Karl Marx and the Classics An Essay on Value, Crises and the Capitalist Mode of Production John Milios Dimitri Dimoulis George Economakis Ashgate © John Milios, Dimitri Dimoulis and George Economakis 2002 All rights reserved. No part of this publication may be reproduced, stores in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher. Published by Ashgate Publishing Limited Gower House Croft Road Aldershot Hampshire GU11 3HR England Ashgate Publishing Company 131 Main Street Burlington VT 05401 5600 USA Ashgate website: http://www.ashgate.com British Library Cataloguing in Publication Data Milios, John Karl Marx and the classics: an essay on value, crises and the capitalist mode of production 1. Marx, Karl, 1818-1883 2. Marxian economics I. Title II. Dimoulis, Dimitri III. Economakis, George Library of Congress Control Number 2001095433 ISBN 0 7546 1798 X Printed and bound in Great Britain by Antony Rowe Ltd., Chippenham, Wiltshire Contents Preface vii PART I: VALUE AND MONEY 1 Introduction: On the Object of Marx’s “Critique of Political Economy” 3 2 Marx versus Ricardo (Marx’s Theory of Value) 13 3 Money and Capital (Marx’s Theory of Money and the Circuit of Capital) 36 PART II: THEORY OF VALUE AND IDEOLOGY 4 The Question of “Commodity Fetishism” 67 PART III: THEORY OF VALUE AND PRICES. MARX’S AMBIVALENCE TOWARDS CLASSICAL POLITICAL ECONOMY 5 Social Capital and the General Rate of Profit 111 6 Theory of Value and Ground Rent (Smith-Ricardo-Marx: Converges and Disputes) 131 PART IV: THE CIRCUIT OF SOCIAL CAPITAL, THE v PROFIT RATE AND THE ECONOMIC CRISES 7 The “Law of the Falling Tendency in the Rate of Profit” 145 8 The Historic Marxist Controversy on Economic Crises and its Theoretical Significance 158 9 Defining a Marxist Theory of “Overaccumulation Crises” 190 10 Epilogue: On the Character of Marxian Theory, “Ricardian Marxism” and the Role of F. Engels 206 Bibliography 215 Index 226 vi Preface Marx developed his economic theory, under the rubric of A Critique of Political Economy, mainly in the period 1857-1867. It is a well-defined system, structured as a logical array of original concepts and analyses based on Marx’s notions of value and surplus-value. Marxian economics emerged from Marx’s earlier historic-sociological analyses and is formulated along with a new methodological approach. However, from the moment of Marx’s death, it had already become apparent that Marxist theory and Marxist economic analysis would accommodate not only one interpretation, and do not evolve on the basis of a single, and unique, theoretical direction. On the contrary, the existence of Marxism is always interwoven with the formation of various Marxist trends or schools, which as a rule are constructed at the base of contradictory and opposed theoretical principles, positions and deductions. This phenomenon is universal, and has taken place in all of the countries where Marxism was developed. The contradictory picture of Marxist theory can be partly interpreted by its conflictual and revolutionary character, i.e. by the fact that it is constituted as a critique to the established economic and social order and the ruling forms of ideology that aim to consolidate it. In its struggle with the ruling theoretical disciplines, Marxist theory often intertwines with it, in the means that certain bourgeoisie ideological forms are being reproduced within Marxist analysis. At the same time, the development of Marxist theory is affected by the political conjuncture, as Marxism, besides a theoretical discipline becomes also a mass ideology of the Left, influencing the modes in which theory develops. The above mean, on the one hand, that Marxist theory acquires the form of a necessarily conflicting and schismatic science, and on the other, that the Marxist economist, social scientist or researcher should take a position in the conflict, the object of which is Marxist theory itself. vii viii Karl Marx and the Classics However, universal is the belief among Marxists that there is only one authentic interpretation of Marx’s writings, the one shared by the person (or school) stating the argument. The authors of the present book share the opinion that the schismatic character of Marxist theory shall also be attributed to the contradictory character of Marx’s mature economic writings themselves, as Marx did not remain consistent to his own theoretical system of the Critique of Political Economy, i.e. to his rupture with the Ricardian value theory of “labour expended”, but often slipped back to the Ricardian system of thought. Marx’s Critique of Political Economy constitutes not a “correction” of Classical Political Economy’s “mistakes” or “misunderstandings”, but the formation of a new theoretical domain, shaping thus a new theoretical object of analysis and a new theoretical “paradigm” of argumentation. Unlike the Ricardian, Marx’s theory of value is a monetary theory. The value of a commodity cannot be determined as such, but only through its form of appearance; it cannot be determined in isolation but only in relation with all other commodities in the exchange process. This exchange-value relation is materialised by money. In Marx’s system, no other “material embodiment” of (abstract) labour and no other quantitatively defined form of appearance (or measure) of value can exist. As money comprises the only form of appearance of value, both quantities do not belong to the same level of abstraction. In other words, they are incommensurable, and consequently they cannot be the subject of quantitative comparisons and mathematical calculations. In Marx’s system, value does not belong to the world of empirically detectable (and measurable) quantities; only money does. Marx formulated the arguments of his theoretical rupture with the Ricardian theory of value mainly in the Manuscripts 1857-58, (first published in 1939-41 as Grundrisse, Foundations of the Critique of Political Economy), in his A Contribution to the Critique of Political Economy (first published 1859) and in Volume 1 of Capital (first published 1867). The same arguments are also to be found in his other works of the period (the Manuscript 1861-63, a part of which was first published during the period 1905-10 under the title Theories of Surplus Value, and the Manuscript 1863-65, containing all drafts of Volumes 2 and 3 of Capital which were edited and first published by Engels in 1885 and 1894 respectively). However, he used a highly abstract and mainly philosophical mode of presentation, which makes the comprehension of his theory rather difficult. Preface ix More important, in his writings of the period 1861-65, Marx becomes ambivalent towards Classical Political Economy: He repeatedly retreats to the Ricardian theory of value, thus abandoning his own theoretical system of the Critique of Political Economy. Summarizing our argument we may say that Marx’s economic writings comprise two different discourses: a) The theoretical system of the Critique of Political Economy, which is mainly developed (albeit in a “philosophical” way of presentation, which makes its understanding not easy) in the first part of Volume 1 of Capital, in the 1859 Contribution to the Critique of Political Economy, in the Grundrisse and is repeated in his other works; and, b) a sophisticated version of the Ricardian Political Economy of value as “labour expended”, which is to be found mainly in sections of Volume 3 of Capital, such as the “Transformation of Commodity Values into Prices of Production” or the theory of “Absolute Ground-Rent” and at other parts of his 1861-65 writings. This second discourse seems to have influenced most contemporary approaches to Marxist value theory. In Part I of the present Book (Value and Money) we reconstruct what we consider to be the first discourse, i.e. the tenets of Marx’s theoretical system of the Critique of Political Economy, which was formed on the basis of a rupture with Ricardian Political Economy. In Part II (Theory of Value and Ideology) we illustrate the conceptual problems arising with respect to ideology and the capitalist power relations from Marx’s way of presentation of his value theory, and more specifically from the way that he introduces the concept of capital and the capitalist mode of production. In Part III (Theory of Value and Prices. Marx’s Ambivalence towards Classical Political Economy) we critically illustrate what we consider to be the second discourse in Marx’s writings, which adheres to the Classical tradition of Political Economy. Finally, in Part IV of the book (The Circuit of Social Capital, the Profit Rate and Economic Crises) we make use of our theoretical conclusions from the previous Parts, to focus on subjects such as crisis theory, instability, and the Circuit of Social Capital, which are related, on the one hand, to the present economic conjuncture, and on the other, to modern debates on value and Marxian economic theory. Dimitri Dimoulis would like to thank the Universidade Bandeirante (São Paulo, Brazil) for supporting and funding a Research Project on Law and the Economy. All authors express their thanks to Howard x Karl Marx and the Classics Engelskirchen, Spyros Lapatsioras and Dimitris Sotiropoulos who have read and commented on this book. The errors that might remain are of course theirs. John Milios Dimitri Dimoulis George Economakis. PART I: VALUE AND MONEY 1 Introduction: On the Object of Marx’s “Critique of Political Economy” 1. Marx’s Mature Economic Writings The aim of this introductory chapter is to compendiously illustrate the position that Marx’s mature economic writings acquire in the author’s overall theoretical work, in order then to posit the questions, which this book will try to investigate: the relation of Marx’s theoretical analysis to Classical economic theory on the one hand, and its significance as a tool for gaining an insight into contemporary capitalist economies on the other.