|Max Sawicky wrote:
> The account, due to Marx and not the guide, glosses over the salience of
> uncompetitive markets and monopoly industries. There is also some
> inconsistency between the premise that capitalists must invest to compete
> and the logic of a low- or zero-profit equilibrium that results from stiff
In volume I of CAPITAL, as I understand it, Marx deliberately ignores
the role of monopoly and its effects on pricing and investment
decisions. In many ways, as David Harvey points out, he is criticizing
the ideal world that was presented (and worshiped) by the
_laissez-faire_ economists of his day (and today): in the competitive
Garden of Eden that they present, he sees a major snake (i.e.,
surplus-value, exploitation). In this abstract world, prices equal
"prices of production" (long-term competitive equilibrium prices,
which in the real world are seen as "centers of gravity" for the
fluctuations of empirical competitive prices). At one point (in
chapter 5), Marx argues that all that monopoly does is redistribute
value, while his question concerns the creation of surplus-value on
the level of capitalist society as a whole. Questions about how an
individual capitalist can make more profit than average are left aside
After chapter 3 of volume I, the emphasis is more and more on what we
macroeconomists call a "representative agent model": there's one
capitalist ("Moneybags") who represents the entire capitalist
class. It's only in volume II that Marx starts to introduce
empirical differences among capitalists and the role of those
differences. In terms of the "labor theory of value," we see value =
price of production = price because he abstracts not only from
monopoly and other market imperfections, but also from empirical
differences of the organic composition of capital (which lead to
value/price of production deviations). In volume II and especially
volume III, the empirical differences among capitalists are
introduced, which imply price/value deviations (in volume III).
One thing that's crucial is that the "labor theory of value" that Marx
presents in volume I of CAPITAL is _not_ a theory of prices (unlike
David Ricardo's similar-sounding theory). (A paper by John Milios that
agrees with this point was recently posted to pen-l. However, it won't
convince a skeptic.) Instead, Marx assumes a "representative agent"
runs the economy (so that value = price) in order to get a picture of
how capitalist production and accumulation work for society as a
whole. It's only in volume III that Marx deals with such issues as
supply and demand.
> As a bean-counter, I found myself wondering how anyone would measure any of
> this stuff (s, c, v, etc.). Especially c. That doesn't mean it's useless,
> just limited in some ways.
In volume I of CAPITAL, Marx presents something that's very close to
modern national income and product accounts. Constant capital (c)
should be seen as a flow of money to pay for raw materials
(circulating capital) and the depreciation of fixed capital. Given
volume I's assumption, this flow of money is stated in value terms.
> The crisis discussion is murky. (Again, maybe the fault of Marx, if not
Marx never finished his crisis theory. So we see competing schools
instead. (I've presented a synthesis, but who am I to talk? Anyway,
I've never believed that I was presenting "what Marx (really) said"
> The decisive channel for crises, especially now, is the credit
> system -- so-called fictitious capital. We might excuse Marx for not being
> around to witness the failure of finance in all its glory. I am not
> suggesting evil finance is separate from virtuous production -- I got off
> that wagon a while back. Minsky's account of financial breakdown, which I
> read as genuinely intrinsic to credit markets, is much more clear and
> compelling to me.
I wish Marx hadn't used the phrase "fictitious capital." It's simply
the present discounted value of expected future earnings. In practice
(after the fact), it turns out that some of that fictitious capital
isn't fictitious, since it corresponds to real earnings (real
extraction of surplus-value). Other fictitious capital turns out to be
Minsky's account is good. But we have to remember that Marx (and
Engels) saw two different kinds of financial crises. Some of them are
due to the autonomous workings of the financial system while others
are reflections of the dynamics of the non-financial sector (falling
profit rates in production). Minsky's emphasis is on the former,
while Marx's is on the latter. One way to put it is that Minsky
analyzed "financial fragility," while Marx's emphasis is on the
fragility of the non-financial economy (his unfinished crisis theory).
> Naive question: if market competition is so fierce, why can't workers
> capture surplus value? I can think of all kinds of reasons why they don't,
> but none that are intrinsic to the basic value relation.
I think that some workers do gain a piece of the surplus-value pie.
These are the small number of professional athletes and entertainers
(think Oprah) whose unique skills allow them to earn scarcity rents.
Just as land-owners get a piece of the pie because they control a
naturally-scarce resource, these folks control a resource which allows
them to earn incomes much higher than the costs of its production.
> On the whole, the book gave me some motivation to try (again) to crack
It's a hard book to crack. Even though chapters 1 through 3 are
extremely important, it may be best to skip them for awhile. Or even
better, read the book with a study group.