peanuts and marx

The longer one goes without posting, the more substantial one feels the return must be. Unfortunately, the substance I have to offer here remains relatively constant. Instead of letting this bad (no posting) equilibrium persist I will just give up on some sort of glorious return. In compensation for a lack in quality, let me give you two items.

No, there is no crude Marxian peanut model of the economy. They are separate points! Peanuts. Then, Marx.

1. Boiled peanuts are absolutely incredible. I do not know much about the peanut industry but it is a shame I went three decades on this earth without trying a boiled peanut. If more posts on boiled peanuts start appearing, please do not mistake me for what people who write cultural columns would call a “foodie.” Boiled peanuts are just really wonderful.

2. I am not sure what to make of this post on Naked Capitalism by Philip Pilkington. Let me quote it at length:

The Metaphysician in Marx: An Unfortunate Historical Non-Event

Marx was close to establishing the truth of the capitalist system. Very close. But he stumbled. This was probably due, at least in part, to his ideological convictions.

Marx asked himself wherefrom the capitalist derived his profit and came to the conclusion that it must be from the worker. Marx, like Ricardo before him, believed that all value came from labour; that is, the blood, sweat and tears of workers. We might find this a convincing argument from a moral perspective – after all, doesn’t the worker do all the work? Or we may not find it a convincing moral argument at all – is that to say that the capitalist literally does nothing? But whether this is morally convincing or not it is, in essence, irrelevant to understanding the processes of a capitalist economy.

Michal Kalecki – whose theory of profit we studied in the last piece – called the idea that profit somehow came from the labourer ‘metaphysical’, and he was right. Marx should have forgotten for a moment abstract questions about where so-called ‘value’ came from and instead looked a little harder at his equation:

M—C—M’

If he had he might have noticed that at a macro-level the profit (M’) in fact must have come in some sense from the original outlay – that is, the investment (M).

In the last piece we saw that this is precisely the conclusion that Kalecki came to. He showed how all profit comes from investment. We also showed that a constant stream of investment is necessary in a capitalist economy in order for profit to continue to be accrued. (Remember that when the capitalist stopped paying his builders to work – i.e. investing in their labour – they became unemployed and the economy was threatened with massive deflation. It was only because the government stepped in with new investment capital that the economy continued to operate efficiently and bankruptcy was avoided).

This passage comes after a generally favorable description of Marx’s M-C-M’ as an important introduction into the character of a capitalist economy. I try to read this in good faith, but it comes across as little more than a signal that he is a “serious person.” When you hear a right of center neoclassical economist criticize Marx, you know they mean it. A left of center liberal like Brad Delong. He is no Marxist. I know Delong disagrees with Marx. I’m not sure about Pilkington. Now I’m not saying Pilkington is an undercover Marxist. On the contrary, I don’t think he thinks very much about Marx either way (which is fine). Maybe there is a term for this – if so let me know – but there is a straw man and then there is this. His mis-characterization of Marx (and Marxian economics) reads like he just needed something, anything, to kick in order to signal his toughness. “I’m no metaphysician!” When Tyler Cowen straw-mans Terry Eagleton it is because he truly dislikes Marxists. Pilkington’s effort seems more…conspicuous.[1]

I don’t like using this space to criticize people, so let me reframe it like this. Some people find Marx and the LTV value useful. We might have different interpretations. We might use it in different ways, but we do not think we are better off completely abandoning it. I would never advise someone with thin skin to make such claims publicly. Expect criticism! Expect criticism from people whose theoretical and/or ideological positions put them at odds with (all) aspects of Marxian theory. But pointless, “let me just throw a few criticisms I’ve heard at a tradition of heterodox economics so that I can push my own marginalized sect without coming off as unserious myself” criticism? Not a huge need for that.

If you follow the comments below the article things get worse. The LTV is old. Theology. A fantasy. Get with the times losers! I get the point. There is nothing new there, but it is just sad to see a Kaleckian adopting this discourse. Pilkington has no duty to agree with Marx, or even be nice, but it is not like Kalecki is the cutting edge of academic research. The “LOL, U GUSY STILL EXIST?” discourse is just as commonly directed at those like Pilkington as it at Marxists. To me it seems nice to resist marginalizing others with the rhetoric you yourself are threatened with. The other option, of course, is to do what Pilkington does.

As for the substance of his argument, it seems obviously wrong. The main point seems to be that the metaphysics of value prevents Marx(ists) from seeing the brilliant Kaleckian insight about investment. No. In short, Pilkington is saying that by explaining the source of surplus value through labor, Marx was unable to ask the question of realization. Marx does not discover the relationship between investments and profits because he already had his answer – labor. Well, Marx (and Marxian economists) have long been concerned about the conditions under which a level of value is realized. Volume 1 largely assumes realization, but Marx is explicit that this is just a temporary assumption. He knows realization matters. One could easily point to Volume 2 and the analysis of simple and expanded reproduction. This is not a perfect model of the capitalist economy, and the assumption about gold money has to be relaxed, but Marx was well-aware that the labor theory of value itself does not answer the question of realization.

Maybe I would agree with Pilkington’s criticisms of Marx’s views on realization/reproduction. Marx is far from perfect, but it is hard to either concede the point, or defend Marx without an actual criticism. Instead we are lead to believe Marx just never thought of this issue because his head was in the clouds.[2]

Since I do not know whether to concede or defend, let me just link:

David Kotz. “Accumulation, Money, and Credit in the Circuit of Capital,” Rethinking Marxism, vol. 4, no. 2, Summer 1991.

If you are pay-walled let me know (although I might actually be myself right now). Who knows if this addresses Pilkington’s concerns, but the article is straightforward. Answers to the question of value do not make issue of realization and money irrelevant and you can get to the importance of investment and monetary accommodation from a standard Marxian starting point.

———-

[1] It might be a case of what the kids on the internet call hippy-punching, but I’m really not up for the task of researching that term.

[2] My biggest pet peeve is the “Marx never thought about…” argument which always comes from people who are sympathetic to Marx but nonetheless think he is worthless. Now, of course, being human Marx did not think of everything but that is trivial. There are probably non-trivial things Marx didn’t think about as well, but they are never the ones people bring up. It is always something like, Marx never realized people could make money on the stock market! Marx never realized capitalist might work too! Marx never realized people might borrow money! Let me put it like this. If Marx never once considered that there was no rule of nature against someone who a capitalist also doing some work, then Marx is a moron. If Marx thought you couldn’t make money in an equity market, or borrow money, then I would [1] think he was a moron and [2] wonder why he bother writing about those things. In such cases, I’m at a lose for words. There are criticisms of Marx’s analysis, and then there is the rumor (popular left-of-center) that Marx just never ever thought of some really basic obvious things at all in any way. It is like people who think Keynes never realized aggregate supply might matter in some way – just too stupid to realize there was a relationship between the stuff we make and our capacity to make that stuff.

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