From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Mar 27 2005 - 12:52:41 EST
>----- Original Message ----- >From: "Stephen Keen" <S.Keen@uws.edu.au> >To: <Gerald_A_Levy@msn.com> >Sent: Sunday, March 27, 2005 6:04 AM >Subject: RE: [OPE-L] Michio Morishima, 1923-2004 > > >Interesting post Jerry! > >Keep me in the loop on this one. For my part, I wasn't particularly >influenced by Morishima--I think he took a wrong tack in trying to express >Marx in marginalist terms because Marx's theory of value was fundamentally >objective whereas the neoclassicals have a subjectivist theory of value. >My interest is in providing a proper expression of an objective and >dialectical theory of value--and as you know I regard the labor theory of >value as flawed in that light. This of course implies that Steve's conception of use value is not subjectivist in the sense of the neo classical utility; after all, he believes that machines are objectively useful in the creation of surplus. So his conception of use value seems more in line with the classicals', though I don't remember whether he spells out himself that use value has radically different meanings in classical and neo classical thought. For example for Smith diamonds are said not to have use value not because they fail to bring satisfaction but because they have no objective or practical use. > >Of the latter group of scholars you mention, the one I do give great >credence to is Arun Bose. His "Marx on inequality and exploitation" is a >classic--and, as it happens, so is the critique he has in there of the >labor theory of value. I think that Steve is referring to his idea that Marx failed to extend the application of his objectivist dialectic of value and use value from labor power to machines as well. Of course Steve fails to apply that same dialectic to the output. For while machines of higher quality may of course increase the quantity of output in use value terms, it will not necessarily increase the value of that same surplus. Grossmann did not make this mistake, but Steve takes his understanding of use value from Rosdolsky who was only summarizing Grossmann! Jerry wrote: > >While Morishima didn't originate these theories, I think he also has to be >given credit ... or blame ... for perpetuating and popularizing *dualism* >and *simultaneism* in Marxian theory. Morishima also influenced people to understand Marx's reproduction schema as a proto growth model a la van Neumann and Harrod Domar. But while it is true that the reproduction schema show the possibility of accumulation, it is important not to overstate their significance. Desai (1979) argues at one point that Marx's reproduction schema demonstrate the possibility of capitalism as an instrinsically stable dynamical system. That is, Marx's reproduction schema are received just as some of Newton's interpreters understood his system to have demonstrated the dynamic stability of the cosmic system and thus its rational intelligibility (according to Toumlin [2001] the driving ambition of economics was to demonstrate that the economy had the same dynamic stability that many thought the cosmic system had). Since Rudolf Hilferding, Marxists have incorrectly understood Marx to have constructed in the last section of Capital, volume II a proof of the possibility of the dynamic equilibrium of an expanding capitalism; the law of value is then misundersood as the mechanism by which an anarchic, turbulent capitalism is returned to dynamic equilibrium. Yet this is to understand capitalism as an inherently stable system whose structure guarantees its permanence unless of course the Creator chooses to close it down or the revolutionary proletariat serves as just such a deus ex machina. But in fact Marx's reproduction schema do not show even the possibility of capitalism as an intrinsically stable dynamical system..How could they? They assume a constant OCC (organic composition of capital), fixed values, annual turnover, exchange at value (rather than price of production). They are too far removed from the reality of an actual capitalist system to lay bare its laws of motion (see Grossmann, 1932 and Mattick 1976). However, even from this distance to reality, the schema already do show that supply does not itself create its own demand (so Marx remains throughout a critic of Say's Law); accumulation--not supply--creates demand: demand is not created to put to use what has been or can be supplied. Accumulation and thus demand are a function of anticipated profitability and competitive burdens. Accumulation does not take place to solve the realization problem; there is no intended link between accumulation taking place and the realization problem getting more or less solved (see Desai, Marxian Economics, p. 180-81). More importantly, it is doubtful--and this is in fact what Marx is trying to demonstrate--that demand will be created in the correct value and material proportions to sop up growing supply, so if capitalism does reproduce itself on an expanding scale it will likely do so with all kinds of disturbances and disproportionalities and crises (see Grossmann, 1941). We can already see this on the basis of Marx's totally unrealistic reproduction schema which were not meant to suggest in any way that capitalism is possibly an intrinsically stable dynamical system. All this said, Marx does not in fact locate capitalism's most important and explosive contradiction in the imbalances between the demand which accumulation creates and growing supply; the fundamental contradiction (and the explanatorily fundamental one for protracted and general crises) is in the production of a diminishing flow of surplus value relative to the capital advanced. As the reproduction schemas assume a constant OCC, they cannot show this. In this sense Otto Bauer's schema into which was built a rising OCC were more realistic; they relaxed an important assumption, though they maintained the totally unrealistic assumption of fixed unit values in the course of accumulation (see discussion in Grossmann, 1970). Marx's own system does not become fully dynamic until the third volume of Capital.
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