Jim Devine wrote:
me:
The essence of the argument that Gary Dymski and I launch against John
Roemer's theory of exploitation under capitalism is that he sees
"surplus-value" (a.k.a. property income) as merely scarcity rent. I'm
not going to repeat that argument here. Our papers appear in
_Economics and Philosophy_, 7(2), October 1991: pp. 235-275 and
_Review of Radical Political Economics_, 21(3), 1989: pp. 13-17.
John V. writes:
Sorry, cannot comment; I live too far away from a univ. library to read them
and they're not available to me online.
Sorry. I'll have to put them online.
In a nutshell: Roemer's assumption was that capital goods are scarce,
so that their owners receive scarcity rents. They are able to get
these because of unequal exchange from workers.
Our view, on the other hand, is that surplus-value arises in
production, a venue that Roemer does not examine, not via
redistribution in exchange. (It's only after it's produced that it can
be redistributed.)
FWIW, I disagree with both viewpoints; but more so with yours than with
Roemer's. There are a number of quite fundamental aspects to this that
need to be resolved before a logical solution can be arrived at. The
first of which is: at what point in time is value determined, in order
to even be able to speak of "surplus-value". Although I'm not aware of
any internal contradiction in Marxian (value) theory, its integrity
stays intact only as it applies to a command economy, where an inherent
resolution of supply and demand can be said to have occurred already in
the abstract; or conversely, in the conclusion (through M-C-M') that a
capitalist market economy (i.e. a distributional one, thus imperatively
requiring a unit of account) is inherently unstable and its values can't
be determined as such.
It seems to me that Marxism would be trying to have it both ways if the
self-determination of its value concept, coming into being at the moment
capital goods/commodities are produced, is applied to a capitalist-run
economy _in terms of its distributional unit of account_, as if this
were a valid observational point of departure in static equilibrium. For
in that case, when, where, how and why does a disequilibrating thrust
enter the picture? My own way out of this dilemma is that the power to
pre-allocate cannot determine value, as investments are worth only as
much as _others_ will substantiate they are _over_ time; determinism in
terms of a unit of account is futile, when output can be spurned.
So my interpretation of your stance is: at whatever given distributional
quota, value is a pre-determined quantity; (i.e.) capitalists will with
glee mop up all the surplus capital goods/commodities output they've
been able to usurp from workers, before distribution takes its course.
How would this differ from supply-side argumentation, Say's Law, or GET
for that matter? So far there seems to be a self-contradiction in your
approach. Value is either self-determined, or determined in terms of a
unit of account after (re)distribution has entered the picture; it can't
be a mix of both.
Given that Roemer isn't talking in terms of a command economy, I agree
with him that the determination of capital goods value, cannot be
considered to have occurred before (re)distribution. I'm going a step
further moreover, in that its determination doesn't even occur ahead of
derivative retail commodity distribution. So, while rent receivers can
_set_ whatever "scarcity" rents they want, an aggregate return in terms
of its unit of account, will only be in the offing as far as these same
capitalists will spend directly, on the retail level; as the income of
workers, the costs of which having been passed on through all pertinent
intermediate economic levels, all cancel out on that same retail level,
_regardless of its distributional quota_ (with retailers having assumed
both these accumulated rents and costs as a condition of doing business,
in advance of resolving returns coming in). It is the non-satiation by
rent receivers for produced output that determines the value of all
capital goods. IOW, its intrinsic value (return on investment) is
limited to the non-inflated amount that rent receivers care to apply to
their standard of living.
So, because the values of "scarcity" rents are determined on the demand
side, the term itself becomes a misnomer. A distributional economy ruled
by double-entry bookkeeping principles and solvency requirements, does
not impose ex ante limits on rents, whatever name they are being given.
If the capitalist setting of these rents, equals capitalists' needs for
a resolution in terms of their augmented standard of living, the system
will be stable. If these rents thereby deprive workers as well as
entrepreneurs of both a usefulness towards society, in the form of
(self-)employment, and/or an equitable sharing of living-standard
output; it's time for authority to step in and levy appropriate taxes to
nullify its effect and substitute government jobs for spurned private
sector ones.
In a similar vein, (and in conformation with the apparent consensus in a
different thread) such taxation is also to be levied when resource
depletion becomes problematic and needs countering; in which case
scarcity does enter the nomenclature in a valid way. The proceeds of
these taxes could provide income, either to those involved in
resource-lean output e.g. the arts, or by allowing a lower taxation rate
for the less fortunate.
Second, it's not the scarcity of means of production (capital goods)
that's crucial, as much as the non-scarcity of labor-power (the
reserve army of labor), which motivates workers to produce
surplus-value.
While "the non-scarcity of labor-power" will no doubt set the initial
distributional quota, the determination in the aggregate of _return
seeking_ charged rents is conditional upon the direct spending of rent
income; the mechanics of which occur dynamically bit by bit over time,
as explained before in a different thread. Motivation by workers in a
_non-command_ economy doesn't determine anything. If all workers would
consent to being paid the near starvation wages, that some multinational
agro-businesses are getting away with at present, it would still be the
direct spending of capitalists on the retail market that would determine
what you call surplus-value. So wouldn't you agree that since this great
immiseration of the masses, could not possibly bear any relationship to
what capitalists would gain; this gedankenexperiment has all it takes to
prove that costs and profits can only be inferred as being independently
determined? BTW, all of this doesn't seem to be that much different from
Kalecki's famous dictum that workers spend what they get and capitalists
get what they spend; so why couldn't you accept it?
Roemer, following the mislead of General Equilibrium
Theory, assumes that labor-power is never scarce.
??? Don't you do the same? (see prev. line above) What's the difference
between your "non-scarcity of labor-power" and Roemer's "labor-power is
never scarce".
All unemployment is
voluntary for him, so he can apply Say's Law without making that
assumption clear. (So much for mathematical rigor!)
When you hold the view that in a _non-command_ economy "surplus-value
arises in production", I fail to see why all of this doesn't hold for
you as well; please enlighten me.
Third, it's not the scarcity of means of production that's crucial,
but instead the capitalist control over the accumulation process,
which keeps labor-power abundant. (Following GET, Roemer does not
seriously consider the role of time.)
"Capitalist control over the accumulation process" involves a bunch of
loaded terms; the definition of which deciding whether or not I agree,
that it "keeps labor-power abundant". But even if I'd fully agree, your
"surplus-value arises in production" does not seriously consider the
role of time either.
Fourth, the capitalist exploitation process assumes that state
coercion enforces capitalist property accumulation rights and that
workers are disorganized and not class conscious. That condition may
not apply forever.
No argument here.
Obviously, there's more, but I can't stuff it in a nutshell.
And a pretty big nutshell it was. Now it's up to you to plug its holes;
or of course take a shortcut and tell me that I'm full of it, because...
John V. had asked:
... Is there anybody on this list who doesn't equate capitalism with
free-enterprise?
me:
To my mind, "free enterprise" is only a slogan, essentially the same
as "laissez-faire." It means "allow profit-seeking businesses to do
what they want." In practice, it involves subsidies when businesses
get themselves into trouble. (This is especially true when the
businesses have good political connections.) This is not the same as
capitalism _per se_, which might be state-managed instead, as in
Japan. In that case, businesses have to follow a lot of rules and
regulations, while (of course) they usually receive subsidies when
they get into trouble.
John:
To my mind, "free enterprise" is much more than a slogan. It defines
enterprise to be operating, free from artificially induced powerful forces
that can inhibit a clearing of the market and reproduction in full.
aren't enterprises artificial creations?
Isn't the economy an artificial creation? Where do you draw the line? I
base mine on a set of three axioms; alluded to in a previous thread and
further elucidated in my "Outline" available on my website.
Once it is recognized that we cannot do without economic planning, we
have two choices; entrepreneurial (with or without input from workers'
committees) or central. I maintain that in terms of efficiency, and
without undue powers of capitalism, the former far outweighs the latter;
and that this unique skill at the enterprise level can and has resulted
in enjoyed lifestyles, well above those in centrally planned economies.
Would you prefer the latter?
what would they do without
corporate law? without police protection? without the armed forces?
In my model, the costs associated with the incorporation and maintenance
of these services become, through levied fees and taxes, embodied in
retail output and thus resolvable by the final recipients of pertinent
income. Artificiality enters the polemic when activities by empowered
agents, expressed in obtained super fees and/or asset inflation, leads
to non-resolvability issues in real terms; whereby it parries the second
of my axioms.
Non-resolvability is the bane of capitalism. It affects capitalists and
non-capitalists in terms of a useless asset inflation, putting in place
the potential condition for economic collapse; while moreover affecting
non-capitalists by stagnating or even deteriorating standards of living,
and/or conditions of involuntary unemployment.
so you define "free enterprise" as market-clearing?
No, see above (and below).
A better term
would be "unfettered markets."
If defined in conformation with the above, I could live with that too.
So are you saying that a country that
doesn't let prices adjust to clear the market isn't capitalist?
That condition is neither sufficient nor necessary to define it as such.
There is a whole range of output prices, under which a resolution in
real terms can occur. So within those parameters, the adjustment of
prices in order to clear the market is perfectly legit. This neither
makes it capitalist, nor necessarily non-capitalist. As said before, the
criterion is non-resolvability.
The US
wasn't capitalist when Nixon imposed wage and price controls in 1971?
Strawman, as above. Nixon's response reflects the paucity of corrective
measures open to authority under capitalism's rules. Without me knowing
the particulars of the (1971) situation, he probably acted as well as
was possible under the circumstances. However in my non-capitalist model
runaway demand-side pull inflation, if not entirely out of the question,
is at least highly unlikely to occur. An increase in worker remuneration
would in the main be limited to automatic participation in productivity
gains, through profit sharing schedules; with government, and other not
for profit, workers getting annual pay raises to match.
I don't know what "reproduction in full" refers to.
Market clearing per se is not a sufficient condition to safeguard a
healthily progressing free-enterprise economy; solvency is just as
vital. A market could conceivably be cleared at firesale prices, leaving
massive unemployment in its wake.
I presume you're
referring to Marx's schemes describing simple and expanded
reproduction of capitalism.
I'm unfamiliar with Marx's description of those schemes.
The full expanded reproduction and even
the full simple reproduction is often blocked under capitalism, as
when we have recessions.
That's indeed what I mean too.
That doesn't make the economy non-capitalist.
??? Again, the criterion is non-resolvability under capitalist rules.
"Making" an economy non-capitalist would depend on authoritive measures
to illegitimatize, or fee burden the capitalist activity of property
value inflation to the extent that this would at least minimize such
inflation. For, while actual asset "values" have no bearing on day to
day economic functionality, only their returns and what asset holders do
with them is significant; while asset inflation is going on, it extracts
purchasing power from the real-goods economy, making it non-resolvable
to the same extent, as well as building up the potential for economic
collapse.
John had written:
Capitalists are as much the enemy of entrepreneurs as they
are of workers. The overwhelming majority of start-ups fail, causing
many of
them [entrepreneurs?] to lose their home and more; all due to the evil
tactics of
capitalists, extracting purchasing power far beyond their own embezzled
lifestyle.
me:
I don't get the distinction. I follow Schumpeter to see entrepreneurs
as a species of "capitalist," i.e., those who introduce some new
product or process.
John:
Capitalists make use of the license, given to them by conventional
economics, to extract income from what is deemed to be the positively valued
entity called capital.
It's not conventional economic theory or economists who give them that
license. It's really the system of capitalism as a whole -- backed by
the coercive state -- that gives individual capitalists a return
simply from owning property.
As long as any conventional economic theory cannot make it indubitably
clear, that it is not any particular owned property that can as such be
accounted for as a source of wealth; but that this source instead is its
equivalence in terms of countless fractions of _other_ properties; such
theory will set itself up as an exculpator of owned property by whoever.
And thus provide capitalists with the rationale that, investing being an
equilibrium event, they can push the economy towards betterment.
Most of them aren't pure _rentiers_ by
the way (especially because they can pick the jobs they want). They
add high salaries and benefits to the return on ownership.
No argument here again.
Entrepreneurs understand that in order to extract
such income, they will have to go into debt first. They are a different
species operating in the same economic theater....
That doesn't conflict with Schumpeter, though (like him) I'd add the
role of innovation.
Although I'm no fan of Schumpeter, I don't have a problem with his
understanding of the role of an entrepreneur.
me:
That new product or process may not be a good
thing: whoever introduced "crack" cocaine was an entrepreneur.
John:
That's one reason why there are laws against such entrepreneurship. It's
high time for electronic money to replace cash, and that type of enterprise
could thus be extinguished.
You think? no-one ever manipulates electronic money in an illicit way?
what about Enron?
Apples and oranges comparison. As I see it these crimes take place on
different levels. 1. An illegitimate product distributed thanks to a
legitimate means of exchange. 2. A (more or less) legitimate product
distributed thanks to an illegitimate means of exchange. Mark to market
valuation would in my model probably be considered to be as criminal as
counterfitting.
In any event, laws are often broken, often even by the folks who are
supposed to be following and enforcing them. The CIA, for example, has
been involved in illegal drug smuggling.
I condemn all that just as much as you do, but fail to see it as an
argument against entrepreneurship.
Entrepreneurs are gatherers of skills required to produce output, in the
attempt to ultimately augment society's standard of living...
their goal is not to augment society's standard of living, except of
course, their small piece of that society.
How would the gist of your argument be different when applied to workers?
That's what's called the profit motive.
I disagree with your judgment. There is enough empirical evidence to
suggest that not only human beings but even many domesticated animals as
well, are truly motivated by being useful to others. Getting something
for nothing requires a perverted mind; with capitalism, in the way I see
it (so not only by your definition), having played no small part in this
deviation from the norm.
Whether or not the benefits trickle down to the rest of
us depends on the political economy (the country and the era).
Nowadays, the trickle-down in the US seems to have been stopped
completely.
We both have different opinions with respect to trickle-down as well. In
my circuitously determinative model it follows deductively that trickle-
down is entirely bogus. As far as I'm concerned you're giving it way too
much credit in your linear model.
BTW, I should mention that there are other kinds of entrepreneurship
besides capitalist entrepreneurship. The brilliant sociologist C.
Wright Mills pointed to the "new entrepreneurs" who rise to the top by
jumping between the corporate and government bureaucratic ladders.
(Henry Kissinger is an example here.)
You claim that lobbyists and their ilk are non-capitalists?
We can also point to
entrepreneurs in labor unions, such as Andy Stern. Genghis Khan was an
entrepreneur among conquerors (and brilliant too). Talk about creative
destruction!
Outside of my entrepreneurship realm.
Thanks for having read all the way to the end,
John V
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