[Marxism] Fwd: Class Interests as Economic Theory � Counter Punch: Tells the Facts, Names the Names

Jim Farmelant farmelantj at juno.com
Fri Nov 14 19:28:56 MST 2014

As that article points out, the labor theory of value was a basic part of classical political economy, especially in the work of Adam Smith, David Ricardo, and then, Karl Marx. Ideologically, it had been a useful weapon when deployed against the pretensions of landlords and aristocrats. But by the mid-19th century,socialist writers were starting to use it to critique capitalism. Karl Marx was the most notable example of this, but in Britain there were a number of other writers doing much the same thing, if not quite so well, the so-called Ricardian socialists. So on an ideological level, the labor theory of value was losing its appeal for pro-capitalist economists and ideologues. Hence, the appeal of marginalism to pro-capitalist economists.  However, to complicate things a bit, some of he early marginalists, like Walras, were themselves socialists too, so it was quite possible to reject the labor theory of value and still be a socialist. And in the 20th century there were quite a number of economists who rejected the labor theory of value but were still good socialists. People like Oskar Lange, Joan Robinson, Pierro Sraffa, and John Roemer, to name just a few.

Joan Robinson BTW viewed both the labor theory of value and the marginalist conception of value as both being "metaphysical" and, hence, not science. She rejected both, while still embracing much of the Marxist critique of capitalism. In her view both the classical economists' labor theory of value, and marginalism, were based on untestable, unverifiable assumptions.  Since most neoclassical economists have been avowed positivists, this criticism ought to bite.

On the other hand, just to keep things interesting, it should be noted that the Polish socialist economist Oskar Lange considered himself to be both a Marxist and a neoclassical economist.  In his view both Marxism and neoclassical economics were necessary if we were to get a full picture of economic reality.  He thought Marxism provided the key to understanding the historical evolution of capitalism (including its eventual ultimate displacement by socialism), but he regarded traditional Marxist economics to be inadequate in several ways. He rejected the “labor theory of value” as being unscientific, and held that a Marxian concept of exploitation could be restated without it. He made statements like

 “If people want to anticipate the development of Capitalism over a long period, a knowledge of Marx is a much more effective starting point than a knowledge of [Friedrich von] Wieser, [Eugen von] Bohm-Bawerk, Vilfredo Pareto or even [Alfred] Marshall (although the last-named is in this respect much superior). But Marxian economics would be a poor basis for running a central bank or anticipating the effects of a change in the rate of discount.”


“[I]n providing a scientific basis for the current administration of the capitalist economy ‘bourgeois’ economics has developed a theory of equilibrium which can also serve as a basis for the current administration of a socialist economy. It is obvious that Marshallian economics offers more for the current administration of the economic system of Soviet Russia than Marxian economics does, though the latter is surely the more effective basis for anticipating the future of capitalism."

At the same time, Lange, among other things was able to show how neoclassical economic reasoning could be used to argue on behalf of socialism and socialist economic planning,

Over time in eastern Europe, views, similar to Lange's, became popular among many economist there during the 1950s and 1960s and they provided the theoretical basis for reform proposals in Hungary, Poland, Czechoslovakia, and the Soviet Union.

Even though many contemporary neoclassical economists would concede Lange's abilities as an economist, few would would be willing to follow him in combining neoclassical economics with Marxist analysis. In other words, they are willfully committed to keeping their discipline "autistic."

Jim Farmelant
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---------- Original Message ----------
From: Louis Proyect via Marxism <marxism at lists.csbs.utah.edu>
Subject: [Marxism] Fwd: Class Interests as Economic Theory � CounterPunch: Tells the Facts, Names the Names
Date: Fri, 14 Nov 2014 17:17:16 -0500

There is now a widespread consensus that mainstream/neoclassical 
economists failed miserably to either predict the coming of the 2008 
financial implosion, or provide a reasonable explanation when it 
actually arrived. Not surprisingly, many critics have argued that 
neoclassical economics has created more confusion than clarification, 
more obfuscation than elucidation. Economic �science� has, indeed, 
become �an ideological construct which serves to camouflage and justify 
the New World Order� [1].


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