commissioner.org
| Source | Jim Devine |
| Date | 13/05/19/13:43 |
| 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 > competition. 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 for later. 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 > Heinrich.) 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" about crisis.) > 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 truly fictitious. 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 > Capital. 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. |
Copyright (c) 1998, Joongpil Cho