Re: Keynes and Marx

[Louis Proyect <lnp3@xxxxxxxxx>]

[Another interesting item from the American Socialist, this time a book
review by Harry Braverman of what appears to be an out-of-print book by
Paul Sweezy. Appearing in the June '54 issue, it provides a succinct
summary of the differences between Marx and Keynes. One of the keys to
understanding the Cochran-Braverman co-edited magazine is that it is very
much a post-WWII vision of Marxism. The group that broke with the American
Trotskyist movement had come to the conclusion that the 1930s paradigm did
not apply to the new epoch, one that we are basically still in. Key to this
re-orientation was coming to terms with Keynes, who played as key an
ideological role in the 1950s as Freud did.]

BOOK REVIEW

Marx and Keynes

The Present As History; Essays and Reviews on Capitalism and Socialism, by
Paul M. Sweezy, Monthly Review Press, New York, December 1953, $5.

CAPITALIST ECONOMICS opened its career a century and a half ago with a
resounding crisis because its thinking was too clear for its own good at
the outset. Unable to accept the basic groundwork of classical economics,
it wandered homeless in a desert for fifty years after Adam Smith and
Ricardo. In the Seventies, it finally found shelter under the patchwork
pieced together by the "marginal" theoreticians: Menger, Jevons, Walras,
and then later their followers.

Modern capitalist economics was thus born in the Seventies of the last
century, but its essential concepts can be traced back to earlier vulgar
and apologetic theorists, particularly one contemporary of the classicists,
Jean Baptiste Say. Say was a French interpreter of Adam Smith who, while
claiming absolute fidelity to the master, gave his writings such a twist as
to vulgarize and in the end to negate them completely. What emerged from
Say?s writings was the essence of later capitalist economics.

He rejected the classical labor theory of value, substituting a subjective
value theory (the value of commodities comes not from labor expended in
their production, but from the value attached to them by the buyer). As a
first result of this, Say naturally lost track of the problem which arises
for the classicists and which Marx solved so definitively: Where does the
value the capitalist gets?his profit?come from? As soon as one adopts a
subjective value theory, this ceases to he a problem, because the origin of
surplus value can be easily found in the exchange of commodities along with
commodity value in general. But if vulgar economics lost interest in the
origin of profit, it replaced this with an intense interest in justifying
profit. Thus arises the trinitarian formula of the "factors of
production"?land, labor and capital?and the rationalizing apologetic as to
why each factor "deserves" a part of the product.

After Say had delineated these apologetic evasions of the real questions of
economics, he still faced the problem of the functioning of the system as a
whole, the circulation of capital and commodities, the crises, etc. He
solved the entire complex with a single master stroke known as Say?s Law of
Markets. He reasoned that there could never be a general oversupply of
commodities, since every seller, by his act of selling and thus acquiring
money, is a potential, and soon an actual, buyer. This superficiality?Marx
called it "childish babbling"?served capitalist economics in place of a
serious analysis of the capitalist process for a full century.

THESE PORTIONS of Say?s thinking proved to be the elements of? later
capitalist economics: subjective value theory which was refined in
"marginal" terms, with curves and formulas that made the conception more
impressive but no more scientific; the trinitarian formula for factors of
production and the division of the product; and the Law of Markets.

Keynes made one basic change in orthodox capitalist economics. He abandoned
Say?s Law of Markets, declaring the possibility of a general shortage of
demand or oversupply of commodities, bringing with it large-scale
unemployment and the reduced functioning of the capitalist economy. Even
more, Keynes felt that this is the situation toward which the capitalist
system tends.

Having abandoned Say?s law, Keynes had to revise traditional economies from
top to bottom in harmony with his new thought. This was the Keynesian
revolution.

When one considers that Keynes published his "General Theory" in 1936?right
after world industrial production had fallen off by at least 40 percent,
when unemployment figures for the capitalist countries totaled some 40
million, when vast quantities of commodities were unsold and unsalable,
when governments were destroying commodities and limiting production?then
Keynes achievement in finally abandoning a "law" of markets which says such
a situation is impossible can hardly be called monumental.

Keynes did not dispute any of basic conceptions of capitalist economics,
including the outlook that capitalism is an eternal system. What he did do
was decide that there was no natural law that made the working of the
system at full capacity a sure thing, and he advocated a governmental
policy which would make up for deficiencies of the system.

The most important consequence of Keynes? revision was a change in the work
within which many of the economists worked. Instead of remaining
preoccupied with the problems of the individual firm or industry, Keynes
focused attention on the "aggregates"?the big totals economy such as
national income, consumption expenditures, saving, investment--and upon
their relation to one another. This revolutionized both the thinking o
economists, especially the younger and also economic statistics which kept
for the whole economy in a makes it possible to follow basic the economy
and its various sectors.

HAVING ACCOMPLISHED this Keynesian economics pulled up short. Sweezy
writes: "But Keynes stopped in his critique of existing society. Our
troubles, he believed, are due to a failure of intelligence and not to the
breakdown of a social system. ?The problem of and poverty,? he wrote in
1931, ?is but a frightful muddle, a transitory and unnecessary muddle.?

Keynes? way out of the "muddle," explains, is by "treating the state as a
deus ex machina [handy god] to be invoked whenever his human actors,
behaving according to the rules of the capitalist get themselves into a
dilemma from there is apparently no escape. Naturally this Olympian
interventionist resolves everything in a manner satisfactory to the author
and presumably to the audience. The trouble is?as every Marxist knows--the
state is not a god but one of the actors who has a part to play just like
other actors."

As to the possibility of Keynesian investment on a sufficiently large
scale, Sweezy points out: "It may be possible to spend a few billion
dollars in ways that do not threaten capitalist interests, but this is
certainly not so of 25 or 30 or 40 billion?and these are the relevant
orders of magnitude. That is to say it is not possible except on war
preparations. All other forms of really large-scale government spending
either involve competition with private enterprise or they confer benefits
on the masses and thus indirectly undermine authority and privileges of the
capitalists and their upper-class allies and retainers.

"As to a direct assault on inequality of incomes, it is clear that this
strikes a very heart of our social-class system will be resisted to the end
by special beneficiaries of that system."


Louis Proyect
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