confront this work as
enquirers not as presenters. Gerry's suggested approach would
be appropriate if we were in the position of possessors of
knowledge who are merely discussing how best to inform the
world of this knowledge. This directly contradicts the idea
that we want to discover, to learn, to investigate and to
enquire which, I take it, is the real goal of the enterprise.

My suggestion would be, therefore, to shift the attention
from the order of presentation to the order of enquiry. My
suggested order of discussion would be:

a) The conceptual foundation of Value, price and the
commodity. A Critique of these concepts in modern
political economy and in Marx (Critique in the
*strict* sense of analysing bringing out the
necessary presuppositions of the concepts; not an
exhaustive survey of the concept as it appears in the

b) Money. Likewise a critique

c) Surplus Value, likewise a critique

d) Relative Surplus Value and technical change; a
detailed discussion of the 1861-63 manuscripts and of
the concepts of Organic Composition, FROP, and the
formation of social from individual values

e) Accumulation, above all expanded reproduction. A
discussion of the lacunae of Volume II

f) The world economy.

g) The modern state

h) Poverty and Crisis

That is, roughly, in terms of the plan,


It may seem very strange that I should propose missing out
volume III. But it is precisely because this is in a sense
the easiest, and the most-thoroughly theorised, in the
literature, that it is necessary to seek not just a
superficial study of this literature but the underlying
foundations of the ideas which the literature takes for

I am slightly loath to advance this proposal since it runs so
directly counter to what has been discussed before, but I
think it is probably best to put it on the table. I would
hope to make it clear, however, that whatever order of
discussion is decided on I will work with it as best I can.

2)Logical sequence

Jerry's original proposal (para 2) states that we should
'attempt to develop an "outline" which logically traces the
topics that remain to be studied in greater depth and their

The idea is that the logical sequence will emerge from the
discussion. I am sceptical. I think it is probably the case
that, in the present climate, if we make a mistake with the
logical sequence, the self-contradictions of our thinking
will lead by some process or another to a better logical
sequence. But it may take an unconscionably long time. I
agree with Awao that we are more likely to start out right,
or to put it another way we will have less wrong iterations,
if we consider basic principles first.

For example: wages. As we all know and probably agree, the
foundation of Marx's theory of wages is his theory of surplus
value, on which there was a lot of discussion. But the
foundation of his theory of surplus value is his theory of
value. There was a lot of discussion on the law of value, if
there is such a thing. But surely the crucial thing to
establish is Marx's *concept* of value?

One cannot do this without paying at least some attention to
the representation of Marx's concept of value in 99.90f the
literature, because in 99.90f the literature it is simply
wrong, and demonstrably so. The concept of value now
presented as Marx's is that of *reproduction value*; the set
of unit values which would allow society to reproduce itself
perfectly if there was no technical change and if goods sold
at their value. This is normally represented with an equation

(1) lambda*A=lambda*C+L

where lambda is a vector of unit values, A is a 'technical
matrix' (coming from which chapter of Capital, pray?) and L
the vector of abstract labour by sector.

This idea appears nowhere in Marx. It amounts to taking the
reproduction schemas of Volume II as the *definition* of
value. Instead of a value theory of reproduction, we have a
reproduction theory of value.

The counterpart of this in the sphere of prices is a
reproduction theory of prices, given by the equation

(2) p*A(1+r)=p*X

where X is the vector of outputs and r the hypothetical (and
non-existent) uniform rate of profit.

Since we have a reproduction theory of values, and a
reproduction theory of prices, of course we will never have a
value theory of prices. Nor will we have a theory of
reproduction, either in terms of prices nor in terms of
values, since the assumptions concerning reproduction are the
*premise* of both systems, and any conclusions drawn from
either system will merely replicate the premises in a more or
less fetishised form.

These equations are not only epistemologically bankrupt but
also logically absurd. Equation (1) requires the capitalists
to produce goods at the end of a period of production whose
unit value is *exactly* the same as their unit value at the
beginning of the same period of production. Now one may, if
one wishes, hypothesise a society in which this happens.
Unfortunately, it isn't capitalism. It is a Proudonhist

Equation (2) requires the capitalists to produce goods at the
end of a period of production whose unit price is the same as
their unit price at the beginning of the same period of
production. One may equally, if one wishes, hypothesise a
society in which this happens. Unfortunately, this isn't
capitalism either. It is the self-image which capitalism
wishes to present to itself, a mathematically perfect and
hermetically-sealed apologetic system.

The 'transformation problem' thus posed is: how can a perfect
Proudonhist Utopia be reconciled with a perfect capitalist
Apologia? Easier to square the circle.

When some of us began polemicising around this very simple
idea, the reaction we generally got was either silence or
ridicule. People couldn't accept the collapse of the safe and
established body of thinking (and writing) which allowed them
to conceive of value as the solution to equation (1). But now
we are getting a reaction which is in some ways just as
dangerous, which is to say, 'OK, there are different ways of
conceptualising value, and your way of doing it rescues Marx
from the charge of inconsistency. Now, as I was saying before
you interrupted...'

But once you accept that equation (1) is not only wrong, but
a false way of conceptualising Marx, you can't go back to
what you were saying before you were interrupted. Because you
don't have a concept of value any more. If you don't have a
concept of value, you don't have a concept of price, or
surplus value, or wages, or capital. You don't have anything
at all. If you don't have those, I don't see how you can have
a plan of Capital.

You therefore have to reconstruct Marx's value properly. You
have to agree what the alternative is, or at least on a range
of possible alternatives; you have to understand the relation
between the concepts in the different alternatives, and you
have to at least hold some discussion over which was Marx's
alternative. Otherwise you can have a dialogue, but it will
be a dialogue across an abyss. You will be like a Disney
character who has run off the end of a cliff, and still acts
for that magic, impossible ten seconds as if the cliff was
still there.

It isn't just me saying this; I think any independent
bystander will come to the same conclusion. Gil made an
extensive critique of our work in which this point figures
fairly extensively; if I am not misrepresenting him, his
argument is that a temporal system intoduces so much
indeterminacy that the connection between values and prices
ceases to exist. Yes, it does, in the sense which the marxism
of the Twentieth Century has come to understand this. Prices
are not 'determined' by values in the sense which the
discussion on OPE wants them to be, that is, there is no
necessary quantitative relation between any individual price
and any individual value. There may be an empirical relation
but this is a matter for observation and will be specific to
a given country at a given time. This is obvious; there are
individual producers, for example Bill Gates, whose prices
bear no relation whatsoever to their labour inputs. Otherwise
how on earth did he get rich?

But the problem is, what Gil is (quite naturally) attacking
is not what Marx himself says, but what the Marxists claim or
believe he said.

Actually, the idea that there is such a thing as value, and
the much more important idea that price is its transformed
form, is completely independent of whether or not prices
approach values quantitatively. To take a simple
illustration: if I buy cotton for L10 and you buy wool for
L10, and then the price of my cotton rises to 15 while the
price of your wool falls to L5, then any fool knows that L5
has been transferred from you to me just as surely as if I
took it from your pocket. Ask Nick Leeson.

But I *didn't* take L5 from your pocket. There *is* no
physical transfer of use-value in the price movements just
described. So *what* was transferred? The answer is of course
value - generalised abstract purchasing power or, to put it
in its non-fetished form, power over the distribution of the
results of past human labour. In order to be able to describe
such events in such a way a concept of value is as
indispensible to political economy as the concept of energy
is to physics. You can't even talk about economics without
it. In actual fact, practicing economists refer to value all
the time. If they don't need the concept of value, why do
they keep talking about it? What on earth is a value-added
tax? What is the 'real value' of money? What is 'value for

The problem is, unless you wrench the concept of value free
from the deadweight of thinking which sees Marx's theory of
value as a sophisticated quantitative relation between
individual values and individual prices, you ain't never
going to break through to what value really is for Marx, and
even if you do, no-one will understand you.

*Conclusion: the starting point in the logical sequence
imposed on us by the last hundred years of Marxism, is the
requirement that we critically recover Marx's concept of
value, in the process critically evaluating the restatement
of this concept which is accepted as Marxist by most of the

3)'Furthering and extending' versus 'defending'

The statements I made in the last section placed no reliance
at all on any imagined empirical relation betwen the
magnitude of an individual price and the magnitude of an
individual value. The question is, then, how on earth did
'Marxism' get deflected into seeking such a relation in the
first place? Certainly there is almost nothing in Marx about
it - I discovered one single passage where such a relation is
hypothesised and critically assessed. If by ceasing to be
'defensive' Jerry means we should stop trying to defend
things Marx never said, then I agree one thousand per cent.
But we can't do this by remaining silent about whether Marx
said them. We have to settle accounts with the past. We have
to say 'on this, that, these and those matters commonly
considered to be Marx's view, this is not what he said'. But
this means we cannot avoid making a critical assessment of
the schools of thought (99.90f Marxists) who claim that he
did say those things. Otherwise our (more hostile) critics
from outside of Marxism will tie us in knots, and rightly so.
All they need to do is whip out their copies of Sweezy and
point to the contradictions between what he says and what we
say. You can't duck the issue of saying, politely but firmly,
that Sweezy is Sweezy and Marx is Marx, that Marx was a nice
guy and Sweezy is a nice guy, but whilst there is a
connection between them, Sweezy ain't Marx.

And if you do that, you have to say what Marx is and how he
differs from Sweezy. That amounts to defending Marx against
Sweezy. It's not a choice of our making. It's Sweezy that
says Marx is wrong, not Marx who says Sweezy is wrong. If you
accept Sweezy's view, you accept a concept of value that you
can't work with if you want to extend Marx, for the simple
reason that it ain't Marx's concept of value.

I tend to think that Jerry's proposal seeks a way out of this
which, oddly enough, I would characterise as overly reverent
to Marx. What the draft plan of work seems to be saying is
this: let's start *directly* from Marx. Let's look at Marx's
plans, and see if we can carry on where he left off. In the
process we can perhaps critically examine those plans,
discuss our differences with them, and so on, but the
fundamental framework is Marx's and that's guaranteed by
starting from Marx's own plans.

Actually, valiant though this idea is, I don't think it
works. If anyone has read Asimov's Foundation Trilogy, then I
would say it is like acting as if only the first Foundation
existed. If Marx had to change his plans all that many times,
it seems to me guaranteed that, had he lived, he would have
changed them some more. And how would he have changed them?
To react to two sets of changing conditions: (1) the changed
world (2) the changed map of political economy.

Marx's plans reached their most complete state in the
intellectual climate of his time and Capital is a work of its
time. Why is it relevant today? Not because of the order of
exposition, which Marx as a disciple of Hegel would have
accepted is necessarily dependent on the stage of development
of the Notion at the time the exposition is delivered, but
because of the validity of the fundamental concepts which the
exposition develops. It is these concepts, not the plan for
their exposition, that I think we have to address. Which of
them are then important? What is the methodology for singling
out particular concepts for study? I think one reason for the
importance of this project and the proposal is that they have
broached this question. But I don't think they have answered
it, and I think we need more time on it. My own view, as I
said above, is that to identify the concepts needful of study
we have to look at the way contemporary capitalism has been
analysed by contemporary political economy, and look where
the contradictions lie.

>From this point of view, the three most salient and obvious
facts of the modern world are poverty, crisis and war. Not
just the poverty of workers but the poverty of *nations*. Not
just occasional interruptions but endless, recurring and
increasingly destructive crises of accumulation. Not just
outbreaks of war but repeated military interventions
interlaced with apocalyptic orgies of destruction. Leaving
aside war, which orthodoxy finds easier to discount as 'extra-
economic', the two most flagrant contradictions of modern
economic thought is that it predicts *equality* as the
distribution of development in space and *uniformity* as its
distribution over time. Neither happens, and the scale of
their not happening dwarfs and numbs the imagination.

The inequality between the richest and poorest nations (141
times in 1990, the last time I looked at the data) is now
seven times what it was when Marx died. For the first time in
history with the exception of the Irish we find mass famines
*solely* due to the operation of the market. The fundamental
question, in my view, which has to be addresed to capitalism
is, why is it that after a hundred years of progress, now
that the technical means exist ten times over to feed and
clothe the people of the world in civilised comfort, the
market cannot do this? To say the least the invisible hand
seems to have contracted Parkinson's disease.

Equally flagrant is the recurrence of crisis, the most
chronically permanent feature of capitalism. Marx remains one
of the very few economists in history who insisted that this
was an *endogenous* feature of capitalism. Frankly,
*predicting* (and it was a prediction) one hundred years ago
that periodic convulsions of accumulation would be with us
till the end of capitalism remains, in my view, one of Marx's
most outstanding scientific achievements.

What I think has to be at the focus of our attention is the
fact that both poverty and crisis are endogenous. This fact
has received insufficient attention. The critical difference
between our time and Marx's, IMO, is that in Marx's time
capitalism was not universal. All manner of explanations
could thereby be proposed for inequality and crisis which
relied on the *incompleteness* of capitalist development. The
visionary character of Marx's analysis consists in the fact
that he turned his back on all such accounts and derived the
principal characteristics of capitalism from its *internal*
law of motion; surplus value, rent, finance capital, crisis,
and so on and so on. He could easily have analysed rent under
the supposition of precapitalist landownership, semi-feudal
labour relations, and so on, and come out with a very
sophisticated description that would probably have
corresponded quite accurately to the conditions in Russia
that formed the basis of much of his work on this question.
He did not do so. He chose to make the assumption, quite
perversely in its time, that *all* relations were commodity
relations, that capital had penetrated *everywhere*. This is
because he wished to detach those phenomena which were
intrinsic to capitalism and could be abolished only with its

Oddly enough, therefore, the most important change in the
world is that it far more *closely* resembles the world of
Capital than it did in Marx's time. In Marx's day capitalism
was a system in the process of taking over the world.
Capitalist production relations existed on less than a third
of the territory of the planet. The working class was a tiny
minority of the world's population. The astonishing breadth
of his vision was nothing to do with his analysis of that
world, the world of his day; what is breathtaking is that he
analysed this world, the world of *our* day. All his
analytical work concentrates on an economy which did not
exist at the time; an economy in which the market had
penetrated everywhere, in which 'globalisation' was the main
premise. He analysed what this world would be like before it
actually existed.

Now it exists.

Capitalism today has no excuse. It cannot plead ancient
enemies, backward peoples or the lack of a free hand. It is a
world system. It can do anything it wants. Its problems are
entirely of its own making, and that's what, in my view, we
have to get across and understand.

Marx's 'Law of Motion of Capitalist Society' was conceived of
and explicitly presented in a single nation. If there is
updating to be done, this must surely concern the world
operation of capital. Now. there are modern and distinctive
variants of 'Mechanism' and 'Idealism' that have the present
world economy as their point of departure. In a certain sense
the world throughout the epoch of capitalism confronts two
these currents of thought which systematically surface in one
form or another, and which we might dub fatalism and

Fatalism treats social laws as having the same status as
scientific laws, as if they were not the disguised result of
conscious human actions and therefore there were no way to
resist them. In Marx's day it took the form of Lassalle's
'iron law of wages' But the modern form of this is the view
of Meghnad Desai and many others that the globalisation of
capital is an inevitable fact against which no resistance is

Utopianism in Marx's day took a number of forms of which the
most persistent was probably Proudhonism [Blanquism was
another], which arose from the attempt to reverse the effects
of social laws whilst failing to penetrate their real
operation. Proudhon took the facts of the world as they
presented themselves to consciousness and concluded that
exploitation must be the result of trickery, of a violation
of the natural law of the market. The radical-anarchist
conclusion that property is theft disguised the reformist
character of the utopian project of restoring this 'natural
order' of the market.

Utopianism today is, I am afraid to say, rather
characteristic of those socialist movements of the advanced
countries which disguise a right-wing practice under radical
rhetoric. IMO its most distinctive feature is its
fetishisation of national boundaries and differences, which
it takes like Proudhon as an evident fact of the world rather
than a product of the capitalist order, so that the
disparities between nations and the oppression of its peoples
must be a fault of political will which can be overcome
merely by wishing equality into existence. This radical-
utopian project disguises the reformist practice of reducing
all class struggle to the distributional wage struggle in the
advanced countries.

We require, in my view, a modern version of Wage Labour and
Capital; a vision of the self-movement of the modern world
economy which explains exactly how and where conscious humans
may direct their efforts for self-liberation in order not
merely to challenge but to succeed.

Is this an extension of Marx or a defence of Marx?

I don't think it is an extension of Marx in the sense that
this is normally meant; I do not accept that there are
fundamental lacunae in Marx such that Marx's conceptual
structure no longer suffices for the analysis of the modern
world. I do not accept, for example, that one cannot find in
Marx the means to discuss or explain the ecological menace of
modern capitalism, racism, the oppression of women, the USSR,
imperialism, or whatever. On the contrary Marx is
astonishingly modern once one knows where to look.

The problem is, everyone looks in the wrong place, because
our kind friends the Marxist opticians have kitted us out
with tunnel-vision glasses.

Neither do I accept that there are fundamental *errors* in
Marx, in the way that 99.90f Marxists claim; that he got
the transformation wrong, or the falling rate of profit
wrong, or the Law of Value wrong. This statement has often
been misinterpreted so I ought to clarify it. The point is
not at all that Marx got nothing wrong. He was completely
wrong on the historical destiny of Czechoslovakia, for
example, and in the context this was not a small error.

The point is that (a) he did not get wrong what he has been
accused of getting wrong; and (b) the entire Marxist industry
has been constructed around putting these mistakes 'right'.
This industry has therefore manufactured a version of Marx
which makes it impossible to apply the things he got right.
To build on Marx we have to first save him from his friends.

I just don't believe it will turn out to be possible to rise
to the challenge which the modern world presents us with
unless we *systematically* recover Marx's original basic
insights; and therefore, I remain unconvinced that the
'defence' of Marx (a better word might be the 'recuperation'
of Marx) is not an indispensible prerequisite to the
extension and advance of Marx's thought.

9 October