How Sweezy and Baran stood Marx on his head

by Jehu

I wrote this a few days ago:

“The movement of capital and the movement of the commodity are not separate movements, but constitute the same movement. Marxists lose their way and begin tracing the movement of the commodity, while completely neglecting the movement of capital. Keynesian economics is not about the movement of commodities; it is solely concerned with the movement of capital. But its specific obscuring method is to present the movement of capital as the mere movement of commodities. “

This is what I think throws the Monthly Review school off.

sweezy and baranThe MR school only sees the buying/selling of labor power and the terms and conditions under which this buying/selling takes place. For this school (and many others as well) the buying/selling of labor power is completely detached from the production of surplus value. This is very similar to certain anarcho-capitalist/voluntarist strains of communism who treat wage labor in complete isolation from the mode of production. They both share the view that wage labor is not itself constitutive of a definite set of relations.

How so?

They treat the wages contract as a simple market exchange between two individuals — one with a commodity, the other with money. But these two particular individuals are not like any other two individuals in the market at all. They are, in fact, each absolutely dependent on the other for their own individual existence. The capitalist cannot be a capitalist, nor the worker a worker, without this exchange. Their existence each as individual participants in the exchange is the material expression of the existence of the other.

This social relation does not arise in simple commodity production and exchange. The worker is always the seller, while the capitalist is always buyer — this polar relation appears in no other form of commodity exchange. Moreover, the worker cannot be a seller unless the capitalist is a buyer and vice versa. In every other commodity relationship the seller of a commodity at one point later becomes the buyer of another commodity.

This exchange between worker and capitalist, however, constitutes the mode of production; and it always appears in this way: The worker sells, capitalist buys. When later the capitalist appears as seller and the worker as buyer, this is not capital, but an ordinary commodity exchange. Which is to say, the worker does not buy a commodity from the capitalist as a capitalist, but as a simple consumer. And the capitalist does not sell labor power, but his ordinary commodity that produces no surplus value at all. Capital cannot become capital without the first exchange, while the second exchange is not about capital, but a simple commodity exchange. The second exchange is constitutive of simple commodity exchange; the first, however, is constitutive of capital — it is essential to it.

When the MR school treats this first exchange as a mere commodity exchange, they completely lose sight of its specific significance. The sale/purchase of labor is not like any other sale/purchase of a commodity in the mode of production. So far as I can tell, the MR school does not think this is true. In a crisis they see a mass of unemployed labor power and a mass of idled capital and treat these two simply as a mass of unsold commodities. The specific condition that brings these two masses together — the production of surplus value — appears nowhere in the equation. It seems to me that, for the MR school, there is no production of surplus value at all. I would love to put this question to John Bellamy Foster directly:

“Is there production of surplus value or not under the capitalist mode?”

From what I read of his works, I am certain he would say, No.

*****

Perhaps surprisingly, however, I think this is not the real defect of the MR school. The MR school arises after fascism is already established with the active attempt by the state to suppress the law of value. The attempt to suppress the law of value presupposes the production of surplus value no longer occurs. It also presupposes money has been replaced by a valueless token; and that the state has assumed the functions of capitalist. All three of these assumptions appear in the Foster article I addressed in my previous post. For the MR school, there is no surplus value, but “economic surplus”; prices rise freely in response to higher wages; and the state is employed to address “underutilization”.

Critical to the MR school’s argument is Sweezy’s “stagnation thesis”. In 1990, Foster described Baran’s and Sweezy’s stagnation thesis this way:

“Thus, [Baran and Sweezy] suggested that Marx’s fundamental ‘law of the tendency of the rate of profit to fall’ associated with accumulation in the era of free competition, had been replaced, in the more restrictive competitive environment of monopoly capitalism, by a law of the tendency of the surplus to rise (defining surplus as the gap, at any given level of production, between output and socially necessary costs of production). Under these circumstances, the critical economic problem was one of surplus absorption. Capitalist consumption tended to account for a decreasing share of capitalist demand as income grew, while investment was hindered by the fact that it took the form of new productive capacity, which could not be expanded for long periods of time independently of final, wage-based demand. Despite the fact that there was always the possibility of new ‘epoch-making innovations’ emerging that would help absorb the potential economic surplus, all such innovations—resembling the steam engine, the railroad and the automobile in their overall effect—were few and far between. Hence Baran and Sweezy concluded that the system had a powerful tendency toward stagnation, largely countered thus far through the promotion of economic waste by means of ‘the sales effort’ (including its penetration into the production process) and military expenditures, and through the expansion of the financial sector. All such ‘countervailing influences’ were, however, of a self-limiting character and could be expected to lead to a doubling-over of contradictions in the not too distant future.”

In this excerpt, “surplus” is defined by Foster as “the gap, at any given level of production, between output and socially necessary costs of production”, which is to say, the total product of labor and the wages paid to the laborer. You have to note what has taken place in Foster’s description of Baran’s and Sweezy’s thesis: this is a simple inversion of Marx’s law of the tendency of the rate of profit to fall.

In fact in Marx’s law the falling rate of profit is already associated with a rising rate of surplus value extraction from labor. This two-sided process leads to concentration and centralization of capital and a mass of superfluous capital and population of workers. Baran and Sweezy are, therefore, adding nothing new to Marx’s theory with their so-called “stagnation” thesis. However, they do reframe Marx’s argument not as an expression of the outmoded character of capitalist relations generally, but as an underutilization of the ever growing mass of superfluous capital and workers. The problem, in other words, is not to put an end to these relations of production, but to find a use for the excess capital and workers. Baran and Sweezy simply abandoned labor theory and adopted a radical Left fascist argument.

(At this point, I want to re-emphasize that the term “fascist” is not a pejorative for me, but a designation with precise meaning. In my usage, “fascism” means management of the “economy” by the existing state, i.e., the state acting as the national capitalist.)

Baran and Sweezy, therefore, posit a role for the existing state in making up for what Foster calls the gap between the total social product of labor (“output”) and wages (“socially necessary costs of production”). What is this gap between the total social product of labor and wages? It is, of course, the surplus value produced within the capitalist production process. Since the starting point of capitalist production is production of surplus value, not use value, it must, sooner or later, encounter a definite theoretically evident limit.

In labor theory, this limit is the limit under which the production of use values, material wealth, can take the form of values. Which is to say, it is the limit under which the production of material wealth can take the form of capital. This is not a limit on the production of material wealth per se, but a limit on production of material wealth in its capitalistic form. There is, in fact, a mass of superfluous capital and a mass of unemployed workers who can produce material wealth, but this production can no longer take the form of capital..

Foster explains,

“Capitalist consumption tended to account for a decreasing share of capitalist demand as income grew, while investment was hindered by the fact that it took the form of new productive capacity, which could not be expanded for long periods of time independently of final, wage-based demand.”

What does this gibberish mean in plain English? “Capitalist consumption” simply means the consumption of labor power for the expressed purpose of producing surplus value. The expansion of this “capitalist consumption” was “hindered” by the fact it took the form of capital itself. Which is to say, capital ran into the obstacle that it was capital! Marx had already completely predicted this in Capital, volume 3, when he stated:

“The real barrier of capitalist production is capital itself.”

What we have in Baran’s and Sweezy’s argument is Marx labor theory adapted to the requirements of fascism, of state management. This, mind you, occurs with the MR school assumption, which is general to most variants of Marxism, that Marx did not foresee the rise of fascist state management of national capitals. Marx’s theory somehow predicts capitalist breakdown, but it does not predict fascism. In fact we know this is not true and we know the classical Marxists understood this as well.

This prediction is on full display in Engel’s Socialism, Utopian and Scientific,

In the trusts, freedom of competition changes into its very opposite — into monopoly; and the production without any definite plan of capitalistic society capitulates to the production upon a definite plan of the invading socialistic society. Certainly, this is so far still to the benefit and advantage of the capitalists. But, in this case, the exploitation is so palpable, that it must break down. No nation will put up with production conducted by trusts, with so barefaced an exploitation of the community by a small band of dividend-mongers.

In any case, with trusts or without, the official representative of capitalist society — the state — will ultimately have to undertake the direction of production. This necessity for conversion into State property is felt first in the great institutions for intercourse and communication — the post office, the telegraphs, the railways.

and expressly framed by Luxemburg as a choice between “Socialism or Barbarism”,

Friedrich Engels once said: “Bourgeois society stands at the crossroads, either transition to socialism or regression into barbarism.” … Today, we face the choice exactly as Friedrich Engels foresaw it a generation ago: either the triumph of imperialism and the collapse of all civilization as in ancient Rome, depopulation, desolation, degeneration – a great cemetery. Or the victory of socialism, that means the conscious active struggle of the international proletariat against imperialism and its method of war. … In this war imperialism has won. Its bloody sword of genocide has brutally tilted the scale toward the abyss of misery. The only compensation for all the misery and all the shame would be if we learn from the war how the proletariat can seize mastery of its own destiny and escape the role of the lackey to the ruling classes.

While there are minor quibbles to be made with how Luxemburg poses the problem, there is no question the classical Marxists realized where society was already headed unless the proletariat could seize power: Fascism.

Labor theory in fact predicts a crisis where eventually “the critical economic problem was one of surplus absorption.” What it does not do, however, is argue, like Baran and Sweezy, this crisis can be resolved by fascist state management of the national capital. The opposite is true: Engels argues the capitalist relation is not done away with and the state becomes the direct exploiter of labor power.

“The modern state, no matter what its form, is essentially a capitalist machine — the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers — proletarians. The capitalist relation is not done away with. It is, rather, brought to a head. But, brought to a head, it topples over. State-ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.”

The “stagnation thesis” is fully fascist, since it proposes to extend capitalist relations by means of state intervention in the “economy”. In the relation between the association of the producers and the association of capital, it sides with capital against the producers. On the other hand the “stagnation thesis” seems to me to be an accurate reflection of the problems of state management of the national capital. There is indeed “a powerful tendency toward stagnation, largely countered thus far through the promotion of economic waste”. And it is true that this effort has “a self-limiting character and could be expected to lead to a doubling-over of contradictions in the not too distant future.” All of this goes to show how profound Baran’s and Sweezy’s grasp of the problems of fascism were.

The problem they run into, however, is that their solution to fascist state management is more fascist state intervention, which is to say, they never concluded that the fascist state is the capitalist now directly exploiting the proletariat and, therefore, the continue imagine there can be a political fix for fascism.

In the MR school, as in most Marxist schools, the state power still remains an object of conflict between the two classes. They imagine the existing state can be wielded by the proletariat as an instrument in its struggle against capital. They hold to this idea even though it was argued as early as the 1870s by Marx and Engels this was not possible. Once the state becomes the national capitalist, the conflict between the two classes over the state power is ended. The struggle against capital by the proletariat now becomes immediately a struggle against the state itself.

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