The New York Times has launched a debate about whether Karl Marx was right after all about capitalism (http://www.nytimes.com/roomfordebate/2014/03/30/was-marx-right). As the NYT put it in its introduction to the contributions of some well-known economic commentators and bloggers:“in the golden, post-war years of Western economic growth, the comfortable living standard of the working class and the economy’s overall stability made the best case for the value of capitalism and the fraudulence of Marx’s critical view of it. But in more recent years many of the forces that Marx said would lead to capitalism’s demise – the concentration and globalization of wealth, the permanence of unemployment, the lowering of wages – have become real, and troubling, once again. So is his view of our economic future being validated?”
You can see what’s worrying the NYT. Like many supporters of capitalism as the only and best system of human social organisation, the NYT is worried that capitalism does not (or no longer seems) to deliver ever-increasing living standards for the majority, but instead is producing ever greater inequalities of wealth and incomes, to such a point that it could provoke a backlash against the system itself.
So the NYT offers a debate. And the question of whether Marx was right about capitalism is put to five bloggers. Of course, most of these are very quick to assume that capitalism does work or is, at least, the best system on offer and there is no alternative (TINA), to use Margaret Thatcher’s infamous phrase about the ‘free markets’ and welfare cuts.
Take free marketer, Michael R. Strain, a resident scholar at the neo-liberal American Enterprise Institute. Mr Strain tells us that maybe Marx had a point back in the days of Victorian England and Charles Dickens, when there was poverty everywhere. But now, Strain tells us, things are different. Now only just over 5% of the world’s population is living on less than $1 dollar a day compared to over 26% just 40 years ago. This is the great achievement of ‘free enterprise’.
This statistic hides a story though, because the big reduction in the worst level of poverty (living on $1 (1987 prices) was achieved by China’s dramatic rise in the world economy. I would be surprised if Strain would conclude that China’s economy is an example of ‘free enterprise’. For that matter, the biggest falls in poverty also took place in the Soviet economies until the fall of the Wall.
No matter, after damning Marx with faint praise, Strain brings up a hoary old chestnut used by mainstream economics: the fallacies of Marx’s labour theory of value. You see, it’s obvious false “that the value of an object is determined by the labor required to produce it. I could spend hundreds of hours writing a song; Bruce Springsteen could write one in 15 minutes worth far more than mine. Q.E.D”.
Well, fancy Marx not noticing that the product of some people’s labour is worth more in the market than others even though they take less time. Clearly, Strain has not read Marx’s Capital Volume One, where he deals with this issue and many others in relating the difference between ‘concrete’ labour and ‘abstract’ labour time.
But again, no matter, Strain has to admit that Marx may still have point about capitalist crises: “There is an inherent instability in capitalism — cycles of boom and bust lead to human misery. Capitalism does create income and wealth inequality.” That doesn’t sound good for ‘free enterprise’ but Strain then tells us that, after all, such crises are not ‘inherent’ and all this inequality and boom and bust were just leftovers from the Great Recession and capitalism would be soon all right. Great – panic over!
Strain’s arguments are thin indeed. We get a more serious bashing of Marx from top Keynesian Brad de Long, professor of economics at University of California, Berkeley, and who blogs at Grasping Reality With Both Hands. First, he tries a quick demolition of “Marx’s fixation on the labor theory of value” which according to De Long “made his technical economic analyses of little worth”. You see, Marx’s claim that only labour creates value meant that he could not see rising living standards being achieved if the rate of exploitation of labour rose over time. Marx was “confused between levels and shares” of income. After all, you can have a falling share of value going to labour, but still have rising living standards.
This, of course, is yet another chestnut: that Marx reckoned wages would keep on falling under capitalism until the point that, as De Long puts it, the working class would starve. And how wrong was that. This is a nonsense view of Marx’s immiseration theory. Marx clearly recognised that rising productivity of labour under the dynamic development of the capitalist mode of production could lead to increased wages, except that the workers would have to fight for them. A rising rate of exploitation did not necessarily mean falling wages, although sometimes it could. Again this is all in Marx’s Capital – but our esteemed economist seems ignorant of that.
All these misrepresentations of Marx’s value theory are deliberate. Marx’s theory explains that the world’s wealth does not come from capitalists investing, landlords from owning land or bankers from lending money, or somehow from ‘technology’, but from the effort of human labour. But the product of labour is usurped and appropriated by the owners of capital so there is a direct contradiction between profit and the value created by labour. This is something that cannot be admitted or accepted by the apologists of capital.
De Long tells us that Marx thought that new technology under capitalism would lead inexorably to rising unemployment and Marx was wrong. But what Marx explained was that capital’s drive for higher profits would mean more labour-saving technology. That would mean a rise in the ratio of machinery, plant and technology per employee, what Marx called the organic composition of capital. The evidence for this happening over time in every major capitalist economy is overwhelming. The ratio of the means of production to the employment of labour has risen hugely. And this creates a tension between capital and labour on sharing out the new value created and on the continued employment of labour in outdated industries. A reserve army of labour is permanently available for capital to exploit or not. This seems to describe exactly the nature of technology and labour under capitalism, not De Long’s distortion. Ironically, De Long says at the end of his piece that maybe robot technology will actually displace human labour permanently after all. But that’s another story.
Tyler Cowan is a professor of economics at George Mason University and blogs at Marginal Revolution, which covers economic affairs. Tyler is a firm proponent of modern neoclassical economics that starts from the assumption of free markets and sees economics as the study of the allocation of scarce resources, basing himself of the neoclassical assumptions of marginalism.
For Cowan, Marx has got the wrong end of the stick. Capitalism’s failure to provide things like decent education and health or better living standards, at least right now, is because of ‘vested interests’ blocking the free market from making a proper allocation of resources. ‘Rent seekers’ and monopolies (including trade union interference) are the problem, not capitalism as such. Cowan reckons Marx has little to say on these issues. Again, of course, yet another eminent economist has not read his Marx, who dealt with the issue of monopoly and rent at length.
Like De Long, Cowan confuses productivity with profitability. For him, the low profitability that Marx pointed out “perceptively” is due to the low growth in productivity since the 1970s. Thus Cowan suggests that Marx had a similar theory to the neoclassical marginal productivity theory, something by the way that Thomas Piketty also thinks in his recent opus, Capital in the 21st century.
But turning Marx into a neoclassical economist won’t work. Actually Marx’s theory is the opposite: a higher growth in the productivity of labour will eventually lead to a falling rate of profit, because it can only be achieved by increasing investment in the means of production and reducing relatively the costs of labour. But as profits only come from labour power, there is a tendency for profitability to fall as productivity rises.
Yves Smith writes the blog Naked Capitalism. She is the head of Aurora Advisors, a management consulting firm and generally considered more to the left in the economic spectrum. But she soon dismisses Marx’s analysis, as she sees it, in her contribution. We are told that Marx had an underconsumption theory of crises under capitalism, namely that “Marx believed that overproduction would lead to pressure on wages, which would prove to be ultimately self-defeating, since the drive to lower pay levels to restore and increase profit levels would wreck markets for goods and services. That’s very much in keeping with the dynamic in advanced economies today.”
This is the usual view of Marx by many lefts and the modern version of this is to claim that rising inequality of incomes is the cause of crises, or at least the latest one. I have spent a lot of time on my blog explaining both that this is wrong and it was not Marx’s view either (see my post: https://thenextrecession.wordpress.com/2014/03/11/is-inequality-the-cause-of-capitalist-crises/.)
But no matter, because according to Smith, Marx got it wrong anyway about class struggle under capitalism eventually leading to its overthrow. You see, a ‘middle class’ developed around managers and trade unionists and this has permanently blocked any move to end capitalism. So Marx was wrong in his expectation of change.
There was only one blogger who defended Marx’s ideas out of the five invited to contribute to the NYT debate – I suppose a fair ratio of views among economists. Doug Henwood is editor of Left Business Observer, host of a weekly radio show originating on KPFA, Berkeley, and is author of several books.
Henwood makes it clear where he stands: “I don’t see how you can understand our current unhappy economic state without some sort of Marx-inspired analysis.” Even better, he places the Marxist theory of the cause of crises under capitalism squarely with the movement of profitability. “Corporate profitability — which, as every Marxist schoolchild knows, is the motor of the system — had fallen sharply off its mid-1960s highs.” As Henwood explains, the strategists of capital moved to raise profitability through a reduction in labour rights and by holding down wages. “The “cure” worked for about 30 years. Corporate profits skyrocketed and financial markets thrived. The underlying mechanism, as Marx would explain it, is simple: workers produce more in value than they are paid, and the difference is the root of profit. If worker productivity rises while pay remains stagnant or declines, profits increase. This is precisely what has happened over the last 30 years. According to the Bureau of Labor Statistics, productivity rose 93 percent between 1980 and 2013, while pay rose 38 percent (all inflation-adjusted)”.
However, Henwood reckons the current crisis is the result of inequality and low wages reducing consumption and thus the answer is to raise wages and public spending. The problem with this view of Marx is that it does not match the facts: consumption did not slump at all prior to the Great Recession: it was the collapse of the housing market, profits and then investment, not consumption. Raising wages and reducing inequality will help the majority but lower profitability further and thus reignite the capitalist crisis. It’s not higher shares for labour that is the answer but the replacement of the capitalist mode of production.
But at least Henwood understands better Marx’s views, unlike the other bloggers. That did not stop Philip Pilkington, a heterodox economist, blogging that Henwood was wrong. Pilkington correctly refutes De Long’s distortion that Marx thought wages must keep falling. As he says “I don’t know why this myth continues to bounce around. Everyone and their mother seem to think that Marx was dead sure that real living standards of workers could not rise under capitalism. But this is simply not true…Marx did not argue that real wages could not rise under capitalism. End of story”
Unfortunately, Pilkington relies on the arguments of the post-Keynesian ‘Marxist’ economist of the 1940s, Joan Robinson. As a result, he claims that Henwood is confused to argue that US profitability fell in the 1970s. He says “I don’t know where this stuff comes from. I know that Marxists want to bring every crisis down to some sort of crisis of profitability but really, the data is readily available.”
Yes, it is readily available and unfortunately for Pilkington backs the Marxist case. Pilkington is confused with his data. Not understanding Marx’s law of the tendency of the rate of profit to fall, Pilkington provides us with a graph showing the year on year change in the mass of profit to refute Henwood, not the rate of profit! Oh dear.
Pilkington concludes with a question “is Marx relevant for understanding the world today?” And his answer: “Frankly, I don’t think so.” For him, we are back to rising inequality and banking speculation as the explanations of crises – they remain the most popular and yet the furthest away from Marx’s.
So Marx continues to be blogged to death.
Michael Roberts Blog 
“Marx clearly recognised that rising productivity of labour under the dynamic development of the capitalist mode of production could lead to increased wages, except that the workers would have to fight for them.”
Actually, Marx didn’t even believe that. He argued against Weston, for example, that the reason workers needed Trades Unions, was more to fight to prevent their wages being reduced below the value of labour-power at times, more than to fight to raise them above the value of labour-power. Even then, Marx thought their chances of achieving that were usually slim. The real function of Trades Unions as he sets out their and in his Programme for the First International is as organising centres for other activities – such as building their Co-operatives and Friendly Societies, and the Workers Party, which could transform their condition in a way that economistic struggle could not.
As Engels put it,
“The history of these Unions is a long series of defeats of the working-men, interrupted by a few isolated victories. All these efforts naturally cannot alter the economic law according to which wages are determined by the relation between supply and demand in the labour market. Hence the Unions remain powerless against all great forces which influence this relation. In a commercial crisis the Union itself must reduce wages or dissolve wholly; and in a time of considerable increase in the demand for labour, it cannot fix the rate of wages higher than would be reached spontaneously by the competition of the capitalists among themselves.”
Engels Condition of The working Class in England p243
And, as Marx stated,
“I think I have shown that their struggles for the standard of wages are incidents inseparable from the whole wages system, that in 99 cases out of 100 their efforts at raising wages are only efforts at maintaining the given value of labour, and that the necessity of debating their price with the capitalist is inherent to their condition of having to sell themselves as commodities. … the working class ought not to exaggerate to themselves the ultimate working of these everyday struggles. They ought not to forget that they are fighting with effects, but not with the causes of those effects; that they are retarding the downward movement, but not changing its direction; that they are applying palliatives, not curing the malady. They ought, therefore, not to be exclusively absorbed in these unavoidable guerilla fights incessantly springing up from the never ceasing encroachments of capital or changes of the market.”
Marx, Value, Price and Profit
Moreover, as Marx sets out in the Grundrisse, capital is forced to continually find new use values to produce to sell to the workers, because as the quantity of existing use values sent to market increases exponentially, it increasingly comes up against the limitations of the market, making it increasingly difficult to realise produced surplus value. In so doing, it carries out this “civilising mission” or automatically raising workers real living standards, including selling to them commodities such as education and culture, which thereby facilitate the transformation of the working-class into a class capable of assuming the role of ruling class.
Reblogged this on Hello.Lenin! and commented:
This is how Karl Marx continues to haunt not only Europe but even the virtual world. Hilarious.
You’re way too kind to Henwood. But on the other hand, at least he has read Marx and tries to quote chapter and verse to back his positions. And he calls himself a Marxist (along the lines of other Marxists-without-Marx like the Monthly Review crowd).
He’s weakest when it comes to the historical position of capitalism as a mode of production in transition to a new one (socialism). He doesn’t see what Marx did, that capitalism is transcending itself within the capitalist framework, and that this is a historical process as inevitable as the demise of the slave-owning mode of production and the rise of feudalism, and the demise of feudalism at the expense of capitalism.
Since he doesn’t see this process as the working out of the elementary transactions and behaviours at the most fundamental level of the economy (and human society) – ie the distribution of labour in society and the division of wealth accompanying it – which in capitalism takes the form of the transactions between commodity owners, and the character of the labour involved in producing the commodities – ie exchange value and use value – then he doesn’t grasp Marx’s economic analysis in all its political-historical implications.
He’s unhistorical in his approach and therefore spends his time flapping around on the surface counting the bubbles in the flecks of foam on the waves instead of focusing on the currents and tides under the surface. As his magnum opus Wall Street wonderfully demonstrates – a magnificent brick of a book that is almost a complete waste of time when it comes to understanding how modern capitalism works in our world and modifies it.
“All these misrepresentations of Marx’s value theory are deliberate. Marx’s theory explains that the world’s wealth does not come from capitalists investing, landlords from owning land or bankers from lending money, or somehow from ‘technology’, but from the effort of human labour. But the product of labour is usurped and appropriated by the owners of capital so there is a direct contradiction between profit and the value created by labour. This is something that cannot be admitted or accepted by the apologists of capital.”
Roberts is right. It’s the wage system which delivers the product of labour to the capitalist. Under the wage system, the producer receives the price of his or her skills. Thus the producer’s skills are bought and sold as commodities in the marketplace. In exchange for price of his or her labour power/skills, which of course vary depending on how much socially necessary labour time is embodied within them, in other words, according to their exchange-value, the producer gives up (or alienates) ownership over the product of his or her labour to the capitalist employer.
The wealth embodied as value in the goods and services produce of labour is marketed and depending on the supply and demand for the product, it is sold for its market price, just as labour power was purchased for its market price. Thus, the wonderful world of commodification begins and ends and then begins again with the purchase of more labour time from the producing class.
“…depending on how much socially necessary labour time is embodied within them, in other words, according to their exchange-value…”
The concept of value being “embodied” in commodities is, in fact alien to Marx. It is a form of commodity fetishism, believing that value is some kind of quality that has become inherent within the commodity as a thing.
In fact, according to Marx, each individual commodity performs the function of nothing more than an empty vessel which acts to represent a portion of total social labour-time. Each individual commodity acts as merely “a representative of its class”, as Marx says in Capital I, Chapter I. That is, it is not relevant how much socially necessary labour-time was “embodied” within it, in its own production. What is relevant is how much SNLT is CURRENTLY required for the production of this class of commodities.
As this quantity is constantly changing the value of each individual commodity unit is itself constantly changing too. If the SNLT were “embodied” in each individual commodity, then this implies that it is fixed, and unchanging.
The analogy is in physics. Every electron occupies a unique position in respect of the nucleus. Whenever there is a change in energy, the electron moves position, but because the position of each electron must be unique, the position of every other electron in the Universe instantaneously changes too. As energy is constantly changing, the position of each electron is constantly changing, and the information of that change is instantaneously conveyed to every other electron in the Universe no matter how far away.
In the same way the value of each individual commodity is constantly changing, because the information about the level of the total social labour-time, and the SNLT required currently for any class of commodity is constantly changing. The fact that this actual constant change in value may not be apparent on the surface is irrelevant, just as the movement of the position of electrons is not apparent on the surface either.
You put your finger on a very important aspect of the labour theory of value. The quantity of labour (socially necessary labour time SNLT) for which a commodity exchanges (all other things being equal) is indicated by a kind of virtual label attached to the commodity – a price ticket, if you like. And the amount on the ticket – as if it was being electronically updated in a hypermarket – is constantly changing to reflect the proportional division of labour within the economy (economic jurisdiction, if you like) as a whole.
So living labour is like quicksilver, pouring here and there in free flow, wherever resistance is least.
And the labels reflect the latest info in the system, regardless of what the owner of the commodity might want them to reflect (his costs, as opposed to average costs within the system, for instance).
What holds all this virtuality together is the material interest of all producers and consumers to operate within a united and coherent production and distribution system. This is so strong that it is usually completely unconscious to those working within it – like the atmosphere and breathing. But keeping the labels on the commodities until they are sold isn’t straightforward – it requires extreme watchfulness and security measures so commodities don’t wander off by themselves. And of course this jealous guardianship tends to make the owner think he can set his own prices since he can keep the goods separate from the rest of the market in his warehouses and stores. So there’s a lot of to-ing and fro-ing and discrepancies on all sides when it comes to the accuracy of the price label as a reflection of general conditions.
All this is of course music to the ears of revolutionary Marxist socialists, since it demonstrates that all production and circulation is so closely tied together and collective, social, in essence, that any non-collective, non-social organization of human labour in production and circulation is irrational and inefficient and will ultimately be jettisoned. The economic system itself in human society has this as an imperative.
How we respond to this imperative socially and politically depends to a great extent on how conscious we are of it, and of the fundamentals of our economic organization in society. A consciousness those of us following this blog and pursuing Marxist economics and politics are doing our best to increase.
“They do it, but they aren’t aware they’re doing it”, Marx wrote of the capitalists in Capital 1. Our job is to do what needs to be done, while being aware of it. We can’t shut our eyes and let the system do our work for us.
To add another topical analogy I have been thinking and writing about recently, this constant revaluation is what happens with “High Frequency Trading”. That is these algorithms pick up on every piece of data about say the weather in Brazil, and adjust their valuation of coffee beans within a fraction of a second. They then buy or sell billions of dollars of coffee, which itself moves the market, which then affects the value of coffee producing firms and so on.
Of course, as Marx sets out it is this contradiction between the real value of commodities, and their market prices that ultimately leads to crises, as market prices fall below prices of production and even costs of production. Its why, as he says, crises of overproduction usually occur in periods of exuberance caused by high rates and volumes of profit that cause over accumulation, which pushes up input prices that cannot be passed on into market prices, and wages that directly reduces surplus value. But, its also why, as he says, these crises are usually quickly resolved, allowing the boom to continue. That is why they differ from periods of stagnation.
Point of fact: Marx most certainly does refer to labor and labor time being embedded in commodities, and he does so repeatedly throughout Capital. He does not refer to value embedded in the commodity, because the commodity exists AS value, but then again neither did Michael in his post,he referred to socially necessary labor time.
You write: “However, Henwood reckons the current crisis is the result of inequality and low wages reducing consumption and thus the answer is to raise wages and public spending. The problem with this view of Marx is that it does not match the facts: consumption did not slump at all prior to the Great Recession: it was the collapse of the housing market, profits and then investment, not consumption. Raising wages and reducing inequality will help the majority but lower profitability further and thus reignite the capitalist crisis. It’s not higher shares for labour that is the answer but the replacement of the capitalist mode of production.
I’m not convinced you are representing Henwood correctly in this passage. He only seems to be saying that in order for there to be an increase in the growth of the overall economy, we could raise wages and public spending. But he does not say that it is “the answer” and much less that it is what Marx would think the answer is.
Nor does he say that the Great Recession was started in 2008 by inequality and low wages. What he says is that where the majority of us are today is the outcome of no longer being able to sustain our pre-2008 consumption levels because there is no credit to do so; we only have our low wages, if we are employed at all. The system that sustained the availability of credit for consumption “broke” in 2008.
But why did it break? You rightly point out what brought the 2008 crisis about; he does not say explicitly. What he does say is that in 79 there was the beginning of a crackdown on what he identifies as “a breakdown in class relations: workers no longer feared the boss.” This is likely where his weakest point is in the blog entry. I leave this to you to explain as I am no specialist, but it seems like the crackdown was a response to new underlying economic dynamics that could no longer satisfy the hunger for increased profitability while maintaining the older household economic practices built into the daily lives of Americans – I speculate that the origin of this “contradiction” was the earlier freeing of our monetary policy from the “gold standard”. The crackdown in other words had to do with the cost of inflation.
If we care to lessen the suffering that results from the increase of poverty and economic instability, then higher wages and government spending can help (which you agree would benefit a majority of people). But, Henwood realizes that the obstacle here is one of political will, and those for whom profitability would decrease as a result have too much political power for that will to materialize. They have even more today than they did in 79.
A solution to “the problem” of corporate profitability, however, will not be solved without undoing its possibility all together.
Reblogged this on bolshevikpunx and commented:
“[Marx] is accused of being outdated by champions of a capitalism rapidly reverting back to Victorian levels of inequality.” – Terry Eagleton, Why Marx was Right, p.3.
Read Paul Mattick, ‘Business as Usual’ (London, 2011)
Agreed – great book!
On the comment about Springsteen by Strain, Marx addressed that claim directly in “Capital.” In order to produce value the labor must be socially necessary, in other words there must be a social demand for it. There is no social value in Strain’s song, but a great deal of social value in one by Springsteen.
Marx noted that when spinning machines were introduced the weavers in India still produced 1 yard of material per hour, but the value of their labor had been reduced to half of that because the machines could produce twice as much as the manual weavers.
Also, in Chapter One, Marx says the following, “Some people might think that if the value of a commodity is determined by the quantity of labour spent on it, the more idle and unskilful the labourer, the more valuable would his commodity be, because more time would be required in its production…The labour time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time.”
Too bad the NYT did not open the debate to Marxist scholars. I don’t suppose there could have been a reason for this?
Businessmen obviously believe that the value of something depends on the amount of labor involved. Why else the constant drive to to reduce immediate labor costs ?
But, then why by the same token, the constant drive to reduce the costs of their materials, the machines they buy, the taxes they pay and so on? In fact, as Marx says in Capital III, capitalists DO NOT see that their profits come solely from labour. They believe that their profits come from their capital as a whole.
In fact, as Marx sets out in Capital III, Chapter 11, the big capitalists have more incentive to reduce the costs of their constant capital than they do the cost of wages. He sets out there that those capitals (usually the bigger capitals) with a higher than average composition of capital, see their prices of production fall as a result of a general rise in wages, whilst the capitals with a lower than average composition see their prices of production rise. All capitals see the rate of profit fall.
But, the only way that the prices of production of the former can fall is if the supply of commodities produced by them rises. Similarly, the only way the prices of production of the latter can rise, is if the supply of commodities produced by them falls. In other words, a general rise in wages means that capital flows away from producers operating with a below average composition, and towards those operating with a higher than average composition. It means concentration and centralisation increases in favour of the bigger capitals.
But, what it also means is that more of the commodities produced by the bigger capitals thereby get supplied and demanded. The point being that with this higher level of production, although their rate of profit might fall, their actual mass of profit may well rise. As Marx points out, it is only for the smaller capitals that the rate of profit is important. For the bigger capitals, the increase in the mass of profit outweighs any fall in the rate of profit. On the back of this increased mass of profit they can expand their capital by larger amounts. In fact, the higher wages paid to workers employed by the smaller capitals, and which forms a larger proportion of their costs, is one reason that demand for the commodities produced by the bigger capitals can be demanded in greater quantitities.
This is one reason Engels says that by the end of the 19th century the interests of the small capitalists had become quite at odds with those of the big capitalists.
“The competition of manufacturer against manufacturer by means of petty thefts upon the workpeople did no longer pay. Trade had outgrown such low means of making money; they were not worth while practising for the manufacturing millionaire, and served merely to keep alive the competition of smaller traders, thankful to pick up a penny wherever they could. Thus the truck system was suppressed, the Ten Hours’ Bill [2] was enacted, and a number of other secondary reforms introduced — much against the spirit of Free Trade and unbridled competition, but quite as much in favour of the giant-capitalist in his competition with his less favoured brother. Moreover, the larger the concern, and with it the number of hands, the greater the loss and inconvenience caused by every conflict between master and men; and thus a new spirit came over the masters, especially the large ones, which taught them to avoid unnecessary squabbles, to acquiesce in the existence and power of Trades’ Unions, and finally even to discover in strikes — at opportune times — a powerful means to serve their own ends. The largest manufacturers, formerly the leaders of the war against the working-class, were now the foremost to preach peace and harmony. And for a very good reason. The fact is that all these concessions to justice and philanthropy were nothing else but means to accelerate the concentration of capital in the hands of the few, for whom the niggardly extra extortions of former years had lost all importance and had become actual nuisances; and to crush all the quicker and all the safer their smaller competitors, who could not make both ends meet without such perquisites. Thus the development of production on the basis of the capitalistic system has of itself sufficed — at least in the leading industries, for in the more unimportant branches this is far from being the case — to do away with all those minor grievances which aggravated the workman’s fate during its earlier stages.”
I was watching a progamme on TV a few weeks ago presented by Jamie Oliver. One feature showed butchering animals.
A chef pointed out that much of what is ‘thrown away’ during the butchering process is great meat (it isn’t actually thrown away but mashed up for other uses). He also said that a few selected producers still cut meat that was ‘thrown away’ by most other mass producers. This usually discarded meat sold cheaper than the classic pieces, such as sirloin etc. Here is the rub, it took longer to produce this meat than if it had been mashed up! This would seem to contradict the LTV. However, the only way this meat was produced in this day and age was by what are effectively artisans, specialising and taking advantage of a gap in the market. Competition determined that the mass production of meat did not involve butchering the whole animal. Therefore the LTV would appear to be correct.
The point is the historical process should never be ignored.
I think you have to take into consideration the value of the whole animal. The relevant point here is that this meat is what would otherwise be considered “waste”. In other words, although this specific labour process of processing this “waste” meat might be more than simply mashing it, the labour-time involved in producing the whole animal has already essentially been written off, so the labour-time involved in producing this specific product is thereby lessened.
There are debates around these situations of “dual- production” and how they are dealt with by the LTV, however.
I would argue this shows the ‘gravitational’ affect of the SNLT. Paul Cockshott uses an analogy with entropy (rather than gravity), which I think is an intriguing idea.
I think the point is that, as Marx relates, be it high or low, the price of beef always involves the same sacrifice for the ox.
One other point :
“…capitalism is transcending itself within the capitalist framework, and that this is a historical process as inevitable as the demise of the slave-owning mode of production and the rise of feudalism, and the demise of feudalism at the expense of capitalism.”
i.e. Walmart’s supply chain minus wage exploitation.
(actually Henwood noticed this too)
You have to give Pilkington this: the guy is reliable.
Let him write and you can bet your ass he will write something stupid.
He never disappoints.
‘Raising wages and reducing inequality will help the majority but lower profitability further and thus reignite the capitalist crisis.’
Sorry for the tangential point, but I would love to know some Marxian opinions on the extent a ‘universal basic income’ (or whatever you want to call it) would fall under that above description of wage rises, and thus whether (regardless of it not being immediately ‘revolutionary’) it could even work as a sustainable way to improve lives?
“the larger the concern, and with it the number of hands, the greater the loss and inconvenience caused by every conflict between master and men; and thus a new spirit came over the masters, especially the large ones, which taught them to avoid unnecessary squabbles, to acquiesce in the existence and power of Trades’ Unions, and finally even to discover in strikes — at opportune times — a powerful means to serve their own ends. The largest manufacturers, formerly the leaders of the war against the working-class, were now the foremost to preach peace and harmony. And for a very good reason. The fact is that all these concessions to justice and philanthropy were nothing else but means to accelerate the concentration of capital in the hands of the few…”
US New Deal in a nutshell. With postwar trans-nationalization of big US capital + end of Russian Revolution wave, that class compromise no longer required in that country.
Yeah, but that hasn’t been the situation in the advanced countries since 1974– and rarely with the exceptions of say Mexico or a Peron in Argentina has that ever been the case in the 20th or 21st century. It’s a moment, rarely here and quickly gone.
Matthew,
The Conference of Socialist Economists in the pages of “Capital and Class” theorised this at length during the 1980’s and 90’s, in examining Fordism and Regulation Theory. What Engels describes is the basis for the establishment of bourgeois social democracies in the 20th century. Its why people like Winston Churchil as secretary of the Board of Trade introduced a Minimum Wage in 1909, because as he said the “good employers” should not be undercut by the bad. Its why Bismark introduced the Welfare State in Germany, and every other developed capitalist economy followed suit. In Britain, it was the Tory Neville Chamberlain who in the 1920’s, first put forward the proposals that basically became the Welfare State after 1945, for example.
But, it was enshrined in the Fordist Regulation model, so that in the post-war period in car factories, for example, so called “mutuality agreements” were established, whereby the workers were guaranteed annual real wage increases linked to rises in productivity.
It was perhaps most clearly symbolised by the “Beer and sandwiches” sessions that the Labour (and Tory Governments) of the 1970’s held with TUC leaders, and in the Social Contract of the mid to late 1970’s. But, even Thatcher made sure to attack the rank and file organisation of the Trades Unions, and thereby strengthened the power of the Trades Union bureaucracy. Many of the reforms of the time also incorporated some of the rank and file leadership into the bureaucracy by turning them into full-time or semi full-time convenors etc.
When the Japanese car plants were brought in such as Nissan in Sunderland and Toyota in Derby, it was done, not on the basis of banning Trades Unions, but on the basis of single union agreements, negotiated with the Trades Union bureaucracy, which acted as a means of exerting control in the way Engels describes.
This would be fine and dandy, “good employers” vs. “bad employers,” big capital less inclined to attack wages, relying on cooperation with organized labor, if it corresponded to reality– to the reality of the last forty years in the United States.
It has not and does not, no more than increased government expenditures on unemployment benefits materially raise the average wage, or enhance the living standards of the working class as a whole class.
Think about it: Does the increase in unemployment claims and expenditures during the Volcker double dip recession of the 1980s stand as measure, an index to “improvement” of the condition of the working class in order to realize, or “demand” the “supply” of commodities produced by capitals of higher than the average organic composition?
In the United States, the capitals of higher than average composition have increased their fixed asset base, reduced workers, moved to low wage, non-union areas, dismantled pension and health care programs.
Boffy to the contrary not withstanding, if such programs are indicative of social democracy, of an alliance between big capital and workers for a bigger piece of the pie, then clearly social democracy, along with union membership, is a dead man walking.
The increases in government spending, so-called fiscal policy has not been directed at social welfare. First off, the TARP program, introduced by Bush, as Keynesian as it might have been, had absolutely nothing to do with anything other than financial institutions like banks and insurance companies. The amount, I believe, finally expended was $431 billion.
Secondly, Obama’s American Recovery and Reinvestment Act was keyed upon$ 260 billion in tax cuts to stimulate consumption. Another $54 billion was derived from further tax credits for small businesses. $100 billion was earmarked for infrastructure, alternative energy and the like. Yes unemployment benefits were extended for an additional 33 weeks. Yes $24 billion was dedicated to subsidizing COBRA (continuation of health insurance benefits) for laid off workers; and $87 billion to states for Medicaid subsidies.
And yes supplemental nutrition claims have more than doubled between 2008-2013, from $34 billion to $76 billion.
So what? Is that an index to some sort of rationality of capitalism– more people are pushed into poverty and the food stamp program is supposedly some sort of offset?
So has the money dedicated to education prevented the lay-offs of large numbers of teachers? Has the money dedicated to Medicaid prevented Increasing restrictions on Medicaid availability. Has the material condition of the working class as a CLASS improved or declined. Has the material condition of workers employed by “big capital” improved or declined?
So we have $431 billion in direct subsidies to financial institutions (not including FNMA, FMAC) vs $260 billion in tax cuts, a doubling of food stamp claims, increasing rates of child-poverty, and we’re supposed to conclude what? Big capital is more inclined to cut its constant capital costs than its wages? Look around, boys and girls, exactly where has capital cut those cost without also reducing its wage bill?
And over the last 30 years, cyclical as capitalism might be, what has been the secular trend for the class as a CLASS, for those employed by “big capitals,” the big capitals in the “advanced” countries which should be bastions of this pollyanna bullshit about “good employers” and Fordist enlightenment .
The new deal was a response to a major crisis of capitalism, a considerably more acute one than we have now. The response was to introduce social security, umeployment benefits, work programmes, increase tax rates on the wealthy.
Today we see the opposite in response to a less acute crisis. We see austerity virtually everywhere.
The lack of an organised working class help explains the difference.
An organised working class makes a material difference.
Don’t let anyone ever tell you that it doesn’t.
The idea that it doesn’t is fanatical economic determinism.
Except that in nearly every economy in 2009 there was massive monetary and fiscal expansion! Arch Thatcherite Samuel Britain wrote in the FT at the time “We are all Keynesians now”, and then went on to explain that there was no real contradiction between the use of Keynesian fiscal stimulus and Friedmanite monetary stimulus.
It was the conservative George Bush who brought in the $750 TARP; the same Bush socialised a huge amount of companies health expenses on to the Public balance Sheet. Obama has continued the fiscal expansion, and would have introduced more via his Jobs programme had the Tea Party not mobilised against him.
In China, where independent Trades Unions are banned, living standards have soared, and in recent years, the stalinist leaders have actually encouraged higher wages as part of moving the economy up the value chain. A similar thing happened previously in Singapore. China has also introduced massive fiscal stimulus, as has Japan.
The fiscal expansion was not used to expand public provision or increase state benefits, create job programs, extend the welfare state etc. It was used to prop up the system while the state attacked public provision, the welfare state etc.
The erosion of social democracy and the benefits that accrue from it are not some economically determined and pre ordained destiny but merely a reflection of the balance of class power.
In the US, a large part of the fiscal expansion went to extend unemployment benefits to those who would have run out, it went to provide foodstamps etc. Another large part went to rescue GM, a part of the rescue package being that GM had to hand over a large number of shares to the UAW.
The introduction of National Insurance in Prussia by Bismark occurred before there was any significant working-class, let alone organised labour movement. Bismark introduced such a system and a welfare state in Germany even when those conditions still existed, and under conditions of the Anti-Socialist Laws. In fact, Marx and Engels opposed support for the introduction of N.I. A large part of the increased spending HAS gone to welfare payments because of the automatic stabilisers the welfare state provides. In the 1980’s, under Thatcher the state expanded massively, and so did welfare payments as unemployment increased hugely.
There had been a long history of introducing state controlled welfare programmes in Britain such as the Poor Law, and the Speenhamland System before it. Churchill didn’t introduce the Minimum Wage under pressure from the Trades Unions – at the time the Trades Unions were being undermined by legal decisions like Taff Value and the Osborne Judgement – but because as Marx says in Capital, what Marx need above all is a level playing field. That level playing field of a welfare state providing it with the kind of labour-power it requires, favours big capital as Engels sets out.
As Marx puts it in the Grundrisse, describing the “Civilising Mission of Capital”,
“On the other side, the production of relative surplus value, i.e. production of surplus value based on the increase and development of the productive forces, requires the production of new consumption; requires that the consuming circle within circulation expands as did the productive circle previously. Firstly quantitative expansion of existing consumption; secondly: creation of new needs by propagating existing ones in a wide circle; thirdly: production of new needs and discovery and creation of new use values. In other words, so that the surplus labour gained does not remain a merely quantitative surplus, but rather constantly increases the circle of qualitative differences within labour (hence of surplus labour), makes it more diverse, more internally differentiated. For example, if, through a doubling of productive force, a capital of 50 can now do what a capital of 100 did before, so that a capital of 50 and the necessary labour corresponding to it become free, then, for the capital and labour which have been set free, a new, qualitatively different branch of production must be created, which satisfies and brings forth a new need. The value of the old industry is preserved by the creation of the fund for a new one in which the relation of capital and labour posits itself in a new form. Hence exploration of all of nature in order to discover new, useful qualities in things; universal exchange of the products of all alien climates and lands; new (artificial) preparation of natural objects, by which they are given new use values. The exploration of the earth in all directions, to discover new things of use as well as new useful qualities of the old; such as new qualities of them as raw materials etc.; the development, hence, of the natural sciences to their highest point; likewise the discovery, creation and satisfaction of new needs arising from society itself; the cultivation of all the qualities of the social human being, production of the same in a form as rich as possible in needs, because rich in qualities and relations — production of this being as the most total and universal possible social product, for, in order to take gratification in a many-sided way, he must be capable of many pleasures [genussfähig], hence cultured to a high degree — is likewise a condition of production founded on capital. This creation of new branches of production, i.e. of qualitatively new surplus time, is not merely the division of labour, but is rather the creation, separate from a given production, of labour with a new use value; the development of a constantly expanding and more comprehensive system of different kinds of labour, different kinds of production, to which a constantly expanding and constantly enriched system of needs corresponds.”
The welfare state was developed in all capitalist economies, including those that had weak labour movements, and those that did not have specifically “Labour” parties – such as the US (in fact, the US was one of the first places to introduce free education, long before it had any kind of powerful labour movement) – for the reasons Marx sets out above. It was a means of capital ensuring that workers bought these cultural, educational and other commodities in the amounts capital required to ensure the supply of the kind and quantity of labour-power it required. It was an efficient, Fordist mass production means of providing those commodities. It meant the workers handed over their money to the capitalist state for these commodities in the form of “Insurance” payments, rather than developing their own independent alternatives – look for example at the Plebs League struggle for independent workers education, against the support by the bourgeoisie for the establishment of the WEA by the TUC.
That capital seeks more efficient means of delivery of any of these commodities is not surprising, but the point is that the capitalist state seeks to keep control of the insurance aspect of the system, i.e. to keep control of the purse strings, not control of the hired help used to deliver the service.
“The erosion of social democracy and the benefits that accrue from it are not some economically determined and pre ordained destiny but merely a reflection of the balance of class power.”
Social democracy is the expression of the alliance between big capital and the working-class, whose purpose is to further the interests of big-capital via the electoral support of workers, in return for which workers get a bigger share of the pie when capital is expanding, and get some social protection when its contracting. To that extent – social democracy is not being eroded at all. And, it is precisely the case for the reasons that Marx and Engels set out that those benefits ARE economically determined.
The position you argue is thoroughly subjective and reformist. It basically says, workers are low paid, have poor conditions because capitalists are evil/greedy (choose your adjective) and have to be forced by organised labour to pay higher wages and so on. In fact, what Marx and Engels argue is that wages are the phenomenal form of the value of labour-power, which like the value of any other commodity is objectively determined by the economic laws of capital. Like any other commodity the market price may vary as a result of competition in the short run, and to that extent unions can have a marginal role in affecting that short run market price, but in the longer run, it will average out.
Your argument is reformist, because it implies that if only workers were more militant, more organised and so on then their wages would be higher, conditions better. In other words its the kind of syndicalist nonsense the IS/SWP used to argue in the 1970’s, which led workers into a blind alley. It pays no attention to the actual laws of capital, described by Marx that set out precisely why it is that at certain times when capital expands it not only can, but MUST pay higher wages, and why at other times when it is stagnant no matter how militant the struggle, workers will not be able to obtain higher wages or better conditions. Your position would lead workers into a reformist dead end of believing that the key to their problems is simply more militant struggle for better wages – Economism – that capital can provide if only they fight hard enough, as opposed to the revolutionary approach, which is to point out why Capitalism cannot provide those better conditions, at certain points, no matter how hard they struggle for them.
In the 1950’s, for example, workers in Britain and most of Europe were still trying to recover from the defeats they suffered in the 1930’s and 40’s. They still had to rebuild their organisations. Yet, in the 1950’s and 60’s wages and conditions improved strongly as part of the capitalist boom. In the 1970’s and early 80’s, they had rebuilt powerful labour movements, workers were strong and militant, as witnessed by the Miners Strikes in Britain in 1972 and 1974 and 1984. Yet, in the 1970’s even the most militant actions barely ensured that wages kept pace with rising inflation, and in 1984 the Miners lost to Thatcher.
By contrast, with a very tame labour movement at the start of this century, Tony Blair trebled expenditure on the NHS, and increased other spending on the Welfare State. Workers real wages and conditions improved significantly even though there was little in the way of strike action. In fact, many of the biggest increases in living standards came in new industries where trades unions didn’t even exist.
“In the US, a large part of the fiscal expansion went to extend unemployment benefits to those who would have run out, it went to provide foodstamps etc. Another large part went to rescue GM, a part of the rescue package being that GM had to hand over a large number of shares to the UAW.”
Total US federal spending has levelled off since 1980, after 40 years of secular increase. There was no extension of public provision, welfare etc after the 2007 crisis. What they gave on one hand was taken away on another, and more then. The bailout of GM came with strings, and workers were made to pay. You surely know the details? You use of statistics is worrying!
“The introduction of National Insurance in Prussia by Bismark occurred before there was any significant working-class, let alone organised labour movement”
This has to be some sort of joke, yes? Bismarck introduced the anti socialist laws in 1878, which was primarily aimed at the Social democrat party! If ever a man was under pressure from working class radicalism it was Bismarck! The revolutionary period that preceded Bismarck, which Marx spent a great deal of time describing, frightened the old rulers of Europe, and that threat had direct, material affects. The revolutionary and reformist action of the working classes improved their conditions of existence. I am not denying economic determinism outright, but it seems to me you are a fanatical economic determinists. Men make history!
“The position you argue is thoroughly subjective and reformist. It basically says, workers are low paid, have poor conditions because capitalists are evil/greedy (choose your adjective) and have to be forced by organised labour to pay higher wages and so on.”
I suppose we should ask the question why Trade Unions were ever developed in the first place and continue to exist if they serve no purpose? In fact if the economy automatically results in optimum distribution for the continuation of capitalism why the heck do capitalist states need welfare? Why were they ever developed? Surely the right libertarians are correct in your view?
“In fact, what Marx and Engels argue is that wages are the phenomenal form of the value of labour-power, which like the value of any other commodity is objectively determined by the economic laws of capital.”
You should be aware that there is more to Trade Union work that wage disputes.
“Your argument is reformist, because it implies that if only workers were more militant, more organised and so on then their wages would be higher, conditions better.”
You should be aware that there is more to socialism that quantitative considerations. But even so, if I argue that humanity will have better conditions than capitalism can deliver, even under social democracy, if they move to socialism, then I am no longer a reformist and your argument turns to dust.
In the 1950’s and 1960’s the US had high top tax rates, high wages share as a % of GDp. Now we have corporate profits at their highest share of GDP and wages at their lowest. The point is that this state of affairs happened over decades of working class defeats. Cause and affect and often years apart.
Tony Blair was still a product of the history of a labour movement and led a party that still had ties to this movement. So his policy spending on the NHS was in light of this history and years of Tory underfunding, in real terms. It formed part of the election pledge.
Your confusing Socialism and Social democracy. One involves a replacement of Capitalism, the other involves an acceptance of its continuation, which means at times of crisis workers end up worse off for the benefit of big capital.
There certainly was an extension of unemployment benefits to workers after the financial crisis to the longer term unemployed, whose benefits would have run out. Of course, the bail-out of GM came with strings, and workers had to pay. That is how social-democracy works!
“This has to be some sort of joke, yes? Bismarck introduced the anti socialist laws in 1878, which was primarily aimed at the Social democrat party!”
But, the introduction of National Insurance in Prussia occurred in the 1820’s nearly 60 years before the anti-socialist laws, and nearly 30 years even before the revolutions of 1848. Engels says the idea of a socialist revolution in 1848 was ridiculous with hindsight, because the only place at the time where there was even a working-class of any size was in Britain.
Bismark did not introduce a Welfare State in Germany under pressure from the working class, because, Marx and Engels opposed such statist methods, as Engels makes clear in his Critique of the Erfurt Programme.
“Men make history!”
Absolutely, but they do so by changing the material conditions of their existence, not by accepting the continuation of those conditions and simply negotiating a temporarily higher wage!!!
“In fact if the economy automatically results in optimum distribution for the continuation of capitalism why the heck do capitalist states need welfare? Why were they ever developed? Surely the right libertarians are correct in your view?”
I’ve not argued that distribution is automatically determined as an optimum in a free market sense. Capitalism went beyond those limits long ago with the development of socialised capital. But the underlying laws still apply. Capital needs welfare for precisely that purpose, and in those places where there is a sufficient supply of the labour-power it requires, it needs Welfare less, which is why it has not developed a Welfare State in China. Interestingly, China is now seeking to develop a Welfare State, not because its under pressure to do so from workers, but because Chinese Capital needs to dissuade Chinese workers from saving to cover periods of ill-health, retirement and so on, so as to encourage them to spend more on current consumption.
“You should be aware that there is more to Trade Union work that wage disputes.”
I was a TU branch secretary, and president of my local TUC, as well as sitting on the regional Council of the TUC, so yes I know that. But, to the extent that such activity is only about improving conditions it is still Economism. That is why Marx argued that the main function of Trades Unions was not this kind of activity, but was as a sort of holding pen, or recruiting body for directing workers towards more effective means of changing their material conditions via the establishment of Co-operatives, and the Workers Party.
“But even so, if I argue that humanity will have better conditions than capitalism can deliver, even under social democracy, if they move to socialism, then I am no longer a reformist and your argument turns to dust.”
I didn’t say you were a reformist. I said the argument you put forward was subjectivist and reformist, and it is. It was based on the idea that workers living standards are high or low as a consequence of whether the workers were well or poorly organised.
My point entirely is that in the 1950’s wages and conditions were high, despite the fact that workers were still recovering after periods of severe defeats in the 1930’s and 40’s! They were so, because capital was expanding rapidly. Chinese workers wages today are rising rapidly despite there being a ban on independent unions, for the same reason, Chinese capital is booming.
“Tony Blair was still a product of the history of a labour movement and led a party that still had ties to this movement. So his policy spending on the NHS was in light of this history and years of Tory underfunding, in real terms. It formed part of the election pledge.”
Blair was trying to break the link with the unions! he was making a virtue out of challenging the unions, and perpetuating the most restrictive union laws in Europe! He wasn’t increasing spending on the NHS because he saw himself as the inheritor of the mantle of Bevan, or because he was udner pressure from unions to do so. He was doing it, because it was in the interests of British capital, and because British capital was booming as part of the global boom, and so could afford it.
One reason Capital needed to create the Welfare State in every developed economy.
“The commercial worker, in the strict sense of the term, belongs to the better-paid class of wage-workers — to those whose labour is classed as skilled and stands above average labour. Yet the wage tends to fall, even in relation to average labour, with the advance of the capitalist mode of production. This is due partly to the division of labour in the office, implying a one-sided development of the labour capacity, the cost of which does not fall entirely on the capitalist, since the labourer’s skill develops by itself through the exercise of his function, and all the more rapidly as division of labour makes it more one-sided. Secondly, because the necessary training, knowledge of commercial practices, languages, etc., is more and more rapidly, easily, universally and cheaply reproduced with the progress of science and public education the more the capitalist mode of production directs teaching methods, etc., towards practical purposes. The universality of public education enables capitalists to recruit such labourers from classes that formerly had no access to such trades and were accustomed to a lower standard of living. Moreover, this increases supply, and hence competition. With few exceptions, the labour-power of these people is therefore devaluated with the progress of capitalist production. Their wage falls, while their labour capacity increases. The capitalist increases the number of these labourers whenever he has more value and profits to realise. The increase of this labour is always a result, never a cause of more surplus-value.”
Capital III, Chapter 17.
And, of course, there was no point capital advancing all of this social capital for education to train these wage workers, if they all died when they were twenty from ill-health, or were off work sick for much of the time. Capital needed them to apportion a minimum amount of their income to necessary levels of healthcare, and in order to ensure that it introduced compulsory National Insurance and Tax deductions from their wages to pay for it, in pretty much the same way that individual capitalists had paid workers in truck rather than in cash.
Reblogged this on Econo Marx 21.
a crisis is caused by the movement of price away from value. The answer is the collapse of prices back to value, there is no other answer and any “improvement” would only last until the next crisis
I don’t recall Marx ever putting it that way; but that might just be an index to a weakening memory.
First, the correlation between any price of an individual commodity and its value is a chance, a moment, and never a necessity. Likewise the correlation of the value of all commodities and prices of all commodities at any particular moment, is a chance occurrence.
Prices always move one way or another. The oscillation is a mechanism NOT for commodities achieving some sort of parity between price and value, but for distributing, allocating, apportioning the total realizable surplus value among capitals and capitalists. It is inin this deviation of price from value that the law of value, as a distributive law for the distribution of social-labor time is made manifest.
The deviation of price from value then, since it is more or less continuous, can’t be the “cause” of a “crisis.” The deviation of price from value in oil production, say 2003-2007 is symptomatic of the changes between the size of the constant capital employed, and the labor power aggrandized, but itself is not the cause of the “crisis” of 2008.
The oil production industry in the US was more, than less, experiencing its crisis when the price and the value actually coincided– in 1998 when the price of oil dropped below the $10/barrel mark.
The cause of a “crisis”– depends on what you define as crisis. But the impairment of capitalist reproduction as a total system of reproduction is not to be found in the deviation of price from value.
The impairment of capitalist reproduction resides in the accumulation of capital itself– that it depresses the rate of profit, and the very force that depresses the rate of profit– the growing constant capital, and particularly its fixed asset component– means that the mass of profit, as substantial as it may appear to be actually is insufficient to maintain the self-expansion of value.
the crisis tends to show up in finance and this is not the cause or the crisis it is a reflection of the underlying problems. Dealers will not accept securities at the value offered or their “book” price as they know they are over valued. In some case dealers already have too much of a certain security and refuse to accept any more at any price. When the housing bubble burst mortgage backed securities could not be swapped/traded rolled over unless a huge discount was accepted if you could move them at all. This causes a liquidity crisis which causes the price of everything to move back to value unless you you put the finger in the dyke and print money. The liquidity crisis does not cause the crisis it is just a reflection of the fact that prices have moved too far away from value and this causes the crisis, very dialectical.
BTW I never said Marx “said that” I am saying it having read Mark and others I consider to be marxists. I am not a religious person so am only interested in the answer or trying to establish it and I really don’t care who provides it. Marx doesn’t need me to defend him and at the end of the day I think his analysis will prove correct and can stand up to developing ideas
I didn’t say you said Marx said that. I was relating my understanding of Marx’s analysis of the relation of price to value and how that does or does not relate to “crisis.” I’m not a religious person either. I just happen to think Marx’s analysis is materially correct, and that the deviation of price from value is not a determining condition for the crisis of capital.
What you describe, or think is “dialectical” is no dialectic it all but purely an exposition of appearances.
In a longer, Project Syndicate version of his anti-Marx musings, DeLong attributes his understanding of Marx’s “mistakes” to remarks by Suresh Naidu. I wonder what Naidu thinks about that.
https://www.project-syndicate.org/commentary/j–bradford-delong-wonders-whether-capital-now-substitutes-for–rather-than-complements–labor
even appearances are dialectical, are you saying appearances don’t need to be explained? the crisis is expressed through the lack of liquidity and if you don’t agree then happy to hear your reasoning so far have just read about the general condition of capitalism and nothing specific to crisis. This can be difficult as Marx wasn’t that clear on crisis but no excuse for falling back on a general analysis to cover a lack specifics. Appearances can sometimes be confused with specifics, again it seems dialectical
My experience is that when people throw the word “dialectic” around, it’s supposed to act like sort of credential, or shield, to camouflage a weak argument through an appeal to “ideology.”
After all everybody’s got his or her dialectic. Stalin had his; Mao had his. Everybody has a dialectic, which of course, makes the term itself next to meaningless. .
You started by saying that he crisis is caused by the movement of price away from value. I pointed out that that divergence is always part of capitalism, and specifically, “in the current crisis” used the example of petroleum to show that the divergence of price did not cause a crisis in that industry, or in capitalism generally.
There was a) a real decline in profitably from the peak in 2006 after the 2001-2003 recession b) real overproduction of the means of production as capital— in transportation equipment. particularly shipbuilding, steel, and we can extend it to flat screen, TV’s etc. etc.
You follow your original claim about the divergence of prices and values being the cause of crisis with this: “the crisis tends to show up in finance and this is not the cause or the crisis it is a reflection of the underlying problems. Dealers will not accept securities at the value offered or their “book” price as they know they are over valued. In some case dealers already have too much of a certain security and refuse to accept any more at any price” … which leads to a “liquidity crisis,” which according to you, causes prices to fall back to values.
Now I’m sure you’re going to point to this as an example of your “dialectic” but if the “financial crisis” is not the cause of the crisis but leads to a “liquidity crisis” which leads to prices falling back in line with values– and presumably “auto-corrects” the divergence between price and value– what is the CAUSE? The divergence between the price of X number of X commodities, and Y number of Y commodities? You have to be able to fill in the blanks if you’re going to make claims about cause and effect. The inflation of the value of asset-backed securities? You just said that wasn’t the cause.
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The source of the “crisis” in capitalism is not in the divergence between price and value. Price is a function, not a determinant of value production. The obstacle to capital accumulation is in that which is its determinant– which is the production of value. Those who know dialectics know that its the determinants that become the negations. The same mechanism by which profit is generated and aggrandized, leads to the decline in profitability.
“Now I’m sure you’re going to point to this as an example of your “dialectic” but if the “financial crisis” is not the cause of the crisis but leads to a “liquidity crisis” which leads to prices falling back in line with values– and presumably “auto-corrects” the divergence between price and value– what is the CAUSE? ”
The financial crisis is expressed through the liquidity crisis this is not the financial crisis leading to a liquidity crisis again dialectical but have no interest in debating your understanding of dialectics as we seem to have a problem with the economics.
The movement of value away from prices is the cause thought that was self evident!!! Auto corrects? A crisis is a crisis and auto correct could apply in that it is inevitable and unavoidable not sure what you are actually talking about.
Price is a function but you seem to have some mechanical view of this. Whilst it is a function or related to would be a better term it is able to move in relation to value. I assume what you are confused with is the cause of price moving away from value and hence the irrelevant references to oil.
Whatever– I’ll leave at that– with your statement that “appearances are dialectical.” What nonsense. The dialectic, such that it is, operates between essence and appearance; between manifestation and cause.
Yves Smith from Naked Capitalism has made a contribution to the NY Times debate:
http://www.nytimes.com/roomfordebate/2014/03/30/was-marx-right/marx-foresaw-capitalisms-dangers-but-not-workers-response
and
http://www.truth-out.org/news/item/23075-was-marx-right.
Her last piece on truthout.org is weird; it looks like she’s trying to refute Henwood on falling profitability in the 1970s.
Yes see my post on this
http://slackwire.blogspot.ca/2014/04/substitutes-or-complements-marx-and.html
Suresh Naidu writes:
“The howls of outrage from the online guardians of the one true Marx in response to the NYT panel were more irksome than anything written by the panelists. Marxist economics is much larger than Marx, and textual exegesis of the original manuscripts, as opposed to reinventing and redeploying the concepts in new historical and intellectual environments, does it a great disservice.”
The phrase “from the online guardians” links to this post.