From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Tue Sep 26 2006 - 16:03:23 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. > Marx did not intend simply to write a lot about foreign trade in a big fat book made up of disjointed insights. He intended to theorize the role of foreign trade in terms of the expanded reproduction of a capitalist mode of production. > 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. I think Rosdolsky on this point is very hard to follow. He seems to think books 4-6 were left incomplete, but he really evinces little understanding of HG's argument. > > 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). Why reject HG? Why critical of Rosdolsky? More later. HG answers some of your queries below in what he did write. 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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