|
What does it mean to be a left wing economist today? |
|
|
|
|
Page 5 of 38
Marx’s critics have pointed out that he made rather too much of the alleged inability of bourgeois economists to explain profit. Marx argues that in the competitive markets described and idealized by bourgeois economics, the price of everything will fall to its value (to its cost of production). The usual and normal case is that when the merchant buys the pig M --> C, the merchant will buy the pig at its value, as determined by the market. When the merchant sells the pig C -->→M, the competitive market will force the merchant to sell the pig at its value. By buying the pig for what it is worth and selling the pig for what it is worth, the merchant will make no profit. Except for occasional flukes, the merchant will be frustrated. (If the merchant moves the pig to another place, then the cost of transportation will be added to the costs of production, thus raising the value of the pig, but still frustrating the merchant, since the higher price received will just cover the higher costs.)
Marx’s argument seems plausible on its face, but the weight of informed opinion today, even the opinion of people like Joan Robinson who sympathized with Marx’s objectives, is that Marx did not get the concept of value quite right. Today people talk about chains of value and about value-added, and do not regard the existence of profits at several stages of the production of a commodity as a mystery that needs to be explained. But whether or not the analysis Marx offered cleared up a mystery that other social scientists could not clear up, the solution he provided for his problem, or for his pseudo-problem as the case may be, was decisive for subsequent Marxism. After the passage quoted above, Marx invites his readers to travel with him away from the sphere of the circulation of commodities (i.e. away from the marketplace) and into the sphere of the production of commodities (i.e. into the factory). In production Marx discovers the secret of profit making.
The gist of Marx´s scientific explanation of profit making can be expressed by commenting on a diagram that Marx does not use until the second volume of Capital:
M ---> C .......... P ............ C´ ---> M`
This diagram again starts with money, M. The capitalist invests money with the intention of ending up with more money. Again, like the merchant who bought the pig, the capitalist buys commodities, C. Among the commodities purchased there is a peculiar one. The peculiar one is labor power.
|
