From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Thu Feb 03 2005 - 03:22:05 EST
At 5:24 PM -0500 2/2/05, Gerald_A_Levy@MSN.COM wrote: > > 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) This seems to define profit, not explain it. That residual could then be explained as a reward for the supply of entrepreneurial skill, for the absorption of risk, for waiting, etc. Or is there something left over after that? Why? >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_. Yes indeed. As if capitalists are interested in only the quantity and not the value of the things that their money profit can command. > >The single biggest shortcoming from a learning perspective with B&E >was that it presented their perspective with barely a reference to >mainstream theory. Yes, I think it is impossible to teach without such engagement. > 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. I have this book, so I shall look it up. > 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? I think this is a very helpful book because it is inherently critical of the mainstream alternative. So is Ranganayakamma, Saad-Filho and Fine, and Foley. I don't think it's an accident that the texts which are interested in the critique of mainstream theory are also the truest to Marx. > >> 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; But this does not explain why risk or waiting or entpreneurial skill did not go 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*? It is simply not specific enough. How does profit arise out of production? What is the relation between production and circulation? There is a helpful book by Obransky (sp?) Profit Theory and Capitalism. RB > 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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