From: Fred Moseley (fmoseley@MTHOLYOKE.EDU)
Date: Sun Oct 23 2005 - 23:01:05 EDT
On Mon, 17 Oct 2005, Michael Heinrich wrote:
> Because "capital in general" should show " the quintessence of
> characteristics, which distinguish value as capital from value as simple
> value or money", profit and interest were included in all the plans
> Marx made for the presentation of "capital in general" (see the plan
> vol. 28, p.205, were Marx divided his presentation in three big
> sections, I. Generality, II. Particularity, III. Singularity. The first
> section ends with "Capital as profit. Capital as interest", competition
> belongs to section two). Compare also the heading of section three of
> his chapter on Capital (in "Grundrisse"): "Capital as Bearing Fruit.
> Interest. Profit. (Production costs, etc.)"
> There is no doubt, that Marx explicitly included profit and interest in
> "capital in general". Therefore Marx division between capital in general
> and competition is not the same as Fred's division.
>
> In his first plans Marx spoke of profit and not of average profit.
> Indeed, I think, he was not totally clear about average profit in
> "Grundrisse". The first precise presentation of the average rate of
> profit and the process of competition related to this we can find in
> "Economic Manuscripts 1861-63". In this text Marx gets clarity, that the
> presentation of the average rate of profit needs to consider at least an
> abstract form of competition, and this means to consider the movements
> of individual capitals (which were excluded form "capital in general"
> see the quotation above). But this had an enormous impact: interest
> belongs to "capital in general", interest couldn't be developed without
> the average rate of profit, the average rate of proft couldn't be
> developed without competition, i.e. without leaving the scope of
> capital in general. What Marx intended to do with his concept "capital
> in general", to present a certain content at a certain level of
> abstraction, has proofed to be impossible.
Michael, thank you very much for this helpful summary of your argument.
I understand your argument better now.
Profit and interest are two separate issues. I will discuss each in turn.
The issue of interest is more complicated, so this post is fairly long,
but does not begin to exhaust the subject.
PROFIT
I agree that Marx included PROFIT in capital in general. I have said so
ever since my first paper on this subject in 1995. So the inclusion of
profit in the early outlines for capital in general does not contradict my
interpretation.
But there is a big difference between PROFIT and AVERAGE PROFIT that Marx
was very clear about this distinction from the beginning. Profit belongs
to the level of abstraction of capital in general and average profit
belongs to the level of abstraction of competition. Average profit NEVER
appears in the outlines of capital in general. Marx emphasized from the
Grundrisse on that average profit belongs to the level of abstraction of
competition (see pp. 758-62). There is no early confusion about this
distinction.
The concept of profit does not have to do with the distribution of
surplus-value. Profit is the same magnitude that is determined in the
Volume 1 theory of the production of surplus-value, as I discussed in a
recent post. The most important thing about the concept of profit is that
the surplus-value that is actually produced by labor, and is hence
intrinsically related to variable capital only, is seen in a different
light, as it appears to capitalists and economists, as the result of the
total capital, both constant capital and variable capital. Thus profit is
an ILLUSIONARY FORM OF APPEARANCE of surplus-value. This subject is prior
to the equalization of profit rates across industries and the
determination of average profit. Therefore, the subject of profit belongs
to the level of abstraction of capital in general.
INTEREST
The inclusion of interest in the early outlines of capital in general is
more complicated and also very interesting. This requires a detailed and
thorough examination of Marx's discussions of interest in the various
drafts of Capital, which I don't have the time to do right now, because I
will be out of town this week at a conference, and I am preparing for
that. So I will just state my interpretation of Marx's theory of
interest, and I will come back to a further discussion of the textual
evidence after I return.
There are two main aspects of Marx's theory of interest.
1. Interest as an "ILLUSIONARY FORM OF APPEARANCE" of surplus-value,
similar to profit, as discussed above. But interest is even more
illusionary than profit. In the form of interest, the origin of
surplus-value is disguised again, and disguised even more than in the form
of profit. In the form of interest, appears not to come not from both
constant capital and variable capital as components of productive capital,
but from money itself, without any relation to production at all ("money
produces money"). Marx called interest "the ultimate fetish".
2. Interest as a QUANTITY, as one part of the total surplus-value produce
by labor (along with other individual parts of the total surplus-value:
industrial profit, commercial profit, and rent). Also the determination
of the rate of interest.
I think that the reason Marx included interest in capital in general in
the early outlines in the Grundrisse is that he was thinking at the time
only about the first aspect of interest, the "illusionary form of
appearance" aspect. The title of Section III of the Grundrisse is:
"Capital as Fruit-Bearing: Interest. Profit(This is Section III of the
"chapter" on "Capital in General". Section I is the "production of
surplus-value and Section II is "the circulation of capital").
However, in the draft of Section III that follows, Marx does not discuss
interest at all. He only discusses profit (in the sense of an illusionary
form of appearance of surplus-value, as discussed above), the rate of
profit, and also the falling rate of profit (other subject that also
belong to the level of abstraction of capital in general). So we don't
know for sure what Marx intended to say about interest in this section.
But the title "Capital as Fruit-Bearing" is consistent with my
interpretation that he intended to discuss only the first aspect of
interest - as another (and even more complete) illusionary form of
appearance of surplus-value than profit.
In the Manuscript of 1861-63, Marx made some very interesting and
important theoretical advances related to the distribution of
surplus-value in general and about interest in particular (for details,
please see my papers cited in an earlier post, available at:
www.mtholyoke.edu/~fmoseley). To focus for now just on interest, Marx's
first extensive discussion of interest is about 2/3 of the way through the
manuscript (at the end of what we know as Volume 3 of Theories of
Surplus-value), in the chapter on "Revenue and its Sources", which is the
first draft of what later became Part 7 of Volume 3 of Capital.
Marx's main point in this chapter is point #1 above - that interest is the
"most complete fetish" of surplus-value. He briefly mentions the ratio of
profit to interest (related to point #2 above), and states; "it is not
intended to investigate here how this ratio is determined. This belongs
to the section dealing with the real movement of capital [i.e. with
competition], i.e. [many] capitals. While we are concerned here with the
general forms of capital." (TSV.III. p. 471) (see also p. 462).
So it appears that Marx was still thinking at that time that interest
would be included in capital in general, because he was considering only
the first aspect of interest and not the second (quantitative) aspect.
However, in the rest of the chapter, Marx also discussed the second point
quite a bit. Section 3 is entitled: "The Separation of Individual Parts
of Surplus-value in the Form of Different Reveunes. The Relation of
Interest to Industrial Profit "
I think that Michael is correct that Marx realized more clearly in this
manuscript that the quantitative aspect of interest - the determination of
the quantity of interest and the rate of interest - presupposes the
average profit, which belongs to the level of abstraction of competition.
However, this realization did not cause Marx to abandon the levels of
abstraction of capital in general and competition, but rather eventually
led Marx to relocate his theory of interest from the level of abstraction
of capital in general to the level of abstraction of competition, where
Marx now realized it belongs, since interest is one part of the total
surplus-value and thus has to do with the distribution of surplus-value
(more on this below).
The section on "revenue and its sources" is the end of the Theories of
Surplus Value,. However, it is not the end of Marx's manuscript. Marx's
manuscript continues, and continues to pursue the same general question of
the different individual forms of the distribution of surplus value. (The
rest of the Manuscript of 1861-63 has recently been published for the
first time, and is extremely interesting.) Marx first discusses
commercial profit, and then breaks off to write a draft of what he called
"Chapter 3" on "Capital and Profit" (MECW.33: 69-153). "Capital and
Profit was the title of Section III of capital in general in the
Grundrisse, so it seems reasonable to assume that "Capital and Profit" in
the Manuscript of 1861-63 continued to be the third part of capital in
general. Therefore, this title suggests that Marx was continuing to use
his general analytical framework of capital in general and competition,
with capital in general divided into "the production of surplus-value",
"the circulation of capital", and "capital and profit". This
interpretation is further supported by the fact that the contents of this
draft is the same as in the Grundrisse: profit, the rate of profit, and
the falling rate of profit (all at the level of abstraction of capital in
general.. Nothing is said in this draft of this chapter about interest.
Neither does the title include interest (as it did in the Grundrisse).
Perhaps Marx had already decided to relocate the consideration of interest
from the level of abstraction of capital in general to the level of
abstraction of competition.
Furthermore, while discussing profit in this draft, Marx also briefly
mentioned average profit several times, and repeatedly stated that "a more
detailed investigation of this point belongs to the later investigation of
competition." (MECW.33: 83, 94 and 101). I think this is strong textual
evidence to support my interpretation - that Marx continued to structure
his theory of the production and distribution of surplus-value in terms of
the levels of abstraction of capital in general and competition, even
after Marx's pervious discussion of interest, in which he realized more
clearly that the quantitative aspect of interest presupposes the average
profit.
The clearest evidence that Marx decided to relocate interest from the
level of abstraction of capital in general to the level of abstraction of
competition is the location of Part 5 of Volume 3 of Capital (on interest)
- in between the other individual forms of surplus-value: average profit
(Part 2), commercial profit (Part 4) and rent (Part 6). These individual
forms of surplus-value have to do with the distribution of surplus-value
and therefore belong to the level of abstraction of competition. The
title of Part 5 is: "The Division of Profit into Interest and Profit of
Enterprise", which has to do with the determination of interest as another
part of the total surplus-value. The determination of the quantity of
interest presupposes average profit and commercial profit, and these
subjects belong to the level of abstraction of competition. Therefore,
interest should come after average profit and commercial profit at the
level of abstraction of competition. Interest no longer comes immediately
after profit at the level of abstraction of capital in general, as Marx
originally planned, because the quantitative aspect of interest has to do
with the distribution of surplus-value and therefore belongs to the level
of abstraction of competition.
Indeed, in Chapters 21 and 212, Marx discusses the determination of the
rate of interest, which he argues is determined by - guess what? By
COMPETITION between lenders and borrowers. This is another clear
indication that Marx's theory of interest belongs at the level of
abstraction of competition.
I will discuss other textual evidence to support my interpretation after I
return from Mexico - Marx's expanded outline of Volume 3 at the end of the
Manuscript of 1861-63, the many times Marx stated that various subjects in
Volume 3 belong to the level of abstraction of competition (e.g. average
profit and prices of production), and Marx's use of synonyms for capital
in general in his later works (such as "the general formula for capital",
the "general analysis of capital", etc.).
Furthermore, the strongest artument that Marx did not abandon the levels
of abstraction of capital in general and competition (after realizing that
the quantitative determination of interest presupposes average profit) is
that the quantitative dimension of these levels of abstraction is the
production of surplus-value (capital in general) and the distribution of
surplus-value (competition). Marx clearly maintained the logical
structure of first analyzing the production of surplus-value (Volume 1)
and then analyzing the distribution of surplus-value (Volume 3), with the
total susplus-value to be distributed taken as a predetermined given.
Therefore, he also maintained the levels of abstraction of capital in
general and competition, as the logical structure within which to analyze
the production and the distribution of surplus-value.
I look forward to Michael's (and others') comments and to further
discussion when I return.
Comradely,
Fred
P.S. Aside from the controversy over the levels of abstraction of capital
in general and competition, my main point is that, in Marx's theory of the
division of the total surplus-value into enterprise profit and interest,
Marx assumed that the total surplus-value was already determined by his
prior theory of the production of surplus-value. The quantity of interest
is not determined independently in some way, and then added to an
independently determined enterprise profit to determine the total
surplus-value (this was the theory of "vulgar economics").
Michael (and others): do you agree with this last point?
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