From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Wed Sep 27 2006 - 14:58:46 EDT
Hi Rakesh,
You wrote:
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.
Reply:
The reality was that Marx had some large manuscripts at the time that he was
wondering how to stitch together into an acceptable publication. No one is
of course saying that he "intended simply to write a lot about foreign trade
in a big fat book made up of disjointed insights". And we do not know for
certain how he would have written more volumes of Das Kapital, if he had had
the oomph to do it.
I'm just suggesting that Ricardo's theory of foreign trade, as the
culmination of the classical school, would have been a logical starting
point, precisely because it revealed how the political economists thought
about the foundations of trade (economic exchange) as such - and indeed
quite a few of the sharper Marxian scholars have taken that up, as I
mentioned (I can provide biblio if you want it).
There is no hard evidence that "Marx intended to theorize the role of
foreign trade in terms of the expanded reproduction of a capitalist mode of
production", whatever that is taken to mean. That is your interpretation,
from Grossman's theory of crisis, but to make that stick, you'd have the
specify what such a catch-all phrase would mean, and how it logically
follows from the 4 volumes of Das Kapital. In the absence of such an
elaboration, I'm inclined to think it's just spin.
"If capital is mobile, Ricardo posits... the theory of comparative costs
will not hold, because in that case international specialization will be
determined by absolute costs, like specialization in one country. As this
would erase his free trade principle, it is only logical that Ricardo
expresses the conviction - and hope - that this will not happen:
'Experience, however, shows, that the fancied or real insecurity of capital,
when not under the immediate control of its owner, together with the natural
disinclination which every man has to quit the country of his birth and
connexions, and intrust himself with all his habits fixed, to a strange
government and new laws, check the emigration of capital. These feelings,
which I should be sorry to see weakened, induce most men of property to be
satisfied with a low rate of profits in their own country, rather than seek
a more advantageous employment of their wealth in foreign nations' (Ricardo
1817: 136-7). This argument is rather remarkable when we consider today's
world economy, in which financial flows are largely unregulated, and
financial markets are so heavily integrated, that a tempest in one part of
the world almost automatically conjures up storms in other parts. Even more
important, multinationals organize the conception, production and sales of
their products world wide, and therefore increasingly resort to foreign
direct investments and outsourcing. The capitalism of Ricardo's time must
certainly have been different from today's capitalism... (...) But the truth
of the matter is that even in Ricardo's day this assumption did not hold.
Adam Smith already had a different opinion when he wrote his Wealth of
Nations: 'A merchant, it has been said very properly, is not necessarily the
citizen of any particular country. It is in a great measure indifferent to
him from what places he carries on his trade: and a very trifling disgust
will make him remove his capital, and together with it all the industry
which it supports, from one country to another' (Smith 1776: 426)"
(Cited from Dr Robert Went, Essays on Globalization, Amsterdam 2001, p. 26).
To their credit, the classical political economists based their theories of
foreign trade - rightly or wrongly - on their own perceptions of actual
capitalist behaviour - very different from most modern economists, who just
spin mathematical models from behind their writing desk, with theoretical
assumptions that deface reality. What interested Marx was the social and
economic forces impelling capitalist behaviour, and shaping the perceptions
of it by the political economists. Simply put, why would foreign trade take
the form of C-M-C', when domestic trade also took the forms of
M-C...P...C-M', M-M', C-C', M-C-M' and so on? Dr Robert Went actually
develops the argument you suggest, in terms of "the circuit of social
capital", but point is, it doesn't get him very far, and in the following
essay he raises the question "5.1 How to analyse capitalism?". What is at
stake is the explanandum and the explanans of the Marxian theory of foreign
trade, and the aim is to reveal the law of motion of foreign trade. And
obviously that has to be resolved in part through a conspectus and critique
of what came before.
Grossman shows awareness of of what the problem is, and devotes a section of
his book to "the function of foreign trade" in staving off or precipitating
crises. I do not deny the utility of some of his insights, but basically his
theory cannot be empirically sustained; one reason for that is, that (in
typical Marxist fashion) very abstract concepts are directly applied to
experience, raising the question of why you need any theory at all. It is
simply not true that export is "determined by overaccumulation", like a cup
that flows over, that's just poetry - poetry may be fine if you have an
overflowing cup, but it's not economic analysis. Grossman argues "the
valorisation of capital is the driving force of capitalism and governs all
the movements of the capitalist mechanism - its expansions and
contractions". This is simply not true, any international banker can tell
you that. The driving force of capitalism is not valorisation, but capital
accumulation ("Accumulate! Accumulate! That is Moses and the prophets"! -
Marx), and capital accumulation does not necessarily require valorisation,
because accumulation doesn't necessarily involve production... Anyway, once
we abandon the fetishistic adherence to Grossmann, there's hope for some
better research into 21st century realities.
Jurriaan
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