An Economist Misses Her Marx (1944)

Book Review from the January 1944 issue of the Socialist Standard

“An Essay on Marxian Economics," Joan Robinson (McMillan, 7s. 6d)

Those who have read Robert Tressell’s sketch of working-class existence, "The Ragged Trousered Philanthropists," will remember the chapter entitled “The Oblong,” in which Owen, the house painter, tried to explain to his mates the division of wealth among the classes in modern society. Although nicknamed "the Professor,” Owen would hardly have passed first-class in an examination in Marxian economics. None the less, he expressed the gist of the matter fairly clearly in the remark, "As the money they get in wages is not equal in value to the things they produce, they find that they are only able to buy back a very-small part.” (P. 177.)

It is noteworthy that he used the idea of value. Though his two dozen fellow-workers made no pretence of culture, they were not so simple as to imagine that they were reconditioning and re-decorating that most desirable residence, "The Cave,” for the accommodation of any working-class family. So many ceilings sloshed with whitewash, so many walls stripped of old paper, so many rotten floorboards replaced by new ones, new fire-grates for old—all these things had to be brought into relation to the items of subsistence of those who could hardly aspire to a council house in the days of which Tressell wrote. In spite of their obvious differences push-bikes have something in common with Rolls-Royces. Shoddy is akin to broadcloth and black-puddings can be expressed in the same terms as the best grills at the Savoy, i.e., coin of the realm; for all have value. All have occupied a certain portion of the labour-time of society. In this respect they differ only in the quantity of value, in the amount of time which is necessary to produce them. The workers spend more time in producing for their masters than they spend in producing for themselves. This simple fact is hidden by wage-contracts. Like Owen's mates, the majority of the workers think that they are paid for their labour. The "great money trick,” as Owen called it, has to be analysed before the fallacy of their ideas can be grasped.

Any student of Marx knows that he based his analysis of Capitalism upon his analysis of value. Incredible though it may seem, an economist has "discovered" that “none of the important ideas which he [Marx] expresses in terms of the concept of value cannot be better expressed without it.” “An Essay on Marxian Economics," Joan Robinson (McMillan, 7s. 6d.; page 24). 'Again, "No point of substance in Marx's argument depends upon the labour theory of value” (p. 27). Once more, "The concept of value has no more application in the economics of Socialism than it has in the economics of the capitalist system” (p. 33). Readers of Marx may well wonder why such an insult is offered to them, .loan Robinson offers the following explanation: "The chief difficulty in learning from him [Marx] arises from the peculiar language and the crabbed method of argument which he used, and my purpose is to explain what I understand Marx to have been saying in language intelligible to the academic economist” (pp. v and vi), "Foreword.” The result is that, in spite of 114 references to "Capital” (Vols. I, II and III). "as a gauge of good faith” (p. vii), she manages to falsify Marx's meaning on his most fundamental points. Marx, of course, did not write specifically for academic economists. He merely presupposed "a reader who is willing to learn something new and therefore to think for himself” (p. xvi. Author's Preface, "Capital,” Vol. I, Sonnenschein Edition). He had therefore no use for the slick professional jargon current among the above-mentioned gentry, but preferred to express his meaning in terms which he was careful to define. Joan Robinson is equally careful not to define the terms which she coolly substitutes for those of Marx. One can only infer the sense in which she uses a term from the conclusions at which she arrives. Thus she persists in using the term "capital” to refer to what Marx defines as "constant capital," i.e., the money invested in the factors of production (other than human labour-power); such as machinery, raw material, etc.; and has the cool impudence to put forward the following travesty of Marx’s views: "Land and capital produce no value, for value is the product of labour-time” (p. 20). Marx sub-entitled his first volume "A Critical Analysis of Capitalist Production.” The second chapter of volume II is entitled "The Rotation of Productive Capital.” Lastly, in volume I (p. 383), he wrote: ”Machinery, like every other component of constant capital, creates no new value, but yields up its own value to the product that it serves to beget.”

Marx went to considerable pains to make it clear that before the worker can indulge in labour-time he must sell his labour-power to the capitalist; whereupon it becomes just as much a part of productive capital as the machinery, raw materials, etc. Under Capitalism, therefore, production, that is, the labour-process, is a function of capital. It is capital's means of self-expansion.

Money makes money only because labour-power, fraught and sold for money, creates a value greater than its own. It does this by transforming the raw materials, by means of the machinery provided, into articles of consumption; thus preserving their value and adding further value to them at the same time. The process does not end with the bare re-production of their wages by the workers. It goes on in order that they may produce profit. Hence, the struggle between the workers (who are not interested in the production of profit) and their masters (who are) arises from the conditions of production under Capitalism.

Joan Robinson misconceives capital as a material thing. On p. 22 she attempts to distinguish between "capital” and “ownership of capital”; but: what is capital if not a particular form of ownership?

Machinery is not, in itself, capital, any more than is labour-power. Both productive factors have to be purchased by the capitalist and set in motion with a view to the production of profit. We may readily agree that "capital is necessary to make labour productive ” (p. 21) beyond a certain point; but only in the sense that the whip is necessary in order to make the chattel-slave produce. When the means of production have been converted into the common property of society they will have lost their capitalistic character. They will be used for the common good instead of being instruments of exploitation.

A glaring example of Joan Robinson's failure to present Marx's views correctly occurs on p. 27. Quoting two sentences from Vol. III, p. 221, she omits a most important bracket and thus manages to make Marx appear to suggest that "the exchange, or sale, of commodities” will continue under Socialism in spite of the fact that the plain meaning of the first sentence is contrary to any such assumption. When society establishes "a direct relation between the quantity of social labour-time employed in the production of definite articles and the quantity of demand of society for them," it will by that very act abolish the production and exchange of commodities, i.e., of articles of sale. Exchange is manifestly an indirect way of regulating the relationship between the labour-time spent and social demand.

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On this flimsy basis our. authoress proceeds to juggle with alleged "problems of Socialism." These have been neatly exposed by Mr. T. A. Jackson in his criticism of her work (see “Plebs," May, 1943),, though it is to be regretted that even he lapses, however momentarily,' into her jargon when he refers to " increases in capital" in a socialist community,

To the present writer it appears that Joan Robinson's crowning audacity consists of her assertion on p. 42 that “Marx can only demonstrate a falling tendency in profits" (she means rate of profit) “by abandoning his argument that real wages tend to be constant."

This is on the strength of Marx's “assumption" of a constant rate of exploitation in his illustration on p. 247 of vol. III. An examination of this page shows clearly that Marx's purpose here is simply to demonstrate that a given rate of surplus value will express itself in different rates of profit according to the different volumes of constant capital.

As one goes through the chapter one finds that Marx gives illustrations which completely refute Joan Robinson's contention. On p. 253 Marx devotes half the page to showing that a higher rate of exploitation is consistent with a lower rate of profit. Instead of analysing Marx's figures and showing wherein they are wrong, our academic guide trots out some hotch-potch of her own from which her bugbear, the concept of value, has been completely eliminated. This prevents her from showing even what the rate of profit actually is, but she is not to be deterred by mere trifles like that. She proceeds to assert that if (as a result of an increase in productivity) a 10 per cent. increase in constant capital leads to an equal increase in the mass of profit (in terms of “product" as distinct from value) then "the rate of profit on capital would be constant" (p. 44).

A consideration of the following figures should show the falsity of this remark. It will be observed that a principle which applies to a 10 per cent. increase applies equally to an increase of 200 per cent. in capital and profit in terms of “ product," to avoid awkward fractions.

1. Constant Capital £100. Variable Capital £50. Surplus value £50.
2. Constant Capital £300. Variable Capital £25.  Surplus value £75.

In (1) the rate of exploitation is 100 per cent., that of profit 33-1/3 per cent.
In (2) the rate of exploitation is 300 per cent., that of profit 23-1/13 per cent.

In (2) productivity is assumed to have doubled, while real wages (in terms of "product") have remained constant, falling in value by half. The capitalist's share (whether expressed in terms of "product" or value) is now three times us large as that of the worker's, just as the constant capital is three times as large as in the first instance. None the less the rate of profit (as distinct from its mass) has fallen by 10 per cent.

This illustration is not intended to do anything more than to show the unreliability of "the more precise and refined methods of modern analysis " (Joan Robinson's “ Foreword." p. vi), and to point the suggestion that even academic economists might do worse than to read Marx for themselves.

This brief review does not profess to have dealt exhaustively with Joan Robinson's misconceptions. It may be noted, however, that her unreliability is not confined to purely theoretical points. On p. 38 she says, “Marx's argument requires modification if it is to be brought into line with the rise in real wages which has actually occurred in modern times." Here is a magnificent opportunity for her to produce some practical evidence in support of a statement. One looks for it in vain, as we are merely referred to certain unnamed "conservative trade-anion leaders, who look back to their own ragged and barefoot childhood and count up the blessings which Capitalism has brought to the workers." (Footnote to p. 39.)

In his small volume, “The Worker's Share” (Allen A Unwin), Mr. A. W. Humphrey showed in 1930 that, " accepting the estimate of Dr. Bowley and Sir Josiah Stamp, we may say that a problematical 5 per cent. was the only improvement in the average income of working-class households between 1914 and 1929 " (p. 80). Has Joan Robinson forgotten the posters on the hoardings in the winter of 1928-9: " A million of your fellow countrymen are in need of food and clothing"? This referred, moreover, only to the miners, at one time among the highest-paid workers. The fact that some of the lower-paid workers have risen towards the average level in living memory by no means offsets the lot which has overtaken others who were above the average; particularly noticeable being those in the export trades (such as the textiles), shipbuilding, etc. Increases in wage-rates by no means guarantees employment at those rates.

In spite of her academic outlook it must be conceded that Joan Robinson admits the exploitation of the workers, and here and there hints at expropriation of the capitalists as the remedy. She even credits Marx with penetrating insight. Her attempts to criticise his theories, however, fail just as effectively as those of her predecessors.

Eric Boden

Does Mao provide the Answer? (1970)

Book Review from the October 1970 issue of the Socialist Standard

Freedom and Necessity: An Introduction to the Study of Society. Joan Robinson. (Allen and Unwin. 128 pages. 12/-.)

This rather expensive little book by Economics Professor Joan Robinson certainly comes up to her disarming claim that it is “intended to provoke inquiry rather than to give information”, but as its conclusion is to hold China as a model for the future of mankind that is not good enough. Professor Robinson sees Mao's China through rose-tinted spectacles but makes no attempt to back up her claims with solid information or to answer the many criticisms of whose existence she cannot be unaware.

She covers an enormous range of subjects, starting with social groups in the animal kingdom and sweeping through tribal society, feudalism and capitalism, the Russian Revolution and finally Maoist China. Her particular claim is that “Chinese socialism is something new in the world.”

She writes:

   The Czech reformers claimed to establish socialism with a human face. The Chinese have set out on the more ambitious course of establishing economic development with a human sense of values.

She then tells us that we shall have to wait twenty years to see “Whether or not humanity is capable of carrying out such a programme.” Professor Robinson is well aware that exactly the same claims about human values were made by the capitalists who overthrew feudalism, by the Russian Communist party in 1917, and by Labour governments with their so-called “welfare state”. Socialists did not have to wait twenty years to know that these were bound to be empty claims; socialists had the advantage of understanding the basic difference between capitalism and Socialism and of knowing that the state capitalism that Lenin proclaimed as the next step in Russia and that the Labour Party wants in Britain is not Socialism. Professor Robinson shows no such understanding: when she talks of Socialism it is state capitalism she means. For her Russia, as well as China, is “socialist”. She makes no attempt to consider the proposition that the human values she seeks are unattainable except in socialist society as conceived by Marx and the Socialist Party of Groat Britain.

She realises however that she has to show China as being, in some way, different from Russia. She makes many references to the “mistakes” of the Russian government and its tyranny and cruelties, but how is China basically different? For example, in Chapter Eleven (“Another Way") she describes how China has tried to solve its agricultural problems, but it reads exactly like a Communist Party description of Russia’s agricultural policies, including all the familiar features: state farms, collectives, and peasant holdings. In Russia these policies were imposed on the resisting peasants forcibly and brutally. Professor Robinson admits that the Chinese peasant outlook (as in Russia) “did not fit in with the ideals of socialism”, but she blandly tells us that the Chinese peasants “agree” with what the government does to them and accept it “with goodwill”. She gives no evidence for this. She might tell us if the Chinese government allows peasants (and workers) freely to make their own decisions and form their own political parties to further them, and if not why not.

When the Conservative M.P., Sir Fitzroy McLean, went to China in 1963 he said that he found there the same kind of inequalities and privilege that he found when he visited Russia. He wrote:

  In China, as elsewhere, how you live and what you buy depends on how much money you have. And who, it will be asked, has the money? The answer, as in the Soviet Union is: the privileged classes, officials, high-ranking officers, scientists, technicians, skilled workers and so on. But there must be added a small and peculiarly Chinese category: the Chinese capitalists. These, surprisingly enough, are the former owners of, for example, factories, whose enterprises have been taken over by the State and who receive annually from the State as compensation a percentage of the capital value of the enterprise. As they are also very often employed as managers of the factories, some of them are extremely well off.

(Sunday Times, 9 Oct. 1963)

Colette Modiano, the French woman courier in charge of a group of Western visitors to China in 1969, gave a similar account and instanced a manager in whose house they stayed receiving £13,000 a year as interest on the capital value of his business taken over in 1956. (Sunday Express, 28 Sept. 1969.) Does Professor Robinson ask us to believe that lop-paid Chinese peasants and workers approved of these privileged incomes, or indeed, were ever consulted about them?

Professor Robinson does not offer to explain the “human values” of Chinese armaments, including those weapons of mass destruction, the hydrogen bombs which the Chinese government claims it is now perfecting.

Among a number of references to Marx is one concerned with population. Professor Robinson says that Marx was right to criticise Malthus about population, but "unfortunately he drew from this the conclusion that growing numbers are not a menace to well-being.” She holds Marx, at least partly, responsible for the Russian government’s “dogma that family planning is contrary to socialism”. She gives no evidence that Marx held such a view and it is in direct conflict with his own assertion that what he held to be the laws of population under capitalism had no application elsewhere: “every special historic mode of production has its own special law's of population, historically valid within its limits alone. An abstract law of population exists for plants and animals only, and only in so far as man has not interfered with them.” Capital, Vol. I, Chap. XXV, Section 3.) Incidentally. Engels, during Marx’s lifetime, expressed the view that socialist society might find itself “obliged to regulate the production of human beings” (Quoted by Professor Lewis S. Feuer in Marx & Engels. Fontana Classics. (P. 32).

Professor Robinson’s book opens with a not-at-all original saying of Chairman Mao. She and other Mao admirers can now add to their collection of his sayings the most recent of all: he sent greetings to Queen Elizabeth II on her birthday!

Edgar Hardcastle

Marxism's Relevance to China (1973)

From the September 1973 issue of the Socialist Standard

One of the bits of evidence produced by Maoists to show that the policies of the Chinese rulers are “firmly rooted in Marxist theory” is to point to the widespread circulation in China of works by Marx and Engels (and Lenin and Stalin too, of course). In itself, this is an absurd argument: one wonders how many bibles there are in that Christian and neighbour-loving country, the United States. Nevertheless, the prospect of large numbers of Chinese workers reading Marxist writings is one that Socialists can only welcome.

A reading of the writers mentioned above will reveal that they cannot all be fitted into a single system of thought. Marx and Engels provided a scientific basis for the establishment of Socialism, that is, for the emancipation, by their own action, of the propertyless wage-workers who had been brought into being by capitalism. The Bolshevism of Lenin and his successors, in contrast, furnished an ideology for the capture of political power in countries where capitalism was still in its infancy by a minority who would then develop the means of production in those countries along state-capitalist, not socialist, lines. The atrocious experiences of the Russian people under Stalin were an example of such state-capitalist development carried out in a particularly ruthless and violent manner — they were in no sense regrettable aberrations of Marxism.

Exactly which works are published in China is not always clear. One of the works which ought to see the light of day in China is Stalin’s pamphlet Anarchism or Socialism?, originally written in 1906-7. In this quite remarkable tract, the future dictator makes it quite clear that Socialism (he makes no distinction between Socialism and Communism) will be a society without buying or selling, with no need for political power, and without wage labour. No-one could read this section of Stalin’s pamphlet and believe that China was socialist.

However, there are some passages in the writings of Marx and Engels which, considering that they were written upward of sixty years before the Chinese revolution of 1949, are amazingly appropriate to developments in China.

For example let us examine Engels’ essay Socialism: Utopian and Scientific. At one point Engels discusses the way in which the social nature of the productive forces causes competition to give way to monopoly, with the creation of joint-stock companies or trusts. Following this, the state itself (“the official representative of capitalist society”) will have to undertake the direction of production. But, says Engels, the capitalist mode of production remains, whether ownership is in the hands of joint-stock companies or of the state:

The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalist, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage workers — proletarians. The capitalist relation is not done away with.

What better description could there be of state capitalism as it exists today in China, Russia and (in the case of nationalized industries) in Britain? Only one step remains to be taken (though Engels does not take it), the realization that under such a system those who control the state machine can be identified as the ruling class.

Another passage which readers in China would do well to ponder occurs in Engels’ introduction to the English edition of this same pamphlet. He discusses the struggle of the bourgeoisie against the strictures of feudal society, a struggle which ended in the eclipse of feudalism and the victory of capitalism, and singles out “three great, decisive battles” — the Protestant Reformation in Germany, England in the seventeenth century, and the Great French Revolution of 1789. In comparing the features of these revolutionary movements, Engels comments:

Curiously enough, in all the three great bourgeois risings, the peasantry furnishes the army that has to do the fighting, and the peasantry is just the class that, the victory once gained, is most surely ruined by the economic consequences of that victory.

This is a brilliantly accurate picture of what was to happen in China. Peasant armies defeated both the Japanese invaders and the Nationalists under Chiang Kai-shek, bringing to power the Chinese Communist Party. Land reform, the aim of the peasantry and the main reason why they supported the CCP, was carried out over the period of 1950-2, and resulted in a more equitable distribution of landholding, but it was followed by various types of collectivisation, culminating in the communes. There are now no peasants in China (in the sense of agriculturalists who produce primarily for their own consumption on family holdings), only rural wage-workers. The peasantry as a class have certainly been ruined by the consequences of the victory for which they fought so hard (though their material standard of living has certainly been improved — but that is not the point).

One text which certainly ought to be available in China is Marx’s Capital. Its opening sentence is justly famous: “The wealth of those societies in which the capitalist mode of production prevails, presents itself as an immense accumulation of commodities”. This is undeniably correct with regard to China. However much one reads about state regulation of prices, and so on, this does not alter the fundamental reality of commodity production there. Let us look at a recent and naively enthusiastic account of the Chinese economy, Joan Robinson’s Economic Management: China 1972. How can an economist like Robinson, who has read her Marx, reconcile claiming that there is "production for use not profit” with saying “so long as industry yields profit to the state overall, it does not matter that some commodities are sold at a loss”? The proposition that exchange-values and production for use can co-exist is not one that would have appealed to the author of Capital.

Study of the section of Capital dealing with accumulation would help to explain some elements of the Chinese economy which Chinese workers may otherwise find puzzling. The need to accumulate capital is eloquently reflected in labour legislation in China: trade unions, for instance, were urged to organize labour emulation drives and strive to increase production, while workers involved in disputes with management were to maintain production (i.e., not strike). The legislation which set up the first communes laid down that the rate of increase in members’ wages was to be slower than the rate of increase in production; indeed in 1959, about thirty per cent, of commune income was allocated for accumulation. A dilemma of the sort familiar to capitalist governments the world over occurred in 1958: it was found that higher urban wages tended to attract country-dwellers into the cities, so the regime called on enterprises to lower the wages of the lowest-grade workers to the level prevailing in nearby rural areas in order to stem the flow of manpower into cities — in other words, part of the Chinese working class suffered a decrease in their standard of living as a calculated part of national policy. None of this makes sense if one believes that what exists in China is a higher kind of social system than capitalism, but if one views China as a late-developing capitalist country in a hurry to catch up, it is all perfectly natural.

It should be said that some Chinese workers have already realized the true nature of the social system they live under — the Sheng-wu-lien group in Hunan; see the Socialist Standard for November 1969. (In passing, one would like to ask those who believe that the Chinese dictatorship is “democratic”, whether the Sheng-wu-lien document is openly available in China.) Anyone who is able to use his eyes in China is quite likely to come across some of the usual features of capitalism, such as pollution (which is especially bad in big cities like Peking; see the Guardian, January 13), a wealthy élite (who apparently still exist today: see our companion journal the Western Socialist, 1972, No. 3) and, less concretely, an increasing concern with foreign trade. The Chinese rulers may perhaps be aware that in encouraging their subjects to read the basic works of Scientific Socialism, they are placing in the latter’s hands an exceedingly dangerous weapon — a knowledge of Marxism. In other words, capitalism, in China as elsewhere, produces its own gravediggers.

Paul Bennett

When Keynes met Marx (2001)

Book Review from the May 2001 issue of the Socialist Standard

Capitalism and Its Economics: A Critical History. By Douglas Dowd. Pluto Press, 2000.

Douglas Dowd is a radical American political economist who has written extensively about both the development of modern capitalism and its shortcomings. This, his latest book, presents a radical critique of the capitalist system and of the economists who have sought to understand it over the last two centuries and more. Dowd uses some of the analytical tools of Marxism to pursue his critique but in other respects he more closely occupies the territory of left-Keynesianism than Marxism, being something of an acolyte of the late Joan Robinson, who was a key figure in the post-war "Cambridge School" of economics combining Marxian phrases and concepts with a radical Keynesian and interventionist outlook.

Because of this there is a sense that Dowd's radical critique has been refracted too much through the distorting prism provided by Robinson and other writers like Paul Baran. Some of Marx`s key concepts which would have served him well enough-on matters such as inflation, credit and taxation-have been superseded by a more Keynesian framework of analysis to which economic history has, frankly, been rather less kind.

To the extent that he does utilise Marx and the Marxian critique of political economy there can be little doubt that Dowd is at his best as a cogent critic of "conventional" economics and he does a particularly good job exposing some of the ridiculous assumptions bequeathed to the latter-day practictioners of the dismal science. In this sense his book can be seen as a useful companion to Paul Ormerod`s insightful work, The Death of Economics, from 1994.

One of the best sections of the book sees Dowd describing what he calls "The New World Order [of] Globalization and Financialization" and the "Decadent Economics" associated with it. This really is a tour de force through the recent history of the global economy with its heightened concentration of capital, massive trans-national corporations and US economic (and cultural) hegemony. But well-written as this particular section is, it is Dowd`s general preoccupation with the economic history of global capitalism which paradoxically causes the text as a whole to lose some of its focus. Sometimes political economy and economic theory are lost in a potted History of the World-type discourse with large swathes of text on phenomena such as the rise to power of the fascist parties and on the Second World War. This is a shame, for what could have been a useful adjunct to a critique of the economists becomes instead the main focus of attention-and there are already more than enough books about with this type of theme.

Despite this particular shortcoming there is no denying that Dowd is an entertaining enough writer and all things considered there is probably more here for socialists to agree with than to excoriate him for. His analysis of the state of the world economy at present is especially praiseworthy and is prescient indeed given the recent turmoil on the financial markets. In addition, his concern for the wider environmental damage that the market economy is doing to the planet is both justified and relevant. The only great problem with all this-and he is not alone here-lies in his lack of a coherent answer to the apparently insurmountable problems the capitalist economy creates. He calls for a lessening of global inequalities and for "a movement toward economic, political and social democracy" but his readings of Marx should have told him that there can be no such thing if the dictates of the profit system are allowed to hold sway. Unfortunately, when it comes to tackling the problems that capitalism creates, Keynes and Robinson obviously carry more weight in his mind than does Marx, and the solutions he hints at amount, unfortunately, to little more than their own failed suggestions from the last century.

Dave Perrin