====================================================================== Rule #1: YOU MUST clip all extraneous text when replying to a message. ======================================================================
Andy Pollack wrote: “It's shockingly explicit rejection of Marxist economics, both in dismissing any importance for profit rates, and for justifying a focus on appearance rather than essence…” I think this is exactly the point. Monopoly capital, though I would say this is already latent in ‘The Theory of Capitalist Development’, is, at the root, a neoclassical rehashing of an underconsumption theory (couched in Marxist vernacular) which Marx did already have in consideration in his investigations, (contrary to the myth that he had not been able to observe this stage, a myth which dates back to Engels,) and had consistently opposed, precisely, by writing Capital and not making monopolies the determinant of accumulation. As Marx would unequivocally write in the Grundrisse, “Competition executes the inner laws of capital; makes them into compulsory laws towards the individual capital; BUT IT DOES NOT INVENT THEM. It realizes them. To try to explain them simply as the results of competition therefore means to concede that one does not understand them.” So the theory of monopoly capital takes the ‘apparent’ form of the market, whether this be competitive or not, etc., and places it, in a completely abstract way, if I may be allowed the impudence, as the determinant of accumulation. What one has to do is the reverse, one must start with the essence of the laws of accumulation to then explain their form; this is what the dialectical method does as the reproduction of the real concrete in thought, as opposed to the abstract ideal models which take ideas for reality. I translated a little piece by Juan Kornblihtt, an Argentinean researcher who writes for the group ‘Razón y Revolución’, a while back, which touches on some of these issues (it might not be a completely accurate translation). I don’t necessarily agree with the whole of it, or at least with how some of the things are put, that is probably due to the constraints of a magazine format as well, but, in broad strokes, it’s a much better approximation to how empirical data support Marx. There is also the work of Anwar Shaikh, Willi Semmler and other researchers like Juan Iñigo Carrera whose work is still not in English. I won’t have much time to reply during these days, but because I think it’s a crucial discussion and because I can’t wait to get accused of ultra-leftist sectarianism, I wanted to lay some things out… Interesting though, that expert Marxists like Dawson should feel that, at the time of a crisis of generalized overproduction, the best thing the left can do is to forget Marx’s main scientific achievements. (Note: for some reason my posts’ format is messed up, so I suggest putting this in word for better readability.) The theory of monopoly capital and the supposed end of competition Juan Kornblihtt It’s almost commonplace to lay blame on the big monopolies of being the cause of the evils provoked by capitalism. In this article, we will discuss this idea. Not because the capitals with the highest concentration deserve any defense, but because the idea that their power resides in their monopolistic character leads to confusions regarding the functioning of capitalism, and, in large measure, how to combat it. The north-American economist Paul Sweezy is one of the most influencing intellectuals in Marxism and the one who gave theoretical justification to the idea that the domination of monopoly capital replaced competition [1]. His theories are present in a large number of traditional parties of the left in all their variants, from Maoists to Trotskyists. The debate could seem minor and be reduced to subtleties. Nevertheless, what is being hidden behind attributing the handling of the economy to the monopolies is the absolute transformation of Marx’s theory: the end of competition between capitals implies, in the last instance, to forget the theory of value. A position which is against the data afforded by reality: permanent increase in the productivity of companies to win markets, the disputes through price lowering for different products, the persistence of various companies including in those branches with the highest concentration, and the historical tendency of the falling rate of profit. FAREWELL COMPETITION Marx pointed out that in capitalism, contrary to other modes of production, exploitation is realized in economic and not [in directly, LK] political form and that this was the key to the competition between capitals. Starting from the phase of primitive accumulation and that of the bourgeois revolutions, there had taken place an expropriation of the means of production resulting in those who owned them, on the one side, and the workers, on the other. Given that they are all formally equal in the eyes of the law, the bourgeoisie cannot appeal to the extraction of the surplus product with brute force as it occurred under feudalism. It is the market which presents itself as the great articulator of society. Companies sell their commodities and workers, their capacity to work. The great discovery of Marx was that behind the buying and selling, apparently egalitarian and democratic, was hidden the expropriation of wealth by the bourgeoisie. The worker sells his/her labor power for its value, that is, the socially necessary labor time to reproduce him/herself and his/her family. Thus, the capitalist, by acquiring this labor power, obtains, gratis, a labor greater than what it was paid for. It is there where surplus value is originated. But the capitalist cannot sit awhile, they must sell the commodity to obtain the profit produced by the worker. That is to say, he must return to the market. There, he/she finds he is not alone and must compete against other bourgeoisies in the same situation, to settle who sells the most. To win, the key is to make the product as cheap as possible. Therefore, the capitalist does not set the price whimsically. This must be lesser than that of his/her competitors, but proportionally greater or equal to the time to produce the commodity. In this way, competition forces him/her to impel the reduction of time which takes to produce each commodity by way of an increase in productivity. By doing this, he/she sells the commodities cheaper although above their cost, thus obtaining a larger profit rate than his/her competitors. But this cannot last because new investors will invest in the production of the same commodity with the same or a better technology, precisely because they are attracted by that higher profit. This forces all of them to lower the price to the limit of its value, the minimum which gives them the mean profit. This is the way Marx showed that competition was the mechanism by which prices were established and, in the last instance, how the law of value was expressed. The consequence is a permanent war between capitals in the hunting for profit. To achieve their goal, they must increase their productivity and at the same time destroy their competitors. This is the form in which a permanent development of the productive forces is produced with the concomitant reduction of the number of capitalists, due to the destruction or annexation between themselves. This process was synthesized as ‘concentration and centralization.’ [2] The whole of capitalism is sustained, therefore, in a structure of competition between capitals. As we pointed out, this competition develops in a process of permanent war. A process which, by the end of the 19th century and beginnings of the 20th, expressed itself with more virulence, leading to the rise of movements propelled by the very relegated sector of the bourgeoisie which seeks to avoid their own destruction by larger companies. Marxism, influenced by this climate of the epoch, nurtured itself by numerous investigations promoted by the weaker bourgeoisie and saw in the new larger corporations the end of competition and the coming of monopoly as a qualitative change in the dynamics of capitalism. In the classical authors, like Lenin or Bukharin, this change was trying to be reconciled with the law of value, but it will be Sweezy who will take the logical conclusions to their extreme. FAREWELL VALUE Sweezy, along with Paul Baran, in their book ‘Monopoly Capital’, elaborated an explanation of an economy dominated by monopolies. According to their hypotheses, when competition reached its limit, each individual firm could set their prices without limits, beyond the constraints of demand. Unless they had an altruist spirit, the capitalists would not lower their prices any longer; on the contrary, they would raise them in a permanent way, only limited by consumption. The result is that the determination of prices by value would be annulled. This would then break up with what Marx called the exchange of equals. For Marx, there is no robbery in the market, but buying and selling of commodities for their value. With monopoly, this would end, as would end also the extraction of profits through the extraction of surplus value. On the contrary, for Sweezy the monopolists could obtain more returns by applying the direct force granted to them by their monopolistic presence in the market. Thus, he developed a theory of surpluses which would replace surplus value: “…we prefer the concept of surplus to the traditional one of surplus value from Marx, because the last one is probably identified, in the minds of the majority of people familiarized with the economic theory of Marxism, with the aggregate of utilities, interests and rent.” (perhaps not verbatim, LK) [3] The concept of surplus implies an extra-economic extraction by the countries where the monopolies resided from the less developed countries through imperialism, but without referring to human labor as their principal source. This implies a fundamental change: the end of economic exploitation, replaced by an extra-economic exploitation, ruled by political power in a direct way though the looting of riches. The disappearance or attenuation of competition implies, for Sweezy, another logical consequence: the end of the drive of capitalists to innovate. Without any pressure to lower their prices, there is no pressure to reduce the time of production. Therefore, technological change is no longer immanent to the dynamic of capital and is reduced to the desires of the capitalists: if they want more profits, they will innovate (as long as the costs of the new technology are not greater to the profits they obtain.) With the end of value, there would also be an annulment of the tendency of the profit rate to fall, provoked in the increase of technology which replaces human labor. With innovation finished, a stage of chronic stagnation begins where the economy is increasingly regulated by monopolies. This does not lead to a planned society, but crises are attenuated. These conclusions opened the doors to reformist positions, with the illusion that, by limiting the power of monopolies there could be a capitalism “for everyone”, both for workers and for small and medium industrial capitals. FAREWELL SCIENCE As Sweezy himself acknowledged, the concept of monopoly capital was constructed as an ideal model [4]. The problem is that empirical studies show that the conditions of monopolistic domination are not realized and even less, their consequences. In the first place, the supposed centralization of capital is not absolute. On the contrary, if we take the principal branches of production, as for instance the automotive sector, we can observe that there is a strong and permanent competition between different makers on a global scale. A similar situation can be observed in the metal or food industries. There are thousands of examples. Even in those braches in which there is a consolidation of monopoly, the tendency is that, after a determinate period, this disappears [‘withers’ would be more appropriate, LK]. For example, the telephone service in Argentina counted with monopoly rights established by the state, after privatizations. However, with these high profit margins, cellular telephone companies appeared which impelled competition mocking the monopoly. Neither can we observe an absolute increase in prices, another strong premise of Sweezy. On the contrary, a large number of products cost less than in the past. It suffices to look at the price of computers, or even more those of cell phones just a couple of years ago. There are increases of prices in certain raw materials or oil, where in effect there are monopolies of the land, but not in the average of industrial prices. The lowering of prices leads us to observe what is happening with productivity and verify if (socially necessary) labor time still determines prices, as Marx said, or if one must look for an explanation elsewhere. In this aspect, investigations show that the stagnation in investment prognosticated by Sweezy does not hold. Different researchers have measured the increase in productivity in terms of the incorporation of machinery, which in effect can be verified not only in the general measures of the global economy [5], but also in the study of particular braches of production. For example in the production of shoes, candy, textiles, flour or metals show transformations in the production process with the objective of reducing the portion of living labor and increasing relative surplus value. This increase in productivity questions the chronic stagnation. This can be verified by observing the evolution of the profit rate. Monopoly for Sweezy implied a stoppage to its fall. However, the increase in machinery over human labor impelled a tendency to its fall from the 50’s to today of more than 50% depending on the measurement one takes. [6] Empirical investigation shows that the idea of domination by monopoly capital must be questioned. It can exist in certain braches, at certain moments, but it does not explain the dynamic of capital. And yet, it has been assumed by a large part of the left without questioning. This is foreign to Marx’s scientific method, for it substitutes investigation of concrete conditions of capital accumulation by a mechanical utilization of ideal types, only supported by authoritative quotes. On the contrary, what a program for revolution requires is the scientific analysis of the reality in which one is to intervene. [1] Véase Baran, Paul y Paul Marlor Sweezy: El capital monopolista, Siglo XXI, Buenos Aires, 1969. [2] Para una lectura didáctica que amplíe los conceptos resumidos en este párrafo, ver: Shaikh, Anwar, Valor, acumulación y crisis, Buenos Aires, Ediciones ryr, 2007 o sino remitirse directamente a Marx, Karl: El capital, Siglo XXI, México, 1998. [3] Baran y Sweezy: op.cit., p. 13, cita al pie nº 6. [4] Sweezy reconoce el uso de metodología de corte weberiana antes que marxista: “Mediante la construcción y análisis de modelos de segmentos o aspectos de la realidad que se estudia se llega aquí a una comprensión científica. El propósito de estos modelos no es reflejar la imagen de la realidad, ni incluir todos sus elementos en sus medidas y proporciones exactas, sino más bien separarlos. (…) El modelo es y debe ser irreal en el sentido en que la palabra se usa más comúnmente.”, Baran y Sweezy, op. cit., p. 17 (el resaltado es nuestro). [5] Véase, entre otras, las mediciones de Shaikh, Anwar: op. cit., p. 448 o Gerard Dumenil en http://www.jourdan. ens.fr/~levy, para los EE.UU. Mediciones que también se observan, aunque en menor escala, para la economía argentina, ver: Iñigo Carrera, J. La formación económica de la sociedad argentina, Imago Mundi, Bs. As., 2007. [6] Véase Shaikh, Anwar: op. cit., p. 450 y Moseley, Fred: “Teoría marxista de la crisis y la economía de posguerra de los EE.UU.”, en Razón y Revolución n° 14, primavera 2005. _________________________________________________________________ Hotmail: Powerful Free email with security by Microsoft. http://clk.atdmt.com/GBL/go/171222986/direct/01/ ________________________________________________ Send list submissions to: [email protected] Set your options at: http://lists.econ.utah.edu/mailman/options/marxism/archive%40mail-archive.com
