Marx and the Moderns
E. Marx and the Moderns
Professor Brewer, who has little patience with Marxian theory (above, p. 1), at the same time writes of attempts “to modernize or resuscitate Marx’s ideas” (Brewer 1995: 141), and allows that the reproduction schemes “could be seen as forerun- ners of National Income accounting, input-output models, and so forth” (129). Unfortunately, the forementioned lines had to wait for “the development of the mathematical techniques and computer hardware to allow simultaneous equation systems to be manipulated in a useful way and for the empirical data on inter- sectoral flows to become available”; while “the fact that so many ‘descendants’ can and have been suggested shows how underdeveloped Marx’s schemes of repro- duction actually are.” Now one could equally well argue that though the neglect of Marxian theory by late-nineteenth-century writers might have been justified, neglect by later generations is not. 22
22 See also Samuelson 2000: 28–9, cited below, p. 484. Also of high interest are the Soviet develop- ments where a more direct influence may be discernible, particularly the application of Marx’s
departmental schemes by G. A. Fel’dman in his growth models of the 1920s (see Jones 1976: 110–19; Ellman 1987). See also Erd¨os 1967.
Conclusion – A Recapitulation and Overview
In the first place, it is to Marx’s credit that he should have spelled out the superposition of cycles on an upward trend (Chapter 5, p. 160). After all, it was not until Harrod (1939, 1948) and Domar (1946) that “the propriety, indeed the necessity of approaching the business cycle as a problem of an expanding economy . . . fluctuating about a rising trend” was properly appreciated (Hicks 1950: 7–9). And even then the English-language literature continued to preoccupy itself with “equilibrium” or “steady” growth; thus for example, Meade 1968 makes no mention of the cyclical dimension. On the other hand, Schumpeter maintained of Marx that “we are left without a factor that would necessarily impart cyclical fluctuation to the [secular] process and account for an imminent alteration of pros- perities and depressions” (Schumpeter 1952: 49). But this is singularly unfair, since
a similar criticism can be directed against Schumpeter’s own Business Cycles (see Kuznets 1940). 23 More specifically, Joan Robinson opined that “[t]here are many pointers in Cap- ital to a theory of effective demand. Marx’s disciples could have worked it out before Keynes and Kalecki learned it from the brutal teaching of the great slump; but they did not do so” (Robinson 1967 [1942]: vi). Morishima comes to a similar verdict: “It is no exaggeration to say that before Kalecki, Frisch and Tinbergen no economist except Marx, had obtained a macro-dynamic model rigorously con- structed in a scientific way” (Morishima 1973: 3). And Paul Samuelson allows that the expanded reproduction scheme of Capital 2 “is perhaps the first example of those golden-age paths of compound interest which Cassel, D.H. Robertson, Von Neumann, Harrod, Domar and all the rest have made so fashionable in modern economics” (1967: 618); even if these writers were not influenced by Marx, “we all might well have benefited earlier from study of the Marx tableaux” (617). He refers also to Marx’s “successful depiction” of tableaux of stationary reproduction and (geometrically) expanding reproduction . . . ” and “hail[s] his numerical tableaux”
(Samuelson 2000: 28–9). These are royal tributes indeed. 24 The sympathetic treatment by Bronfenbrenner of Marx’s macro-dynamics, setting out from the departmental schemes, is equally revealing, for in his “translation” and extensions
he “stress[es] Marx’s merits, not always recognized, in anticipating analyses and ideas which we academics only derived (however independently) fifty years after his
23 On the matter of cycles, see also Desai’s parallel between Marx and Hayek: “Hayek agonized over capital heterogeneity, and his attempts to provide a complete theory of cycles foundered
on his failure to integrate heterogeneous capital as well as money in a Walrasian general equilibrium framework. This is no denigration. The only other economist, in my view, who tried and failed as well was Marx. Compare if you will the middle third of the second volume of Capital and Hayek’s Pure Theory of Capital, and you will discover a similar enterprise” (Desai 1997: 5–6). 24 This alone should put paid to Samuelson’s own earlier designation of Marx as “a minor post-Ricardian” (1957: 911). Despite his sympathetic treatment of Marx’s economics, Sowell apparently accepts this verdict (2006: 186).
485 death” (Bronfenbrenner 1965: 205; also 1966). Brewer himself recognises a specific
E. Marx and the Moderns
impact of Marxian theory on Sraffa and on Kalecki and Robinson. 25
A brief discussion of the Sraffa-Marx connection, which is surely the most impor- tant from the perspective of the surplus-value issue, is in order. 26 By way of general background it should be mentioned that Sraffa adopted a per- spective on the development of economics in general and the nineteenth-century in particular that is entirely Marxian in its emphasis on ideology. This fact emerges clearly in the Cambridge Lectures (Piero Sraffa Papers, D2/4: pp. 2, 4). The devel- opment of theory is also said to reflect environmental factors – in Ricardo’s case the clash between landlords and others (both capitalists and labourers); in the post-Ricardian period the increasing importance of the conflict between manufac- turers and labor (10). Sraffa refers to the use made of Ricardo’s value theory by the so-called “Ricardian Socialists” Thompson and Hodgskin (11). The use of “ortho- dox Ricardian economics” in this “unexpected way” led to a reaction by Torrens, McCulloch, Senior, and J. S. Mill; and “thanks to the influence of Mill, the Ricar- dian theory, though considerably qualified and changed in important respects, dominated political economy up to the seventies” (14). In the same light Sraffa viewed the development of marginal utility theory as a defensive reaction against Marx (14–16). So much for Sraffa’s Marxian historiographical outlook turning on ideology and environmental considerations.
Sraffa’s familiarity with, and sympathy for, Marx in fact goes back to his early years, before his first travels to Britain in 1920 (see, e.g., Roncaglia 1998). Potier observes regarding 1924–25 that “[i]t is not easy today to determine precisely what might have been Sraffa’s opinion of Marx’s Capital ” (1991: 16), and Cavalieri points out that “little is known about the range of works read by Sraffa in the 1920s and early 1930s” (2001: 114). But it is surely significant that at the close of his famous 1926 paper on costs, after discussing credit and the like, Sraffa concludes in Marxian terms: “these are mainly aspects of the process of diffusion of profits throughout the various stages of production and of the process of forming a normal level of profits throughout all the industries of a country” (1926: 550). We also know that in the mid-1920s the research culminating in Production of Commodities was set in motion, Sraffa drawing on notes from that period when preparing the work
25 For the continued relevance of Marx from a very different perspective, see Howard and King 2001. The authors argue that “Marx’s treatment of agents’ choices and constraints, and of sys-
temic cooperation and conflict, is far superior to that of orthodoxy in several crucial respects and can provide a better grounding for non-neoclassical analyses.” (It is not clear how their per- spective would apply to Marx’s treatment of entrepreneurship, the subject matter of Chapter 14.) See also Eltis’s evaluation that when one extends the coverage to encompass the insti- tutional framework determining “class power,” and changes therein, for an appreciation of income distribution, there is much to be learned from Marx (2000: 307–9). 26 These remarks draw on Hollander 2000. See also Porta 2001 for a similar approach.
Conclusion – A Recapitulation and Overview
(see the Piero Sraffa Papers) and that by the late 1920s its “central propositions had taken shape” (Sraffa 1960: vi). Now Sraffa is reported as expressing his indebtedness to Marx at this time: “Sraffa told us [in June 1973] that he would not have been able to write Production of Commodities . . . if Marx had not written Capital. It is clear, he told us, that the work of Marx strongly influenced him, and that he felt more in sympathy with him than with those he called the ‘camouflagers’ [les
camoufleurs] of capitalist reality” (Dostaler 1982: 103; see also 1986: 468). 27 More specifically: “Sraffa considered that his model described some aspects of the same reality that Marx had described, a reality characterized by class antagonism between workers and capitalists, the exploitation of the first by the second”; and his equation r = R (1−w) derived from the Standard Commodity was seen by Sraffa to be the equivalent of Marx’s rate of exploitation, for it was “immaterial whether this reality is expressed in terms of the worker working x hours to reproduce his labour-power and y hours to create surplus-value for the capitalist, or in terms of a physical surplus, R, the distribution of which constitutes the stake [l’enjeu] in a struggle
expressed ‘algebraically’ by the famous equation r = R (1−w).” 28 Indeed, the role of the Standard System was, Sraffa explained, to “give transparency to an [actual] system and render visible what was hidden” (1960: 189), a formulation that conveys precisely Marx’s methodological rule that “all science would be superfluous if the outward appearance and the essence of things directly coincided” and his concern to counter the superficial view of “normal average profits” as “immanent in capital and independent of exploitation” (MECW 37: 804, 816).
The informal record of Sraffa’s position that Production of Commodities was inspired by Marx’s perspective on exploitation should be read together with two further considerations: First, Sraffa’s insistence that the main features of his own work – concerned with the problem of a given physical surplus to be distributed to assure a uniform profit rate – reflect Ricardo’s “method of approach” of the Principles, not only the passing phase of the Essay, which “rendered distribution independent of value” (Sraffa 1951: xxxii–xxxiii); and secondly his position that Marx’s critique of capitalism is entirely based upon Ricardo’s theory of values” (PSP, D/4: 14–15). 29
27 Dostaler particularly emphasizes the Sraffa-Marx linkage, considering the subsequent “criti- cisms to which Sraffa has been subjected from certain Marxist centres” (1982: 103). But he also
points out that Sraffa himself “also confirmed [in 1973] that he considered the transformation problem to be a false problem” (1986: 468n). 28 R is Sraffa’s Maximum Rate of Profit, corresponding to a zero wage. This, Sraffa observed, had been suggested by Marx’s rejection of Adam Smith’s claim (see Chapter 2, Appendix) that prices are “immediately or ultimately” resolved with no commodity residue into wages, profit and rent, “a claim which necessarily presupposed the existence of ‘ultimate’ commodities produced by pure labour without means of production except land, and which was therefore incompatible with a fixed limit to a rise in the rate of profits” (Sraffa 1960: 94). 29 There is another linkage. At the time Sraffa composed his 1926 paper on costs, he was working on the reproduction schemes of Capital 2 (Potier 1991: 60). These schemes, it has been pointed
487 Some Marxian loyalists are incensed by Sraffa and “neo-Ricardians” for aban-
E. Marx and the Moderns
doning labor value and equal rates of surplus value as starting point (on which matter, see Blaug 1988: 29–30); 30 and some non-Marxians insist on a complete divorce of Sraffa from Marx. 31 But it seems to me perfectly reasonable for one to retain the spirit of Marx even though dispensing with the letter. This we have seen was Sraffa’s own position. (See also Meek 1975: xxviii–xliv; Kurz 1979; Blaug 1980: 20–3; Sweezy 1981; Garegnani 1998.) It was also that of Morishima who proposed “a Marxian economics without the labour theory of value,” and concluded that “Marx’s theory of exploitation may survive the von Neumann Revolution,” at least “in an economy with homogeneous labour” (1973: 181, 196). Lange perceived “exploitation” simply as the forced surrender by labor of part of the national prod- uct to undeserving property owners (1935). And so too did Joan Robinson who wrote famously that “no point of substance in Marx’s argument depends upon the labour theory of value. Voltaire remarked that it is possible to kill a flock of sheep by witchcraft if you give them plenty of arsenic at the same time. The sheep, in this figure, may well stand for the complacent apologists of capitalism; Marx’s pene- trating insight and bitter hatred of oppression supply the arsenic, while the labour theory of value provides the incantations” (1942: 22). It is all the more essential to insist that Marx himself thought of his exploitation theory as requiring a labor theory of value, at least of the Capital 3 or Ricardian variety (see above, note 2).
I have not been concerned above with the validity or invalidity of Sraffa’s reading of Marx (or, for that matter, of Ricardo). My remarks relate rather to Sraffa’s understanding of the literature and the inspiration he drew from it. 32 The textual evidence considered in this book in fact suggests that Marx in common with Ricardo
out, were the source of propositions that Sraffa showed Keynes in 1927, from which developed The Production of Commodities (Eatwell and Panico 1987: 446). See also Samuelson 2000: 28.
30 Steedman – adopting Sraffa’s apparatus, taking account of joint production and choice of production methods, and drawing on Morishima 1973 – set out to demonstrate the irrelevance
of Marx’s value magnitudes to a range of “Marxian” issues including “the relationship between surplus labour and the existence of profits” (Steedman 1977: 15). For an important objection to Steedman’s claim, see Horverak 1988: 285n.
As expressed by Schefold: “Sraffa’s essential goal was to show that prices (in the sense of natural prices, prices of production or normal prices) were defined, given the structure of production and distribution. It thus became clear that prices of production could not be represented as ‘transformed’ labour values: both labour values and prices have to be derived from the structure of production. In place of Marxian surplus value, we have here a physical surplus, the production of which requires both the physical means of production and labour” (Schefold 1996: 1319). 31 Thus Samuelson: “Sraffian economics . . . devastatingly repudiates that central part of Marx’s economics, Capital, Volume I (1967) which proposes a new paradigm involving an equal ‘rate of surplus values’ by industries or departments” (1987: 458); and “[Sraffian analysis] debunks [the] proposed Marxian transformation solutions” (1990: 278). 32 For pertinent comments, though in a different context, relating to the “influence” exerted by
a work even though misunderstood, see Baumol 2000.
Conclusion – A Recapitulation and Overview
and the Ricardians, and unlike Sraffa, proposed adjustment mechanisms involving output variations to assure uniformity of the rate of return on capital and also variability of the wage rate and the interdependence of value and distribution (see Chapter 1); and that, unlike both Ricardo and Sraffa, he allowed for an effect on the general profit rate of disturbances emanating in luxury production (Chap- ter 1.H, 10.E).
There is also, of course, the entire range of issues pertaining to growth, of the highest concern to Marx but excluded by Sraffian static-equilibrium economics. It is only in this broader context that we can, for example, understand J.A. Schumpeter’s deep appreciation of Marx’s perception of the advance of science and technology as endogenous to capitalist organization, an aspect of the “economic interpretation of history” (see Rosenberg 1994: 58–9). Schumpeter in fact refers to the “testimony to [Marx’s] broad-mindedness” offered by the “glowing” account in the Communist Manifesto of the achievements of capitalism; moreover, “even in pronouncing pro futuro death sentence on it, he never failed to recognize its historical necessity” (Schumpeter 1950: 7). All this has been documented in Chapter 13, though subject to the caveat that Marx was impeded by the surplus-value doctrine from accounting for the dynamism of capitalism, only belatedly allowing that the industrial capitalist played some role.