As we approach the exact date of the publication of Marx’s Capital Volume One 150 years ago (14 September), a host of conferences and books are coming out in the small world of Marxist study on the relevance of Capital today. The symposium that I am organising with King’s College London will be on 19-20 September, just around the corner from the British Library where Marx did the research for his opus magnum. But already there have been conferences in Greece on Capital; a conference in New York at Hofstra University, and next week, York University, Toronto. All have a large participation by leading Marxist scholars.
And the books are also coming out. The first is aptly entitled Reading Capital Today edited by Ingo Schmidt and Carl Fanelli from two Canadian universities and includes contributions from various activists and academics covering the issues of class struggle, internationalism and the Bolshevik revolution, imperialism, social reproduction and the environment. But I’ll only comment on the specifically economic subject: the labour theory of value.
Prabhat Patnaik is emeritus professor of economics at the Jawaharlal Nehru University in Kerala, India. In his chapter, Patnaik argues that Marx’s value theory is not meant to explain relative prices between commodities. The real purpose is to show that commodities priced in money reflect the socially necessary labour time involved in the whole economy. However, that is as far as I can agree with Patnaik’s interpretation of Marx’s theory.
Patnaik seems to accept that there are two systems, one of value and one of price and that Marx’s transformation of value into prices leads to the total surplus value in an economy being different than the total profit. This is clearly wrong as the work of scholars like Carchedi, Freeman, Kliman and Moseley have shown. He also seems to think that Marx’s theory depends solely on commodity money (gold) and does not work or apply to fiat money (notes and reserves not backed by gold) – again a wrong interpretation.
It is true, as Patnaik says, that Marx argued that a rise in wages does not lead to inflation of prices as such, but instead to a fall in the share going to profit (see Marx’s famous debate with Weston, a British trade unionist, in Value, Price and Profit). But from this, Patnaik seems to conclude that the fundamental contradiction in capitalism revealed by Marx’s law of value is that rising wages will squeeze profits (a profit squeeze theory). There is no mention of how Marx’s value theory leads onto his law of the tendency of the rate of profit to fall. For Patnaik, Marx’s value theory appears to differ little from that of Ricardo (two systems of value and prices and the distribution of wages and profits as key to crises). With this interpretation, Marx’s famous formula for the rate of profit (s/c+v) becomes irrelevant.
A more useful exercise for those interested in studying Capital today is to read the book itself. And some great Marxist scholars have developed reading courses that can be followed to do so. The most comprehensive is that by David Harvey, probably the most well-known scholar on Marxist economics in the world today – and one of our speakers at Capital.150 this September in London. Indeed, David Harvey debated only this month with Patnaik on the latter’s current take on imperialism.
Harvey covers Volume One of Capital in detail here, as well as Volume Two and a recent set of lectures on his take on Capital today. These lectures are compiled in written form in: A Companion to Marx’s Capital (Verso, 2010) and A Companion to Marx’s Capital Volume 2 (Verso, 2013).
Over the next few months, I shall try to critique Harvey’s and other scholars’ analysis as we head towards the Capital.150 symposium. But you can see some of the differences that I and other scholars have already raised with Harvey’s views, particularly on the causes of crises here.
David Harvey’s contribution to understanding Marx’s great work has been invaluable. But there are other readings that have also made an important contribution, if less well known. For example, out in Los Angeles, Frieda Afary, a philosophy MA and librarian, has been conducting community-based readings of Capital throughout this year.
But perhaps, the most useful guide in reading Capital today is a new book by Joseph Choonara, A Reader’s Guide to Marx’s Capital (not published until July). Choonara takes the reader through each chapter of Volume One with some clarifying analysis and relevant comment to help. Choonara says that “It is designed to be read in parallel with Capital itself, with each chapter of this book consulted either before or after digesting the relevant sections of Marx’s work.” The aim, unlike that of Harvey’s more comprehensive approach in his video lectures, is “instead to dwell on those areas that are the most vital to an overall understanding of the work and those that most often confuse, drawing on my own experience teaching Capital to left-wing audiences of students and workers over the past decade”. For, in Choonara’s view, Marx attempted in Capital to see capitalism from the point of view of labour and aimed for a working-class audience. Capital clearly does the former, but whether it achieved its aim of reaching working class readers is more doubtful. Choonara’s guide can help here.
Choonara says that “Marx focuses on production in the first volume. The second deals with the circulation process, which is the way that capital passes through its various phases (production, but also purchase and sale). The third volume integrates both aspects of capitalism and so deals with the process as a whole, allowing Marx to explore some of the most complex aspects of the system.” This is important, because the full story of capitalism as Marx sees it requires the reading of all three volumes (and what is often called the fourth – Theories of Surplus Value) as well as Marx’s earlier research notes compiled in what is called the Grundrisse.
This is important, Choonara comments, because “the interlinked nature of the project causes problems for those who just read volume one. This can potentially lead to a crude focus on production, in which issues related to the circulation of capital or questions such as finance and credit that are discussed mainly in volume three are overlooked. That said, it is helpful to see production as forming the foundation for circulation, and so Marx’s ordering of volumes makes sense.” This contrasts with Harvey’s interpretation: “In this I take issue with David Harvey’s very influential reading of Capital, which tends to flatten down these different levels of analysis, treating them all as equally fundamental.” Choonara goes on: Harvey’s “idea is that production and circulation should be considered as having the same explanatory priority in the analysis of capitalism, whereas Marx clearly feels that production is in some sense more basic than circulation.”
Choonara is not afraid to take a view on what Marx means, particularly in the more difficult early chapters on value. In particular, he varies from Patnaik’s view on Marx’s view of money: “there is nothing in this analysis that precludes the replacement of the money commodity with symbolic representations or electronically created credit (the form taken by most money today). To understand this requires going much further into Capital, and in particular the sections on finance and credit in the third volume.” This follows from Marx’s endogenous theory of money, namely that “more or less money would circulate according to the needs of circulation …. Marx’s argument is that the amount of money simply reflects the total price that has to be circulated and the speed with which it circulates.”
Choonara’s reading also shows that Marx did not have some ‘iron law of wages’, as argued by the classical economists Ricardo and Malthus, leading to the view that it was impossible to raise the real wages of workers by their own efforts as wages were determined by the value of the means of subsistence and the effect of productivity and capital accumulation on that.
Choonara comments: “One peculiarity of the subsequent attacks on Marxist theory is that this iron law is often attributed to Marx himself. The vehemence of Marx’s attack (on the iron law) reflects the fact that if the “iron law” were correct, then struggles over wages, and indeed the formation of trade unions, would be pointless, leading the socialist movement into a dogmatic cul-de-sac by isolating it from the real movement of workers.”
Recently, the eminent Marxist professor Michael Lebowitz seems to claim Marx did fall into this fallacy. Lebowitz implies that Marx’s accumulation theory that workers cannot raise their living standards through struggle as the gains from productivity growth will all go to capital. In Lebowitz’s words, Marx accepts the ‘Ricardian default’.
Yes, for Marx, “the rate of accumulation is the independent, not the dependent variable; the rate of wages is the dependent, not the independent variable”. In other words, the pattern of accumulation tends to drive the shifts in wages, not the other way round. But changes to wages, emerging out of accumulation, can still react back onto the patterns of accumulation (Choonara).
And that perceptive mainstream economist, William Baumol, long ago showed that for Marx “wages need not be equal to the value of labour power… and the omission of any fixed equilibrium was deliberate because Marx wanted to show that workers have the power to raise wages substantially even under capitalism”. Indeed, they could do so and actually alter “the historical and social element that enters into the value of labour power”, which is not determined by the iron law of nature or ‘subsistence’.
Indeed, that is the lesson of the struggle to lower the working day so comprehensively described in Capital. As Marx put it: “The Ten Hours’ Bill was not only a great practical success; it was the victory of a principle; it was the first time that in broad daylight the political economy of the middle class [ie the capitalists] succumbed to the political economy of the working class.” This was a gain for the value of labour power that was permanent, as is the 8 hour day in the 20th century – although only continual class struggle can preserve such gains.
There are many other useful commentaries by Choonara on aspects of Capital: on the nature of alienation, productive and unproductive labour, mental and material labour, complex and simple labour, on accumulation etc. But enough for now, for there will be more to follow over the coming months, as we consider the relevance of Capital, now 150 years old.