[OPE-L:411] Comments from Riccardo-2

Riccardo Bellofiore (bellofio@cisi.unito.it)
Sat, 4 Nov 1995 04:18:02 -0800

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5. Value theory as the theory of the origin of profits, again.

If there is a double deduction, the potential value created in
production will be eventually 'actualized', or if you prefer realized,
only on the market, with the metamorphosis with money.

An analysis of the production of the (potential) surplus value
cannot be done directly in labour terms, because the units of labour
expended in different industries are, *before* exchange, non homogeneous,
- they are still concrete, useful labours,
though their quality comes to them from the technical configuration of capital, from the capitalist *form* of machines. The point was made long ago by de Brunhoff (with Benetti-Cartelier). To be developed, the analysis of the creation of surplus value as
surplus labour needs then some system of exchange rates.

In Marx - that is what I suggest - there is a sense in which there
is a logical and *historical* priority of values relative to prices. But
this historical priority has nothing to do with Engels'. It is a
precedence which is, so to speak, replicate d in every act of capitalist
production and circulation.

If you want to explain capital, you cannot presuppose capital, and
must start with the commodity and, *in a sense*, with a dual system of
exchange ratios for the same commodity, as in Marx transformation
procedure. Thus Marx reasoning can be reread
as going in steps. The argument starts with a 'fiction' where are only
reproduced the means of production and wage labor (simple reproduction
*without profits*, or the Schumpeterian circular flow). Then the workers
are *compelled* to work more, while lea ving the exchange ratios the same
as in the fiction of the circular flow, where of course values=prices. So
a surplus value emerge, and with it abstract wealth, capital. According to
the rules of the distribution of output, this surplus value will be allo
cated as profits to the different sectors, with prices different from
values. Here we go from value to price, from prodution to circulation. And
that is done at every capitalist circuit. Though values may never be the
ruling prices (but more on this later ), they are *always* behind prices.
Because it is the pumping out of labor which is behind capitalist
exploitation. The reasoning could be developed from the extraction of
absolute surplus value to the extraction of relative surplus value, as
I've tried t o do with Roberto Finelli at the Bergamo conference. The fact
that the rate of profit in value terms and in price terms, or that the
rate of exploitation in value terms and the gross profits/wage ratio, are
systematically different, could in no way chang e this state of affairs.

It is simply the important task of going from the 'essence' in
production to the 'appearance' in circulation - where the appearance is in
capital(ism) tremendously important. The fact that Marxian 'essence'
cannot be traced in quantitative terms, i n the sense of
statistical-econometric terms, does not detract from its *real*
importance. And from the possibility to intervene practically at the point
of production. (Look at how Marx made social enquiry in Capital, vol. I).

There is textual evidence that Marx had something like this in
mind. Look, again, at the critique of Ricardo in the TSV - I have only
here the Italian edition: look vol. II, ch. 15, B, 3, 656).

6. Some comments on money

It is true that money is information. What most theorists forget is
that it is first of all information centralized through banks, in a
context full of what mainstream calls imperfections (principal-agent
issue), and are in fact asymmetries of powe r.

It is true, also, that it is a system of social accounting (Paul
C., this is in fact at the heart of Schumpeter's Das Wesen des Geldes,
published in German in 1970: there is an Italian translation). And it is
true that it is a ternary social relati on. More precisely, it is *the
promise of payment of a third agent*, in modern times typically the banks.

Why this stress on banks? Because the problem of all theories until
now has been how money comes in in the economic process. From the sky?
>From hoarded golds (history)? From the State? I think that also with money
we must have an ab-ovo analysis, w hich means that we should not
presuppose what must be explained, i.e. stocks of money present somewhere
in the system. And I think (with Marx) that the analysis must start
without the State. Without the State, you don't have deficit financing,
'outside' m oney, and State debt instruments. Though Duncan's post on this
issue is important, then, it does not resolve the question of the nature
of money. The only reasonable way out from the conundrum is to let money
come in through bank finance to capitalist pro duction.

If, as I told before, generalized commodity exchange *is*
capitalist commodity exchange, then the commodity must be produced, and
this production must be financed. If money is a commodity, and not
sign-money (as bank-money), from where comes the mo ney-commodity that
finances the production of the money-commodity? BTW: the rupee, as Keynes
(but also Schumpeter) said, is a banknote stamped on gold.

The question of history: it is not at all clear that the first
money was a commodity money - as Menger would have put it. Heinsohn and
Steiger (Private property, debts and interest, or the origins of money and
the rise and fall of monetary economie s, Studi economici, n. 3, 1983)
says the contrary. For my part I am completely neutral on the historical
issue, because I think it is irrelevant. Not necessarily what cames before
is the simplest, essential form of a category, thus bank money could in
fac t well be the typical form of money. For people who have read the
Grundrisse the starting of the preceding sentence should ring a bell. Bbut
the complete phrase is not Marx's, is Schumpeter (same Das Wesen des
Geldes as before).

I think most of the precedingstress on banks can have Marx as his
ancestor. On content (though Capital vol. III is sometimes muddled with
the idea of bank as partly intermediary, i.e. with the loanable funds
approach). And on method: if the commodi ty with which Capital vol. I is
opened, this 'presupposition', is a capitalist commodity, is the 'posit'
of capitalist production, and this capitalist production is to be
financed, this presupposition has bank-money capital as his own
presupposition. From
this point of view Chai-on is both right and wrong: to develop the
money-form the commodity is logically primary, but in the argument the
prius becomes a posterius.

But there is a problem - a big one. In Marx, as I hinted before,
labor is eventually abstracted in exchange. Moreover, in Marx money is
anticipated in monetary terms. Thus, if money is (directly or indirectly)
linked to gold, as in vol. I, and if w e does not take into account
potential abstract labor which is not actualized in exchange (if you
prefer the less correct but more usual phrase, value created in production
which is not relized in exchange), as again in vol. I, then we can, as
Marx, subtr act the labor contained in the gold which is expected to buy
the commodity from the labor contained in the gold which has already
bought the labor power, and we have surplus labor, even before going to
the market. But if money is sign-money, then the surp lus labor will be
known only on the market, when abstract labor will be finally realized as
value, and the labor embodied in the labor power will be fixed through the
exchanges of money wages with the wage goods on the commodity market. At
this point, how
can one distinguish, as Marx wanted, among the exploitation arising from
production and all the other factors which affect distribution and prices,
then which affect gross profitability? I have tried, in some writings, to
face - more or less successfully
- this issue. But here I am more interested to the problem, than to my
solution. And I imagine that most of you will have to quarrel with my
definitions, so I'm waiting the comments.

7. Competition

In the posts almost always competition is synonimous with tendency
to the equalisation of the profit rate. I agree that this was a big
concern for Marx, so that the 'transformation problem' cannot be too
simply dismissed.

Let me add, parenthetically, that any solution to the
transformation neither shows, or 'proves', the 'truth' of Marx, nor add
much to his theory: simply, the transformation *must* go right in some
sense to guarantee that Marx's theory is logically coherent. But I am
ready to ammit that is possible a coherent neoclassical theory (I am not a
fan of Sraffian's chase to logical errors in neoclassical theory), a
coherent neo-Ricardian theory, and so on. So what?

But I think also that in Marx there is another kind of competition,
which systematically upset equilibrium. It is the dynamic (Schumpeterian)
competition. It is interesting that *this* kind of competition is already
in Capital vol. I, when the leve l of analysis is capital in general -
look at ch. 10. I think that this idea of competition is already embodied
in the same notion of abstract labor, as private labors which becomes
their opposite, social labor, through the exchange of commodities.

If that is true, is it not possible that historically the second
kind of competition often 'beats' the first kind, thus helping to explain
some stylized facts emerging from the analyses of Cockshott and Cottrell,
and Shaikh? That is, that the tend ency to the equalisation of the rate of
profit does not realize itself in reality?

8. Why capitalism is still around?

Duncan, Michael, and Andrew are right. It is true that one
stumbling block has been the absence of a viable alternative to organize
social production.It is true that powerful forces were against. And it is
true that Marx thought 'the viable al ternative could emerge through the
self-activity and self-development of the process of creating the new

But it is also true that Marx was rather optimistic on the last
point - *some* arguments in Marx points towards the idea that crises and
exploitation will deepen, that the social revolution is on the way, and
that capitalism has given us the materia l precondition of a richer and
freer society where the human being is the master of her destiny. The only
problem is the 'personal' oppression of capitalists. Other, more
interesting, hints of Marx goes against this view: capitalist technical
progress, an d capitalist development, makes a revolutionary consciousness
and alternative more difficult, exactly because this 'freer' human being
is the process of her own development, and this development has external
(and internal!) powerful forces against us, sys temic ones. And that we
don't have a blueprint on what is a 'freer' human being, thanks God.

Let me restate this through a different angle. The centrality of
labor in Marx is due to the fact that abstract labor is *both* capital in
its reproduction, and the use value of labor power. It corresponds to a
real centrality of production in capi talist society. But IT HAS NOTHING
environments, before but also after capitalism. Thus the centrality of the
'working class' in the social struggle against capital has to do with the
that labor is at the core of THIS social system; but this centrality
cannot be confused to a centrality within the new society in formation in
the struggles of today, that is with a centrality of the old and modern
'Paris communes', of the alternative so cial subject who must create a
viable new society with its own practice. Now, both the Second and Third
International marxism, as well as most of the New Left marxism, has been
made just this error, have predicated a too easy translation of the
of labor within capital in a centrality of labor beyond capital. This
explain the tragic separation from feminism and green movements of the
'workerist' movement in the '70s, at lest here in Italy - a tale of errors
from both side.

What happens when labor is able, together with other movements, to
create areas *within* capitalism of self-development, filled with
different values from the capitalist ones? That is the story of 1848, the
Paris Commune, of the 1920-1, of 1968, an d the long '69 in Italy (it is
not important that the beginning was at the point of production or not).
That, obviously, capital reacts, and the 'alternative communities' 'fade
into the air', to borrow Marshall Berman's phrase. The Marxian left has
still to learn to think of his 'communes' as something not too solid: to
survive to their own dissolution, with an accumulation of forces, and
ideas, despite and trough the (inevitable) defeats. The problem we face is
to accumulate the experiences of the many ' Paris communes' without
disperding them, in a process of anti-capitalist struggle and constant
redefinition even of our personal identities. Assuming that the building a
new, viable, social environment beyond capital means to go *against the
primacy of p roduction*. I fear thi process will last (well) more than a

Moishe Postone's book is very useful, I think, on this topic.

(2. continue)

Riccardo Bellofiore e-mail: bellofio@cisi.unito.it
Department of Economics Tel: (39) -35- 277505 (direct)
University of Bergamo (39) -35- 277501 (dept.)
Piazza Rosate, 2 (39) -11- 5819619 (home)
I-24129 Bergamo Fax: (39) -35- 249975