This book was written during a time hailed by the President of the United States as “the greatest upsurge of economic well-being in history.” Others, in other nations, spoke of an “economic miracle,” or else claimed that “we never had it so good.” Professional economists were overjoyed that their “dismal science” had finally turned out to be the hope of the world. They impressed governments and businessmen alike with their theoretical erudition and its practical applicability. With the unfortunate exception of an inarticulate minority, from the “High” down to the “Low” there was general agreement that business was excellent and that it would stay that way. There was som... (From: Marxists.org.)
The theories of bourgeois economists down to David Ricardo were developed
before there was a real awareness of the class issues that dominate capitalist
society. Ricardo, as Marx wrote, “made the antagonism of class interests,
of wages and profits, of profits and rent, the starting point of his
investigations, naively taking this antagonism for a social law of nature. But
by this start the science of bourgeois economy had reached the limits beyond
which it could not pass,”[1] for a further critical development could lead only
to the recognition of the contradictions and limitations of the capitalist
system of production. By doing what could not be done by bourgeois economists,
Marx felt himself to be the true heir, and ... (From: Marxists.org.)
It is rather difficult to regard the theories of Keynes as a
“revolution” in economic thought. However, the term may be used at
will, and the Keynesian theory is called a revolutionary doctrine “in the
sense that it produces theoretical results entirely different from the body of
economic thought existing at the time of its development.”[1] Yet since that
“body of thought,” was neo-classical equilibrium theory,
Keynes’ “revolt” may better be regarded as a partial return
to classical theory. And this notwithstanding Keynes’ own opposition to
classical theory, which in his strange definition, included the whole body of
economic thought from Ricardo down to his own contempora... (From: Marxists.org.)
Whereas Keynes’ preoccupation with monetary questions was based on his
desire to make the capitalist system work more efficiently, Marx’s
relative neglect of these issues stemmed from his goal of formulating a theory
of capital development. This labor theory of value evolved out of his criticism
of classical value theory.
In order to yield regulatory results, the market automatism presupposes a
principle on which exchange is based, a principle that explains prices and
their changes. If a price is given, it may vary in the interplay of supply and
demand, but the question of what determines prices remains. For the
classicists, price derived from value and value was determined by the labor
incorporated in commodities. T... (From: Marxists.org.)
In order to stay in business, every capitalist entrepreneur must strive for
the largest possible amount of surplus-labor; for only by achieving this
maximum can he maximize the profits he can realize through market prices. This
profit maximum is only partly determined by his own exertions in maintaining or
raising the rate of exploitation; it is co-determined by similar
exertions on the part of all other capitalists. To increase the profitability
of any particular capital, the profitability of total social capital
must be in creased, for otherwise there would be no way of realizing the
increased appropriation of surplus-labor as profits in the market. Since
surplus-labor in the form of commodities falls outside the capital-labor
r... (From: Marxists.org.)
Marxist criticism of bourgeois society had to encompass more than proof of
the exploitation of labor by capital. The idea of surplus-value was inherent in
the labor theory of value, and socialists prior to Marx had utilized it in
their arguments. In order to show once more that profit or surplus-value is
gained in production and not in exchange, Marx found it advisable to disregard
the effects of market competition on value relations. This is possible only in
theory, because the production process cannot actually be divorced from the
exchange process. Yet, according to Marx, the laws of capitalist production
“cannot be observed in their pure state, until the effects of supply and
demand are suspended, or balanced.”[1] T... (From: Marxists.org.)
Marx was not particularly interested in demonstrating the viability of
anarchic capitalism. His concern with the law of value relates to his
“ultimate aim to lay bare the economic laws of motion of modern
society.”[1] The
best points in Capital, Marx wrote to Engels, “are 1) the
twofold character of labor, according to whether it is expressed in
use-value or exchange-value (all understanding of the facts depends upon this);
and, 2) the treatment of surplus-value independently of its particular forms of
profit, interest, groundrent, etc.”[2] The twofold character of labor-power is, of course,
the equivalent of the social relations of capital production as a production of
surplus-value. And the independent tr... (From: Marxists.org.)
Marx’s value model of capital development is a methodological device
to “grasp its inner interconnections,” which cannot be observed in
immediate reality. To have a theory of capital development at all, the
“force of abstraction” has to transcend the semblance of
competition. The abstract value-scheme reveals that, apart from competition as
the driving force of capital formation, profit production already finds a
limiting element in the capital-labor relationship.
In order to forestall a decline of profitability, accumulation must never
rest. More and more surplus-value must be extracted; for this purpose,
production must be steadily revolutionized, and markets must be continually
extended. The two-... (From: Marxists.org.)
According to Marx, “the contradictions inherent in the movements of
capitalist society impress themselves upon the practical bourgeois most
strikingly in the changes of the periodic cycle through which modern industry
runs, and whose crowning point is the universal crisis.”[1] Throughout the
nineteenth century, crisis followed crisis in intervals of roughly ten years.
The periodicity of crises, according to Marx, stem simply from
capitalism’s ability to overcome the overproduction of capital through
changes in conditions of production which increase the mass of surplus-value
relative to the existing capital. The definite crisis-cycle of the
last century is, however, an empirical fact not directly related to Marxia... (From: Marxists.org.)
Because of the fetishistic character of capital production, the capitalist
system in all its phases and in all its details may in a way be considered to
be in a “permanent” condition of crisis. Depression is a
precondition for prosperity; prosperity comes to an end in a new depression.
They are, so to speak, two sides of the same coin. Since capitalists operate as
individual concerns in a social production of world-wide scope, and are not
able to comprehend the real possibilities and limitations of the “system
as a whole,” over-expansion in some spheres of production, or in some
nations, may lead to over-expansion in other industries and nations and may
finally affect the world at large. Both the force of co... (From: Marxists.org.)
Capitalist production must progress, for standing still means retrogression.
It cannot cease accumulating without disrupting the whole social fabric on
which it rests. Any static analysis of its relationships is purely fictitious,
and is excusable only as a possible medium for grasping its real dynamics. In
order to secure a continuous production of surplus-value adequate to the
constant need to accumulate capital (which is the capitalistically-necessary
precondition for a more or less satisfactory social production in real terms
– such as sustains social existence) capitalism must unceasingly
revolutionize the sphere of production in its search for ever more
surplus-value, and must consistently expand its markets in order to... (From: Marxists.org.)
Despite its highly abstract character, Marx’s capital analysis has
proved to have great predictive power. The actual course of capital
accumulation followed its general outline of development. Indeed, the course of
capital development as predicted by Marx has never been denied; other
explanations merely state the reason for this trend differently. Keynes offers
one of these explanations. He explains the “long-run” trend of
capital production differently, but his description of the trend itself and of
observable crisis conditions differs from Marx’s only in the terminology
employed. It boils down to the simple statement that investments depend on
profitability, current and expected, and that investment tend t... (From: Marxists.org.)
Keynesian interventions in the economy were at first rather ineffective.
Keynes explained this by saying that “the medicine he recommended was too
niggardly applied.” The unemployment problem remained unsolved until the
approaching Second World War forced the various governments to do for the
purpose of waging war what they had been unwilling or unable to do during the
preceding depression. With the beginning of war production, how ever, Keynes
was finally convinced that his theory would find confirmation, for now it would
be seen “what level of consumption is needed to bring a free, modern
community ... within the sight of the optimum employment of its
resources.”[1]
War-policies, however, were quite ind... (From: Marxists.org.)
Evaluating the work of Keynes, economists came to “distinguish the
problems he opened up from the particular solutions he suggested. These
solutions might all be altered, or discarded and replaced,” it was said,
“and his work would still be revolutionary in the opening up of problems
and the admission of the possibility of some solution different from
the one that had previously been accepted and had foreclosed fresh
inquiry.”[1] In
this, Keynes “succeeded where previous heretics had failed, partly
because he came at a time that was ripe to receive his ideas.”[2] Although Keynes’
“theory of stagnation gave modern expression to some indigenous elements
stressed in Marx’s ‘... (From: Marxists.org.)
As far as laissez-faire capitalism is concerned, Marx’s prediction of
its decline and eventual demise is obviously still supported by the actual
course of development. The prevalence of the “mixed economy” is an
admission that capitalism would find itself in a depression were it not for the
expanding government-determined sector of the economy. What does this
government intervention imply as regards the private-enterprise economy?
No doubt, state intervention increases production and thus expands the
productive apparatus. But if the goal of such intervention is the stabilization
of the market economy, government-induced production must be noncompetitive.
Were the government to purchase consumption goods and dura... (From: Marxists.org.)
The Keynesians see the economy as a money economy and tend to forget that it
is a money-making economy. In their view money appears as a mere instrument of
manipulation for turning insufficient into sufficient social production. An
excessive monetary growth by way of credit expansion and deficit-financing may
lead to inflation, just as credit contraction and too little money tend to be
deflationary. To avoid both excesses, there must be the “right”
quantity of money; and it is the government’s function to arrange for
this “right quantity.” Fiscal policies are in a way also monetary
policies, as they merely allocate the “right quantity” of money in
the direction most conducive to economic st... (From: Marxists.org.)
Apart from its irrational aspects, the mixed economy can exist a long as an
increasing productivity yields a sufficient social product. Production must be
large enough to maintain the necessary profit ability for the stagnating or
relatively declining private capital, to secure existing living standards, and
to allow for a growing quantity of nonprofit production. Since the national
debt can be refunded, it is actually only the interest on it which need be
covered by either taxes or new borrowings. And since the rate of private
investment decreases, more funds become available for government borrowings. In
the long run, however, and with the continuous, faster growth of the
“public” as against the “private” ... (From: Marxists.org.)
The increasingly organized character of the mixed economy has induced some
economists and sociologists to speak of it as a “post capitalist”
system. The possibility of an organized capitalist economy either pleased or
worried many social theoreticians before – Rudolf Hilferding,[1] most notably, envisioned
a completely organized capitalism based on a class-antagonistic system of
distribution. However, a noncompetitive capitalism, though perhaps conceivable
on a national level, is quite inconceivable as a world-wide phenomenon and for
that reason could be only partially realized on a national level. What national
economic organization there is has arias en mainly in response to international
competition; and the mo... (From: Marxists.org.)
Keynes’ theory dealt with “mature” capitalism and its
apparent incapacity for further “automatic” development. This
preoccupation with “mature” capitalism reflected a rather general
disregard for the development of the world’s industrially backward
regions. In Keynes’ view, to recall, it is the diminishing scarcity of
capital, a consequence of the diminishing propensity to consume, which explains
insufficient demand and unemployment in the developed capitalist nations. In
countries where capital is scarce and the propensity to consume consequently
high, this problem does not exist, for a “poor country will be prone to
consume by far a greater part of its output, so that a ... (From: Marxists.org.)
Marx’s model of capital accumulation represents a closed homogenous
system in which the rising organic composition of capital results in a fall of
the rate of profit and therewith in the decline of capital expansion whenever
the conditions of production do not allow for a sufficient rise in the rate of
exploitation. But capitalism is not a closed system: it is able to slacken the
rising organic composition of capital through its outward extension and to
better its rentability through importation of profits from abroad. It is the
value-expansion of the existing centralized capital, however, which determines
the size as well as the character of the world market, and which limits the
capitalization of underdeveloped nations to s... (From: Marxists.org.)
While Marx’s theory of accumulation covers the mixed economy, it seems
to lose its validity for the completely-controlled capitalist economy, i.e.,
state-capitalism or state-socialism as represented by the so-called communist
societies of the Eastern power bloc, where government decisions and economic
planning determine production, distribution and development. These societies
are not the product of a slow transformation from a “mixed” to a
state-directed economy but are the direct outcome of war and revolution. In
practice, they have continued and extended the state-directed war time economy;
theoretically, they regard their activity as the realization of Marxian
socialism. This is somewhat plausible because they... (From: Marxists.org.)
Although often proclaimed as an established fact, the conjunction of free
enterprise and government planning does not really produce a
“mixed” economy. The combination of automatic market relations and
conscious determination of production cannot be more than a side-by-side
affair. In the course of development, one must come to dominate the other; this
means the maintenance of either a competitive or a planned economy. But to
avoid the transformation of the mixed economy into state-capitalism, as we have
seen, it is not enough to curtail its domestic development, for it is no longer
possible to consider the national in isolation from the world economy. The
general trend toward state-capitalism must be halted because the... (From: Marxists.org.)
Lenin’s Marxism did not express the practical necessities of the
modern international, anti-capitalist class struggle, but was determined by
conditions specific to Russia. Russia required not so much the emancipation as
the creation of an industrial proletariat, and not so much the end of capital
accumulation as its acceleration. The Bolsheviks overthrew Czarism and the
Russian bourgeoisie in the name of Marx and by revolutionary means, only to
become themselves a dictatorial force over the workers and peasants. And this
in order to lead them, eventually, by way of intensified suppression and
exploitation, into socialism. Lenin’s Marxian “orthodoxy”
existed only in ideological form, as the false consciousnes... (From: Marxists.org.)
Marx did not envision an intermediary stage between private-enterprise
capitalism and socialism. His rather clean-cut differentiation between
feudalism, capitalism, and socialism made for a certain
“orderliness” and “simplicity” in his revolutionary
expectations. He recognized, however, that his history of the rise of
capitalism pertained solely to Western Europe, and he opposed any attempt to
turn it into “a general historical-philosophical theory of development
valid for all nations, no matter what their historical conditions might
be.”[1] Marx, as
well as Engels, allowed for courses of development different from those in
Western Europe, and for a shortening of the road to socialism for
pre-c... (From: Marxists.org.)
Baran, P. A., The Political Economy of Growth, New York, 1960.
Berle, A. A., Economic Power and the Free Society, New York, 1957.
Berliner, J. S., Soviet Economic Aid, New York, 1958.
Bernstein, E., Evolutionary Socialism, New York, 1961.
Beveridge, W. H., Full Employment in a Free Society, New York, 1945.
Böhmm-Bawerk, Karl Marx and the Close of his System, New York, 1949.
Bucharin, N., Ökonomik der Transformations Periode, Hamburg, 1922.
Burns, A. F., The Frontiers of Economic Knowledge, Princeton, 1954.
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Crosser, P. K., State Capitalism in the Economy of the United States, New York, 1960.
Denian, J. F., The Common Market, New York, 1960.
Deans... (From: Marxists.org.)
