Daniel F. Vukovich wrote:
>Right I guess, and here we see a very classical, Smithian non-recognition
>of a gap between Value and price. That Hayek -- unlike Schumpeter or even
>Keynes -- knows nothing about marxian economics goes withot saying.
Keynes knew very little about Marxian economics. He picked up the famous
M-C-M' formula from a secondary source, and used it as the basis of what he
called a monetary theory of production, which he was devising in the period
between the Treatise on Money and the General Theory. But he read little of
Marx himself - which didn't stop him from denouncing it as "out of date
controversializing." He prefigured Foucault in saying there was little
difference between Marx and Ricardo. In fact, in my book, Wall Street, I
quote a couple of Keynes's comments on Marx, and compare them to Foucault's
paddling pool passage in The Order of Things (excerpt appended below).
Doug
----
Maynard and Karl (from Doug Henwood, Wall Street: How It Works and for Whom
[Verso], chapter 5, "Renegades")
Ironically, Keynes's interest in a "monetary theory of production" came in
part from his reading of an account of Marx's classic formula of capitalist
production, M-C-M' (CW XXIX, pp. 81-83). By this, Marx meant that the
capitalist throws M[oney] into production - engaging both labor and capital
- to create a C[ommodity] for sale, which returns, if all goes well, a sum
of M'[oney] larger than that laid out at first. Keynes was struck by the
contrast between this and the orthodox idea that entrepreneurs produce
products in exchange for products (or the more modern, apologetic idea that
they produce to satisfy consumers). Under capitalism, the satisfaction of
needs is a positive externality of the pursuit of profit, to use the modern
language - and the planned creation of needs a less positive externality.
Keynes learned this from a second-hand source because he found the original
as unreadable as the Koran: "dreary, out-of-date, academic
controversializing" (CW XXVIII, p. 38) - though Rolf Behrens (1985) argued
that Keynes read more Marx than he admitted or his colleagues knew. As an
economist, Keynes ranked Marx below the monetary cranks - something that
caused Schumpeter (1936) to exclaim: "I am no Marxian. Yet I sufficiently
recognize the greatness of Marx to be offended at seeing him classed with
Silvio Gesell and Major Douglas."12
>Marxism as a political philosophy was a "delusion" (CW XVII, p. 268), an
>"obsolete" and "erroneous=8Acreed which, preferring the mud to the fish,
>exalts the boorish proletariat above the bourgeois and the intelligentsia
>who, with whatever faults, are the quality in life and surely carry the
>seeds of all human advancement." The hated doctrine could do nothing to
>"alter=8Ahuman nature," to make "Jews less avaricious or Russians less
>extravagant than they were before" (CW IX, pp. 258-259). Workers he found
>"boorish," though he generously conceded that they were "not as ugly as
>they might be" (quoted in Perelman 1989, p.7). Civilization is not the
>product of humans working together, but "a thin and precarious crust
>erected by the personality and the will of a very few, and only maintained
>by rules and conventions skilfully put across and guilefully preserved"
>(CW X, p. 447). "The class war," he concluded charmingly, "will find me on
>the side of the educated bourgeoisie" (CW IX, p. 297).
The use of "educated" is an interesting qualification; it reeks of the
English aristocrat's contempt for those ordinary souls engaged in trade;
despite the anti-finance bias of much of his economic writing, in his heart
he seemed closer to the City-gentry nexus than his subsequent reputation
might suggest. His arrogance, another marker of his class, could be
breathtaking at times. Unlike Marx, who wanted to "organize the myriad
Lilliputians and arm them with poisoned arrows," Keynes thought that folks
like him could manage everything through their disinterested
sophistication. Marxism, he claimed, "enormously overestimates the
significance of the economic problem. If you leave that to me, I will look
after it" (CW XXVIII, p. 34).
In fact, he thought the General Theory had solved "the" economic problem,
in both theory and practice. With that single shot, he claimed, he'd killed
both Ricardo and Marx. To Keynes, both belonged to the "self-adjusting
school" of "classical economics" (quoted in Behrens 1985), failing as they
did to grasp the doctrine of liquidity preference and the drag on
investment exerted by high interest rates. Here Marx and Ricardo are joined
in their sunniness. But elsewhere he joined them in gloom: "Marxism is a
highly plausible influence from the Ricardian economics, that capitalistic
individualism cannot possibly work in practice." In both cases, the
equivalence is as strange as Foucault's (1973, p. 262) declaration that the
struggle between Marxians and Ricardians was "no more than storms in a
children's paddling pool," since they both shared a common dream of an end
to History. But Foucault had the excuse of deeming economics a 19th century
concern, an excuse unavailable to an economist like Keynes.13
Keynes could not have read Marx's (1973, p. 410) succinct criticism of
Ricardo and his colleagues for having "conceived production as directly
identical with the self-realization of capital - and hence were heedless of
the barriers to consumption or of the existing barriers of circulation
itself," because the Grundrisse wasn't published until three years after
the General Theory. But it would strike someone who'd bothered to read
Capital as pretty familiar stuff; after all, Ricardo isn't exactly known as
an impassioned prophet of capitalism's demise in quite the same way Marx is.
But Keynes could have read (in German, according to Behrens, which he read
well) this from the third volume of Capital; "Those economists like
Ricardo, who take the capitalist mode of production as an absolute, feel
here that this mode of production creates a barrier for itself and seek the
source of this barrier not in production but rather in nature (in the
theory of rent)" (Marx 1981, p. 350). Were the parasitical landlords
smashed, accumulation could continue apace. Keynes, you could say, sought
the barrier not in nature, but in the mind of the capitalist and in the
excessively austere policy preferences of a sadomonetarist central bank.14
Were the rentiers smashed, then accumulation could continue apace. In that
sense, Keynes had more in common with Ricardo than he would have liked to
admit.
>Right I guess, and here we see a very classical, Smithian non-recognition
>of a gap between Value and price. That Hayek -- unlike Schumpeter or even
>Keynes -- knows nothing about marxian economics goes withot saying.
Keynes knew very little about Marxian economics. He picked up the famous
M-C-M' formula from a secondary source, and used it as the basis of what he
called a monetary theory of production, which he was devising in the period
between the Treatise on Money and the General Theory. But he read little of
Marx himself - which didn't stop him from denouncing it as "out of date
controversializing." He prefigured Foucault in saying there was little
difference between Marx and Ricardo. In fact, in my book, Wall Street, I
quote a couple of Keynes's comments on Marx, and compare them to Foucault's
paddling pool passage in The Order of Things (excerpt appended below).
Doug
----
Maynard and Karl (from Doug Henwood, Wall Street: How It Works and for Whom
[Verso], chapter 5, "Renegades")
Ironically, Keynes's interest in a "monetary theory of production" came in
part from his reading of an account of Marx's classic formula of capitalist
production, M-C-M' (CW XXIX, pp. 81-83). By this, Marx meant that the
capitalist throws M[oney] into production - engaging both labor and capital
- to create a C[ommodity] for sale, which returns, if all goes well, a sum
of M'[oney] larger than that laid out at first. Keynes was struck by the
contrast between this and the orthodox idea that entrepreneurs produce
products in exchange for products (or the more modern, apologetic idea that
they produce to satisfy consumers). Under capitalism, the satisfaction of
needs is a positive externality of the pursuit of profit, to use the modern
language - and the planned creation of needs a less positive externality.
Keynes learned this from a second-hand source because he found the original
as unreadable as the Koran: "dreary, out-of-date, academic
controversializing" (CW XXVIII, p. 38) - though Rolf Behrens (1985) argued
that Keynes read more Marx than he admitted or his colleagues knew. As an
economist, Keynes ranked Marx below the monetary cranks - something that
caused Schumpeter (1936) to exclaim: "I am no Marxian. Yet I sufficiently
recognize the greatness of Marx to be offended at seeing him classed with
Silvio Gesell and Major Douglas."12
>Marxism as a political philosophy was a "delusion" (CW XVII, p. 268), an
>"obsolete" and "erroneous=8Acreed which, preferring the mud to the fish,
>exalts the boorish proletariat above the bourgeois and the intelligentsia
>who, with whatever faults, are the quality in life and surely carry the
>seeds of all human advancement." The hated doctrine could do nothing to
>"alter=8Ahuman nature," to make "Jews less avaricious or Russians less
>extravagant than they were before" (CW IX, pp. 258-259). Workers he found
>"boorish," though he generously conceded that they were "not as ugly as
>they might be" (quoted in Perelman 1989, p.7). Civilization is not the
>product of humans working together, but "a thin and precarious crust
>erected by the personality and the will of a very few, and only maintained
>by rules and conventions skilfully put across and guilefully preserved"
>(CW X, p. 447). "The class war," he concluded charmingly, "will find me on
>the side of the educated bourgeoisie" (CW IX, p. 297).
The use of "educated" is an interesting qualification; it reeks of the
English aristocrat's contempt for those ordinary souls engaged in trade;
despite the anti-finance bias of much of his economic writing, in his heart
he seemed closer to the City-gentry nexus than his subsequent reputation
might suggest. His arrogance, another marker of his class, could be
breathtaking at times. Unlike Marx, who wanted to "organize the myriad
Lilliputians and arm them with poisoned arrows," Keynes thought that folks
like him could manage everything through their disinterested
sophistication. Marxism, he claimed, "enormously overestimates the
significance of the economic problem. If you leave that to me, I will look
after it" (CW XXVIII, p. 34).
In fact, he thought the General Theory had solved "the" economic problem,
in both theory and practice. With that single shot, he claimed, he'd killed
both Ricardo and Marx. To Keynes, both belonged to the "self-adjusting
school" of "classical economics" (quoted in Behrens 1985), failing as they
did to grasp the doctrine of liquidity preference and the drag on
investment exerted by high interest rates. Here Marx and Ricardo are joined
in their sunniness. But elsewhere he joined them in gloom: "Marxism is a
highly plausible influence from the Ricardian economics, that capitalistic
individualism cannot possibly work in practice." In both cases, the
equivalence is as strange as Foucault's (1973, p. 262) declaration that the
struggle between Marxians and Ricardians was "no more than storms in a
children's paddling pool," since they both shared a common dream of an end
to History. But Foucault had the excuse of deeming economics a 19th century
concern, an excuse unavailable to an economist like Keynes.13
Keynes could not have read Marx's (1973, p. 410) succinct criticism of
Ricardo and his colleagues for having "conceived production as directly
identical with the self-realization of capital - and hence were heedless of
the barriers to consumption or of the existing barriers of circulation
itself," because the Grundrisse wasn't published until three years after
the General Theory. But it would strike someone who'd bothered to read
Capital as pretty familiar stuff; after all, Ricardo isn't exactly known as
an impassioned prophet of capitalism's demise in quite the same way Marx is.
But Keynes could have read (in German, according to Behrens, which he read
well) this from the third volume of Capital; "Those economists like
Ricardo, who take the capitalist mode of production as an absolute, feel
here that this mode of production creates a barrier for itself and seek the
source of this barrier not in production but rather in nature (in the
theory of rent)" (Marx 1981, p. 350). Were the parasitical landlords
smashed, accumulation could continue apace. Keynes, you could say, sought
the barrier not in nature, but in the mind of the capitalist and in the
excessively austere policy preferences of a sadomonetarist central bank.14
Were the rentiers smashed, then accumulation could continue apace. In that
sense, Keynes had more in common with Ricardo than he would have liked to
admit.