Re: Re: Re: Re: Re: the expression "political economy" (fwd)

[phillp2@xxxxxxxxxxxxxxx]

Mine wrote:
>
>However,as you
> know, there are some Marxists in the Marxist tradition who uncritically
> subcribe to the notions of "orthodox" economics and free market
> capitalism. This, I would charecterize as economic determinism, has
> interesting commonalities with liberal economics since it treats
> capitalism somewhat theologically and mechanistically. The typical "theory
> of stages" argument says that we should let the market forces operate
> untill capitalism unleashes itself. Any intervention in markets is seen as
> postponing the collapse of capitalism. so as the argument goes, this
> tradition still emphasizes the primacy of economic laws rather than
> revolutionary unity of theory and practice, which is so central to Marx's
> thinking. is such a distortion of Marx unique to economics dicipline in
> general? I have not seen, for example, such a religious reliance on
> markets in other diciplinary discussions on political economy of
> capitalism
>
The problem is that 'markets' are just one institution in the political
economic organization of society.  Markets existed in pre-capitalist
societies, organized exchange occurred amoung aboriginal tribes
in North America long before contact with Europeans and the
expansion of merchant capitalism, markets existed in the USSR
and eastern Europe under central planning, markets were a
characteristic of medieval Europe, etc. etc.  Polanyi makes this the
central thesis of _The Great Transformation_.  Prior to industrial
capitalism, he argues, markets were imbedded in society, meaning
in part that markets were controlled by society to reflect social
institutions and values and maintain the social status quo. (hence,
for instance, the laws on usury, on engrossing, on fair price, etc.)
In other societies, ultimate control on the distributive inbalances of
markets were repealed by Jubilees, potlaches, etc.

The great transformation -- the triumph of capitalism -- comes with
the subjugation of society to "free markets", that is that instead of
markets being embedded in society and used as an institution to
facilitate production that reflects prevailing social values, society
becomes an institution that reflects the values determined by
markets.  In the ultimate, the market replaces society as in
Maggie's infamous dictate, "there is no such thing as society, only
individuals."

The Canadian political economy basically takes of from this point.
The 'father' of the tradition, Harold Innis, was highly influenced by
Veblen.  In one of his most interesting articles, he makes the
statement (this is by memory so is not exact) that, in new
countries like Canada (he is writing in the 20s), we must discard
the economic theory of the old countries and develop new
economic theory appropriate to conditions in Canada.  The theory
of the old countries (i.e. Britain) are exploitative of the new.

His 'new' theory has become known as the 'staple theory' such that
he argues that society is shaped by the institutions and economic
aspects of development of the leading, natural resource, export-
based economic sector.  Markets are one aspect of this, but more
important, particularly for some of the other major staple 'theorists',
like Fowke (Rod take note), Creighton, Buckley, and including
Naylor, was the balance of class power which determined the
distribution of income and wealth and of the 'spread' and 'backwash'
effects of economic expansion.

I think the most important aspect of understanding this approach to
political economy is understanding the nature and location of power
in society and how this was manifest in the material (economic)
development of Canada.  In the early part of Canadian history, the
staple industries that shaped the political and social institutions
were TRADES (Cod, fur, timber, wheat) which were heavy users of
_commercial capital_ and hence, power was dominated by
commercial capital who used this dominance to control political
institutions and the distribution of political power.  It also
determined ultimately the political, religious elite.  (See for
example, Creighton's _The Commercial Empire of the St.
Lawrence, or Tom Naylor's _History of Canadian Business_.  When
economic development turned to railroads and the grainhandling
system and settlement, power gravitated to the hands of financial
capital (not industrial capital as many Marxists assume) which
lead to the control of the elite by the bankers, insurance and
mortgage companies, etc.

Now, the Canadian political economy tradition gradually split into
two camps, the liberal camp that followed from the economist
Mackintosh and, as Mine suggests, reflected a very mechanistic,
non-class based, non-power based analysis -- markets for staples
as conditioned by policies and institutions reflecting existing
political alliances and interests (and those inherited from Britain
and shaped by American influences) determined the course of, and
distribution from, 'development'.  Class does not appear in Innis,
Mackintosh and the modern proponents of this form of political
economy.  Thus it was largely unable to make the transition from
the 'staple era' to the 20th C. 'industrial era' and is, as far as I can
make out, largely disappeared in the "new information economy
age" where services dominate over material commodities.  (I would
argue that a lot of orthodox marxists have also been rendered
speechless by this development toward services.  However, that is
more contentious so I don't want to develop it here.)

The more radical stream of Canadian political economy went in a
somewhat different direction.  While it was generally radical and
nationalist and greatly 'Marxist informed', it was not necessarily nor
did it consider itself strictly 'marxist'.  In fact, it picked up the
dependency theme (in part was involved indirectly in the origins of
dependency theory) and integrated it into staples theory.  Put
simply, staples (whether trade or industrial) required capital --
commercial at some times, financial or industrial at others.
Canada had very little indigenous capital and hence was
dependent, before  the 1st WW on British Capital, after the 1st
WW on American capital.  Furthermore, Canada was dependent on
British markets before the 1st WW and American markets after.  In
both cases, Canada's dependency put it in a weak bargaining
position and British and US power were used to shape Canadian
development and society.

One particular example of this was the prairie grain exporting area.
The 'industrial capital' was provided by the farmer's themselves,
though in a dependent relationship with the banks and mortgage
companies (a form of debt peonage).  Control of the trade was in
the hands of the Rlwys, the banks, and the grain companies who
allied together to extract the surplus from the independent
commodity producers through the exersize of monopoly power and
pricing.  This, in turn, resulted in the rise of a collective oriented,
populist agrarian political movement which ulitimately produced our
grain co-ops, the Canada Wheat Board, etc.  It also (because of
the instability and inequity of distribution) gave birth to the semi-
socialist "social gospel movement" which provided the political
basis for much of Canada's welfare state, in particular, medicare.

The point I am trying to make here is that markets are just one
institution that interact with political, ethnic, regional, technological,
social institutions to produce the social structure of accumulation,
that useful term given to us by Gordon et al to describe the whole
edifice surrounding the material production of society.  It is that
interaction that, to me, defines modern political economy as
Horvat's definition suggests.  I also think it is entirely in tune with
Marx's conception of political economy.  The 'liberal version',
because of the narrow view of human motivation and the limited
institutional framework ('new institutionalism' a la North) with its
disregard for class and power as the dominant forces _within_ the
market, and its failure to see society as more than the sum of its
parts, is, I would argue, not compatable with classical political
economy be it grounded in Smith or Marx.  (Marshall, as
demonstrated, was aware of the importance of class.  His solution
was to eliminate class, by force if necessary, not to include it in
the analysis of economics.  It seems to me that was the point of
separation.)

Paul Phillips,
Economics,
University of Manitoba