Re: The method of Marxist economics

[Jim Devine]

Charlie wrote:
>Gil Skillman asked where my book From Capitalism to Equality "address[es] 
>my argument" made several years ago. The answer is, nowhere directly, 
>since the book is about economic reality, not a debate of economic theories....

The debate that happened years ago on pen-l (back when I started 
participating), if I remember correctly, concerned Gil's argument that Marx 
made a mistake when he asserted that surplus-value can't be appropriated by 
capitalists merely by exchange.

Again if my memory serves me well, Gil sees M-M' (M' > M) as possible on 
the macroeconomic level even without M-C ... P ... C'-M'  (an exploitative 
production process) somewhere in the system, so that a capitalist can 
garner profits even without any subjection ("subsumption") of workers in 
the production process. In my view, on the other hand, Marx was right: if a 
pure money-lender or a pure merchant capitalist is able to get a profit, it 
represents a _redistribution_ from either an industrial capitalist who 
organizes M' > M in his or her production process (using direct supervision 
and the threat of the reserve army of the unemployed) or from some 
non-capitalist dominator who uses overt force to extort surplus-labor from 
the direct producers. The cases of usury or merchant capitalist activity 
that involve the actual production of surplus-value aren't pure cases, 
since they are mixed with either capitalist or non-capitalist subjection 
and exploitation of workers. In early capitalism (and even today in many 
places), usurers, merchants, and political functionaries form a power bloc 
(or are united in the same individual) so that they can put enough 
extra-economic force on the direct producer to extort the production of a 
surplus-product even without direct supervision. (If you don't pay the vig 
to the usurer, his torpedo Vinnie will come apply extra-economic force to 
your legs or your house will burn down "by accident.")

I present most of my argument in a somewhat neoclassical way in Bill 
Dugger's book, INEQUALITY: RADICAL INSTITUTIONALIST VIEWS ON RACE, GENDER, 
CLASS, AND NATION (Greenwood: 1996). Rather than get into the details, I 
think that interested people should read that.

Though I think Marx's method is highly superior to NC economics for 
understanding how a societal system like capitalism works, I think that his 
theory can be explained in a neoclassical way, as in the article just 
cited. The difference is that Marx starts with the view that capitalism is 
an interconnected totality (a method well-explained by Levins & Lewontin, 
BTW, in their DIALECTICAL BIOLOGIST), while the NC types start from the 
individual level, with individual decisions and almost always go no 
further. (Even when they do go further, the parts -- the individuals -- are 
presumed to be more fundamentally "real" than the whole. In jargon, 
individuals are "ontologically prior" to the whole.)

I think one can understand individual decisions under capitalism pretty 
well if one first understands that such decisions within the context 
explained in volume I of CAPITAL, the big picture of capitalist social 
relations. In volume III of CAPITAL, as in much of Charlie's book, 
common-sense concepts of individual choice are applied, such as those 
behind the tendency toward equalization of profit rates between sectors and 
even opportunity cost. One of the reasons I like Charlie's book is that he 
combines the levels of the totality and the individual well. (BTW, I should 
post my disagreements with that book. But who has the time to re-read it?)

If I understand him correctly, Gil follows the methodological individualism 
of the orthodox economists, the NC school. Thus, he argues that Marx 
commits the "fallacy of division" (that of reasoning from the property of 
the whole to properties of the parts). I think that even though Marx was 
not as clear about his method as he should have been, he was deliberately 
talking about the whole or totality of capitalism in volume I, so that when 
he refers to individual capitals there, he's talking about an average or 
representative capital that's representing overall class relations. That 
is, he's not actually talking about an individual capital, so he can't fall 
for the fallacy of division. On the other hand, I think that NC economics 
and Gil suffer from the fallacy of composition (that of reasoning from the 
properties of an individual to those of the societal totality).

But I don't think it's worth our time to dwell on the debate (especially 
when I have to $#%^*@!! grade exams). The important thing here is that 
different methodological commitments lead to different understandings. I 
had hoped that Charlie's book was clear enough that Gil would be able to 
transcend the methodological gap, to be able to see how capitalism can be 
analyzed in a non-NC way.

BTW, Justin, this is one of the reasons why issues of method are important.

Jim Devine [EMAIL PROTECTED] &  http://bellarmine.lmu.edu/~jdevine