WHY THE WORLD ECONOMY IS IN A MESS
Dec 18th, 2009 by Conor McCabe
A short ten-minute video from Cliff Bowman, Professor of Strategic Management at the Cranfield School of Management at Cranfield University, explaining Marx’s theory of economic crisis.
That’s an excellent little presentation. Thanks very much, Conor.
I’ve been much exercised in recent years by the Labour Theory of Value, and it seems to me, even from that presentation, that a theory of exploitation doesn’t actually require the LTV in order to explain why the capitalist needs to keep wages down, nor indeed why such a need results in crises in overproduction. I understand, too, that there’s some debate over whether Marx himself actually uses the the LTV in Capital. I reckon it can be junked.
Post-Sraffa and Steedman, the Analytic Marxists came to the same conclusion, i.e. that a theory of value isn’t required to explain either prices or exploitation, and fellas like Elster and Cohen made a game attempt at forging a new Marxism, but it’s Marxist only in name, IMHO. That doesn’t mean a credible class-struggle socialism can’t be created, just that it requires a new theoretical underpinning.
Have you read Diane Elson’s essay on the value theory of labour? I think she does a good job in tackling Straffa. She argues that the object of Marx’s theory of value was not price, but labour. This is not to say that Marx was not concerned with price, nor its relation to the magnitude of value, but that the phenomena of exchange are not the object of the theory. she writes that ‘it is not a matter of seeking an explanation of why prices are what they are and finding it in labour, but rather of seeking an understanding of why labour takes the forms it does, and what the political consequences are.’ It’s a wonderful essay, and says a lot more than I could do justice to in a comment box, and so I’m tempted to scan it and put it up as a pdf, and cross my fingers that neither she or the publishers will mind too much.
Can’t say I’ve reached a definitive conclusion on it myself, but have to say I find myself drawn to people like Elson and David Harvey on this.
Hi Conor–
I must read Elson’s essay, so if you have a pdf I’d love a copy.
Neither Sraffa nor Steedman’s work in themselves were a clincher for me either, and as far back as Joan Robinson Marxist economists have known that it was demonstrable that prices and value are entirely independent. The problem for them, of course, is that if value isn’t reflected in price at all, then there’s no relation between value and profit, which undermines the theory of the tendency of the profit rate to fall. The fact that Marx struggled to reconcile price and value and never succeeded suggests that he was aware of the problem but never managed to resolve it.
I’d recommend Howard and King’s two-volume History of Marxian Economics to anyone interested in this topic. It’s excellent for its account of attempts to rescue Marx’s economic theories from the evidence, fruitlessly, I think. All the same, a radical economics and sociology that bases itself on the issue of private ownership of the means of the production and the conflicts that arise as a result can still form the basis of a class-struggle socialism, because even without the LTV, the capitalist is still obliged to keep wages down, simply in order to compete with rivals. But I also believe that a theory of value that recognizes that what labour actually does is modify natural resources in order to render them consumable by releasing their latent energy, stored up over millions of years, would add a sorely-needed green hue to socialist economics, acknowledging that wealth doesn’t magically appear as a result of human labour but as a result of labour extracting, releasing, and using up the planet’s resources.
I had a huge pile of pdfs on the LTV from a whole spectrum of writers on my office PC, but I binned the lot, unfortunately, when the hard drive got full. Probably for the best, all things considered; it was becoming a bit of an obsession.
Maybe I shouldn’t read the Elson essay after all.
I think it’s worth it (the Elson essay). Andrew Kliman has a lot to say on the tendency of profit to fall, but it’s still in my ‘to read’ list, but from what I’ve delved into so far, again along with Harvey on the subject, there’s enough there for me anyway to see that the idea that the labour theory of value and the law of the tendency of profit rate to fall have been shown conclusively to be weak, wrong, or inconsistent is not exactly the case. There’s enough there for me anyway to have an open mind on the topic, at least for now.
Interesting points about latent energy, wages, and future theoretical templates based on same. There were some comments made over on cedarlounge about links between socialism and the green movement. did you come across them?
Hi Conor–
I’m an avid fan of the Cedar Lounge, so I probably read the comments at some point, although they don’t spring to mind immediately.
It’s ironic, I think, that for all the criticism of Marxism’s blind spot, classical “bourgeois” economics doesn’t have a way of measuring environmental damage either; it can’t put a price on things until it commodifies them! I just read over the Xmas period Raj Patel’s new book, The Value of Nothing, which is very good on this topic, although he doesn’t really come up with anything more than a vague solution. This is how sad I am: The book was a present from my brother, taken off my wish list. I actually asked for it.
Have a great new year, btw. That goes for all you folk at D.O. It’s always a pleasure to read the posts here.
Hi Conor–
Just went over to Kliman’s site and read a few of his papers on the Transformation Problem. Looks very interesting indeed, although I’m not going to start down that route again!
It strikes me that the argument about whether or not Marx’s theory of value is internally inconsistent (which Kliman disputes) isn’t really relevant if the theory is either wrong or doesn’t have any explanatory power, both of which I suspect to be the case. But don’t let me put you off.
In Reclaiming Capitalism Kliman argues that the criticisms are inconsistent, and not based on an actual reading of all volumes of Capital. He makes it quite clear that he’s not proving Marx is right by showing the weakness in the criticisms of the transformation problem, merely that Marx’s argument is logically consistent. It doesn’t mean his argument is right - a logically consistent argument based on a fallacy is the cornerstone of theology after all - so in that respect Kliman would agree with you. Having said all that, I doubt that Kliman would have bothered to go through all of that work if he thought Marx was wrong with regard to the labour theory of value and the law of the tendency of the profit rate to fall, but there you go.
There’s another blogger, Brendan M.Cooney, who’s done a lot of work on this. It’s through him that I came across Kliman.
http://kapitalism101.wordpress.com/
Both Kliman and Cooney are open to comments and debate on the matter if you do decide to go down that road again.
Cheers for the link, Conor. Agree with all you say there about Kliman. It isn’t a path I expect to be treading down in the near future, I’m happy to say, just because I think there are so many other holes in Marxism, some of which are actively deleterious to the socialist project, that it isn’t worth trying to rescue it. Funnily enough, I’ve actually found myself going right back to the start of my sociology training and re-reading Weber, C. Wright Mills, Bourdieu, Elias, Veblen, and, of course, Castoriadis and various feminist theorists, because they provide, I think, much more astute and rounded analyses of contemporary society.
Either that or I’m still trying to figure out where I went wrong.
Hi Conor–
More on this here:
http://crookedtimber.org/2010/01/06/marxian-economics-mia/#comments
Cheers
John