I would be interested in seeing the ideas/assertions in this piece being applied to the process of globalization (privatization of international commons) and the controversy about whether 1) it is necessary and why 2) it does (not) result in any gain for the working class.
Joanna
Jurriaan Bendien wrote:
Rakesh, you wrote:
"Marx's reproduction schema do not show even the possibility of capitalism as an intrinsically stable dynamical system. How could they? They assume a constant OCC, fixed values, annual turnover, exchange at value (rather than price of production)? They are too far removed from the reality of an actual capitalist system to lay bare its laws of motion."
Correct. I think that above all, Marx wanted to show in the second volume "how it is possible" for Capital to dominate the entire economic life of an economic community, and internalise more and more of the conditions for its own economic reproduction (cf. Roman Rosdolsky, The Making of Marx's Capital). In other words, how the relationships, which he had analysed at the level of the enterprise and the labour process in the first volume, asserted themselves at the level of social production as a whole, the interactions between enterprises. The subtitle of the second volume is, in fact called "the process of the circulation of capital" and not, for example, "the process whereby Capital finds its equilibrium" or "the process by which Capital ensures economic growth".
Marx is not trying to find the necessary conditions for total supply and total demand to balance, he is rather seeking to specify the necessary conditions for the accumulation of Capital, when the circulation of money and commodities (commercial trade) invade an entire economic community, rather than exist merely at the boundaries of an economic community, as happened for most of the economic history of trade. Precisely because any economic community is faced with the necessity of producing specific types of use-values (in the first instance, means of production and means of consumption), Marx is investigating how Capital modifies and regulates that process.
A good discussion of the reproduction schemes is also provided by Edward Chilcote, see www.gre.ac.uk/~fa03/iwgvt/files/97Chilcote.rtf+Chilcote+reproduction+schemes &hl=nl&ie=UTF-8
I think that the best way to understand the connection between "economic growth" and "capital accumulation" in Marx's theory is to say that economic growth IS CONDITIONAL on capital accumulation, capital accumulation is the sine qua non, the necessary condition. This formula, or something like this, I think is apposite, because it shows that "economic growth" and "capital accumulation" are not at all the same thing, they are different things. You can have relatively slow growth in real production, and relatively fast capital accumulation, precisely because the capitalist mode of production is a "contradictory unity of the production process and the circulation process", as Marx himself says repeatedly. With the aid of credit and monetary manipulations, and given a high productive capacity (such that a smaller proportion of the workforce produces a larger physical output), circulation processes can become semi-autonomous from production processes.
The implication of this is as follows: Marx describes the basic forms of capital as "production capital", "money capital" and "commodity capital", but it may be that an increasing proportion of capital is tied up in money capital and commodity capital, and Marx says, that this is ultimately purely a question of relative profitability and profit expectations. Rosa Luxemburg said quite correctly that under capitalism, simple economic reproduction is conditional on expanded reproduction, and that the implication of this is, that capitalism requires a continual expansion of the market, and it is in this expansion of the market that she sees the root cause of imperialism. But this side-steps the question: "market for what, exactly" ? A market for money capital, commodity capital, or production capital ?
In fact, this issue is crucial to understanding what has happened in the world economy, where the volume of annual world trade exceeds the volume of "new valued added", and a gigantic mass of capital is tied up in monetary speculation. When Harrod and Domar tried to derive the conditions for a "steady economic growth path" in the 1950s and 1960s, they do not really understand this, because growth in real output and capital accumulation are really separate questions, yet bourgeois economics is unable to treat them as separate questions, because it fails to understand, or hides, the social framework within which these social processes occur. The objective of the owner of capital is not to raise output as such, but to raise output to make more money, and if he cannot make more money from that, he does not raise output, but he takes his money somewhere else, where he can make more money.
This insight enables us to specify another observation: the imperative of the capitalist mode of production is not the maximal expansion of the physical surplus product as such, but the maximal expansion of surplus-value. Physical surplus is expanded only if surplus-value expands, the latter is the incentive for the former. But the physical surplus product might in fact decline, while the total surplus-value increases within certain limits (this is something which you can model mathematically quite easily, by demonstrating the importance of temporal-spatial displacement through credit and foreign trade, and the appropriation of income from the working class when economic growth declines). When Piero Sraffa talks about a "physical surplus", he just confuses this issue, because he fails to grasp the "surplus" as a purely relative, social category subject to class relations, such that financial claims to a share of the social product are determined by the power relationships between social classes, which are founded in production, in production relations, in the private ownership of assets. It is never the case that the product is just produced, and then shared out. The share-out is already determined in production itself, by the private property relations involved.
All of this shows that "equilibrium" has nothing to do with the "price mechanism" as such, but rather with the ownership of private property, and the necessity to produce the means of life and the tools & technology that make life possible. Prices merely mediate the basic relationships which must exist for society to survive and grow (the necessary proportions of production, distribution, circulation and consumption). It is therefore a theoretical fallacy to suggest that "the economy" constitutes the equilibrium, because in so doing, we disappear the social relations which constitute this equilibrium, which is at most only a "relative social stability". Prices and values are merely the means by which we can reveal what those social relations are. For Marx, social order and social change are constituted by the mode of production itself, a specific articulation of forces of production (lincluding labour-power) and relations of production. Anything else is economic determinism.
The overall purpose of Marx's analysis of capitalism is to reveal the social nature of capitalism, in order to make a contribution to the problem of understanding the way in which it can be superseded by socialism. His discussion of the capitalist regulation and modification of necessary relationships required for the production of means of production and means of consumption to balance out is part of that. But if the problem of equilibrium cannot even be understood correctly for what it is, it is impossible to understand how socialism could emerge either.
It is not accidental, by the way, that Marx doesn't consider production prices in the second volume, because production prices constitute precisely the link between production and circulation. The very concept of "cost price + average profit" already suggests that.
Jurriaan
