From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Tue Sep 26 2006 - 14:00:17 EDT
Hi Rakesh, A few points... You argue: "Since Marx never accepted the assumptions on which Ricardian theory of ca is based, it's not clear to me that he had to develop an explicit critique of it in order to demonstrate the possible multiple effects of foreign trade on the expanded reproduction of capital." Well, I guess we differ a bit there - I take Marx to be doing what he said he was doing, namely making a critique of political economy (such as was known in his time). Ricardo was undoubtedly the intellectual giant in economic thinking at the time, and Marx was evidently interested in the topic of foreign trade as well, for example, he copied estimates on British imports and exports from "The Economist" magazine. He just did not write a lot about it, except for currency exchange, but that was because as I argued, his project was unfinished and incomplete. The main point though that Marx repeats several times (in the Grundrisse and Capital) is that - whereas obviously people would not normally trade unless they gained something from it - some could gain much more from the trade then others, so that in aggregate more labour effectively traded for less labour, i.e. you have to produce more and more, to obtain the same amount of product in exchange. This modifies the operation of the law of value. In Marx's day, foreign trade was not quantitatively so significant as it is today. As I mentioned, e.g. the US economy nowadays swallows up an amount of foreign goods and services the value of which is nearly equal to Italy's GDP each year (of course, I need a bit more statistical rigour here since multinationals are in the habit of re-exporting as well, for which the figures have to be adjusted). One of the points Prof. Anwar Shaikh makes is that effectively the comparative advantage/cost theorists operate with two theories of trade, one applying to the domestic market and another one applying to international markets - but why should there be one set of economic laws for the domestic market and another set for international trade? Presumably Marx would argue that capitalist behaviour internationally would follow the same kinds of principles that operate nationally. (Shaikh's papers on international trade are available here: http://homepage.newschool.edu/~AShaikh/). You asked: One more question: did Mandel ever speak to the relationship between the six book plan and the four volumes that Marx did write? Yours, Rakesh As far as I know, he did comment on it (e.g. in his Introductions to Capital) but he mainly followed Rosdolsky's interpretation. Mandel's theory of the world market (in Late Capitalism) contains some important insights, but as Klaus Busch among others points out, there are also problems with it. Mandel's theory of unequal exchange isn't very good yet. But it is better than those scholars who argue Marx upheld a Ricardian theory of foreign trade (rather odd especially since Marx wrote relatively little about foreign trade). Makoto Itoh also provides a careful discussion of the topic in his "The Basic Theory of Capitalism", p. 55 ff. Itoh rejects Grossmann's interpretation and is also critical of Rosdolsky (being an Unoist). Among other things, when Grossmann discussed this issue in 1929, Grossman did not have access to the Grundrisse and all the related economic manuscripts and letters by Marx. On 15 August 1863, Marx wrote to Engels: "In one respect, my work (preparing the manuscript for the press) is going well. In the final elaboration the stuff is, I think, assuming a tolerably popular form, aside from a few unavoidable M-C's and C-M's. On the other hand, despite the fact that I write all day long, it's not getting on as fast as my own impatience, long subjected to a trial of patience, might demand. At all events, it will be 100 p. c. more comprehensible than No. 1. When, by the by, I consider my handiwork and realise how I've had to demolish everything and even build up the historical section out of what was in part quite unknown material, I can't help finding Izzy a bit of a joke; for he has already got 'his' political economy in hand and yet everything he has peddled around hitherto has shown him to be a callow schoolboy who trumpets abroad as his very latest discovery, with the most repulsive and impertinent garrulity, theses that we were doling out 20 years ago as small change to our partisans, and ten times better at that." http://marxists.org/archive/marx/works/1863/letters/63_08_15.htm What does Marx mean by the "demolition" here? It is not clear. It could refer (1) to abandoning his original plan, (2) to reworking the manuscripts he previously wrote, or (3) to overturning every theoretical matter in the classical literature. As I think K. Tribe noted (Economy & Society, May 1974), Grossman's idea might have been that the purpose of the reproduction schemes is to show that the capitalist economy can in principle be self-reliant, without depending on foreign trade or the world market. But as I already quoted, Marx states explicitly "Capitalist production does not exist at all without foreign commerce." http://www.marxists.org/archive/marx/works/1885-c2/ch20_04.htm#12 It is not really that Marx is trying to prove the self-reliance of a national capitalist economy (anymore than he is trying to prove an Arrow-Debreu equilibrium theorem), rather he is showing that his theory of surplus value and accumulation can be sustained when considering the reproduction of the total social capital, in abstraction from the effects of foreign trade. This is a model of the "pure case" if you like. Moreover, the analysis yields important conclusions about how the annual gross product should really be defined and valued, conclusions which also appear in the "Resultate" manuscript. The problem with Grossmann's analysis is "at what level does the logic of reproduction that culminates in crises apply?" At the national level? Or at the world level? As I've mentioned already, there exists a considerable body of Marxian theoretical work on the world market, from semi-Marxists like Varga and Kondratieff onwards, though much of it not in English unfortunately. It would be good to translate Christian Girschner's book, but I haven't time or energy for it now. Once we are not so concerned anymore with doctrinal orthodoxy, we can develop Marx's analysis in new directions. How would Marx have tackled foreign trade? Presumably he would have started off with a survey and critical sifting of what the political economists had said about it, in the context of their times, and then develop a more adequate theory, along the lines that "foreign policy is an extension of domestic policy". Luxemburg actually takes such an approach to an extent, but she tries to make the reproduction schemes do more work than they warrant. One of the reasons why cogent economic argument gave way to a lot of hot-air theoretical hullaballoo about "globalisation" in the 1990s is precisely because a good critical examination of facts and theories about foreign trade and the world market was lacking. I think you have to understand the economic basis of imperialist aggression, without however reducing it totally to that economic basis. AG Frank wrote long ago: "Between 1600 and 1750, Portugal itself underdeveloped and was not able to expropriate so much of its Brazilian satellite. Portugal was ever more converted into a satellite. The treaties of the seventeenth century, and especially the Treaty of Methuen in 1703, brought on the destruction of Portugal's textile industries, the take-over by Great Britain of its foreign and even domestic trade, and the conversion of Portugal into a mere entrepot between Great Britain and Brazil and other Portugese colonies. Portugal did become an exporter of wine, in exchange for the textiles it could no longer produce because of the flooding of its market by British products - which David Ricardo in 1817 had the temerity to interpret as a law of 'comparative advantage'. Portugal became a satellite-metropolis which took an ever smaller part of the economic surplus of its own Brazilian satellite thanks to the monopoly position it still retained, while Great Britain took over the economic monopoly and spoils. Illuminating in this connection are the observations of the Marquis of Pombal, Prime Minister of Portugal and its second Colbert, who clarified the situation and therewith the roots of Portugal's underdevelopment in 1755, some years before Adam Smith inquired into the causes and nature of the wealth of nations, and half a century before Ricardo assured the world that Portugal's production and exchange of wine for Britain's textiles was a universal law for the good of all. Pombal wrote: (...) "These foreigners, after having acquired immense fortunes, disappeared on a sudden, carrying with them the riches of the country...". - Andre Gunder Frank, Capitalism and Underdevelopment in Latin America. Harmondsworth: Penguin edition, 1971, p. 183-184. For more detail on the historical origins of the doctrine of comparative advantage, see: S. Sideri, Trade and Power: Informal Colonialism in Anglo-Portuguese Relations. Rotterdam (Netherlands): Universitaire Pers Rotterdam, 1970. (it is held at UCLA SRLF UCD UCSB UCR UCSD ). Jurriaan
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