Showing papers by "John E. King published in 1992"

Capitalism and Underdevelopment

Abstract: The analysis considered in Part II focused upon the functioning and transformation of advanced capitalism. Each theory sought to provide an explanation of the ‘long boom’, understand the contradictions which would ultimately undermine it, and thereby account for the passivity of the working classes in the West, as well as locating the basis for any future radicalisation. In all cases the economic structures of backward areas and their relationship to those of developed countries figured hardly at all. Only Baran and Sweezy thought them to be significant, and even in Monopoly Capital they were of secondary importance. The forces of stability and change in the heartlands of capitalism were seen to operate primarily through the reproduction and growth of the major capitalist economies.

The law of the shrinking middle: inequality of earnings in australia 1975–1989*

Abstract: International evidence shows a marked increase in the dispersion of earnings since the 1970s. In this paper the authors review some of this research. Earnings data for Australia indicate that since 1975, the distribution of earnings became significantly less equal there too. This cannot be entirely accounted for by the growth of part-time employment, cyclical influences, demographic change or greater labor market flexibility. In Australia in 1983 an "Accord" was reached between employers, unions and government. One stated aim of this incomes policy was to bring about an equitable redistribution of income, but it did not in fact reverse the trend to rising earnings inequality. On some measures the growth of inequality actually accelerated after 1983, particularly for women working full-time. Copyright 1992 by Scottish Economic Society.

The Permanent Arms Economy

Abstract: Perhaps the most obvious (and certainly the most sinister) difference between the post-war and pre-war worlds was the level of military expenditure carried on by the victorious powers. Disarmament had not been complete even after the First World War, but there was no precedent in the peacetime history of capitalism for the scale of arms spending which was now being undertaken. In 1950 military expenditure accounted for 6.6 per cent of the United Kingdom’s GNP, for 5.5 per cent in France and 5.1 per cent in the United States; a decade later the figures were 6.5 per cent, 6.5 per cent and 9.0 per cent respectively.1 One explanation for this persistent militarism was what the liberal economist James Tobin was later to describe as the ‘naive theory’ of arms spending, which saw it simply as ‘a response to world events’.2 However, this is less naive than it sounds. Undoubtedly there were serious political barriers to disarmament after 1945. France and (less desperately) Britain were embroiled in colonial wars, the United States was defending its newly-won ‘informal empire’, and all three were engaged in the long Cold War confrontation with the Soviet Union and China.

Marx, Jones, Rodbertus and the Theory of Absolute Rent

Abstract: As is well-known, Karl Marx distinguished three types of rent. In addition to two categories of differential rent, closely related to the Ricardian extensive and intensive margins, he argued (against David Ricardo) that rent was paid on the least fertile land. For Marx this so-called “absolute rent” resulted from the barrier posed by landed property to the free movement of capital into agricultural production. Since the organic composition of capital was relatively low in agriculture, the prices of production of farm products were lower than their labor values. The existence of private property in land prevented the reduction of agricultural prices to these prices of production, and allowed the payment of rent even on what could be described, in Ricardian terms, as marginal land. There exists a sizeable literature on Marx's theory of absolute rent,1 but there is no systematic account of its gestation and development. In this paper we explain how Marx's critique of Ricardian rent theory evolved between his first doubts early in 1851 and the articulation of a distinctive alternative analysis in the manuscripts of 1862–63. We also assess the influence exerted on Marx by Richard Jones and Johann Karl Rodbertus, and briefly discuss the significance of Marx's theory of absolute rent for his political economy as a whole.

Marx and Keynes

Abstract: The most important intellectual product of the Great Depression was Keynes’s General Theory, which was published in 1936. It was not totally original, nor did it present an entirely consistent and self-contained theoretical system. Many of its ideas had been anticipated by earlier writers (including Keynes himself) and there were, as we shall see, important analytical lacunae. Even the policy prescriptions which the General Theory contained were less novel, and less controversial, than is often supposed. Moreover Keynes never broke decisively with orthodox theories, and incorporated a number of important neoclassical ideas into his own work.1 All the same, the book was the first systematic and comprehensive expression of the view that mass unemployment was the normal outcome of an unregulated capitalist economy to emerge from the pen of a respected and hitherto mainstream economist, and as such its appearance was a major event which Marxian theorists could not ignore.2 Moreover, Keynes’s ideas offered the prospect of a reformed, crisis-free capitalism in which Marxian economics would become an irrelevance, so that there were direct political implications to be faced. The bulk of this chapter is concerned with the ways in which Marxian political economy responded to the Keynesian challenge. We begin, however, by asking the converse question: what did Keynes make of Marx?

Rational Choice Marxism

Abstract: Rational choice Marxism originated as a distinct school of thought in the 1970s and grew rapidly during the 1980s. Many Marxists who took no part in its initiation have become ‘converts’, while those who continue to criticise it nevertheless tend to treat it respectfully. The overall approach exhibits three main characteristics. First, rational choice Marxists have shown a concern for rigour and clarity to a degree unusual in Marxian theory. This is why the school is sometimes referred to as ‘analytical Marxism’. Great attention has been paid to the exact meaning of concepts, the process of deduction by which conclusions are derived, and how far these conclusions can sustain traditional Marxian propositions. Thus the claim of historical materialism that the relations of production impede the forces of production has been critically evaluated by asking what it could mean, what meanings are the most sensible, and how far they are actually true. There can be no doubt that in the process much light has been shed on the strengths and weaknesses of the materialist conception of history.1

The Political Economy of Stalin

Abstract: As the Great Depression engulfed the economies of Western capitalism, the rate of growth in the Soviet Union dramatically accelerated. Between 1928 and 1937 industrial production increased threefold, rising from less than one-third of national product to nearly one-half. It more than doubled again between 1937 and 1953, constituting close to 60 per cent of total output at the time of Stalin’s death. Only through large investments was this made possible. On average, over 20 per cent of output was devoted to accumulation in each year. The consumption of workers and peasants fell sharply; it was not until the early 1950s that real wages regained their level of 1928, while peasant living standards fell even more, and took longer to recover.1

Is Socialism Economically Feasible? An Analysis of Marxian Answers

Abstract: Analyses the economics of socialism within the Marxian tradition. The ideas of Marx and Engels are included, as are those of the theorists of the Second International. The debate on market socialism associated with Oskar Lange also receives attention. The evolution of Mises′s and Hayek′s responses is traced, and there is an outline of how economists in Eastern Europe have come to similar conclusions to these Austrians. Concludes with an assessment of the economics of socialism in the work of contemporary theorists.

The Political Economy of Socialism

Abstract: In the intellectual history of Marxism the political economy of socialism has been dwarfed by the attention given to the capitalist mode of production. Only episodically have the issues of post-capitalist economic organisation come to the forefront, and even then often in very concrete circumstances that limited the generality of any conclusions that might be drawn. Sections II and III below explain how this neglect is inherent in the original Marxian perspective, and the following sections indicate why the economics of socialism have been elevated to a more prominent position since the 1920s, and especially since the 1970s. The dramatic events of 1989, when the depth of the crisis in ‘actually existing socialism’1 became evident, suggest that the topic will dominate Marxian political economy in the 1990s.2 Treating the economics of socialism separately, and in the final chapter of this book, thus appropriately reflects the history of Marxian political economy itself.

‘Second Slump’: Theories of Crisis after 1973

Abstract: By the early 1970s there were clear signs that the long post-war boom was over. The quarter-century after 1945 had seen a ‘Golden Age’ of rapid economic growth throughout the advanced capitalist world and (for most countries) virtually continuous full employment, while real wages had grown steadily but not so rapidly as seriously to threaten the profitability of capital.1 After 1973, however, accumulation slowed considerably. The GDP of four major European countries (the UK, France, West Germany and the Netherlands) plus Japan, which had grown at an annual rate of 5.6 per cent between 1950 and 1973, rose by an average of only 2.1 per cent per annum between 1973 and 1984, and the growth rate of output per hour worked fell from 5.3 to 2.8 per cent per annum over the same period. For the United States the decline was only slightly less marked: from 3.7 to 2.3 per cent (GDP) and 2.5 to 1.0 per cent (GDP per hour worked) respectively.2 The rise in unemployment was even more dramatic. Male unemployment in Britain, for example, ranged from 1.1 per cent to 3.6 per cent between 1953 and 1970; from 1971 to 1980 the range was 3.6 per cent to 8.7 per cent, and in 1981–3 unemployment rose from 13.7 per cent to 16.7 per cent. The experience in other countries was similar, if less extreme.3 Both the rate of profit and the share of profits in net output fell in the 1970s,4 while inflation — an irritant rather than a major problem in earlier decades — accelerated dramatically.

Critics of Underdevelopment

Abstract: All theories of underdevelopment treat capitalism as functioning on a global scale in the manner of Marx’s account of merchant capital, where monopoly power and unequal exchange redistribute surplus between geographical areas. Frank and Wallerstein add a zero-sum description to this circulationist perspective. Not only do they maintain that advanced capitalism under-developed the periphery, but they also insist that the centre has developed only because of the exploitation of the periphery. Furthermore, for Frank and Wallerstein it is production for profit realised on the market which defines capitalism. Specific relations of production are not regarded as important. Capitalism includes various forms of labour control, each of which is the outcome of optimising behaviour by property owners, including serfdom, slavery and wage-labour. Thus class structures are endogenous variables and have no causal significance; any effect which may be attributable to them can be reduced to the more fundamental determinant of profit maximisation.1

Marxian Value Theory After Sraffa

Abstract: As we indicated in the previous chapter, the impact of Sraffa’s The Production of Commodities by Means of Commodities was by no means immediate. The initial effect was to generate an attack upon neoclassical theory, which resulted in the ‘Cambridge Controversies’ of the mid-1960s. Although this was relevant to the Marxian analysis of ‘vulgar economy’, it did not bear upon the logical coherence of Marxian political economy itself, and it was not until the 1970s that the direct implications for Marxian economics began to be appreciated. Meanwhile, the questions raised by Francis Seton and Paul Samuelson in the 1950s awaited answers (see Chapter 12 above). It remained to be seen whether Samuelson’s conclusions could be generalised to an n-sector model, and whether (as Engels and others had supposed) the transformation of values into prices of production could legitimately be regarded as a historical as well as a logical process (see volume I of this book, Chapter 3, section II). Also unresolved were important methodological issues concerning the role of mathematical models in the appraisal of Marxian value theory, and the relative significance of the qualitative and quantitative aspects of the problem.

The Falling Rate of Profit

Abstract: There is a simple justification for beginning a chapter on modern problems with an account of earlier developments. Almost all the central issues in the theory of the falling rate of profit had been raised, and not a few also resolved, before 1945. Apparently unknown to most of the participants, many post-war controversies thus involved little more than a reworking of debates which had taken place in previous decades.1 Two central questions can be detected in the early literature, both with a bearing on recent contentions. First, is the theory logically valid, yielding a determinate prediction concerning the long-run tendency of the rate of profit? Second, does it provide a basis (or even the basis) for a coherent Marxian theory of crisis? Two further questions — has the profit rate actually declined, and if so, why? — were somewhat neglected.

Marxian Political Economy and Surplus Economics

Abstract: Sraffian economists1 have remained essentially unmoved by all attempts to salvage Marx’s theory of value, and have continued to maintain that the critique outlined in Chapter 13 above holds true: the labour-value categories, however reformulated, are at best redundant and at worst contradictory or erroneous. At the same time Sraffians have claimed that their analysis of Marx is constructive, arguing that Sraffa and Marx both belong to a ‘surplus paradigm’ and so share the same perspective and methodology. Thus they argue that their critique of Marx is an ‘internal’ one, and that Marxian political economy has really been strengthened because the defects in the original formulation have been exposed and shown to be irrelevant to the more general approach which underpins it. In consequence, Sraffa’s work represents a secure foundation upon which the surplus paradigm can be developed and the real insights of Marxism reconstituted.2

Value Theory Before Sraffa

Abstract: This part is devoted to the Marxian theories of value and exploitation. It tells, as simply as we have been able to tell, a very long and complicated story. Readers should be warned that the structure of this part of the book is somewhat unusual. It contains two chapters (12 and 14) which are broadly chronological in their discussion of the transformation of values into prices of production, and two on Srafian economics (13 and 15) which are largely analytical in nature and deal only incidentally with the evolution of ideas over time. This division of the subject-matter is admittedly rather awkward, and necessarily involves some repetition. It seems, however, to be an inescapable consequence of the material with which we are concerned.

Has Capitalism Changed

Abstract: At the end of the Second World War many Marxian (and some non-Marxian) economists anticipated that a severe economic downturn, possibly in the same league as the Great Depression, would follow hard on the heels of the peace. When, a dozen years later, the expected crisis had still not materialised and the accumulation of capital was still proceeding rapidly and smoothly in the advanced capitalist countries, the Marxists were under pressure to reappraise their entire political economy. The most important analytical issues concerned the relationship between Marxism and Keynesian theory, and will be considered in the following Chapter. Here we deal with a broader set of questions relating to the possibly changed nature of capitalism. Marx himself had expected the structure of capitalist economies to alter over time, but he had provided little guidance on the limits (if such there were) to the evolution of the system.1

Marxian Economics and the Great Depression

Abstract: The Great Depression was by far the most severe economic crisis in the history of capitalism. In the United States real GNP fell by 9.9 per cent in 1930, a further 7.7 per cent in 1931, and by 14.8 per cent in 1932. In the latter year industrial production in both Germany and the US was no less than 47 per cent below its 1929 level (for the other capitalist powers the collapse was less complete, but nevertheless severe).1 Marxian economists asked two questions about this cataclysm. What did it mean for the future of the capitalist system and the prospects for socialism? And how could it be explained consistently with Marx’s theory of crisis? Neither question was simple. Marx’s theory of capitalist crisis was nowhere well worked out, nor, indeed, even organised systematically, while the political history of the 1930s involved novel developments. The most notable phenomena were the success of fascism in Germany, the New Deal in the United States and the growth of state intervention elsewhere. They raised once again the question of the state’s role in modern capitalism and the basis of mass support for reaction or reform rather than revolution.