13 Marxism
13.1 Transformation Problem
Ian Wright
My paper, “A category mistake in the classical labour theory of value”, tackles Ricardo and Marx’s problematic in the context of a formal model of capitalist production. The formality is austere but has the advantage that it imparts precise semantics to some of the key concepts of the labour theory of value. This helps pinpoint a certain kind of logical error in the classical theory.
Philosophers, such as Gilbert Ryle (1984 [1949]) and Ludwig Wittgenstein (1953), argue that the underlying cause of a long-lived and insoluble problem is often a hidden conceptual confusion or mistake. The problem is insoluble because the conceptual framework in which the problem is stated is itself faulty. Empirical study, or experimental activity, cannot resolve such problems. Rather, the problem must be deflated or dissolved by applying conceptual analysis.
For instance, Ryle introduced the term “category-mistake” (Ryle 1984[1949], ch.1) to denote the conceptual error of expecting some concept or thing to possess properties it cannot have. For example, John Doe may be a relative, friend, enemy or stranger to Richard Roe; but he cannot be any of these things to the “Average Taxpayer”. So if “John Doe continues to think of the Average Taxpayer as a fellow-citizen, he will tend to think of him as an elusive an insubstantial man, a ghost who is everywhere yet nowhere” (Ryle 1984 [1949], p.18).
In the paper, I argue that the contradictions of the classical labour theory of value derive from a “theoretically interesting category-mistake” (Ryle 1984 [1949], p.19), specifically the mistake of supposing that classical labour-values, which measure strictly technical costs of production, are of the same logical type as natural prices, which measure social costs of production, and in consequence labour-values and prices, under appropriate equilibrium conditions, are mutually consistent. Since this supposition is mistaken, Ricardo’s search for an invariable measure of value and Marx’s search for a conservative transformation attempt to discover a commensurate relationship between concepts defined by incommensurate cost accounting conventions. They therefore seek an impossible “elusive and insubstantial man” or “ghost”.
Once the category mistake has been identified we can resolve the classical problems by “giving prominence to distinctions which our ordinary forms of language make us easily overlook” (Wittgenstein 1953, § 132). Such distinctions then solve, or more accurately, dissolve the problems.
The key step is to notice that we can and should define a different measure of labour cost – total labour costs – that generalises the classical measure to include real costs induced by the institutional conditions of production. We then immediately possess a more general labour theory of value that includes both total and classical (i.e., technical) measures of labour cost. The general theory then applies the different measures in distinct, but complementary, theoretical roles, and in consequence separates issues normally conflated in the classical theories.
The classical authors attempt to explain the structure of total costs of production – which include both technical costs due to the material conditions of production (e.g., the cost of physical capital and labour inputs) and additional social costs due to the institutional conditions of production (e.g., the cost of money-capital, state imposed taxes, etc.) – in terms of the structure of technical costs of production alone, which explicitly ignore institutional conditions. This conceptual error is the underlying cause of the almost two hundred year history of the “value controversy”.
In the paper I explain why the more general theory has both an invariable measure of value and lacks a transformation problem. The main technical result is the theorem that natural prices are proportional to physical real costs of production measured in labour time. Hence, prices and labour costs, in appropriate equilibrium conditions, are “two sides of the same coin”. The measurement relation, missing from the classical theory, is therefore established, which implies that labour costs can in principle explain economic value. The more general theory therefore removes the primary theoretical obstacle that has hindered the development of the classical theory of value since its inception.
13.2 Marx durability
Milanovic
The greatness of social scientists is shown by their “durability”, that is, by the ability to be relevant over the long haul.
Whoever has read Marx must know that his program was much wider than the transformation of economics. The critique of political economy, as the subtitle of Capital says, is just one part of that overall program. His program was to propose an entirely new understanding of human history in which economic forces play an important, and perhaps, key role. Once the meaning of history discovered, this knowledge needs to be coupled with conscious action to bring about the change that history “reveals” to us. Our actions bring that historical evolution, discovered intellectually, to fruition. This is where the key Marxist concept, praxis, appears: it is the unity of theory (idea) and practice. It is at that point that that ideas (if they indeed are “correct” in the sense that they have seized the key determinants of evolution of human society) become material forces. Idea is then as much of a tool of change as a demonstration, the barricade, or the invention of a new machine.
Why do I need to go through this long explanation of Marx’s system (which of course is something that has been hinted at since Gramsci and Lukacs but became much better known after Marx’s manuscripts were published in the 1960s)? Because it shows that reducing Marx’s objective to influencing economists like J. S. Mill and others is totally misunderstanding Marx. Marx was in the business of influencing the world history and social sciences as a whole. This was supposed to be done through the workers’ movement which imbued with the “correct” ideology becomes the instrument that changes history, brings about classless society, and lets us enter “the realm of freedom”. Marx was not in the business of applying for a job at the University of Cambridge, or writing refereed papers.
Comment by Krassen Dimitrov
Excellent essay. There are some differences, however, with the other social scientists and social events that you reference.
The October revolution was not really an event that validated Marx’s theory - it was just a serendipitous coup by a group of people who happened to read and espouse Marx. Not a proletarian revolution as proscribed by Marx, by any means; heck that country hardly had any proletariat to speak of.
Further, once in power the Bolsheviks institutionalized Marxism as state ideology, which is not something that happened to any of the other scholars that you mentioned. Their theories are mostly pure science, or in the case of Keynes applied science, which happened to be corroborated by world events. The Marx - October Revolution connection is quite different. That does not invalidate the intellectual merit of Marx’s writings, but it is just a different paradigm.
I think a more relevant comparison is probably early Christian doctrine and its institutionalization by Constantin and the Roman Empire. While powerful, emotive and viable for over 300 years, the Christian cult was not meant to become the state religion of the most powerful Empire. It was an extrinsic event that vastly increased Christianity’s relevance in history.
While Marx’s writings are as compelling as any of the other scholars you mention, the October revolution did indeed elevate his historical status in the XXth century far above that of any other social scientist, in a somewhat random and stochastic way.
End of Comment