The 50th anniversary conference of the Union of Radical Political Economy (URPE) finished last weekend. URPE has played an important role in developing and enhancing alternative economic theory and analysis to the dominant mainstream theories in modern economics. It has survived despite the long reaction in economics during the ‘neo-liberal’ era that we have been subjected to since the 1980s – where even the so-called ‘progressive’ economics of Keynesians was submerged under the general equilibrium, ‘free market’ economics of the neoclassical mainstream.
I was unable to attend to conference held at the University of Massachusetts, Amherst, so my comments on proceedings will be solely based on some of the papers presented that I have obtained and also from some of the comments on the sessions by participants. This is obviously inadequate but I think it is still worth doing if only to publicise the role of URPE and to let readers of my blog know the sort of issues being debated.
There were many themes at the conference: social reproduction theory; labor economics; crisis theory; environmental economics; alternative economic systems post-capitalism; international economics; broad issues in Marxist political economy and of course, China. But as is my wont, I shall concentrate on the themes that interest me most.
There was the usual heterodox mixture of the Marxist approach, alongside post-Keynesian/’financialisation’ schema, as well as some support for the contribution of the neo-Ricardian views of Piero Sraffa. URPE is radical political economy, not just Marxist.
In political economy, this means there was some discussion about whether Keynesian theory had anything to offer to Marxist economics. Readers of this blog know well that I do not consider Keynesian theory as a complement to Marxist economics – indeed, on the contrary I view it as part of mainstream bourgeois economics being applied to macro-managing slumps in capitalist production.
Deekpankar Basu (UMass) presented a paper entitled “Does Marxist Economics need Keynesian Insight?” and his short answer was apparently: no. Simply put, Keynesian theory looks to the failure of aggregate demand for the explanation of crises; neoclassical theory looks to ‘shocks’ to the smooth running of production (supply); but Marx looks to the profitability of capital for the faultlines in capitalist production. Basu’s analysis was backed up by a panel on Marxist political economy which one participant reckoned showed that “the key advantage of Marxist analysis is it theorises profit, which mainstream economic models pretend doesn’t exist – despite overwhelming evidence (from the mainstream) that it does.”
Nevertheless, Peter Skott, also at Amherst, did present a post-Keynesian analysis on the relationship between capitalist accumulation and employment in his paper “Post-Keynesian growth theory and the reserve army of labor”. I cannot comment on this paper, but I refer you another of Skott’s which deals with the challenges facing post-Keynesian analysis of modern economies.
On the Marxist front, there were several papers on recent developments in theory. Hyun Woon Park (Denison University) took what he considers are puzzling inconsistencies in use of MELT (the monetary equivalent of labour time, a tool used to analyse trends in capitalism with Marxist categories)(Park and Rieu. 2018). Park was concerned that if Marxist theory says that unproductive sectors like finance, real estate, merchanting etc do not produce value but merely redistribute value created in productive sectors, does it have any role in capitalism? If it plays the role of helping to make the productive sector more efficient, can we talk about an ‘optimal’ size for the sector? He concludes (as far as I can tell from his paper) that there is no ‘optimal’ size where the unproductive sector helps rather than detracts from capital accumulation in the productive sector in modern economies. I’m not sure what we should conclude from this.
Sraffian economics was also discussed at URPE. This school is based on the approach of Piero Sraffa, who also argued that the real contradiction in capitalism was not the tendency for profitability to fall, but the class battle between profits and wages. At least this is what I think we can conclude from the Sraffa’s theoretical model, based on the classical political economy of David Ricardo. Bill McColloch of Keene State college, presented a paper “On Sraffa and the History of Economic Thought;”, which was kindly posted on the Naked Keynesianism website.
According to McColloch, “In Sraffa’s mind Marx’s great victory was to have rediscovered the essential meaning of the classical system in an era in which it was increasingly lost to all observers” namely “that capitalism rest upon exploitation, an exploitation of human beings and of nature, and that is remains the task of economics today to speak to this reality and its consequences. Whether Marx’s own proof of exploitation can be shown to be true is perhaps of negligible importance.”.. McCulloch asks “if Sraffa was ‘really’ a Marxist? I would suggest not”. But apparently that does not matter because both Sraffa and Marx saw economic theory as both ‘sociological and institutional’ and not bound by ‘technique’ as in the neoclassical. Well, I find it hardly “negligible” whether Marx’s theory of exploitation is true or not. There is now a whole literature backing up Marx’s theory why profit only comes from exploitation of labour and nowhere else – while Sraffa’s theory is full of holes on that point, among others. For a more thorough critique of Sraffian economics, see Fred Moseley’s book, Money and Totality
Marx’s theory of exploitation is important because, at URPE, the arguments of post-Keynesian and financialisation theorists were presented again. Fletcher Baragar of the University of Manitoba has argued that the financial crash and Great Recession were the result of increased ‘financialisation’, as expressed through rising household debt that eventually led to the housing bust. Financialisation had created ‘two forms of profit’, one the traditional exploitation of labour in production and the other, the exploitation of households by the financial sector. (Baragar, Fletcher. 2015. “Crises of Disproportionality and the Crisis of 2007.- 2009.”).
I have disputed the argument before that there are two sources of profit (profit of exploitation and profit of alienation) under modern capitalism (see my book, Marx 200). And I have also extensively rejected the view that it was ‘excessive’ household debt that caused the crisis of 2008. The first is a distortion of Marx’s value theory and the second is no more than a mainstream explanation based on debt alone.
On my blog, I have posted several times on the financialisation theme. Recently, Mavroudeas & Papadatos have criticised the whole financialisation hypothesis on five counts. The Financialisation Hypothesis and Marxism: a positive contribution or a Trojan Horse?’ – S.Mavroudeas, 2nd World Congress on Marxism, Peking University, 5-6 May 2018.
The most important questions for me are these: 1) if financialisation was the cause of the Great Recession, what about crises even as late as 1980 when finance was not such a large part of the economy or non-financial companies had not become financial?; 2) has finance completely separated from what happens in the productive sectors where value is created?; 3) so is finance the class enemy while ‘productive’ capitalism and workers are allies?; 4) are all crises are the result of ‘financial instability’, subject to Minsky moments and the underlying profitability of capital is irrelevant? If they are, does this mean we just need to control the financial institutions and can leave the non-financial sector of capitalism alone? Do we control the investment decisions of JP Morgan but not those of Amazon of Boeing?
Imperialism has become a hot topic among Marxists in the recent period with ‘globalisation’, the rise of multi-nationals operating in the so-called emerging economies; and the centralisation of finance in the US and Europe. There is a running debate on how imperialism operates and who is exploiting whom (Harvey versus Smith) that URPE has followed. And there were some very incisive papers on this at the conference that show light on the debate from Marx’s value theory. I can only refer to Depankur Basu’s superb and precise account of Marx’s theory of ground rent and Hao Qi (Renmin University) on Marx’s theory of absolute rent, both of which can be applied to the issue of imperialism. Ramaa Vasudevan (Colorado State university) also moved into this territory. Marx_s Analysis of Ground-Rent_ Theory Examples and Applications; A Model of the Marxist Rent Theory
Finally, there is what happens if and when capitalism is overthrown globally. What are the economic outlines and categories for a communist society? Can we go beyond the prescriptions that Marx offered in the Critique of the Gotha Programme? A panel composed of Seongjin Jeong (Gyeongsang National University, Korea), Richard Westra, Al Campbell and Ann Davis took this up at a session on an ‘alternative economic system for the 21st century’.
Al Campbell (emeritus professor at Utah) has offered some pioneering work in this area. And Seongjin Jeong’s paper on the faultlines of Soviet planning was revealing. Two things here: first that the most important development under an economy moving towards communism is raising the productive forces to levels that quickly enable goods and services to be provided free at the point of consumption (ie transport, education, health, energy, basic foodstuffs etc). But that could not be applied for some time for all goods and services, so there would have to be planned production and distribution.
Jeong argues that such planning should be based on labour time calculation. But the Soviet economy of 1917–91 was not a labour-time planned economy. Although input-output tables are essential to the calculation of the total labour time needed to produce goods and services and were available to Soviet planners, they never seriously considered using them and instead depended on material balances. However, with the development of AI, algorithms, big data and quantum power, such planning by labour time calculation is clearly feasible. Communism will work. SovietPlanningLTC_Seongjin_URPE20180928.