patnaik marx bourgeois econ

8/8/2019 Patnaik Marx Bourgeois Econ

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Social Scientist

Karl Marx and Bourgeois EconomicsAuthor(s): Prabhat PatnaikSource: Social Scientist, Vol. 12, No. 6 (Jun., 1984), pp. 3-22Published by: Social ScientistStable URL: http://www.jstor.org/stable/3517000

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K a r l M a r x a n d B o u r g e o i s Economics

WHEN Karl Marx died in London in 1883, no English newspaperreported he fact immediately. The first reportto appear in an Englishnewspaperwas after some days in the form of a brief mention,and thattoo was a despatch from the paper's Paris correspondent Like thebourgeoispress, the bourgeoiseconomics profession oo sought to consignMarx to oblivion, initaallythrough a "conspiracyofsilence" abouthiswork,and, somewhat later,whenit did choose to take notice of him,throughcontemptuousdismissals of his work. NeitherCarl Menger,norStanleyJevons,nor LeonWalras, all leading bourgeois economists whoweremoreorless contemporariesof Marx, took any explicit notice ofhim. AlfredMarshalldid, but dismissed him as a tendentious thinkerwho ha(ImischievouslymisunderstoodRicardo. Eugenvon BohmBawerktook him seriously enough to write a book on what he calledthe "GreatContradiction"n the Marxian heoretical ystem,withthe conclusionthat"TheMarxian systemhasa past and a present, but no abiding future."And F. Y. Edgeworth thoughtthat "the importance of Marx'stheories"derived romtheir "wholly emotionalnature.''lToday, a hundredyears afterMarx'sdeath,the attitlldeof bourgeoiseconomicstowardsMarxis ratherdifferent. Not that Marx is not beingrefutedby leading bourgeoiseconomistsall overagain down to this day;not that leadingbourgeois economists do not, on occasions, still makederogatory remarks about Marx: one has only to recollect Keynes'estimateof him as belonging to the dim underworldof heretics,andSamuelson'slabelling him as a "minor post-Ricardian", to convinceoneselfabout this. But the bourgeois profession as a whole is distinctlymore cognizantof Marx, and distinctlymore respectfultowards him, atanyrate fora number of his specific contributions,though, needless tosay? t is as distant fromthe totalityof the Marxian systemas ever; afterall, bourgeoiseconomicswould not be bourgeois economics f it acceptedthe Marxiansystem,but willy-nilly t is forcedto recognise a numberofwhatit would call his "insights". Thischange n the attitudeof bourgeoiseconomics owardsMarxis reflective of the fact that it is much less self-confidentabout its theoretical ystem today than it was a hundred years* Professorof Economics, JawaharlalNehru University,New Delhi and Editor: Social

SCiSlti5't.

PRABHAT PATNAIK*


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4 SOCIAL SClENTISTago. Chanpg reality, incomprehensible ithin the theoretical systemofbourgeoiseconomics,has forcedchanges in the system itself to an extentwhere it is even difficult o talk of a comprehensivesystem of bourgeoistheory. There s no unified body of thought holding sway at the momentin the world of bourgeois economics,as there was a hundredyears ago.This also has meant,however,an end of the smugness and self-confidenceof bourgeoiseconomics,which was so evidenta centuryago. An importantpart of this changing reality of course has been the trsumphof socialismin a part ofthe world coveringa third of humanity, and the progressofdecolonisation n the thirdworld which has thrownup social and economicproblems or which bourgeoiseconomics hasno answers. But perhapsan even more immediate factor behind the break-up of the unity and thedominanceof the theoretical systemof bourgeois economics, which heldsway a centuryago, has been the eruption of severeeconomiccrises in theheartlandof the bourgcoisworld tself, in the advancedcapitalistcountries.This disilltegrationof the bourgeois heoretical system, together with thechanging attitude of bourgeois economics towardsMarx, constitutetheobjectsof investigationof the presentpaper.Marginal Utility Theory

The writings of David Ricardo, the last great representativeofEnglishclassicalpolitical economy, had been put to use in developingasocialist doctrine by a numberof writers in the 1820's, who are oftenreferred o as Ricardian Socialists. Among them were such authors asThomasHodgskin,William Thompson,J.F. Bray and John Gray. TheRicardian Socialists put forwardwhat was essentially a natural rightdoctrine, .e. that labos as the sole active creatorof wealth, had a naturalright to the whole produce, and that profits and rent alike were snatchedfrom labollr as a consequenceof "the legal or artificial"right cndowedonpropertyowners to appropriate the products of other peoples' abour.2Hodgskinwhose two pamphlets were referred to by Marx as "among hemost significant products of English political economy"3, statedcategoncally that society needed capital, not capitalists. While this"naturalright" conception of socialism was evidently pre-scientfic, areactionagainst Ricardo and indeed the e1ltire traditionof value theoryrepresented y Ricardo, developed n bourgeols economics owing to the"dangeroususe" to which the Ricardian oncepts were being put. WhenMalx took over the achievements f Englishpolitical economy, embeddedthem in the comprehensive heoretical systemof scientific socialism,andcstablished political economy as a historical science, the entireclassicaltraditionof value theory, of which Ricardo was the most consistentexponent, became further anathema to bourgeois economics. A whollynewthcoretical system, first advanced systematically n 1811, came todominatebourgeois economtcs,which sought to at itself off from itsmoorings n English classical political economy, especially those veryachievements f it which Marx had lauded,developedand enriched. The


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KARL MARX AND BOURGEOISECONOMICS sproponentsf this systemwereMenger, evons ndWalrasalld while heymaynothave explicitlyaken noticeof Marx, the development f thisentire tradition was in essence battleagainst he hiddenMarx.The starting ointof the analysiswasthe use-value f a commodity,or "utility" s it came o be called,and the exchangealueof commoditieswasexplainedn terms of the attitude f the individual onsumerso thecommoditiess use-values atisfying ndividualwants. At any givenexchange atioof one commodityn termsof another,he amount fthefirstcommodityhatan individualendowedwitha given sum of thesecond (e.g, money) would demand,would depend uponwherehisaddition o utilityby buying moreof the first s exactlycounter-balanceeIby his loss of utility entailedn parting with thesecond. Thus,givensome nitialdistributionf commodities among market-participants eachtrying to maximise his otility, the exchange process would bring about aset of equilibrium exchange-ratios between commodities. But how doesthis initial distribution of commodities or claims upon them come about ?Theconsumers are at the same time suppliers of thc "factors ofproduction", e.g, labour? land, capital, etc. The demand for these"factors of production" is a derived demand, from the demand for thefinal products. Given the state of technology, and given the supplies of thevarious "Eactors of production", the relative prices of these factors woulddepend upon the relative demands for them, arising from the relativedemands for the final goods. Since these relative demands for finalgoods, as we have seen, depend upon the prices of the factors via theconsumption behaviour of the "factor-owners" we have a case ofsimultaneous determination of a general equilibrium. For given factorsuppliesn given techniques of production (i.e., possible factor combi-nations to produce any given product), given tastes, a set of relativeprices in final goods and factor markets woulcI be established, at which thedemand and supply are equal in all markets. Such in essence was thenew value theory of bourgeois economics.

The focus of the theory was on the atomistic individual. Theachievement of the theory in fact was supposed to consist in thedemenstration that the behaviour of atomistic individual decision-makingtInits, each responding, whether as a consumer or as a factor-supplier, toany given set of prices in the markets, which he takes as parameters forhis decisionmaking, leads in the aggreagate to a situation of generalcompetitive equilibrium, with determinate relative prices. There was noscope for the concept of class in this analysis. All the atomistic individualdecisiotl-making units stood on the same footing. There was no essentialdifference for instance between capitalists and workers; they were merel)rfactor-suppliers with diSerent factors to supply. In fact in the formaldemonstration of the theory it was not even necessary to label these factors;they could be any n factors no matter what they were called. The theoryin other words was insistent on symmetry: symmetry between factorsof production, symmetry between preduction and eonsumption, and so on.


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6 SOCIAL SCIENTXSTThis theoreticalapotheosis ofthe apparent symmetryof the market-placebecame possible becausethe theory was almost exclusivelyconcernedwithmarket-phenomena, ith what Marx had calledthe "sphereof circulatin".The sphereof productiondid not merit any separateanalysis according othis new bourgeois theory. Production consisted simply in the combi-nation of the factorsof production. In which possible way the factorswere combinedwas determined, iven the state of technology, upon theirrelativeprices. Hence the analysisof production was simply an extensionofthe analysis of excllange. The essentials ofthe theory remained hesame whetherwe were talking of a primitivebartereconomy or a moderncapitalisteconomy: he theory was fundamentallyunhistorical. Therewasno scope for analysing ocial relationsof productionbecauseproducticn asa historically-conditicned tlmanactivity did not figure n the theory. Thesubjective elationof men to things in the market place occupied itsattention o the exclusion ofthe objective relationof men tomen in thesphereof production. fIence the social relational nature of categorieslike commoditiesSalue, capital, etc., was totally obliterated.All this is quite well-knownand need not be elaboratedhere. On]ytwo featuresof the theory howeverneed to be understood in the presentcontext The first is that there was no scope within it for the concept ofexploitation. The price commandedby each factor reflected ts relativescarcity n the equilibrium situation;distributionwas simply the outcomeof the processof price-determinationnd was conjointly determinedwithit, given the factor supplies,technologyand tastes. Some theoristsof thisgenre of collrse wollld claim ethical neutrality or this theory in the sensethat the theory does not justify why particular actors should be owned byparticularpersons, e.g, why land shouldbe owned by a bunch of landlordsto whom the price of this factor accrues n equilibrium. Their contentionwould be that the theory is concerned only with economic as opposedto sociological mputations as regards the distribution of income. Evenif this contention were true, it permits at best an ethical rather han ascientific concept of exploitation to be extraneously smuggled in tocharacterise n equilbrium situation. When it comes to the factor ofproductioncalled capital, even this alleged ethical neutrality no longerhoIds. Bourgeois theory may not mind if someone calls the landlordsparasites;but it rises to the defence of capital. %'hat is the factor ofproductionwhich the capitalists supply, for which they get a categoryofincomecalled profts ? If it is only the producible means of production,thesemay berelatively scarce n the short-run,entitling their owners, hecapitalists, o an income. But what accounts for a per,retual ategorycalled profits, unless there is a pexpetua] scarcity of these means ofproduction? And how can there be a perpetual scarcity of suchmeans of production which are thelnselves prodllcible, and whosesupplies can therefore be augmented, unless we assume some sort of amonopoly, svhich the theory explicitly repudiates The answer to thisparadox facing the new bourgeois theory was provided by Eugenvon


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KARL MARXAND BOURGEOISECONOMICS 7BohmBawerk,who developed he subjectivevalue theory, brieflysketchedabove, by incorporating nto it asubjective theory of profit. Accordingto Bohm-Bawerk,capital is not a factor of production like land orlabour, etc. Its essence consists in time: more capital-intensivemethods are in essence more time-consumingor more "roundabout"methods. Labourmay directlyproducea particularcommodityunaidedby any implementsor tools. Labourmay however produce the samecommodity n a more "roundabout"way, by firstproducing, asit were,the implements, and then usingthese to produce the commodity. Themore"roundabout" he method, the more "capital-intensive"t can becharacterised as More "roundabout"methods are nlore productive.But the use of more "roundabout"methodsentailscost because"to theoverwhelmingmajorityof men the subjectiveuse-valueof presentgoods ishigher han that of similar future goods " This preference or presentgoods over an equal amount of futuregoods is what he called time-preference. There exists a rate of interest(orprofit)because of this timepreference; its magnitude is determined, as is the price of any othercommodity,by the equilibriumbetween demandand supply for capital,the former arising fromthe greater productiveness of "roundaboutmethods,and the latter beinglimited by time preference. Thus whileabourgeoiseconomist ike Seniorhad attributedprofitsto, "abstinence" nthe partof capitalists,anct Marshall o whathe called "waitings',Bohm-Bawerk ook an essentiallysimilar approach but attributed it to "time-preference",a commonhuman trait,according o him. If there werenoprofits,therewould be no roundabout methods of production, i e., nocapita. Profitswere required o overcomea common humantrait;thoseearning profits were not exploiting anybody, but simply earning acompensation for overcoming their time-preference,which was madepossiblebecauseof theuseof more"roundabout" ndhence more produc-tive methodsthat this gaveriseto. Thustherecould be no ethicalobjectionto profits. Whilethe rent of land need not accrue to a particulargroupof persons,the landlords, profits had necessarily o accrue to those whohad overccomeheirtime-preferenceo makemore "roundabollt"methodspossibleThe second important feature of this new theory is that itnecessarily presupposed he absence of any involuntaryunemploymentof any factorof production. Since thepricesoffactors were determinedin equilibrium by their relative scarcity, any factor which remainedunemp]oyedwouldhave itspricesdrivendownto zero. Long beforethis,however, he factorwouldhave becomefully utilised, since the conditionsof prodllction were alwaysassumed to be such that one factor couldsubstitute or another, and would do so depending upon theirrelativeprices The logic of this system of price-determinationnecessarilypresupposed hat at some priceall supply wollld be demandedn nd thiswas as true of commoditiesas of factorsof production.This entiretheoreticalapparatus,obliteratinghistory,obscuring he


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8 SOCIAL SCIENTISTsocialrelations f production,negatingclassand class-exploitation,ndcalling ntoplayentirelydubious ubjective actors o justify profits,wasfundamentally ntithetical ot only o Marx, but to all thatwas richan


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9ARL MARX AND BOURGEOIS ECONOMICSsavings and investment. This latter equilibrium was cnsured throughchanges n income, and hence employment,becallse savings n the economyas a whole were dependent upOtl he level of income. As a reslllt, giventhe level of investment, independently decidedupon by the capitalists nany period, only that much output was produced and only that muchincome, hence employment, was generated, he savingsout of vvhichwereequal to this level of investment. And this level of employment couId bewell below full employment. To traditionalbourgeois theory's argumentthat reductions in the price ofthe factor of production, labour, wollldincreaseemployment, Keynes' answer was that the wage-bargain beingin money terms, cuts in money wages in competitive conditions wouldlead toparipassufalls in prices, leaving real wages and the employmentsituationunchanged. Keynes' argumenton this last score, which criticisesa traditionalbourgeoisremedy without, in this instanceat any rate, goingbeyond the traditional bourgeois theory, carriedconviction to bourgeoiseconomistswho had witnessed the American PresidentHerbert Hoover'shopelessly unsuccessful attempts to cure the Depression by enforcingwage-cuts.Keynesused his theory to argue the case for state interventionthroughexpenditure nd budgetarypolicies for maintaining a high level ofemployment in capitalist countries; in fact his writing provides thetheoretical underpinning f the economic policies of post-war statemonopolycapitalismuntil recently. He was extremelyaverse to socialismand to Marxist deas and in a letter to Bernard Shaw even claimedthathis theory wouId cut the ground from underneath the Marxists' feet.Nevertheless despite his avowedly bourgeois sympathies,despite thefactthat his theory relies upOIl bourgeois categories and constructs, theproblemhe discussed and highlighted,had already been anticipated byMarx. Marx had already shown the vaceity of Say's Law, namely thatsupplycreates ts own demand, which Keynes was to attack much later.Marx had already criticised Ricardo for denying on the basis of Say'sLaw the possibility of a general over-productioncrisis. What is more,Mars had tracedthis possibilityto its true origin, namely the commodity-form5, rom which he had concludedthat a crisis of ovcr-productionwaspossible even in conditions of simple commodity production through adisruption of tlle C-M-C circtlit. The interposition of money in theprocess of exchangecontained within itself the seeds of a possible generaloverproductioncrisis. With the development of capitalism, how thispossibility nherent in the commodity form may become a reality wasdiscussedby Marx when he had tallced of"realisation crises". It wasnot surprising herefore hat the rediscovery of the "realisation" problemby Keynes should have revived some interest even in the ranks ofbourgeoiseconomists in the works of Marx, which had been assiduously-ignoredor debunked ntil then by the dominantbourgcoisorthodoxy.But Marx had not merelydiscussedrealisationcrises and the generalover-production rising herefrom. He had built up in his two-department


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10 SOCIAL SCIENTISTschemea powerfuland ingenious apparatus for investigating he processof circulation of capital. With this apparates, he realisationproblem,among others, becameanalytically ractable When Keynesianeconomists,whohad stNggled with theproblem, discovered this apparatus in Marxand made subsequent use of it, the interest in Marx's work was furtherenhanced. Joan Robinson, one of the active participants, along withR.F. Kahn, in the formlllation of Keynesianism, reminisces as follows:"Khan, at the 'circus' where we discussed he Treatise in 1931, explainedtheproblem of saving and investmentby imagining a cordon round thecapital-goods ;ndustries and then sttldying the trade between them andthe consumption-goods ndllstries;he was struggling o rediscoverMarx'sschema."ffInterestingly,Michal Kalecki, the Polish economist, who was anengineerbytraining and whose only acquaintance with economics washis stedy of Marx, arrived independently f Keynes and even earlier hanKeynes, at the basic theoreticalconclusions,of Keynes' GeneralTheoryorlthe basis of his familiarity with Marx's reproduction chemes. Kalecki'swork was in many ways analytically sharper than Keynes' and wasunencumberedwith any desireto proSer advice to bourgeoisgovernments,Kalecki having had distinct socialist sympathies. Kalecki analysed asimple economywherethere are only capitalistsand workers. The workersspend their entirewageson consumption; the profits which thecapitalistsas a class are able to realise dependupon the amount that thls cIass itselfspends on consumption and investment. If unsold stocks are quicklyliquidated hroughoutput curtailment y each capitalist, hen the aggregateprofits generated would be no more than what is realised, throughcapitalists'own aggregate pending,whenceKalecki'swell-known phorism:"the workers pendwhat they earn, but the capitalists earn what theyspend". Given the share of profits n net output (or equivalently, giventherateof sutplus value), only thatmuchoutputwouldbeproduced nthe economy, the proSits utof whichare exactlyequalto the sumofcapitalists' investment and consumption during the period, bothindependently determined as the aggregate of individual capitalists'declslons.Inat least tbee respects Kalecki went beyond Keynes: first, heprovidedan explanationof the relative distribution between wages andprofits n terms of what he called the "degreeof monopoly", .e., the extentof profitmark-up over variablecosts that the capitalists wereable toenforce. Secondly,he argued hat if money wage-cutsdid not lead to afall in pricespari passu, but actllally led to a fall in real wages, thenunemployment.nsteadof gettingcured as traditionalbourgeois economicshad assertedand Keyneshad accepted, Yould ctually get aggravated. Socapitalistattempts o pass the burdenof the crisis on to the workerswouldin fact aggavate the crisis, if successfuI. ThirdlyShe argued that in amoderncapitalist economy, full employment or full capacity use may notevenbe attainedat the top of a boom, as the boom may collapse on


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KARL MARX AND BOUROBOISECONOMICS 1laccountof cut-backs n investmenteven before scarcitiesemerge. He alsoclearlysaw that even with Kemesian demandmanagement, tate-monopolycapitalismwould not achieve full employment, becausecapitalism1leededunemployment o coerce the workers.7The Growth DiscussionKeynesian heory, apart fromits direct implications or the earlierbourgeois heorythrough ts demonstration f the possibilityof involuntaryunemployment, ad important ndirect mplicationsas well. It led to a shiftof focus in bourgeoiseconomicsaway from microquestions regarding thedetermination f relativeprices andallocation of resources, owardsmacroquestionsregarding verall output and employment. This,not surprisingly,soon led to a revivalof interest n problemsof growth, .e., how the outputat the macro levelmoves over time. This new theoreticalambience was ofcourse not the sole reason for the revival of interest in the questionofeconomic growth; there were obvious historical reasonsas well for it.The Soviet Union under the five-year plans was experiencingphenomenaIgro^7vthn marked contrast to the capitalist countries. In the post-waryears, apart from the growth-contrastbetweenthewo systems,thereemergeda growth-contrast among the capitalist countries with Japanin particular performing way ahead of some of the other capitaliistcountries. Added to this was the fact that the newly-independentountriesbegan purslling policies to step up their rate of economic grovvth. Thusa new questioningbegan on the subjectof economic growthand bourgeoiseconomicscould not remain mpervious o it.But traditional bourgeois heory was singularly inept athandlingproblemsof economic growth,whilethis had been theSorte of Marxisteconomics, concerned all along with thc macroscopic questions ofaccumulation, technical progress, concentration, centralisation, crises,distribution and the falling tendency of the rate of profit. Bourgeoistheory by contrasthad been generally concernedwith static equilibrium,i.e., with stationary ystems, rather han with growingsystems. This hadnot just been an oversightor a case of imcompletedevelopment. Subjectivevalue and distribution theory, working rom individllal utility to prices,could upto a point be renderedconsistent (though not necessarilyvalid)when all commoditiesappearingon the marketwere finalconsumer goodswith use-values arisingfrom their capacityto satisfy wants immediately.But in a growing systemwith positive net investment,wherea part of thefinal output consists of investmentgoods a consistent utility-based toryto explasn he demand for and the prices of such goods is cxceedinglydiflicult to construct. In short, even if consumption behaviour couldbe explained n terms of utility, investment behaviour couId not be soexplained; attempts o do so gave riseto insurmountableproblems.Like-wise any examination of how even the static equilibriumof bourgeoistheory could be achieved, .e, how the movement romout-of-equilibriumto equilibrium situations could take place, posed serious problems.


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12 SOC1ALSCIENT1STBourgeois heory therefore remained generallycontent with elaborationof static eqllilibrium positions. When interest in growth revived inbourgeois econocs, it was natural therefore hat bourgeoiseconomistsshould discover he limitationsof their own lnherited theory and shouldgrope towards issues and problems which had already made theirappearance n the writin*gsf Marx.The initial move was made by Roy Harrods,a follower of KeyIles,who sollght to extend Keynesian deas to a discussionof growth. Keynes'had been a short period analysis; he had looked only at the demandgeneratingeffectof investment expenditure. But investment expenditurehad another effect as well namelythat in course of time it adds to pro-ductive capacity, so that investment today means larger productivecapacitytomorrow. For this large productive capacity o be adequatelyutilised, demand tomorrow has to be larger than it is today, for whichinvestment-expenditureomorrow has to be even largerthan it is today.This adds still further o productivecapacity in the subsequentperiod, toutilise which, investmentexpenditure n that subsequentperiod has to bestill larger, and so on. WhatHarrod howed s that this balancebetweendemandand capacity can be maintained, and some desired levelofutilisationachieved n successiveperiods, only if investmentgrows at aparticular ate (depending upon the savingsratio and technical factors).Bllt sincecapitalism is not a planned economy, the aggregate investmentthere is not a planned entity. So there is nothing to ensure that invest-ment would actually grow at this particular rate. On the contrary,aggregate nvestment,which is the resultantof investment decisions bymany capitalists, s likely to behave n a destatilisng manner: when forinstance nvestment s low in a particularperiod leading to less than thedesired evel of capacity utilisation, nvestmentplans would be cut backso that in the next period investment would be lower still and capacityutilisationwould fall further, and this would go on. lfiheconversewouldbe the case if investment happens to be higherthan needed to achievethe desired capacity utilisation n any period. Thas, far from achievingthe particular growth-ratewhich alone can ensure stability, a capitalisteconomy acts in a manner whereany deviationof actual growthfromthis rate tends to set up a cumulative upward or downward movement.This so-called equilibrium growth-rate therefore s like a "knife-edge";if by some fluke you happen to be on it, a fall in either directioncarriesyou further and further away, with no automatic tendency o get backonto it.Harrod's demonstrationcarried with it several important mpli-cations. Thefirst and the most obvious concerned the instability ofcapitalism,namelythatthe growth-processunderapitalismcanneverbe crisis-free. Secondly,t suggested hata capitalisteconomywould echaracterisedy more or less chronicunemployment. f a cumulativeupward movementtnngs the economy close to full employment,heeconomy annot stay on there. Theemergencef labour carcitywould


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KARL MARX AND BOURGEOISECONOM]CS 13push the economy downwards, o that at the nlostthere may be briefspells of labour scarcity at the peaksof the booms) bllt for the rest ofthe time there wollldbe unemployment. A third but less obvious impli-cation can be deducedfrom Harrod,which is as follows:Harrod, and subsequentlyDomar9who put forwardsimilar deas,had been ta]king of laissez-faire capitalismwhere the State did not comein to stabilisethe level of economic activity. When the State did do so,however,there was a limitation attendingupon suchintervention, owardswhich this third implication pointed. It State intervention o reduceunemployment takes the form of State investment, then this also addsto productivecapacity n the subsequent period. Now, if this largerpro-ductive capacity s to be adequately utilised in the salbsequentperiod,there has to be larger demand in the economy, for whicheven largerinvestmentwould have to be uncCertaken.But unemployment havingbeen reduced, the utilisation of this larger productive capacity in thesubseqllentpeliod would give rise to labour scal-cityand inflation. Onthe other hand, if the largercapacity is not utilised, andinflation s keptin check, then the unutilisedcapacity would mean a lower rate of profitfor the private capitalists,which they would resent and which wollld setoffa recessionary tendency. The logic ofthe system therefore s suchthat State intervention o reduce unemploymentwouldbe more eSectiveif it takes the form of wastefuland unproductiveexpenditure, han if ittakes the form of productive investment whichadds to productivecapa-city.' It is not surprising that capitalists oppose state investment nthe particular spheres in which they are entrenched,owing totheir fearthat their rate of profit wouId alI.The fact that demand management s better eSected throughunproductive ather than productiveexpenditure had been appreciatedby Keynes himself: "two pyramids, two masses for the dead, are twiceas one, but not so two railways from London to York''.ll And thebourgeois growth discussion also pointed to this fact. As we know ofcourse, it was neitherpyramids nor masses for the dead, but large-scalemilitary expenditurethroughwhich the level of economic activity wassought to be proppedup underpost-warstate monopolycapitalismwhichcame to be dominatedby a tnilitary-industrialomplex.The Harrod-Domar discussion dealt another blow to tbe basicpresuppositions of traditional bollrgeois economics. This had beenconcernedwith showing hat the net result of individualdecision-making,each relating to the marketon his own and maximising his utility orprofits, was a smoothly functioning economywith an automatic endencytowards equlibriumand efflciency. So ingrained was this belief in theefficacyof the market that LudwigVon Mises had built up his caseagainst socialismon the grollnds that it would do away with the market.Here howeverwas bourgeois growththeory showing that far from therebeing any automatic endency owardsequilibrium rowthwith full employ-ment, a system of individual decision-making,based on market signals,


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14 SOCIM SCIENTISTintroduced nstability, rises and more or less chronic unemployment. Andthis is preciselywhat Marx had said. Not only that, Marx had actuallybuiltup in his two-departmentchemaan apparatus or examiIling he wholerange of questions which bourgeois economicswas beginning o discuss,and these schema had been used for discussing questions relating ogrowth by a number of Russian writers, includingLenin, around theturn of the century. Moreover, he points made by Harrod,who likeKeynes had impeccable "credentials", were also being made by manyeconomistswith Marxistsympathies.It was natural therefore that Harrod's and Domar's work shouldarouse much controversy among bourgeois economists. We need notreviewthis controversyhere except to note a basic limitationof Harrod'sapproach. The exclusive emphasis in this approach, as inded in thewhole Keyneslan analysis, was on theproblem of demand, on the ques-tion of "realisation". The bulk of the bollrgeois economists, even ifthey no longer acceptedthe efficacyof the market,comforted hemselveswith the thollght that, with State intervention, the demand problemcould be taken care of, and capitalism made crisis-free. Thus whilebollrgeoiseconomicshad to shed many of its earlier illusions, t cllmg toits euphoriaabout the fate of the system, as patchedup with Keynesiandemand-management. Even those economists with Marxist sympathies,xvhohad emphasised this particular contradiction in capitalism, nvolv-ing deficiency of demand, o the exclusion of other contradictions, oundthemselves n a position wherethey had to shift their critique of capita-lism to moral grounds. Their critique n effect became: "Yes, capita-lism may overcome its crisis, but in what a grotesque way, throughmilitarism and dangerous war-preparations". The fact that the over-coming of this contradiction accentuatedother contradictions, o thatdemandmanagement did not make capitalism risis-free,was not appre-ciated not only by bourgeois economics,which of course s to be expected,but even by those with Marxist sympathies who exclusively mphasisedthe underconsumptionspect.Few bourgeois economists could have anticipated ither the newand protracted risis which amicted capitalism in the seventies, or theeclipse of Keynesianismwhich came about as a result. But to Marxismthis came as no surprise. Marxism does not have a monocausal heoryof crises; contradictions f capitalism inevitably manifest themselves incrises, not necessrily throughone particularroute, but in diversepossibleways. Moreover with the development of capitalism into monopolycapitalism and imperialism, he nature of crises does not stay the same[n short, Marxism s not one particularmodel of capitalist growth. Itencompasses rich complexityand attempts to study cvncrete conditionson the basis of certain categories deriving from the underlying ocialrelations. The post-war bourgeois growth theory was a belated andlimited recognition of one elementof this complexity. Nevertheless tdid play a role in undennining he dominance of that body of bourgeois


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KARL MAU AND BOURGEOISECONOMICS 15theory which had been assiduously developed in implicit or explicitopposition to Marx over a centuryago.The SraffaCritiqueIf Keynesianism nd the growth discussion hat ensued constitutedthe first breach n traditional bourgeois heory, the secoJldbreachcamefrom a differentquarteraltogether. This was madeby Piero Sraffa'sbookProduction f Commodities y Meansof Commodttzeswhich was publishedin 1960. Sraffahad been a close friend of Antonio Gramsci, the ItalianCommunist leader,and was in the process of editing the WorksandCorrespondence f David Ricardo. Sraffa's book contained a logicalcritique of subjectivevallle theoryprecisely on the question of value anddistribution, nd a rehabilitation fthe Ricardian, and llpto a pointofthe Marxian, traditionon this question. Its power lay in the fact thatit showed traditional bourgeois heory to be logically untenable, not justirrelevant r unrealor useless. And this he showed in the contextofstatic equilibriumitselE, .e., in the terrainchosen by traditionalbourgeoistheory tself. Since it was precisely n the realm of value and distributionthat subjectivetheory had been built up as a counter to Marx, Sraffa'sdemolition ob was of great ideologicalsignificance.

Thesubjective theory had explained distributionas an outcomeofthe exchange process. In static equilibrium,all prices, of finalpro-ducts as well as of "factorsof production",were determined n such away that supplyand demandwere equal in every market. But a neces-sary conditionfor such a static equilibrillm o exist at all is that whenthe price of a particularcommodity,whether final good or factor of pro-duction, falls, the demand or it should increase, for only then can aset of determinateprices be said to exist at whichwhat is suppliedwouldbe demanded. For factors of production as conceived in subjectivetheory, this would mean for example that a fall in real wages shouldincrease he demandfor labour and a fall in interestrate, the demand or"capital". And this was supposed o come about throughchanges nthe methodsof production. With a fall in real wages, more labour-intensivemethods, i e., less capital intensive methods, would be used inthe economyr while with a rise in real wages, less labour-intensiveandmore capxtal-intensivemethods would be used. This in turn presupposesthat methodsof productioncan be distinguishedfrom one another interms of higheror lower capital-intensity, uite independentof the wage-rate or the interest-rate;.e, no matterwhat the wage-rate or the interestrate happens o be, we should be able unambiguously o say that methodA is more capital-intensive thanmethodB. And this is exactly whatsubjective value theory assumed. WJhen ohm-Baverk talked of moreor less round-about, i e. capital-intensive,methods of production, theimplicationwas that methods of production could be so arrangedquiteclearlyand unambiguously.What SraSa showed was that such an ordering of methods of


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16 SOCIALCIENTIST

production,.g.,thatA is always more capital-intensivemethodhan

Boesot hold. The reasons quite simple. Whileabour,and,etc.,

areeasuredntheirnaturalunits,e.g., so many man-hours r somany

acres,apital representsvalue um, which anbe evaluatednlywhen

thericesf production,.e. equilibrium ricesensuring qualratesof

profitverywhere,re known. Since he relativepricesofproduction

changeependingpon changesnthe wage-raterin tberateof profit

(owingochangingelativedeviationsfpricesof productionromvalues

inMars'sheory),he physicaImeansof production erunitof direct

labourn methodA may havea lowerorhigher valuesum(evaluated

athericesof production)han n methodB,dependinguponthewage

rate.n short,methodA may& more "capital-intensive"hanB at

someage-rates,ut ess icapital-intensive"t others.Accordingly,raSashowedthatthe idea that withrisingwagesxveoveo moreandmore"capitalintensive"techniqllessan absurd

one. ethodA maybemost profitablet say,a low levelof wages;

methodmaybecomemore profitableaswages increase,btataswages

risetillfurther,methodA may againbecomethe favouredne. And

it isoteven the casethat at every uch switchthe capitalalueper

workernthepreferred ethodwouldbehigher.Insum, thereforehe

very foundationsf subjectivealue anddistributionheoryare logicallyfaulty. The notion of "factor-substitu-tion',ocentralto this theory,hasno meaning,the notion

of oapitalasa"factorf productions'on a parwithlabour has no meaning;

he pricesofroductioncan be determinedonly if the real wage, or

moregenerallydistribution,s already known;andinsteadof distribution

beingan ollt-comef theexchange process, ts determinantsie outside

of the exchangesphere.Realwagesin otherwordsare not such as would bringabout

fiull

employmentfthe labour force.The determinationof realwagestakes

placeta diSerentxt altogether, ndpricesof productionreformedOnlyn the basis of this determination;hey presupposehisdeter-

mination.nRicardo the real wages correspondedo the subsistencerequirementsf theworkers,houghnexplaining hythiswasso Ricardo

hado fallbackon therepugnantMalthusianheoryofpopulation,hich

Marxharacterisedsa '4libelnthehuman ace''. In Marx, hevalueof

labour-powervasdeterminedbythe alueofthe meallsofsubsistence

requiredoritsreproduction,hisbeingunderstoodf coursenotmerely s

a biologicalequirementut containing"historicalndmoral lement"

in t i.e. whatwasdeemed ecessarytany given ime andplace. Thiswtaso becauseherealwaysexisted n industrial eservearmy,so that

theriseof wageswas confinedwithinlimitswhichnotonly eftintact he

foundationsfthecapitalistsystembutalsosecuredts repreductionna

progressive cale. Butthe organisationf workers Marx aid,could

destroy rweaken ;the ruinous Sects of thisnaturalawofcapitalist

productionntheir lass*'.1-So,theideaof realwagesbeingdetermined


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WARLMARX AND BOURGEOISECONOMlCS 17so that the entire labour-supplywas fully employed at that wagewas afable invented by bourgeois apologetic. And SraSa's demonstrationdestroyed he Iogicalbasisof thatfable.Sraffaalso demollstrated thatgiventhe real wage (or the shareofwages), the conditions of production prevailing determine the pricesofprodllction,upon whichthe patternof consumptionand demandhas noinfluencewhatseever. In otherwords, use-value does not enterinto thedetermination fthe pricesof production. If commodities sell at theirpricesof production, his of course presupposes that supplyand demandat theseprices coincide,but this is becausethe amounts of the variouscommodities suppliedhave adjusted to theirrespectivedemands. Thusthe fact that pricesof productioncan prevail only if demandand supplyare equalat theseprices, does not meanthat theseprices aredeterminedby supply and demand. As Mars put it: "It is evident that the reaLinnerlaws of capitalistprc)ductionannotbe explainedby the interactionof supplyand demand...becausethese laws cannotbe observed n theirpure state,until supplyand demand cease to act, i.e., are equated.''l3 Inlecatingthe determinationof pricesof production in the conditionsofproduction, including the conditionsof reproduction f labour-power?i.e., giventhe real wageor the quantities of commodities constituting herequistemeansof subsistenceof the wc)rker,SrafEarevivedthe approachof classicalpoliticaleconomy,especiallyRicardo.SraWa's as a logicalefort. It exposedthe logical inconsistencyofsubjectivevalue theoryand established he logicalconsistencyof Ricardo'sapproach o the question.In doingthe latter, it also validated that partof Marx's discussion which was common ground between Marx andRicardo, .e., the proposition that given the real wage rate thereexist aset of pricesof l?roduction ndependentof demandat which the rate ofprofitis equalised acrossthe different spheres, and that if commoditysuppliesadjustfree]yto demandthe tendency wouldbe for thesepricestobe established. But Marx's value theory was much more than thisproposition. In fact Marx did not discuss pricesof productionand thedeviationof theseprices from labour values until the third volume ofCapttal,and even then, havingnoted it, continuedto tall in terms oflabour-valuemagnitedes. In othel \words,Mars's valuediscussion s notconfinedto the questionof what determines he equilibriumpriceswhichequalise he rate of profit. It providesthe key to an understanding fthe law of motioIlof capitalism that Marx had discovered:the socialrelationsunderlyinghe systemthat made it movenecessarilyn a parti-cularway. It is not a mere simplificationor an expositional device.Labour-valuescorrespondto the social relations of production undercapitalism,observed n theirpureform witholltthe disturbancentroducedfromthe sphereof circulationby the distributionof surplus walueamongcapitalists that gives riseto the deviationof pricesof production fromvalues. Labourvatues therefore correspond o a reality,a deeperrealitythan is revealedby the pricesof productionwhichwouldbc unintelligible


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18 SOCIAL SClENTISTwithout labour-values, ven though tlley deviate from he latter; heywouldbe unintellIgible ecauseprices of productionay nothingwhat-soeveraboutwhere nd how exploitation akes place 1lnder apitalism.Marxwasnot talking lightlywhen he said; "thepriceof productionsan utterly externaland prima facie meaningless ormof the valueofcommodities,a form as it appears in competition,herefore n themind of the vulgarcapitalist,and consequentlyn that of the vulgarecollomist".'4Yet following raSa'swork, here lasbeena revival f Ricardianism,a neo-Ricardianpsurge,whichon the one handstarts analysis romthepricesof productionabandoningabour values altogether, nd with tMarx's aw of value, and on the other handarbitrarily ssimilatesMarxinto Ricardo y borrowing lldividual bits and pieces of Marx'stotaland integratednalysis o createvariants f an ecIectic ystem, which arepassedoSby someasthe essence f Marx,and by others s an improve-mentoverMaIx. We shall briefly return o this pot-pourrin thefinalsection;blltno matterwhatSraffra's nalysismay have spawned,in naccount f the disintegrationf bourgeois heory nda revival f interestin classicalpoliticalconomy, ndby implication t least n Marx, theimportancef its rolemustbe acknowledged.The Impactof DecolonisationAn importantbistorical reason for the eclipse of traditionalbourgeois heorywas inked o the process f decolonisation.Traditionalbourgeoisheorydid not, indeed couldnot, strike oots in the mindsofevenbourgeoisntellectuals ho hadgrown1lp n a colonialmilieu. Theirpractical ife-experience ilitated gainst irutually very single proposi-tion of traditionalbourgeois heory. Its proposition hat no scientificcontent could be pven to the concept of exploitation n economic ifewent agg?inst theirpractical erception f the drain of wealthwhich wenton from heircountrieso the metropolitanountries;ts propositionhattrade,whether etweenpersonsor between ations, benefitedall partieswent against their memoryof the decimation f traditional-craftsndindustries n their own countriesand the absence f significant odernindustrialdevelopment;ts proposition hat capitalismautomaticallyensuredull employmentf all "factorsof production"went against heobservedfact f large-scale pen or disguised unemploymentn theircountries;ts paradigm f atomistic individualsvoluntarilyengaging nexchange n their OWI1elf-interestwent against he history f coercionthathaddraggedheircountriesnto worldcommerce ndkept them hereas recipients fthe burdensof capitalistcrises; its micro preoccupationwithallocation f resourcesn a staticcontext vventagainst their macroconcernwith problemsof nationaldevelopment.In short traditionalbourgeois theory could hardlyhave much appeal even o bourgeoisintellectllalsn colonial countries triving or indepelldence.And afterindependence,s the weightof these countriesand these intellectualsn


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19ARLMARXAND BOAGEOISECONOMICSthe arenaof internationaldiscussions ncreased, he weight and allthorityoftraditioIlalbollrgeois heory correspondingly uffered an attenuation. IXany case, even many bourgeoisgovernments nd bourgeois intellectuals, nThird World countriesswore by some version of home-brewed"sociallsm'or the other; besides, their intellectual concern in the sphere of economicsnecessarilyhad to have a macroscopic and historical perspective. Eventhe so-caIled development theory which emerged in the West had toshare such a perspective. And within this perspective,Marx and Marxisteconomicscould not be ignored. Even while distancing themselves fromMarx, a large number of bourgeois economists rom the Third World,barring hose few who thought salvation ay in the pursuit of WorldBankor IME-favoured olicies, were forcedto reckon with Marxist ideas, andeven to acknowledgeMarx'stheoretical greatness. And this could hardlyfail to aSect bourgeoisdevelopmenteconomics as it emerged n the West.PushingMarxian deas under the carpet was no longer possible. Therealityof neo-colonialism,of the Vietnam war, of neo-colonial aggressi-veness all over the world, further discreditedany attempt to discussproblems of the capitalist world economy, and of the Third World inparticular, n isolation from the socio-historical ontext.In the sphere of economic techniques also, there was a revival ofinterest in Marx. Many Third World countries initiated some kind of"planning"; economists assocIated with this process often had to turn tothe Soviet experienceand the Soviet discussion which had taken Marx asthe point of departure. A striking illllstration was Mahalanobisplan model worked out on the eve of India's Second Five-YearPlaIlXwhich was very similar to the work of a Soviet economistFeldman, that had taken Marss two-department chema as the startingpoint. Like-wise he so-called input-outputanalysis developedby WassilyLeontief,who was in the Soviet Union till 1925 before emigrating to theWest, had its clear antecedents n Marx'stwo-department chema. EGx-amples ofthis kind can be multiplied,but the point is clear; the neglectwhich had shrouded the vvork of Marx in the period of dominance oftraditionalbourgeois heory, with subjectivevalue and distribution heoryas its corner-stone, had to gradually give way to a recognition, evenamong bourgeoiseconomists,of some at least of his theoretical contribu-tions. But this, paradoxically,poses a new and altogether unprecedentedchallengeto .Marxian conomics, to which we now turn.The Specificity f MarxistEconomicsThere is at the momentno single, unifed and dominant theoreticalsystem in the world of bourgeois economics. The system erected ofJevons, Menger and Walras, has been in the process of disintegra-tion. Keynes, who was more concerned as a practical bourgeoiseconomist in stabiIising capitalism through state intervention indemand management, never provided an alternative thcoreticalsystemgomg to the fundamentals of political economy, e.g., the explanationof


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20 SOCIALCIENTISTprofits,s a counter o Marx. And in the current apitalist crisis,even

theKeynesianolicyprescriptions ave been discredited. Attempts havenodoubteenmadeto repaircollapsingtheoretical structures ndto fashionoutfthem something that can hold together. But thesehave

madelittleeadwayas yet. Two consequencesof this situation need

to benotedirst,in the absenceof anydominant heory,a number of alterna-tiveourgeoisandpetty-bourgeoisheories on particularquestions

havecomep. Tendencieswhichhad remained uppressed r marginalised

ntheeriodf dominsce oftraditional bourgeois theorycan assertthem-selvesoreconfidentlynow. Secondly,many of these tendencies employa oodeal of eclecticism. This eclecticismextends to borrowing

parti-

cularitsand piecesfromMarx So the revival of interest n Marx has

alsomplied attempts to assimilate Marx into one or the otherofthe

non-Marxistendencies. ThismovementIlas been paralleledby anotherone. endencies claiming adherence to Marx have simultaneouslybeenttemptingto sCenrich'Marxism by importing into it ideasfromalienendencies which are in fact incompatiblewithits fundamentals.Thismport s oftensoughtto be legitimised by suitably redefiningthe

fundamentalsy drawingdistinctions etween Marx and Lenin, betweenMarxndEngelsand evenwithin Marxhimself. Thas the disintegrationofraditionalbourgeois heory

and the growth of a number of radicalbollrgeoisnd petty-bourgeois tendencies in its place, whilecertainlyrevivingnterest in Marxism, has also led to a blurring of distinctionsbetwea Marxist and non-Marxist tendencies, to a dilution of

thespecificityf Marxism which Marx and Engels had foughtso hard

toestablish.One suchnon-Marxist endencyhas been referred o above,namelyneo-Ricardianism. ustas Sraffa'swork wasfollowedby a neo-Ricardianupsurge, eynes'workwas followed by the growth of a Left Keynesiantendency,wbich was critical of

capitalism on the grounds hat itcouldget rid of unemployment only by a cure which was worsethanthedisease, namely armaments expenditure. These two tendencies

havemuchn common,andtheyalso sharein manyrespects he outlook

of theTnstitlltionalists.'5Theircritiqueof capitalism s essentially moral

one,reminiscentf pre-Manianradicalwriters.Tbefundamentaldifference betweenMarxism and all suchtenden-cies, no matterhow radicalandhow i'sympathetic"to Marx, lies

in thefact that Marxism looks upon capitalism as being subject to a

law ofmotion. Capitalisms a systemgoverned

by economic aws, whichpropelits movement n a particuIar irection. Of coursehow these laws manifestthemselves oncretely,how capitalismdevelopsand behavesconcretely

anbe studiedonlyconcrdely. But such a study is impossible without

ananalysisofthe economic aws ofthe capitalist mode of production.

Thedifferen betweenMan and all pre-Marxiansocialismlay in this.

Pre-Marxian ocialists oo had talkedof expIoitation:Prolldhonhad declared,"propertyis theft"; Hodgskin had said that profit and rentalike

were


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KARL MARX AND BOURGEOISECONOMICS 21filched from labollr. What Marx did was to integrate the phenomenonofexploitationwithhisdiscoveryc)fthe laws of capitalist production. Ex-ploitation can be scientifically analysed within the context ofthese laws,which in turn are what they are because capitalism is a particularkind ofantagonistic nzode of production, based on exploitation. In Marx'stheory, exploitationceased to be a moral concept, a 'ibad thing"; transi-tion to soclalism ceased to be merely a desirable accurlence, "a goodthing" Rather, the laws of capitalist developmentwere such as to createinevitably he conditions or the overthrowof capitalismand the transitionto socialism. To lay bare these laws Marx started with the simplestofrelations n bourgeoissociety, i e., the commodity. The entire discussionon commeditiesand the law of vallle n Vol. I. of Capital s essential forfhts purpose, e., for understanding he laws of the capitalist mode ofproduction.All other tendencies,no matterhow radical, have this in common:they do not look upon capitalismas a law-governed ystem, .e., as a systempropelled by its inner working na certaindirection. To the extent thatthey do use concepts akin to Marx, e.g, exploitation, hese concepts aredetached rom their scientiEc moorings in Marx, from their context of alaw-governed ystem, and restored o their pre-Marxianmoral context. Itis as if the Marxist theoretical framework s shaken oose and conceptswhich had definitescientificmeaningswithin this framework are detachedfrom it and used in an alternative ontest of diSuse radicalism. For thisshaking oose to be successful,a binding material of the Marxist frame-work must first be attacked,and this is Marx's law of value. Abandon-ment of labour-values,depreciationof Marx's Vol. I analysis of the lawof valuen s almost the touchstoneof all non-Marxist theories. And oncelabour-valuesare abandoned, once analysisbegins with prices of produc-tion, once the Marxist heoretical ramework s shaken loose, then even ifdozens of Marx's concepts are employed n some substitute heory, thattheory cannot but be an eclectic one.The superiorityof Marx'stheory which looks at tendencies undercapitalism, over all other pre-Marxian, or currently fashionable non-Marxist radicaltheories, ies in the fact that concrete analysis of concreteconditionscan be undertaken only on the basis of the former. Thelatter's reaction o concrete conditions in usually one of mora3 oppro-brium; or at best the latter can attempt particular empiricist explana-tions and analyses of particular concrete conditions, each such analysisbeing more or less disjointed from similar analysis of ather concreteconditions But to comprehend and analyse the totality of a concretesituation,to locate it in its historical context, to anticipate hepossibili-ties that this situation s pregnantwith: this only Marxism n principlecanachieve, which is why there is a Marxist analysisof history, but notaspecificallyProudhonianone, or a specifically Ricardianor neo-Ricardianone, nor a specificallyLeft-Keynesian ne.


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22 SOCIAL CIENTISTNOTESANDRl;i}.kEN1 Forthese and other similar estimates of Marx by bollrgeois economists seeMauriceDobb, Theoriesf ValuendDistribationinceAdamSmith, CambridgeUniversityPress, 1973,pp. 141-2.2 Dobb, p.cit., pp. 137-141; an extensive treatment of the views of RicardianSocialists is to be found in Marx'sTheoriesf Surplus alue,art III, Ch XXI3 Marx,op. cit. p. 263 (Lawrenceand Wishart,1972).4 Lionel Robbins, TheNaturendSignificancef Economiccience,London, 19355 Marx,Theoriesf Surplusallle, artII, Ch. XVII6 Joan Robinson. "Kalecki and Keynes," in CollectedEconomicapersVol II,(Blackwell, 1975)7 For this last point, see Kalecki, "Political Aspects of Full Employment" inSelectedEssaJson theDynamicsf a Capialist conomy, ambridge 971

8 Roy Harrod, TowardsD2namic conomics,ondon, 1948, which carried orwardhis earlierargumentdevelopedin an articlein Economicournal, 9399 E.D. Domar, "Expansionand Employment,1Americanconomic eview,March194710 For a recognition of this point, see Joan Robinson, "Marx, Marshall andKeynes"in Collectedconomicapersol II, (Blackwell, 1975)11 J.M. Keynes. TheGeneral }teoryfEmployment,nterest nd Money, Macmillan1949),p. 1311 Marx.Capital,Vol I. (Lawrenceand Wishart), p. 64013 Marx, Capita1olIII. (ProgressPublishers,1974),p. 18914 Ibid,p.19815 Institutionalism as a tendency in economics was particularlyin vogue in theUnited Statesin the 1920sand 30s througllthe writingsof Thorskin Veblen, JohnR. Commonsand WesleyC. Mitchell- Although institutionalism neverbecame amajorschool of economic thought, it exerted considerable nfluencethrough theworksof R.H. Tawney, Sidney and Beatrice Webb, nnd continues to do sothrough J.K. Galbraith and othets; Gunnar Myrdal (Asian Dranta) xplicitlyespouses an Institutionalist position- While Institutionalism emphasises theinfluenceof changing customs and institutionSand seeks to explain economicproblemsat least partlyin terms of broadersocial and cultural phenomena, muchof it is of a descriptivecharacter,and in any case quite far removedfrom historicalmaterialism.

patnaik marx bourgeois econ

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