On Fri, 13 Jan 1995 08:54:42 -0800 <[EMAIL PROTECTED]> said: >(quoting me first) >> As far as I can tell, for example, Marx never used the >> "rationality" assumption when analyzing the macro-structure and >> process of the capitalist mode of production in vol. I of >> CAPITAL. That is, individual decision-making is never >> analyzed. > >I think this claim must be seriously qualified. In general, the >relevance of such processes as the production of relative surplus >value depends on the pervasive individual rationality of >choices (such as of technical innovations) which in the aggregate >yield the indicated consequences, and Marx in each case is careful to >discuss the individual logic behind each process or macro-structure >he identifies. After thinking about what I said overnight, I agree that my statement does need to be qualified. Marx did not avoid the maximizing assumption in vol. I of CAPITAL. But his focus is NOT that of usual neoclassical economics. Rather than taking maximization for granted (assuming it in a deductive system), he delves into the _social origin_ of maximization. The institutions of capitalism give rise to behavior in which a certain class of individuals lust after surplus-value etc. He starts with the macro-structure and process, dealing only with individual cases (the cotton-textile industry, etc.) as exemplars of this macro-level institution. (It's akin to Alchian's story of competition, in which profit-maximization arises not because the economist assumes it but because the Darwinian process imposes it.) At one point in vol. I, Marx does talk about the process of competition and technical change (in an abstract industry). But he also makes it clear that his discussion is out of place in the line of argument he is presenting: "While it is not our intention here to consider the way in which the immanent laws of capitalist production [what I have termed the macro-structure and process of that system] manifest them- selves in the external movement of the individual capitals, assert themselves as the coercive laws of competition, and therefore enter into the consciousness of the individual capi- talist as the motives which drive him forward [something which he was supposed to discuss in vol. III], this much is clear: a scientific analysis of competition is possible only if we can grasp the inner nature of capital [the macro-s & p], just as the apparent nature of the heavenly bodies are intelli- gible only to someone who is acquainted with their real motions, which are not perceptible to the senses. Nevertheless, for the understanding of the production of relative surplus- value, and merely on the basis already achieved, we may add the following remarks." [vol. I, p. 433, Viking edition :-)] After which, he describes the diffusion of a technological improvement. It should be noted that there's a big difference between the type of rationality of volume I of capital (the lust for surplus-value) and the kind of rationality more familiar to economists and that appears in vol. III of CAPITAL. In vol. I, the lust is for surplus-value. In vol. III, it is for money profits. People in vol. I face values, whereas in vol. III, they make their decisions in terms of market prices. (Marx's vol. I story of competition, cited above, assumes that values = prices.) This contrast between types of rationality becomes very important for crisis theory, in which individual rationality clashes with societal rationality, even that societal rationality of the capitalist class (i.e., their class interests). >In particular, one readily finds in Volume I of _Capital_ repeated >references to the "rationality" of individual decisions. See in >particular section 2 of Ch. 7, section 1 of Ch. 10, the last part of >Ch. 13, and section 1 of Ch. 25. Since I agreed with Gil's previous paragraph, I am not going to look these up at this point. But one has to be careful. What did Marx mean by "rationality"? Since he never went to econ. grad school, there's a good chance his meaning is different from that of thee or me. In fact, he probably puts some Hegelian spin on the word. I'll have to check it out, when I get some time. BTW, I tried to avoid the unqualified use of the term "rationality" above, because of its alue-ladeness. I think "maximization" is an even better substitute than "consistency." in pen-l solidarity, Jim Devine [EMAIL PROTECTED] or [EMAIL PROTECTED] Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA 310/338-2948 (daytime, during workweek); FAX: 310/338-1950 "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- K. Marx, paraphrasing Dante.