From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Mon Dec 12 2005 - 12:15:01 EST
Jerry asked: Yet, some of the "laws" asserted by Marx, such as the tendency for the formation of prices of production and a general rate of profit and the law of increased productivity of labor, to the extent that they are empirically manifested, reveal themselves in non-crisis situations. Why would either of these tendencies _only_, or even_ generally_, reveal themselves particularly in times of socio-economic crisis? Well, I take the view that Marx aimed to uncover the inner structure, the anatomy if you like of the capitalist mode of production, in its "ideal average". He notes several times that the way the motion of capital observably appears is often the exact inverse of what is really happening, just as, by analogy, the sun seems to orbit the earth, rather than vice versa. Prices of production are also a good example of that - Marx regarded them as the "external form" or expression of value relations (Anwar Shaikh explicitly claims that production prices do not really exist in trade). Some aspects of the system will be observable all the time obviously, but the real causal connection, the way different facets of the system are really connected, if you like the real nature of the system's functioning, becomes apparent only in special situations, e.g. crises when the most basic interests of economic actors and the system's real imperatives become clear. Marx sometimes seems to have believed a general rate of profit would be formed, empirically, as an overall result, through the competitive process, but his draft manuscript doesn't seem entirely free of ambiguity, and sometimes this general rate seems more like an idealisation (a more credible interpretation). I take the view that the so-called transformation problem was really Ricardo's problem, which Marx tried to solve. But the way Marx solves it, gives a new twist to the analysis, because his point is that what capitalist competition is about, systemically - regardless of how different competitors might view it - is maximising the production and realisation of surplus value, as profit revenues. If capitalists are obsessed with "productivity", that's because they know the "value added" is the ultimate source of profit income and investment capital (in that respect, Ben Bernanke is a bit vague, when he queried "Why is the rate of productivity growth so important? Economists agree that, in the long run, productivity growth is the principal source of improvements in living standards." http://www.federalreserve.gov/boarddocs/speeches/2005/20050119/default.htm - despite increases in productivity, living standards of masses of US workers have yet to improve significantly). You asked: btw, what do you (and others on the list) think about the position of (former member) Julian Wells on Marx's statistical conception and whether Marx believed that the rate of profit equalizes? (see attached). Well I am quite a fan of Julian Wells, and I tend to take a similar view (although my understanding of probability theory is limited, my mathematical education came to an abrupt end, it's something to work on in future). As soon as you admit that there is no "perfect competition", and that the competition involves also the attempt to *block competitors* in various ways, any convergence or levelling out of profit rates is at best a tendency of market functioning. In banale interpretations of competition, it's a sort of sport, whereby every producer aims to produce at the lowest prices and sell the most output, and "may the best man win" in a level playing field, but this is rarely an accurate description - especially in the present age of corporate industrial monopolies, oligopolies, enormous disparities in exchange rates, protectionism, state regulation etc. But this doesn't necessarily invalidate what Marx tried to do - as was characteristic of him, he aimed to solve the problem in the pure case, arguing that if you cannot make sense of it in the pure case, you cannot understand all the variations from it, that might exist in reality, either. And this, in Marx's case, typically involves a form-analysis, whereby you ascend from simple forms to more complex forms, introducing more sources of variation step by step. Only the crudest Marxisms try to apply the abstract concepts immediately to everyday reality. It's interesting to note here also Engels's comment to Conrad Schmidt dated March 12, 1895: "The reproaches you make against the law of value apply to all concepts, regarded from the standpoint of reality. (...) But although a concept has the essential nature of a concept and cannot therefore prima facie directly coincide with reality, from which it must first be abstracted, it is still something more than a fiction, unless you are going to declare all the results of thought fictions because reality has to go a long way round before it corresponds to them, and even then only corresponds to them with asymptotic approximation. Is it any different with the general rate of profit ? At each moment it only exists approximately. If it were for once realised in two undertakings down to the last dot on the i, if both resulted in exactly the same rate of profit in a given year, that would be pure accident; in reality the rates of profit vary from business to business and from year to year according to different circumstances, and the general rate only exists as an average of many businesses and a series of years. But if we were to demand that the rate of profit--say 14·876934...--should be exactly similar in every business and every year down to the 100th decimal place, on pain of degradation to fiction, we should be grossly misunderstanding the nature of the rate of profit and of economic laws in general--none of them has any reality except as approximation, tendency, average, and not as immediate reality. This is due partly to the fact that their action clashes with the simultaneous action of other laws, but partly to their own nature as concepts. (...) it follows from the very first that the total profit and the total surplus value can only approximately coincide. But when you further take into consideration the fact that neither the total surplus value nor the total capital are constant magnitudes, but variable ones which alter from day to day, then any coincidence between rate of profit and the sum of surplus value other than that of an approximating series, and any coincidence between total price and total value other than one which is constantly striving towards unity and perpetually moving away from it again, appears a sheer impossibility. In other words, the unity of concept and appearance manifests itself as essentially an infinite process, and that is what it is, in this case as in all others. Did feudalism ever correspond to its concept? Founded in the kingdom of the West Franks, further developed in Normandy by the Norwegian conquerors, its formation continued by the French Norsemen in England and Southern Italy, it came nearest to its concept--in Jerusalem, in the kingdom of a day, which in the Assises de Jerusalem left behind it the most classic expression of the feudal order. Was this order therefore a fiction because it only achieved a short-lived existence in full classical form in Palestine, and even that mostly only--on paper?". http://www.marxists.org/archive/marx/works/1895/letters/95_03_12.htm It's a slightly impatient rhetoric by Engels, but only because the point seemed "gar offensichtlich" to him - Marx tried to form a theory by making conceptual distinctions in a non-arbitrary, critical way, and then trace out their implications, to arrive at an adequate view of the real nature of the phenomenon in its totality, knowing very well that innumerable circumstances might modify its appearance in practice. You abstract from experience, and return to experience, in order to improve the "fit" between theory and the data. But as regards data, Marx worked out his theory about 70 years before comprehensive macroeconomic data became available, and even then, few people have used that data to corroborate or test the theory. On top of that, it often takes a lot of work to test even a simple hypothesis, so really we usually have more theoretical interpretation than substantive proofs. As a student I regarded the retreat to discussion about transcendental realism and hidden mechanisms as largely a subterfuge, because the real task is to study the facts of experience, and see if the theory can make sense of them or not, and if not, how the theory would need to be adjusted or how we would get better data. Save for that, we're just left with a 19th century phenomenology of capitalism. So I looked at quite a lot of stats, and historical facts. And I think the theory does need adjustment, since capitalism in our time is in many respects different from what it was in Marx's time. The advantage there is, that Marx at least attempted to arrive at a basic model of pure cases with his form analysis, so that you have something to orient research. Things become easier I think when you've cracked the riddle of the "value added" and realise no price accounting can be done at all without reference to a value theory, implicit or explicit. Jurriaan
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