Re: [OPE-L] [Jurriaan] Surplus value

From: glevy@PRATT.EDU
Date: Wed Nov 02 2005 - 21:15:06 EST

---------------------------- Original Message ------------------------
Subject: Re: Re: [OPE-L] [Jurriaan] Surplus value]
From:    "Jurriaan Bendien" <>
Date:    Wed, November 2, 2005 5:43 pm

> I understand your position but I would say that the monetarization
> of (part of) the surplus product represents a necessary but not
> sufficient condition for the constitution of surplus value.

True. Monetization of the surplus product presupposes the ability to
trade in it, and for that you need specific property relations and an
enforcible legal system, in other words, a set of social relations and a
social framework. When you read the literature on economic life in feudal
times, you realise just how difficult that was to achieve, i.e. apart
from technical obstacles, there were numerous rules and restrictions
governing the ability to trade as such, never mind trading only for the
purpose of capital accumulation. The ideology of the ascending bourgeois
class therefore generally revolved around the theme of gaining more
freedom to trade, although this was also a contradictory process, with
battles between free traders and protectionists. In the real world, as I
have said often, markets provide no specific morality of their own,
except the obligations necessary to settle transactions. You can gain
from trade, but also lose from trade, and even if trade typically means
that all parties to the trade gain at least something (otherwise they
would not trade), some of them might gain vastly more than others. If
you're in a strong economic position, free trade is fine; if not, you
seek protection from adverse trading conditions or competitors. And so
the processes by which the majority of outputs could eventually be
traded for money, took many centuries to develop, and it involved many
political and moral conflicts. Marx's main point here is that once
production itself becomes a process of capital accumulation, then the
marketisation process acquires its own independent dynamic or spontaneous
economic logic, of reproducing itself on a larger and larger scale, making
people more and more dependent on markets for a wider and wider range of
products. This phenomenon he refers to with the idea of the "laws of
motion" (Bewegungsgezetzen) of capital accumulation. However, what he
did not comprehensively discuss was the prehistory of capital and all
the social conflicts this involved, and his analysis breaks off at the
point where he brings social classes into the analysis. And this has
generated considerable controversy among Marxists, because the question
is raised of when you can really say that "capitalism" first emerged,
what really defines it. For example, there was wage labour and merchant
capital long before there was capitalist industry, and all sorts of
intermediate situations. If you study for example so-called
"underdeveloped countries" and "transitional economies", it becomes very
clear that markets do not simply spontaneously develop (perhaps because
people realise the benefits of markets etc.), but that both a legal
framework of property relations is required and also all sorts of
cultural norms. The policies of organisations like the IMF - for
better or worse - tend to boil down to giving people the opportunity, or
enforcing the necessity, to buy and sell stuff for money, but this rarely
works, insofar as these people forget that you need also a whole
framework of social organisation which replaces the non-commercial form
of social organisation, right down to patterns of social behaviour. And
that is typically where the "primitive accumulation" process becomes
unstuck. It's very difficult to say to people "you must drop your old
morality and your old ways, and adopt a new morality and new ways".
Hence, the process typically takes place through direct and indirect
coercion, i.e. restriction of access to resources, except through a
commercial supplier. What makes people like Jeffrey Sachs halfway
interesting is, that they counsel against a crude economism, i.e. they
realise that just giving people the option to buy and sell will not
create a market of itself. It is typical of any ruling class that it
mystifies its own historical origins, and therefore it is no wonder that
often the controversies about this (the "development problematic") appear
rather primitive or even banale. It is interesting also to read how IMF
and World Bank economists try to explain the massive increase in barter
in post-Soviet economies. They almost literally say, this is difficult to
explain, why do these funny people not just buy and sell things like
ordinary people?

They ask literally "Now that barter is so entrenched, how can we get the
economy to jump from this bad equilibrium to a good monetized one?"
Lacking a social, moral and historical understanding of market formation,
they cannot actually admit or explain properly how markets are formed in
the real world. Somehow, you have to get people to believe that cash
economies are good for them, even if they are bad for them, but how can
you get people to believe something is good for them, if in reality it is
not in their interest? I am not saying that markets are necessarily bad,
but even if they are not, they might not be in people's interests.

> Jurrian.
> I agree with much of what you say. At the end you say that income,
> expenditure and product measures do not deliver the same results
> necessarily; but don't they in the first two volumes of Capital - where
> prices equal values and reproduction is posited? How can your
> disequilibrium intuition come into this picture?
> Andrew.

Well in my view equilibrium is one of the most abused terms in economics,
basically because it is unclear what is being equilibrated exactly, and
because it is difficult to verify and prove that equilibrium really
exists. Essentially, the idea is that if you have price stability as
shown by price constancy over time, then equilibrium of supply and demand
must exist. This is already a questionable assumption, because we are
only taking about marketed supply and monetarily effective demand, not
what could technically be supplied, or what people really need. For Marx,
"equilibrium" in capitalism (he rarely uses this term) does not inhere in
markets at all, but in the maintenance of the ownership
relations which permit capital accumulation and trade to occur. You can
have five million unemployed people in Germany and price stability, but
whether that constitutes "equilibrium" is rather dubious; there is a
relative "social stability" of sorts, that is all. Markets are rarely in
equilibrium anyway, they are always growing or declining. Hence the
notion of dynamic equilibrium, or balanced growth, but even this is a
vague notion.

The economy (production, distribution, circulation and consumption of
goods and services) can be studied in all sorts of ways and from all
sorts of vantage points, but the trouble is that nothing stays constant
in the cyclical flows of money, commodities and capital, in a long chain
of causes and effects. How then to proceed?  Marx's vantage point is to
stand outside the spectacle of market fluctuations, in order to grasp the
movement of the system as a whole. He wanted to represent the whole
process in its pure forms, in order to reveal the real interconnection of
economic relations involved, the way the social system functions. So he
deliberately abstracts from market fluctuations - assuming that products
will sell, what then drives the whole process along, what motivates it?
Production of output becomes conditional on capital accumulation, but
what are the laws of capital accumulation? But even if products do sell,
this technically does not even imply equilibrium, only a stable or
growing market demand. A key principle here is that the mode of production
"governs" the modes of distribution, circulation and consumption, and that
you have to understand things in a certain order,
to make sense of it all. This is all directly contrary to Ricardo's idea,
that the proper focus of economics is distribution. The socio-economic
processes which Marx studies do not pertain to any specific society,
they refer to the motion of capital in general, although he illustrates
his argument with English examples. For any notion of equilibrium or
disequilibrium to mean anything, you would have to look at a specific
society and see how it really functions. Once the concept and implications
of value have been established, then you can ask what effects relative
price movements can have, but you no longer fall into the error of
believing, like Adam Smith that price movements by themselves keep the
capitalist system in balance. Adverse price movements can cause the
system to dysfunction, from the point of view of promoting capital
accumulation and consequently affecting production of output, sure. But
that is a topic that does not really belong to the pure theory of
capitalism, but to the analysis of a specific society. At best, the pure
theory can tell you that there are various potentials for crises, but no

Anyway, I had my expenditure for the day, will leave it at that for now.


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