Notes on Marx's Capital: Introduction
Before starting Marx’s Capital Volume I, I wanted to better understand some context about Marx and his writing. I started by reading the introduction to the Penguine Classics edition I own, written by Ernest Mandel in 1976. It is striking that this introduction was written before the rapid increase in income inequality starting around the 1980s. Mandel’s insistence on the value and ingenuity of Marx’s analysis rings true in a world in which the social distance between the monolithic “working class” and the “capitalist class,” who have grown far more powerful than they were even in 1976.
Though many of Mandel’s points feel stubbornly in support of Marx - or perhaps stubbornly defensive against Marx’s critics - Mandel demonstrates the profound insight and foresight Marx brought to his work.
One important insight, that I feel has been lost in modern main-stream economics but is so obviously at the heart of all economic debates is key to Marx’s theory - that capitalism is as much defined by a system of production as it is defined by a system of power and control. Though economics is often defined to be something like the study of “production optimization and allocation under scarce resources,” in fact I think that a more apt definition of modern economics may be something like “the study of the tradeoffs between scarce resource production/allocation and individual liberties.”
In fact, the economists who bent the field towards an ever growing reverence for the “free-market” emerged very much from a reaction to the authoritarian version of communism enacted in the Soviet Union. For example, according to Benyamin Applebaum, Milton Friedman grew up fearful that any government intervention in markets would result in dangerous infringements on individual liberties, after his family immigrated out of the communist Kingdom of Hungary (now Ukraine). Friedman became an ardent advocate of the idea that the capitalism enables not only economic freedom but also the separation of political and economic power, thereby ensuring political freedom as well. Of course, US politics since the Citizens United decision seems to provide a counterpoint to such a theory.
Communism became synonymous with fascism, state violence, and social control. Was this equivalence necessary? No doubt, the equivalence pushed mainstream economists further away from thinking about economics as inherently linked with power and politics. Instead, modern economists barely consider the field to be anything but the study of capitalist economies. Current empirical economics research certainly captures much more than simple supply-demand relationships. But it remains the case that the vast majority of introductory economics course - and most graduate courses as well! - leave questions related socioeconomic classes, social hierarchy, economic extraction, power, and political ideology.
In the Introduction to Capital Volume I, Mandel lays out in the simplest terms, what is meant by “capitalism” in Marx’s works. Mandel writes
… the capitalist mode of production is fundamentally determined by three conditions and three only: (1) the fact that the mass of producers are not owners of the means of production in the economic sence of the word, but have to sell their labour-power to the owners; (2) the fact that these owners are organized into separate firms which compete with each other for shares of the market on which commodities are sold, for profitable fields of investment for capital, for sources of raw material, etc. (that is, the institution of private property in the economic sense of the word); (3) the fact that these same owners of the means of production (different firms) are, therefore, compelled to extort the maximum surplus-value from producers, in order to accumulate more and more capital …
Though this quote goes on to draw conclusions about the inevitable mechanization of labor and centralized accumulation of capital, the part that I highlight here lays out the core axioms that Marx takes as truly fundamental to capitalism.
The axioms are not very different from those used by modern day economists to understand the dynamics of our current economic systems. One difference I glean is in the nature of the language used to describe the basic functions of the economic system. That is, Mandel uses phrases such as “have to sell their labour-power” and “compelled to extort” to describe the relationship between workers and capital owners. A perhaps more important difference, though not entirely overt, is that while Marx assumes two distinct sets of people as being “producers” and “capitalists,” most contemporary economic models do not model these two groups of people as distinct. In fact, in most neo-classical macroeconomic models and classical models of public finance, households in the economy are all three: consumers, workers, and capital owners. There is not distinction in the groups and thus there is not a power struggle inscribed. In some models, economists allocate wealth disproportionately across households. In some, economic agents are endowed with varying skill levels which determine their wealth and incomes. These models are growing in popularity, but they remain to deal directly with issues of power, ideology, emotion, and class struggle.
However, the modern economist might ask: how should we determine allocations of investment and production if not through an open market? We are all intimately aware of the political challenges of determining how to spend resources - on what goods should we spend money? who is deserving of support from the government? how should we decide the value of various goods and services to people without having a market determine the price that people are willing to pay? For those who (rightly) question the role of capitalism in engendering great inequality, sustained racism, sexism, exploitation of workers, and an inhumane society concerned with material goods over personal spiritual growth and communal values, the question emerges how we’d like to make decisions over our social allocation of resources. And this is so tricky! What mechanisms do we have to determine how to efficiently - and morally! - determine the allocation of resources. In the modern United States of America, it is hard to imagine that there are real resource constraints that we face.
A more global view of the resource allocation problem reminds us of the challenges we face in producing enough for people to meet basic needs and not hinder individual freedoms. For example, Elizabeth Warren liberals even have a hard time considering giving up their private employer-sponsored health insurance. And these are people who overall consider themselves devoted to more equitable distribution of wealth and income. Many people find their political will challenged when affordable housing is on the docket to be built in their neighborhood, threatening the “character” of their community and the value of their homes. It is justifiably scary to give up wealth, privilege, and stability.
Whether or not resource constraints are real and binding, the question of how to determine a moral and efficient allocation of investment, production, and labor remains an open question. Mandel addresses this briefly by arguing that under socialism, demand for labor (as determined by the allocation of productive resources across industries) must be determined democratically. But what is democracy, how do we aggregate preferences democratically, and how do we understand the now obvious relationship between economic resources and political power, even in a so-called “democracy.”
I have no idea. Theses are just my thoughts.