Re: market "socialism," etc.

["Ricardo Duchesne" <rduchesn@xxxxxxxx>]

JD writes:
>
> Marx distinguished an "industrial capitalist" (i.e., the capitalist who
> organizes production) from capitalists in general (those who own the means
> of production). This is not the same as the distinction between the
> entrepreneur and the capitalist, but it is close.

No, it is not close - as is obvious in the dismissive (marxist)
remarks which you and others in pen-l have made about
entrepreneurship.

> Further, he talks about innovation (the activity which distinguishes the
> "entrepreneur" in Austrian lingo), though I don't think he uses that word.
> (The distinction seems an "Austrian" innovation.) For example, in chapter
> 12 of volume I of CAPITAL, he talks about one capitalist introducing an new
> way of producing things and how it is then imitated by other capitalists,
> due to the coercive force of competition.

But the Austrian would never say "coercive force of competition" -
and this is a crucial distinction - since for them  it is not a matter of
a *structure* pushing you do do something which you might
otherwise not want/desire to do.

> Marx's emphasis is on _process_ innovation (rather than product
> innovation),
>
> The Austrians put a big emphasis on prices as signals (of tastes &
> scarcity). My understanding of Marx is that one of the bases of his crisis
> theory is that these signals are wrong in the sense that they do not allow
> "entrepreneurs" to coordinate to prevent underconsumption and the like.
> Prices cannot provide an understanding of the nature of the capitalist
> totality and the conditions needed for its harmonious expanded reproduction
> over time. Instead of gradual change, we see "equilibration" through sharp
> crises.

Schumpeter, on the contrary, minimizes the role of prices in
innovation. Emphasis on prices gives the impression that
capitalists/entrepreneurs are always passively responding to
market signals. But S's concept of "creative destruction" activates
the capitalist  - at the micro-economic level - in a way that M's
theory could never do, since, for starters, M has micro-economic
analysis. S writes: "Economists are at long last emerging from the
stage in which price competition was all they saw. As soon as
quality competition and sales effort are admitted into the sacred
precints of theory, the price variable is ousted from its dominant
position.  "In capitalist reality [what counts is] the competition from
the new commodity, the new technology, the new source of
supply, the new type of organization..."

S never failed to praise M for his emphasis on the dynamic quality
of capitalism, that cap "can never be stationary", but criticises him
for viewing the capitalist as a mere personification of capital, rather
than as an *agent* who understands his own actions and is
consciously, willingly engaged in the market.



> The word "rational" in economics is basically a theoretical fiction.

It is heuristically useful. You seem to confuse two meanings of
rationality, formal and substantive, in the use of  the value-
judgement "narrow-minded individualistic..." in your definition of
economic rationality. It is interesting to note that for Weber
capitalism was irrational at the substantive level.

I don't know about S, but using the word "rational behavior" does
not imply undue emphasis on individuals  - as Michael Perelman
narrowly thinks as well - since we are talikng about rational
behavior as a pattern or sequence of behavior. No reason to keep
fighting the intellectual ghosts of the 50s.

>
 Marx believed, I think, that a holistic approach was superior
> to an individualistic approach.
That is, he made a sociological statement
> that certain kinds of societies produce certain kinds of attitudes. Thus,
> he saw capitalism -- and specifically the societal environment of
> capitalist competition -- as encouraging narrow-minded individualistic
> profit-seeking (one vision of "rationality"). If Marx is seen as explaining
> the basis for profit-maximization, then all the results derived from that
> assumption can be accepted by Marx (as long as unreasonable auxiliary
> assumptions aren't introduced).
>
> Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine
>