[OPE-L:4323] Re: Mandel vs. Baran-Sweezy

A.B.Trigg -Andrew Trig (A.B.Trigg@open.ac.uk)
Sun, 9 Mar 1997 13:26:46 -0800 (PST)

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From: ope-l
To: Multiple recipients of list
Subject: [OPE-L:4294] Re: Mandel vs. Baran-Sweezy
Date: Friday, March 07, 1997 1:32AM

I think it is important, in looking for a way to handle monopoly in Marxian
economics, to emphasize your statement that the Baran/Sweezy monopoly
capital model is based on a particular reading of Kalecki. In a paper
published in the Journal of Post Keynesian Economics (1994) I have argued
in fact that the Baran/Sweezy model has nothing much to do with Kalecki.
Their argument that potential profits will rise with monopoly is shown to
have more to do with the neoclassical monopoly diagram. Kalecki himself
argues that monopoly does not impact on total profits or the profit rate.
He even has a model which shows the turning points in the business cycle
are due to the falling rate of profit mechanism. Sweezy misreads Kalecki as
badly as he apparantly misreads Marx!

Andrew Trigg
At last, a chance to comment on this thread!

In message Sun, 2 Mar 1997 13:04:10 -0800 (PST),
Alejandro Valle Baeza <valle@servidor.dgsca.unam.mx> writes:

> Mandel criticized many topics of Monopoly Capital. From my point of view,
> the core of his critic is: the concept of potential surplus used
> Baran-Sweezy seems to contradict the theory of surplus value stated by
> Marx. It seems reasonable for non-Marxist theory that monopoly capital
> could increases surplus without limit by increasing selling price in
> relation to cost. Baran and Sweezy claimed that the law of falling rate of
> profit should be substituted by the law of increasing surplus. If such
> behavior of surplus is possible, the most important problems in monopoly
> capitalism is surplus realization.

There is no question in my mind that the concept of potential surplus as
presented in Monopoly Capital bore little relation to Marxian theory. It
derived from a particular reading of the work of Michal Kalecki and his
student, Joseph Steindl, by Baran. Whereas Kalecki/Steindl were primarily
focusing on the question of unrealised surplus value-- that a rising rate of
exploitation (in the absence of sufficient capitalist expenditures) would be
reflected in decreased capacity utilisation (ie., waste), Baran proceeded to
extend this and to argue that a part of the surplus "assumes the form" of
waste. This idea, of course, became central in Monopoly Capital. Similarly,
the concept of "potential surplus" came from Baran and relates to his work
on UDCs.
I think it is important to understand that, whereas Sweezy (influenced by
Kalecki, Steindl and Baran) adopted the potential surplus argument, etc at
the time of the writing of Monopoly Capital), it basically represents a blip
in his argument--- neither before the mid-60s nor much after Baran's death
did this play a role. On the other hand, what Sweezy is totally consistent
on from the Theory of Capitalist Development on is his rejection of the
falling rate of profit argument on the grounds that it is not very
convincing to argue that a rising rate of surplus value can not counteract
the effect of a rising occ. That is a consistent thread in his argument,
that and the focus on capital's tendency to produce more surplus value than
can be realised, a tendency intensified by monopoly capital. (I'm drawing
here from a few points in my essay on Sweezy in Maxine Berg, ed, Political
Economy in the 20th Century (Philip Allan, 1990) in the event people are
interested in pursuing these points.) These points also are in Monopoly
In this respect, I don't think it is entirely appropriate to present as
a critique of Baran/Sweezy an emphasis on increases in the rate of surplus

> The critic of Mandel to this is simple
> and (I think) correct:
> S(t+1)/S(t)=L(t+1)/L(t) s'(t+1)/s'(t)
> where S(t) is surplus value in time t
> L(t) is labor force in time t
> s'(t) rate of surplus value in t, defined by: S(t)/L(t)
> According to this the rate of growth of surplus is limited by labor force
> growth and by the changes in rate of surplus value. Hence monopoly capital
> cannot change this and to increase the surplus value growth it is
> necessary to increase rate of surplus value (asumming constant rate for
> L(t)), as in the competive age.
> In adittion to this basic point, Mandel criticizes the inclusion in
> surplus value of several non-productive activities, for example
> advertising.
> In short, Mandel made clear that the conclusion of Baran Sweezy is
> incorrect and that it is based on labor value theory negation. I used this
> example in a book about Marxian Theory of Value because I think that
> actual reality supports Mandel's assertions.

in solidarity,
Michael A. Lebowitz
Economics Department, Simon Fraser University
Burnaby, B.C. Canada V5A 1S6
Office (604) 291-4669; Office fax: (604) 291-5944
Home: (604) 872-0494; Home fax (with warning): (604) 872-0485
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