Reply to James Daly on political economy

Jurriaan Bendien J.Bendien at wolmail.nl
Thu Dec 12 13:12:10 MST 2002


James asked:

I am not an expert on the subject, but can I raise some questions? Didn't
Marx
say a Spinning Jenny (or money) is not capital; capital is capital only
within
a capitalist system -- which is not what Stalin presided over, pace Tony
Cliff.

According to Marx, capital as money used to make more money pre-existed
capitalism (the capitalist mode of production) by thousands of years. It is
only when commodity-economic forms engulf the entire production process of
an economic community, so that labour-power and means of production are
bought and sold, that capital becomes a "factor of production". However,
some writers such as Wallerstein and Gunder Frank do not define capitalism
as Marx does, in the sense of a mode of production, and indeed reject the
concept of mode of production. Consequently they project the existence of
capitalism further back into history than Marx does. They do not sharply
distinguish between the existence of capital and capitalism, in which case,
if there is capital, then there is capitalism in some form.

What Tony Cliff essentially does is to say that "words mean what I want them
to mean". To the extent that state enterprises existed in the Soviet Union
which made (administered) profits and traded according to administered
prices, and to the extent that the working class as a whole did not
effectively participate in economic and political decision-making, Cliff
concludes that the Soviet Union was state capitalist. However, this ignores
that privately-owned means of production were largely eliminated and that
means of production by and large could not be freely traded. Also,
labour-power was partially decommodified to the extent that such "labour
markets" that existed were highly regulated, and part of workers wages was
socialised (free or near free public services and goods). Cliff has no
problem with that though, he just says state capitalism is a different kind
of capitalism, that is all.

The problem with Cliff's argument is that then it becomes difficult to see h
ow a transition to socialism could occur from an economic point of view.
Cliff just says, "well the workers just have to have power to make economic
decisions" but this is fairly meaningless, it does not explain how it will
be done, and done efficiently. He has no economic programme. The other
problem is that the bourgeoisie does not look on it the way Cliff does. As
far as the bourgeoisie is concerned, private ownership and genuine labour
markets are critical to the definition of capitalism. So really the
Cliffites neither understand bourgeois class interests, nor the transition
to socialism. That is one reason why they will remain only a small group,
they don't have a credible theory of socialist transition.

The Cliffite critique of the Soviet Union is essentially a moral critique,
it refers to the real oppression of the working class there, but it is not
scientifically defensible, it is an ideology. That is why the debates
between Chris Harman and Ernest Mandel about state capitalism really go
nowhere.  Very few Russians would agree with Cliff's standpoint. For the
Cliffites, state capitalism came into being in Russia in the early 1920s,
whereas for real Marxists it came into being after 1989.

Obviously this debate is important, despite sectarian shibboleths, since if
you cannot even specify correctly when there exists capitalism and when
there doesn't exist capitalism, then you cannot effectively fight capitalism
or transcend it.

James asks:

Isn't profit surplus value? Doesn't "economic" mean "making surplus
value"?

Profit is not necessary surplus-value, since you can have a system of
administered or accounting prices to distribute goods which are not
commodities nor only semi-commodities, that is, the commodities are not
produced by means of commodities and cannot be freely traded; and since the
profit may exist, even although it cannot be used for the purpose of private
capital accumulation. So profit may represent surplus-product without being
surplus-value.  By "economy" Marx means primarily the allocation of
society's labour-time, indeed he says in the Grundrisse that all economy
reduces to the economising of labour time. "Economic" does not means
""making surplus-value" since for most of human history, economies existed
in which there was no surplus-value, or in which surplus-value was only a
marginal source of income.

James asks:

Isn't the "law of Value" simply the definition of Value (as socially
necessary abstract labour) -- a phenomenon which arises only in a commodity
system?

The law of value is never exactly defined by Marx, however his texts suggest
he simply means the determination of relative prices (or commodity values,
or average, regulating prices) by socially necessary labour-time, other
things being equal. However this interpretation is not uncontroversial. Some
ultraleftist authors seek to limit the operation of the law of value
strictly to the capitalist mode of production (see OPE-L list for some
debates). These ultraleftist authors are essentially utopian socialists,
they picture a future society without markets, without explaining how we get
there, or how we got capitalism in the first place.

The positive contribution of their point of view is that they affirm
socialists do indeed want to re-arrange the giving and taking of society's
resources in a way that eliminates the need for markets. But they cannot
explain how it will practically be done, and obviously this can only be done
step by step. So usually the ultraleftists, although theoretically seemingly
""orthodox", in practice become either liberals or supporters of a
dictatorship over needs. Basically they conflate the need for the working
class to take political power, with the tasks of socialist construction.

James asks:

Didn't Marx attack as fetishism ideas of capitalism as "economic laws
of gravity". Didn't he predict a mode of production without money?

Marx did not attack as fetishism ideas of capitalism as "economic laws of
gravity", indeed he did believe in economic laws. Rather, he said that the
existence of a universal market has serious reifying consequences, such that
the real economic laws in operation appear to observers in a way which is
different from what they really are. It takes critical science to reveal
what the real laws of motion really are ("if essence and appearance
coincided, there would be no need for science, everything would be
transparent"). In contrast, the neo-liberals argue that markets make
economic life transparent. But what they really mean is that market
discipline forces comprehensive cost accounting, that is all. You can of
course also have comprehensive cost accounting with markets.

James asks:

In the big debate in the Seventies between Alec Nove and Ernest Mandel,
market
socialism vs a participatory democratic (genuinely Soviet) mode of
production,
both argued for a non-bureaucratic non-capitalist possibility.  Could anyone
on the list briefly sum up the arguments and the conclusions of the debate?

I cannot sum up the whole debate here, I do not have time. Essentially Alec
Nove's position is that it is a silly illusion that you can simply do away
with markets quickly, or once and for all, and it is a silly illusion to
think that "workers participatory democracy" is a panacea for all economic
problems. I believe this is correct. However, Mandel objects to the fact
that Alec Nove ignores the classical goal of socialism, which is to
substitute different forms of giving and taking for market mechanisms. For
Mandel, there is no market socialism possible, because socialism implies
precisely getting rid of markets and substituting different allocation
mechanisms more responsive to the needs of the vast majority of human
beings. That is the ultimate purpose of socialist economy. Mandel also
points out that in reality we are now at a stage in history where we could
easily do away with markets in many areas of life. He also points out that a
genuinely  "free market" does not exist and that the operations of many
capitalist enterprises today (especially very large ones) often do not even
respond to market mechanisms at all, but to other considerations.

A difficulty in the discussion is that most participants talk about "the
market" as if it is one thing. But it is not, this is a bourgeois ideology,
there are many different kinds of (possible) markets, some more regulated
than others, with different rules of the game, as Diane Elson suggests.
Another difficulty is that many participants refuse to acknowledge and deal
seriously with the problem of bureaucracy.

If you abandon the market mechanisms, then this means that individual
decision-making about the allocation of major resources in sociaty is
largely abandoned, and then you effectively institute the "power of people
over other people" in another (more political) way, which can easily lead to
a bureaucratic dictatorship over needs, despite all sorts of lofty slogans
about "workers power". This is not much of an advance over the dictatorship
of capitalist markets.

In general, I regret to say that most Marxist discussions of socialist
political economy I have read, are rather primitive, they are based on
illusions about what markets are, and illusions about workers' democracy
(but I do not read Spanish, Chinese, Japanese or Russian). They think that
Marx said the last word about the critique of markets, which is obviously
not true. They fail to respond adequately to the economic arguments of
neo-liberalism except in moral terms.

Unsurprisingly therefore, for most people in the world, the left-social
democrats still win the argument, i.e. you just have to mitigate the evils
of unregulated markets (with their anti-egalitarian implications) through
state intervention and regulation in one form or another.

The cutting edge of socialist political economy is to specify ways of
allocating resources which minimise or avoid market mechanisms, are not
dictatorial, and yet are efficient (both from an individual and a social
point of view). The future of the socialist movement essentially depends on
this (that is not so say that there might not be revolutions in the future,
but they would not be socialist revolutions, that is all, since they lack a
genuine socialist alternative).

Probably the best short introduction to the Western socialist debate is
Catherine Samary, Planning, Markets and Democracy (available from the IIRE).
Samary actually summarises a lot of the relevant literature, including East
European and Russian contributions, and gives a lot of references. For the
Eastern viewpoint, see for example Makoto Itoh, Socialist Political Economy.
Unfortunately Itoh is not really aware of the Western Marxist discussions
about bureaucracy and its economic implications, he is happy to apologise
for communist bureaucracies, seeing them as a minor evil. Samary also gives
a clear discussion of Mandel's contributions to the debate in an article in
Gilbert Achcar (ed), The Legacy of Ernest Mandel. An interesting theoretical
Marxist discussion is in Bertram Silverman (ed), Man and Socialism in Cuba;
The Great Debate.

Jurriaan


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