NOTE: Free essay sample provided on this page should be used for references or sample purposes only. The sample essay is available to anyone, so any direct quoting without mentioning the source will be considered plagiarism by schools, colleges and universities that use plagiarism detection software. To get a completely brand-new, plagiarism-free essay, please use our essay writing service.
One click instant price quote
... list thinking. The second difficulty pertains to the hypocrisy of Roemer's view on consistency: it is one thing to level a charge of inconsistency against Marx's value theory, and quite another thing to claim that it is not useful to criticize the inconsistency of neoclassical utility and production functions - particularly when those inconsistencies are part and parcel of Roemer's own approach. The whole question of consistency is, in fact, far more complex than Roemer's focus on formal logic allows. In its broadest conception, consistency refers not only to the logical relationship of theorems to postulates, but also to the question of whether a particular theoretical structure provides acceptable solutions for the tasks set for it. That is, the definition of consistency must be extended beyond the question of the internal coherence of a theory's constructs, questions, methods and answers, to account for the external relevance and realism of the theory.
According to Avenell (1983, p. 9): The question of the relevance and realism of a theoretical structure requires judgement with regard to the adequacy of the propositions in question in dealing with the processes of the actual economy. That is, critical assessment of the consistency of the theory in question with the object of investigation. In sum, discussion on the level of relevance and realism turns on whether the right questions have been asked and whether the correct methods and view of the economy are employed. Judgements in this area consequently require the application of criteria external to the theory per se. Avenell suggests that the question of relevance and realism differs from, and goes beyond a simple comparison of theories in methodological terms.
Whereas comparison of one theory in terms of another theory implies, at best, the falsification of one set of propositions with reference to another set of propositions, criticism of relevance and realism requires substantial and continual reference to the underlying epistemological and ontological view being taken, however it is perceived (1983, p. 10). Epistemology - how we construct knowledge of the world - has obvious implications for ontology - what we understand as material and social reality. With respect to epistemology, there are several important differences between Marx and Roemer, including simple differences in the meaning of common terms, and crucial differences in methodology. These differences manifest ontologically in three closely related areas: the delineation of historical periods, the role of production in historical change, and the importance of value theory in economic explanation.
While a discussion of what does (or does not) constitute Marxian epistemology is important and relevant to a full evaluation of the analytic school, the task is well beyond the limited objective of this paper. Rather, in applying Avenell's criteria of relevance and realism, I am concerned with a more modest end: to direct attention to Roemer's stated aim to construct a formal model consistent with the insights of a Marxian view of historical reality and the operation of the economy. The key questions: (1) does Roemer succeed in justifying his claim that methodological individualism and equilibrium analysis are essential to the elucidation of a specifically Marxian vision, and (2) are the central concerns of Marxian economics adequately addressed using the analytic tools favoured by Roemer?
Indeed I shall argue - as Marx did - for the opposite conclusion. In making the argument I will refer primarily to Elster's work, which most clearly reveals the contradictions inherent in an economic theory formulated upon the categorical imperatives of methodological individualism. In Making Sense of Marx, Elster himself specifies the social contradiction of methodological individualism by referring to the nature of inference that proceeds from the individual to the whole. He states the paradox as follows: all social action is considered to be the outcome of individual actions, yet general ising from what is true for any single agent or coalition of agents to what is true for all agents necessarily involves a fallacy of composition (1985, pp. 44 - 45).
This is so because economic agents tend to generalize locally valid views into invalid global statements; that is, individuals fail to perceive that causal relations that obtain ceteris paribus may not hold unrestrictedly (1985, p. 19). In short, when individuals act on the basis of mutually invalidating beliefs, unintended consequences result. Elster labels these unintended consequences counter finality. Essentially, counter finality is the observable substance of the fallacy of composition. It is quite clear, from Elster's own statements, that he considers the social contradictions of counter finality and the fallacy of composition to be important in any adequate appraisal of economic methodology. He declares the extremely powerful idea of social contradiction to be Marx's central contribution to the methodology of social science; at least in so far as he (Marx) demonstrated that in a decentralised economy there spontaneously arises a fallacy of composition with consequences for theory as well as for practice (1985, p. 19).
Yet, implicit in Elster's own concept of the fallacy of composition is the existence of a priori constraints on individual action; and these constraints imply methodological limits on the individual as a primary unit of analysis: Insofar as the fallacy of composition revolves around the non-universality of a given property, a specific limit to universality is obviously a presupposition. However, the refusal of Analytic Marxism to entertain supra-individual entities means that such limits are revealed only ex post facto as counter finality (Lebowitz, 1994, p. 167). In demonstrating the non-universality of a given property, Lebowitz refers to Cohens Structure of Proletarian Un freedom. In Cohens classic example of collective un freedom, ten people are locked in a room, and there is a single key on the floor.
Since any one individual may pick up the key and leave the room, for each individual the property freedom obtains. If we then impose the condition that only that person may leave the room, the individual property - freedom - fails to obtain universally. Lebowitz interprets this outcome as a limitation placed by global constraints, that precede the action of any one individual (1994, p. 167): Significantly, in this [Cohens] example, we have prior knowledge that the relevant property (freedom to leave the room) is non-universalizable. Knowledge of the specific whole in this case is prior in the explanatory order to understanding the conditional and contingent state of the individuals within this whole. More is involved than simply a question of epistemology; it is also an ontological question: the true properties of the individuals are only given by the characteristics of the whole.
Ironically, it is in the much vaunted theory of exploitation that the fallacy of composition implicit in analytic methodology most clearly obtains. Consider Roemer's social withdrawal criterion for exploitation. A coalition of individuals withdraw from society with their share of society's scarce commodities and resources: if each individuals income and leisure hypothetically increases, while the assets of the members of the opposite coalition hypothetically decrease, the withdrawing coalition were exploited; if not then they were not exploited. To make any sense of this criterion of exploitation we must first know how an individuals inalienable share in the social capital is to be measured: How much could a worker produce if she or he had never been trained, socialized and educated in a capitalist system?
If she or he had none of the values, emotions, and passions that the current system has generated? (Hunt, 1993, p. 100). Embedded in the social functioning of an economic system, such assets are not the inalienable properties of individuals, but have meaning and value only in relation to participation. Hence, the central measures of Romerian exploitation - income and leisure and capital, as well as the notions of justice that sustain them - cannot be derived from the properties of individuals alone. Rather, these categories constitute the cultural artefacts of philosophical and economic analysis, their meanings implicit in a particular view of science, and a particular view of socio-economic reality, at a given point in historical time. The idea that economic knowledge constitutes a psychological orientation to economic experience is exemplified in Geertzs ideational definition of culture as a symbolic regulatory system of plans, recipes, rules, instructions - for the governing of behavior (1975, p. 44). Applying this definition, knowledge production within American academia may be thought of as contingent upon conventional understandings of what economics is: Man is precisely the animal most desperately dependent upon such extra genetic, outside-the-skin control mechanisms for ordering behaviour (p. 44).
Or, as Popper would have it, the rational economic individual is not the precondition of society, but a product created by the effort which life in an open, and partially abstract society continually demands from us (1973, Vol. 2, p. 176). Popper rejected methodological individualism: firstly, on philosophical grounds that the presumption of rationality is an outcome of socio-economic life, rather than a presupposition; and secondly, on practical grounds that the presumption of rationality is inessential to a falsification ist reference to external reality. Marx set his own method in opposition to both analytic idealism and positivist objectivity. By contrast with the analytic focus on an imagined activity of imagined subjects and the empiricist obsession with dead facts, the premises of Marxian science are real men, not in any fantastic isolation or abstract definition, but in their actual, empirically perceptible process of development under definite conditions (1983, p. 170). For Marx, a true science of human activity in society must elucidate the constraining conditions, through analysis of the profound interconnectedness of the part and the whole: The social structure and the state are continually evolving out of the life process of definite individuals, but of individuals not as they may appear in their own or other peoples imagination, but as they really are; i.
e. as they are effective, produce materially, and are active under definite material limits, presuppositions and conditions independent of their will (p. 169). Committed to the Cartesian priority of the part over the whole, analytic Marxism reduces Marx's concern with the interconnections between individual action and social change to part of the exogenous data for the maximization problems of individuals (Hunt, 1993, p. 96). On the basis of the presuppositions of methodological individualism, economic reality becomes nothing other than an abstract stage for the elucidation of outcomes arising from infinite wants, under an implicit ceteris paribus assumption that psychological states of rationality remain, in some way, eternally unchanging. In this way, distributional states may be taxonomically specified with reference to counterfactual opposites, without reference to the generative processes of change. Certainly, Roemer's analysis does not preclude speculation as to the counter finality that might result if every individual in a Romerian exploited coalition rationally withdrew from society.
Yet, it is precisely where abstract speculation ends - in real life - that real, positive science begins: the representation of the practical process of development of men (Marx, 1983, p. 170). In reality, the absurdity of the idea that individuals might withdraw from economic activity as a practical prescription for working class action in a real capitalist economy is so transparent as to leave no doubt whatsoever as to the strictly mental and hypothetical nature of the analysis (Hunt, 1993, p. 100). If economic knowledge is perceived to be scientific only insofar as it has implications for real human action in the real world, then Roemer's formal solution to the problem of exploitation is not science, but science fiction (Hunt, 1993, p. 100).
Specifically, Marx was concerned with the inner divisions of the capitalist system into production, circulation and exchange. To explore these inner divisions, the labour theory of value is an indispensable tool, enabling a distinction between labour and labour-power. Under Capitalism, labour-power is a factor of production - the workers inalienable capacity to work - sold on the market like any other commodity; and the price paid for labour-power (the wage) is fair in so far as it is determined in accordance with the principles of supply and demand. Labour - the performance of a specified number of hours of work - can be sold only in an embodied form, in produced commodities. Crucially, the distinction between labour and labour-power - between spheres of production and exchange - implies that while labour is the determinant of surplus-value, that surplus is realizable only in exchange. This inner division, inherent in the concept of capital, appears in exchange where it determines both the sum total of the exchange which can take place and the proportions in which each of these capitals must both exchange and produce (Marx, 1973, p. 443).
For Marx, crises result from an inability to realise the surplus value of produced commodities in the sphere of exchange. This contradiction in the proportions produced and exchanged (overproduction) can exist in conjunction with a competitive market only because it comes out of the fact that workers are important for the market as buyers of commodities. But as sellers of their commodity - labour power - capitalist society has the tendency to restrict them to their minimum price (1978, p. 391 n). In other words, the continuous drive to increase the rate of surplus value (productivity increases above the real wage rate) in the sphere of production produces a barrier to the sphere of exchange because the consumption of workers does not grow correspondingly with the productivity of labour.
As a result the production and exchange of commodities do not necessarily correspond simultaneously in specific and restricted proportions. Lebowitz (1994) points out an evident fallacy of composition in the counter finality of overproduction. Any individual capitalist can alter the technological composition of his or her capital, lower costs of production, and realise the additional surplus values thereby generated. Nevertheless, if we generalize from this locally valid statement to all capitalists, it becomes clear that limits to the rate of surplus value are given by totalities: the level of expenditures on means of production and consumption. Marx's point about the logical priority of the whole is precisely that consideration of supra-individual entities is crucial to the revelation of constraints on individual autonomy, where the form of competition among individual capitals produces an inherent tendency to violate the proportional equalities of production and exchange: the necessary balance and interdependence of the various spheres of production and the proportions between them is achieved through the constant neutralization of a constant disharmony (Marx, 1968, p. 529).
For Marx, recurrent crises of overproduction are the visible manifestations of a conflictual relationship between these separate, and yet interdependent spheres of production and exchange: there would be no crisis without this inner unity of factors that are apparently indifferent to each other (1968, p. 500). At an ontological level, Cartesian commitments to equilibrium analysis do not permit articulation of the relationships among the unity of factors that most concerned Marx. On the contrary, General Equilibrium Theory's singular vision of economy as the result of individual exchanges of sellers and buyers, confines interrelationships to the simultaneous resolution of competing desires in hypothetical environments where vector prices allow no excess of supply. By adding time preferences, Debreus proof of Walrasian theory provides a unique equilibrium where markets clear in all present and possible futures.
The significance for more practical supporters of the theory is that it shows (contra Marx) that the only possible market clearing process in a market is that of perfect competition. Yet, paradoxically, the logical consistency of Walrasian theory results from a rigour that dictates the axiomatic form of analysis in complete disregard for the dynamics of convergence of an economy to Walrasian equilibrium (Wientraub and Mirowski, 1994, http). In other words, Debreus rendered the model logically consistent, at the expense of consistency in relation to the actual functioning of an economy. Rather than model reality, Debreus mathematical formalism destroyed the illusion of Walrasian correspondence to exchange economies by demonstrating once and for all, the disconnectedness of the Walrasian structure from its interpretations (Wientraub and Mirowski, 1994, http): The issue [of the actual motion of market economies] could not be avoided forever, however, and there was a long interval in the postwar period in which dynamics were redefined to mean stability within the mathematical economics community (Weintraub, 1991). In that context, the question was posed by Hugo Sonneschein whether the basic structure of Walrasian general equilibrium models placed any substantial restrictions upon the uniqueness and stability of the resulting equilibria, and he proposed the startling answer: no, outside of some trivial and unavailing global restrictions.
For Weintraub and Mirowski, the importance of Debreus theory of value is precisely that it illustrates the intersection of technical, philosophical and historical concerns when it comes to telling what happens when the sublimity of pure mathematics (the music of reason, as Dieudonne calls it) meets the impurity of scientific discourse, a confrontation which can only be postponed but never altogether prevented (1994, http). Whatever the analytic Marxists may think, the economic activities of individuals (including their own mathematical activities) are social activities, and therefore impure. Since reflection on the impure involves reflection of the relationship of order to disorder, equilibrium analysis provides, at best, an inadequate and reified understanding of the determinations of exchange in actual economies. In his earlier work, Roemer seemed to be aware of these shortcomings, adding a caveat on the lineage of his equilibrium model (1980, p. 524): Certain aspects of capitalist production are captured here, but perhaps not those aspects most important to Marx the capitalist labor process is eclipsed in the present model: there is no theory of what determines technology, the real wage, and the organization of production.
Lebowitz (1994) goes further, arguing that Roemer's treatment of property relations as analytically separate from relations of production introduces profound distortions and intolerance's into Marxian theory. Specifically, his treatment of production as no more than a set of technical relations obliterates the critical distinction between labour and labour power; and so necessarily circumvents a full analysis of the origins of profit, the coordination of production, and the forces that promote technological change. Adhering to tools of Walrasian equilibrium, analytic Marxists are unable to address the key interest of the dynamism of capitalism in producing constant revolutions in the processes of production... Instead, they aim to tidy up the scope of Marxism by removing the study of disorder - and therefore the study of change - from the agenda. Lebowitz's critique brings into full focus our line of inquiry: why should Marxists accept the agenda? Why should the individualist principle hold, given the fallacy of composition, admitted in principle by Elster?
Why should the abstract and historically contingent preferences of the Walrasian framework be taken as the essential structure from which all mathematical work in Marxian economics (indeed all economics) must necessarily depart?
Nowhere are the generally agreed upon facts more clearly in evidence than in Roemer's statements on the labour theory of value: this theory is false, and that is all there is to it. The claim plays an extremely important role in the theory and practice of analytical Marxism. Given that Marxian value theory is false, trivial, obscure, and virtually devoid of content, Marxian economics can be safely declared intellectually dead, without ever engaging the classical critique (Elster, 1985, pp. 161 - 5; 1986, pp. 60, 192). At the same time, the validity of the original conclusion is placed beyond question, mediated by standards of rigor and clarity that form the common sense substance of neoclassical methodology. This method of criticism amounts to a preemptive methodological strike foreclosing debate on the ontological question of the origin of value (Lebowitz, 1994).
The ontological question is one of determination. In justifying his preference for equilibrium analysis, Roemer remarks that analytic Marxists choose models to make the CECP true (1982 c, p. 285). If Marxian theory must be inverted - if values must come to depend on prices in order to make the principle hold - then so be it. The actual correspondence to economic reality of Roemer's value theory is beside the point since his derived theorems are consistent with the simultaneous solutions given by his axiomatic models. These simultaneous solutions then become the tablet of stone through which all of Marxian economics is interpreted. The falsity of Marx's value theory as a price theory is given a priori by its failure to permit Walrasian equilibrium-type solutions to Marxian equalities.
Fine points out that this so-called transformation problem has invariably proved to be the grounds on which bourgeois economics has dismissed Marxism, preoccupied as this economics is with the precise calculation of prices, for which a labour theory of value is irrelevant (Fine, 1988, p. 333). According to Fine, the criteria of bourgeois judgement is itself irrelevant. For Marx, the determinants of value are located not in axiomatic models of market exchange, but in real chronological time and expressed in a description of the circuit of capital through successive cycles of production and exchange. The value of a commodity, determined in the process of production, has no implications for the relation of value to price in the current circuit: today price may exceed value by $ 10, and tomorrow fall below it by $ 20 - so what? Likewise, inputs and outputs cannot be determined simultaneously, and to attempt to do so merely invents an illusionary correspondence of value to price.
Marx attributed this illusion to the vulgar economists (1978, p. 186): value says Bailey, is a relation between contemporary commodities This derives from his general misunderstanding, according to which exchange-value equals value He does not in the least suspect, therefore, that value functions as capital only in so far as it remains identical with itself and is compared with itself in the different phases of the circuit, which are in no way contemporary, but rather occur in succession (my italics). Successivist determination is so central to a Marxian explanation of the genesis, growth and crisis of capitalism that it is difficult to see how anyone could judge the labour theory of value false on the criteria that Marxian equalities fail to hold simultaneously. Yet, this is exactly what Elster does, declaring categorically that Marx certainly intended the labor theory of value to be a theory of prices and profits (1978, p. 70). The same assumption operates in Roemer's claim that Marx thought surplus values became monetized through the price system in a simple way because prices were assumed to be just proportional to the amounts of labor embodied in commodities (1989 a, p. 384). This argument is completely untenable, and nowhere substantiated.
While Marx certainly assumed that commodities are the material depositories of exchange-values, he also perceived the central contradiction of capitalism to be precisely its inability to enable the realization of surplus-values in the realm of exchange. The analytic Marxist claim that Marx intended his values to explain prices is seriously misplaced. It is, if I may, a vulgar bourgeois misreading of Marx. Freeman (1996) agrees, arguing that the transformation problem originates not in Marx, but in Bortkiewicz (an early admirer of general equilibrium theory), who appears to have deemed it his mission to free modern economics from the successives prejudice associated with Marx. Freeman provides an excellent account of the distortions that Bortkiewiczs simultaneous approach introduced into a century of academic debate on the labour theory of value. His conclusion: the death of value is inherent not in Marx's method but, on the contrary, in the logic of Walrasian Marxism.
Freemans crucial point is that the falsity of the labour theory of value rests solely upon academic acceptance of equilibrium analysis and positivist methodology as appropriate methods for doing economics. These methodological conventions exercise hegemony in so far as they dictate the common sense view of what constitutes good economics and good science; they are ideological in so far as they are concerned with the imposition of meanings. In the work of the analytic Marxists, parameters of meaning are defined by exclusion - through reference to professional specialization. Consider, for example, Roemer's exclusion of Marxian political economy from the field of economics on the grounds that its subject matter is more rightly fitted to the study of history! Intolerance of alternative methods and meanings is the hallmark of ideological hegemony, a powerful rational behind the century-long search for appropriate micro-mechanisms to correct Marx's mistakes towards the neoclassical system. A less ideological agenda is surely that of Steedman (1977) who fully recognizes the differences and incompatibilities between economic methodologies.
Although Roemer appears less willing than Steedman to break entirely with Marx, his anti-value polemic is directed to the same effect; only with less honesty in its representation of the alternative view.
In seeking out the generative mechanisms that underlie the social relations of power, Marxism is committed to a process of holistic explanation in which there are no a priori assumptions concerning individual behaviour, or market clearing, or the simultaneous equation of value to price. Failures of understanding at this level of ontology explain why Elster makes non-sense of Marx, why Roemer believes that his model is consistent with Marxism, why both of them regard any defence of the labour theory of value as fundamentalist, and why their own contributions to economic thought are motivated by an arrogant and unsubstantiated dismissal of a method of critique founded precisely on the critique of method. Ironically, in replacing the method of critique with the tools of a hegemonic economic theory, the analytic school have effectively deprived themselves of any opportunity to influence Marxian thinking. Within the conceptual framework set down by methodological individualism and neoclassical general equilibrium, unequal endowments are privileged as the core of an idealized world of agents seeking equilibrium in an idealized market untainted by monetary influences. In such a market, the correspondence between exploitation and class is reduced to the role of a postulate, directing attention away from the study of disorder and crisis, and towards theoretic models that allow the principles to hold. In short, Roemer's models violate the essential Marxian requirement that science move beyond reductionist interpretations of the world defined by fixed states, where determination exists without time.
In evaluating the contribution of analytic Marxism on criteria of relevance and realism, the conclusion is rather obvious: the simplifying - in fact, stultifying - assumptions which analytic Marxists have grafted onto Marx's concepts are not only inconsistent with the aims of Marxian political economy, they are unrealistic; and therefore, irrelevant. Quite simply, analytic Marxists are unable to pose any of the questions that interested Marx.
Free research essays on topics related to: socio economic, economic theory, theory of value, surplus value, political economy
Research essay sample on Marxism And The Labor Theory Of Value
