From: Gerald_A_Levy@MSN.COM
Date: Wed Feb 02 2005 - 17:24:37 EST
> Very quickly: how do these alternative textbooks explain the
> phenomenon of profit? Michele Naples cowrote an important article
> about incoherence of explanations offered in mainstream textbooks. In
> Understanding Capital Foley presents an important comparison between
> neo classical and Marx's explanation of profit. Alfredo and Ben
> Fine's Marx's Capital presents a direct critique of several non
> Marxist explanations. I think this is the way to go. Certainly the
> most stimulating for analytical class discussion. How does Gouverneur
> approach this problem? Bowles and Edwards?
Hi Rakesh:
At the time, both B&E were part of the Social Structures of Accumulation
(SSA) school. B has moved away from SSA since; I'm not sure what E's
current perspective is. The ground work for the examination of profit is
presented in Ch. 2 -- "The Surplus Product: Command and Conflict".
Profit is then introduced in Ch. 6 -- "Capitalism and Other Economic
Systems". In that section profit is defined as "the form of the surplus
product in a capitalist economic system; they are what is left over,
out of sales revenues, after wages, the costs of materials used up, and
wear and tear on machines have been paid." (2nd ed., 104) They go on
in Chapter 8 to explain profit, and especially the profit rate, in much
greater depth. While their formula for the determinants of the profit rate
is rather long, I found that it was useful as a way of getting students to
think strategically about various ways in which capitalists can attempt
to increase the profit rate and how workers are affected and can respond.
Note the emphasis on the surplus product rather than surplus _value_.
The single biggest shortcoming from a learning perspective with B&E
was that it presented their perspective with barely a reference to
mainstream theory. This means that instructors have to fill in the gaps,
so to speak, by at least briefly presenting and critiquing mainstream
perspectives. I felt that this was suitable, though, given the context in
which I assigned this book -- for a course in Basic Economics taught at
a "Labor College" where the course was a terminal course. Green &
Sutcliffe explained and engaged marginalism more (but still relatively
briefly) than B&E had. Another alternative at the time -- which I
think is also out-of-print -- was Richard D. Wolff and Stephen A.
Resnick _Economics: Marxian Versus Neoclassical_ (The John
Hopkins University Press, 1987). This book presented _much_
more mainstream theory but I decided not to adopt this text because
I thought that students would be confused by the organization of the text.
Perhaps some others on the list had experience assigning W&R?
> And Green and Sutcliffe in their appropriately named book?
Green and Sutcliffe had (have?) a surplus approach perspective. Profit
is explained at various points in the book, including the short section
from Ch. 1 titled "The economists' dispute about profits" (pp. 11-12).
After briefly outlining and criticizing the perspective of the
"pro-capitalist economists", they present an alternative view. They
begin by highlighting production and how the class relationship is
an unequal power relation. They continue:
"Thus capitalism contains two main spheres of relationships:
production and exchange. This leads to an altogether different
explanation of the origins of profits. In the conventional view,
described above, profits originate in market or exchange
relations. In the alternative view, which derives mainly from
the theoretical writing of Karl Marx, profits depend on the
successful functioning of both spheres in unity with each other.
In the labour process workers must produce commodities
which are worth more than the labour-power and material
inputs which went into producing them; in other words the
productivity of labour must be sufficiently high.
Then the commodities must be sold on the market at a price
equivalent to their worth. The profit must be realized.
In the first part of the process profit is only potential; it is
only when the second part is fulfilled that profit becomes real,
that is, converted into money. Both parts are absolutely
essential. Profit can not be realized in the market out of thin
air; it must first of all have been produced potentially in the
production or labour process. Yet equally, if the potential profit
fails to be realized because of the failure of the market, then it
evaporates. And capitalists will not go on producing commodities
on which they cannot realize profits."
Note that the word "value" is not mentioned above. Putting aside the
assertion about how the productivity of labour must be "sufficiently
high" which excludes the possibility of additional potential profit being
created by additional labor time / worker (i.e. thru the production of
absolute surplus value), *what is wrong with the above*? At the
very least -- it seems to me -- it can serve as a credible introduction
to the subject (recalling again that this was near the beginning of their
text).
In solidarity, Jerry
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