So, this talk on Capital I mentioned. Since the audience had previously looked at Adam Smith’s Wealth of Nations and David Ricardo’s On the Principles of Political Economy and Taxation, and were mainly interested in Marx as an economist, I decided to focus on two things. First, to relate Marx to Smith and Ricardo, and second, to defuse a common myth about Marx’s theory of value – that he believed commodities exchanged at a rate based on the quantity of labour expended in producing them. Here’s the first part of what I said. (I’ll post the rest as I get a chance to write it up.)
Marx admired Ricardo much more than Smith. In Theories of Surplus Value he writes:
Smith himself moves with great naïveté in a perpetual contradiction. On the one hand he traces the intrinsic connection existing between economic categories or the obscure structure of the bourgeois economic system. On the other, he simultaneously sets forth the connection as it appears in the phenomena of competition and thus as it presents itself to the unscientific observer just as to him who is actually involved and interested in the process of bourgeois production. One of these conceptions fathoms the inner connection, the physiology, so to speak, of the bourgeois system, whereas the other takes the external phenomena of life, as they seem and appear and merely describes, catalogues, recounts and arranges them under formal definitions. With Smith both these methods of approach not only merrily run alongside one another, but also intermingle and constantly contradict one another. [Chapter 3]
In other words, Smith had some understanding of the inner logic of capitalism, but mixed it up with endless description that didn’t explain anything. To see what Marx was talking about, see Smith’s ‘digression on silver’, which takes up a large chunk of Book One, in which he traces movements in the price of silver relative to other goods and to gold over hundreds of years, and in which exceptions pile up much faster than rules.
Ricardo, on the other hand, got much respect from Marx. In fact many 20th-century economists have seen Marx as basically an extender of Ricardo. Paul Samuelson famously dismissed him as a “minor post-Ricardian”. Schumpeter, on the other hand, called him “Ricardo’s only great follower”:
Ricardo is the only economist whom Marx treated as a master. I suspect that he learned his theory from Ricardo. But much more important is the objective fact that Marx used the Ricardian apparatus: he adopted Ricardo’s conceptual layout and his problems presented themselves to him in the forms that Ricardo had given them. No doubt, he transformed these forms and he arrived in the end at widely differing conclusions. But he always did so by way of starting from, and criticising, Ricardo – criticism of Ricardo was his method in his purely theoretical work. [History of Economic Analysis, 1954: p. 390]
What did Marx like so much about Ricardo? Obviously, first, that Ricardo did not assume a harmony of interest between the classes, and foregrounded in his analysis the distribution of the economic product between them. But, more broadly, Marx admired Ricardo’s method, his rigour:
But at last Ricardo steps in and calls to science: Halt! The basis, the starting-point for the physiology of the bourgeois system—for the understanding of its internal organic coherence and life process—is the determination of value by labour-time. Ricardo starts with this and forces science to get out of the rut, to render an account of the extent to which the other categories—the relations of production and commerce—evolved and described by it, correspond to or contradict this basis, this starting-point; to elucidate how far a science which in fact only reflects and reproduces the manifest forms of the process, and therefore also how far these manifestations themselves, correspond to the basis on which the inner coherence, the actual physiology of bourgeois society rests or the basis which forms its starting-point; and in general, to examine how matters stand with the contradiction between the apparent and the actual movement of the system. This then is Ricardo’s great historical significance for science. [Theories of Surplus Value, chapter 10]
Ricardo, then, was no mere describer, like Smith. He explained, he got at the hidden mechanisms (well, “physiology”) of the economy, and did not waste time with surface appearances. In fact, Marx thought that most of what was worthwhile in Ricardo’s Principles was in the first couple of chapters, and the rest was just application anyone could have done.
So Marx took Ricardo’s style of analysis as a model to some extent, though he was still a student of Hegel and more dialectical in his method – which, if nothing else did, would make Capital a very different work to Ricardo’s (and which economists often find incomprehensible). What Marx appreciated in Ricardo was logical rigour and a preoccupation with the inner determinants of economic life, which would not be immediately visible in surface phenomena. Marx certainly did not want to be a Smith, a cataloguer.
When you start to read Capital you can see that desire for rigour. (Also you see a tendency for verbosity – as Marx wrote to Engels on June 18, 1862, “I am stretching out this volume, since those German dogs estimate the value of their books by their cubic contents.”) You get the commodity, use value and exchange value, an abstract conception of money, and so on. But very quickly things get messier. History starts to intrude. Before long you are reading chapters on technological advance in the weaving industry, legislation on child labour, the battle over the working day.
By the end of Volume One, you are reading a history of the transition to capitalism in Britain: land enclosures, sheep eating people, the Poor Laws, etc., etc. By this point, Marx’s own work is looking much more like Adam Smith’s: sociological description, historical movement, escaping the conceptual net of any rigorous definition of value.
If you go on to read Volumes Two and Three, you realise that things do not get any tidier, although things are certainly drier than in the first. Marx is continually trying to expand the reach of his concept of value, constantly reframing it to explain more and more dimensions of capitalism. But in doing so, he is always going off on tangents, opening up whole new problems to solve others. In fact, many of the most important and enduring insights in Capital come from the tangents and the observations rather than from what Marx woud have considered adequate and finished.
Of course, Capital never was finished. Volumes Two and Three were pieced together by Engels from sometimes fragmentary manuscripts. In the Preface to Volume Three, Engels complains:
The real difficulty began with Chapter 30. From here on it was not only the illustrative material that needed correct arrangement, but also a train of thought that was interrupted continuously by digressions, asides, etc., and later pursued further in other places, often simply in passing. There then followed, in the manuscript, a long section headed ‘The Confusion’, consisting simply of extracts from the parliamentary reports on the crises of 1848 and 1857, in which the statements of some twenty-three businessmen and economic writers, particularly on the subjects of money and capital, the drain of gold, over-speculation, etc., were collected, with the occasional addition of brief humorous comments.
Capital is, then, a sprawl. It is not a complete or internally consistent theory of capitalism. Marxist economists have shown that internally consistent, insightful theories can be derived from it, but to the extent that they are internally consistent, they are incomplete. Marx did not find in ‘value’ a unified field theory of bourgeois society, nor would he have claimed to, and nor would such a thing be possible. From a modern perspective, Marx has been read as a general equilibrium theorist and as a monetary economist prefiguring Keynes, and both readings have some basis.
David Harvey explains Marx’s approach well, borrowing a metaphor from Bertell Ollman:
It is rather as if… Marx sees each relation as a separate ‘window’ from which we can look in upon the inner structures of capitalism. The view from any one window is flat and lacks perspective. When we move to another window we can see things that were formerly hidden from view. Armed with that knowledge, we can reinterpret and reconstitute our understanding of what we saw through the first window, giving it greater depth and perspective. [The Limits to Capital, 1982: p. 2]
To be continued…