Re: [OPE-L] Six book plan, foreign trade

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Wed Sep 27 2006 - 17:11:37 EDT

>Hi Rakesh,
>You wrote:
>Marx did not intend simply to write a lot about foreign trade in a big fat
>book made up of disjointed insights. He intended to theorize the role of
>foreign trade in terms of the expanded reproduction of a capitalist mode
>of production.
>The reality was that Marx had some large manuscripts at the time that he was
>wondering how to stitch together into an acceptable publication. No one is
>of course saying that he "intended simply to write a lot about foreign trade
>in a big fat book made up of disjointed insights". And we do not know for
>certain how he would have written more volumes of Das Kapital, if he had had
>the oomph to do it.
>I'm just suggesting that Ricardo's theory of foreign trade, as the
>culmination of the classical school, would have been a logical starting
>point, precisely because it revealed how the political economists thought
>about the foundations of trade (economic exchange) as such - and indeed
>quite a few of the sharper Marxian scholars have taken that up, as I
>mentioned  (I can provide biblio if you want it).
>There is no hard evidence that  "Marx intended to theorize the role of
>foreign trade in terms of the expanded reproduction of a capitalist mode of
>production", whatever that is taken to mean.

In fact that's what he did, and it's not difficult to put together
his analyses of just that.
Jerry Levy pointed us to Tony Smith's piece. You could start there if
you think HG anachronistic.

>That is your interpretation,
>from Grossman's theory of crisis, but to make that stick, you'd have the
>specify what such a catch-all phrase would mean, and how it logically
>follows from the 4 volumes of Das Kapital. In the absence of such an
>elaboration, I'm inclined to think it's just spin.
>"If capital is mobile, Ricardo posits... the theory of comparative costs
>will not hold, because in that case international specialization will be
>determined by absolute costs, like specialization in one country. As this
>would erase his free trade principle, it is only logical that Ricardo
>expresses the conviction - and hope - that this will not happen:
>'Experience, however, shows, that the fancied or real insecurity of capital,
>when not under the immediate control of its owner, together with the natural
>disinclination which every man has to quit the country of his birth and
>connexions, and intrust himself with all his habits fixed, to a strange
>government and new laws, check the emigration of capital. These feelings,
>which I should be sorry to see weakened, induce most men of property to be
>satisfied with a low rate of profits in their own country, rather than seek
>a more advantageous employment of their wealth in foreign nations' (Ricardo
>1817: 136-7).

Marx certainly did not share this assumption.

>This argument is rather remarkable when we consider today's
>world economy, in which financial flows are largely unregulated, and
>financial markets are so heavily integrated, that a tempest in one part of
>the world almost automatically conjures up storms in other parts. Even more
>important, multinationals organize the conception, production and sales of
>their products world wide, and therefore increasingly resort to foreign
>direct investments and outsourcing. The capitalism of Ricardo's time must
>certainly have been different from today's capitalism... (...) But the truth
>of the matter is that even in Ricardo's day this assumption did not hold.
>Adam Smith already had a different opinion when he wrote his Wealth of
>Nations: 'A merchant, it has been said very properly, is not necessarily the
>citizen of any particular country. It is in a great measure indifferent to
>him from what places he carries on his trade: and a very trifling disgust
>will make him remove his capital, and together with it all the industry
>which it supports, from one country to another' (Smith 1776: 426)"
>(Cited from Dr Robert Went, Essays on Globalization, Amsterdam 2001, p. 26).
>To their credit, the classical political economists based their theories of
>foreign trade - rightly or wrongly - on their own perceptions of actual
>capitalist behaviour - very different from most modern economists, who just
>spin mathematical models from behind their writing desk, with theoretical
>assumptions that deface reality. What interested Marx was the social and
>economic forces impelling capitalist behaviour, and shaping the perceptions
>of it by the political economists. Simply put, why would foreign trade take
>the form of C-M-C', when domestic trade also took the forms of
>M-C...P...C-M', M-M', C-C', M-C-M' and so on? Dr Robert Went actually
>develops the argument you suggest, in terms of "the circuit of social
>capital", but point is, it doesn't get him very far, and in the following
>essay he raises the question "5.1 How to analyse capitalism?". What is at
>stake is the explanandum and the explanans of the Marxian theory of foreign
>trade, and the aim is to reveal the law of motion of foreign trade. And
>obviously that has to be resolved in part through a conspectus and critique
>of what came before.
>Grossman shows awareness of of what the problem is, and devotes a section of
>his book to "the function of foreign trade" in staving off or precipitating
>crises. I do not deny the utility of some of his insights,

as for example the analysis of the struggle for control of raw materials?

or how about Cyrus Bina's strict application of Marx's rent theory to
of OPEC and global oil pricing in general?

>but basically his
>theory cannot be empirically sustained; one reason for that is, that (in
>typical Marxist fashion) very abstract concepts are directly applied to
>experience, raising the question of why you need any theory at all. It is
>simply not true that export is "determined by overaccumulation", like a cup
>that flows over, that's just poetry - poetry may be fine if you have an
>overflowing cup, but it's not economic analysis. Grossman argues "the
>valorisation of capital is the driving force of capitalism and governs all
>the movements of the capitalist mechanism - its expansions and
>contractions". This is simply not true, any international banker can tell
>you that. The driving force of capitalism is not valorisation, but capital
>accumulation ("Accumulate! Accumulate! That is Moses and the prophets"! -
>Marx), and capital accumulation does not necessarily require valorisation,
>because accumulation doesn't necessarily involve production...

semantic games.

off to class, Rakesh

>  Anyway, once
>we abandon the fetishistic adherence to Grossmann, there's hope for some
>better research into 21st century realities.

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