Baran to Sweezy

Palo Alto, California, February 25, 1964

A few lines in haste before dashing off to campus. (1) Muchissimas gracias for the Lekachman volume; I am looking forward to perusing your contribution tonight.1 (2) In the same mail arrived your letter of the 24th. I am seriously worried about IS [The Irrational System chapter] in its present form; although there is—I believe—nothing wrong with the thoughts it contains, it will have to be somehow recast, almost for tactical reasons. Much of it somehow does not belong probably in a book by economists. But anyway, read it first and let me have your reactions; I would like to return to it after everything else is finished—if for no other reason, than simply because this provides for a “cooling off” period. (3) Meanwhile I am 2/3 done with the revision of Chapter 5 [The Sales Effort]—I think, it comes out now quite well—and aim at finishing it this week, at the latest next Monday. At that time, I’ll ship it to you. (4) Could you put at the top of your priorities list a careful going over the Chapter on Conceptual Implications; this is what I must turn to soon as I am done with Chapter 5, and I would very much want to have on the desk your comments as I go at it. After that is done (no later than end of March and probably earlier)—a massive effort to re-vamp all of QoS [On the Quality of Monopoly Society chapters I and II] cum IS. April for QoS II (QoS I requires relatively little doing except incorporating some new data + the material on income distribution when I get it from Aron Douglas who is now working on it), and May for IS revisions and composition of the Epilogue.2 That would then be the finale. Anyway, the way I feel now is Lieber ein Ende mit Schrecken als ein Schrecken ohne Ende [Better a terrible ending than terror without end].

Your having an office out of the house is a tremendous step forward. Delighted to hear it. A further reform of some consequence would be to have the bourbon bottle at some third place (out of the house and out of the office)—then things would really start popping.

The Jack [Rackliffe] situation is most worrisome. Que faire? [What to do?] We must have a decent copy editing job done.

More later.

Sweezy to Baran

Larchmont, New York, March 2, 1964

Dear Paul,

Most of the penciled notes in the margins were written on first reading—don’t remember exactly when. All the separate notes are from over the weekend. Dunno how much help any of them will be.

At some stage we must invite Huby [Leo Huberman] to read the whole ms., and we could make a point to ask him to keep an eye open for obtrusive repetitions, rasping inconsistencies of style, etc. He is of course not an economic theorist but is often very good on matters relating to form and presentation. As to straight copyediting—which I interpret to mean fixing up bad sentences, etc., as well as imposing uniformity in such things as punctuation and capitalization—we might try Vic Bernstein on one chapter and then give him the rest if we like what he does.

Chapter 10—Theoretical Implications [Handwritten Notes]3

Section 1, paragraph that begins “Writing in 1873”

In connection with the query [on the manuscript here]: If I remember correctly—I am writing without access to Capital—Marx dated the transformation of political economy to vulgar economics from the French overturn of 1830 and specifically emphasized Senior’s doctrine of abstinence as its earmark. Mill he conceded to be far above the level of the run of vulgar economists, a sort of hangover of the earlier period. He never really dealt with the subjective value theorists of the ‘60s and ‘70s, but today we would have to recognize their emergence and triumph as marking the final demise of political economy and the enthronement of apologetics. Thus I would say that this whole development antedates monopoly capital. Its explanation I would find, following Marx, in the rise of the proletariat and of socialism which gave birth to Marxism, which also antedates monocap. What one can say is that the arrival of monocap rendered obsolete the apologetics of the subjective-value school(s)—J.B. Clark, intellectually, was the foremost systematizer of the doctrine qua apologetics—and [took on] the task of devising a new system of apologetics. What you describe beginning with the paragraph that begins “Large and important segments” is the way the profession reacted to this challenge.4

Incidentally, I have come to think (in connection with the formulation on the imperialist stage in the “Towards the end” paragraph) that Lenin did a serious disservice when he identified the monopoly phase of capitalist development with imperialism. This almost inevitably gives the impression that imperialism is essentially a new phenomenon dating from the last decades of the 19th century. The result is to direct attention from and play down the importance of the fateful expansion of the Spanish, Portuguese, Dutch, British, and French empires during the 16th, 17th, 18th, and also the first half of the 19th, centuries. It was during that earlier period of expansion that the patterns of rape and destruction and monstrous exploitation of race discrimination and hatred, in a world of development and underdevelopment, were worked out. The final gobbling up of the world after 1870 was a last, not a first, act. I know how misleading Lenin’s theory can be on this matter because I was misled by it. My eyes only began to be opened when I first read (probably around 1940) Dutt’s India Today (a real masterpiece by the way), and the opening was not completed until PEoG [The Political Economy of Growth]. TCD [The Theory of Capitalist Development] bears all too clearly the deforming effects of accepting Lenin’s schema uncritically.5

Section 1, paragraph that begins “This can hardly be said”

I do not believe it could be shown that either Berle or Galbraith “derived their inspiration from Schumpeter.” Since this point is not crucial I would cut it out.6

Section 1, same paragraph

I don’t see why “pragmatic” should be in quote marks, nor do I understand what is “case-by-case” in either of these gentlemen’s [Berle and Galbraith’s] themes. Perhaps if the quotes are taken off “pragmatic” the other expression can simply be omitted. If not, you’ll have to find a formulation which doesn’t suggest the Biz school “case method.”7

Section 2, opening paragraph

If you will read this exposition minus the numerous underlinings I think you will see how dispensable most of them are and how right Jack [Rackliffe] is to delete them in almost 9 cases out of 10.

Section 2, paragraph that begins “Accordingly such criticism”

You will see considerable question and even dissent in the margins of this and the next few pages. They all resulted from the first reading of this draft—last year, or maybe even before that. I now think I can put my finger on what bothered me. The real trouble, it seems to me, with bourgeois economics is that it assumes a whole hierarchy of human wants and related behavior patterns to be inherent in, or perhaps it would be better to say to make up the essence of, human nature, which in turn is as elemental as air, water, and other components of physical nature. The difference between the savage and the rich in modern society is simply that the former has only the means to satisfy the highest-priority wants while the latter can pretty much satisfy the whole range of wants. It never occurs to the bourgeois economists that these want systems are qualitatively totally different. What has to be stressed is this underlying assumption of an elemental, unchanging human nature. As far as economists are concerned, I know of no effort to justify this assumption. For that one has to go to the philosophers and, in the past even more, to the theologians. I have no objection to quoting a few of those worthies to show what arguments are implicit in bourgeois social science (including economics), but I find the attempt to support this exposition by quoting such [figures] as Eisenhower, Kuznets, and Stigler to be less than persuasive.

To put my point in a somewhat different way: I don’t think there is any point in making the distinctions you make between the “autonomous” individual, the god-determined individual, the biotically constant individual, and the “rational” individual. They all come to exactly the same thing, of course, and these are simply different spurious theories to justify the basic assumption involved. What really needs to be done is to press home the point that bourgeois economics does operate with this assumption (whatever justification may be explicitly or implicitly offered for it), that it amounts to universalizing capitalist man (homo economicus is really homo capitalisticus), and that whatever claim bourgeois economics has to provide a justification for the existing social order stands or falls with this assumption.8

Section 2, paragraph that begins “To be sure, the history of thought”

I think the endorsement of capitalist rationality in early capitalism goes too far. Don’t forget what capitalist rationality meant for the “natives” all over the world—which includes most of the natives in the leading capitalist countries themselves. I’m not quite sure what kind of reformulation is needed, but I would like it to be such that, say, a Congolese reading it would not instantly say “shit.”9

Section 2, paragraph that begins “Whatever validity these propositions”

I don’t see why you suddenly bring in the question of the consumer’s knowledge, nor do I see reason to suppose that there was ever any justification for assuming it to be encyclopedic, or anything faintly approaching that state. But maybe you have in mind something that doesn’t come through to me.10

Section 2, same paragraph

I note that you quite often use the expression “revealed preferences”—with or without the quotation—as though everyone will naturally be familiar with it and understand its meaning. I think I probably know what it means, but I don’t know where it comes from, so I would assume it would be wise to assume that it would simply baffle most readers. Can’t some other reading be substituted?

Section 3, paragraph that begins “The situation”

On re-reading I can’t see any relevance to the quotation from Kalecki. You haven’t even raised the question of price flexibility.

Section 3, paragraph that begins “Nor is it possible”

In the discussion of capital, I think it would be good to introduce the question of the ambiguities which result from the tremendous uncertainties about how long a machine, e.g., will remain economically (not physically) viable in view of the enormous rates of technological and product change created by the corporations themselves. It used to be said that one of the insuperable obstacles to automating many processes is the very high cost and uncertainty about whether the automation equipment could be used long enough to get back the entire investment. Recently, however, I was told by some of the Scientific American chaps that the latest advances in miniaturization of computer components will result in such drastic reduction of computer costs that it may be possible fully to automate many processes with the assurance of completely recovering all outlays in one year. In other words, given the possibility to maintain monopoly prices, most of a plant’s capital may be scrapped and replaced annually. Under such circumstances, what is capital and what is just junk? (I suspect, incidentally, that this sort of thing has a lot to do with the maintenance of high levels of investment, and accounts for the weak influence of what seems to be excess capacity in the last few years. Probably some emphasis should be given to this factor in chapters 4 and 8.)

Section 4, paragraph that begins “While thus most”

The opening, transitional paragraph is weak. I think that what needs saying in substance, is that while it is no part of our present purpose to review critically Marxian economic theory with a view to eliminating obsolete aspects, etc., there is one concept which is crucially important and that requires consideration here—economic surplus.

Section 4, paragraph that begins “For this to be true”

Does Marx actually use the expression “socially necessary” in connection with the notion of a historically conditioned minimum living standard? If so, I do not recall it.

Section 4, paragraph that begins “But as the price of labor power”

I don’t think this is correct. Since there presumably still is some irreducible minimum, that would define the value of labor power. What you are saying, in Marxian terminology, I believe is that in the course of capitalist development the price of labor power tends to rise, and to remain permanently above its value. This implies, does it not, that the workers themselves (through unions, political action, etc.) succeed in appropriating part of the surplus value. It also means, of course, that monopolists can (try to) steal some of this surplus value back from them.

Section 4, paragraph that begins “Marx referred to this increase as ‘profits by deduction’”

With respect to “profits by deduction,” I have to repeat what I said on first reading. I think Marx meant by this concept something quite different from what you mean here. He meant deduction from the value of labor power, and the result was a real pushing of wages below the true subsistence level and a failure to maintain the quality of the labor force. (You may well recall the passage about stunting of a whole generation of British workers.) You mean profits by deduction from a price of labor power which is well above its value.

Section 4, same paragraph

I believe it would be preferable to adhere throughout to the view expressed in the previous paragraph, and also expressed in the quotation from Sraffa, namely, that after a certain point in capitalist development the workers begin to share in the surplus. (I believe also, incidentally, that this is a proposition with very important political implications, providing a necessary part of the explanation of Social Democracy and other forms of reformism.)

Section 4, paragraph that begins “As can be readily seen”

I am not clear what is “the difference between what we call ‘economic surplus’ and aggregate surplus value.” I would be inclined to say that we have, perhaps implicitly, defined surplus as aggregate surplus value minus the share of it which the workers are able to capture for themselves. Am I right about this?11

Baran to Sweezy

Palo Alto, California, March 2, 1964

I strongly feel that the editorial expenses associated with the publication of the opus is the “wrongest” possible place for saving a few hundred $$. We have to get the best available editor and pay what it takes to produce a decent book. To the extent that my part of the MS requires more editorial work than yours, and if you do not share my view on the urgency of having a good editor, I am perfectly willing to have all or much more than half of the editorial expenses charged against my share of the royalties. And if it is a matter of liquidity, I do have a few thousand dollars in the savings bank, and would be prepared to advance whatever amount may be needed. There is no point in skimping where the saving involved is relatively small and the harm to the book could be considerable. I do not know whether V. Bernstein is a good editor, but the chances are that he’d do a better job than someone wholly unfamiliar with this kind of stuff.

By the way, as far as copy editing policy is concerned, I am not entirely certain that one has to eliminate all italics. Certainly, too many ain’t good, but why all? Some of the finest writers are using them, and, it would seem to me at least, to good advantage.

In re: Gunder [Andre Gunder Frank]. On the one hand, it is obviously a good thing that he’ll be able to go where he wants to go. Whether it’ll do him any good, and whether he’ll do them any good, is a different question. He is not the type of economist whom they need at the present time, and being cantankerous and “difficult to get along with,” he’ll find himself in troubles and cause troubles in no time. And as far as his work is concerned, what he needs is sitting in a library for a couple of years, and getting his thoughts organized. But anyway, one cannot “plan the unplannable.”12

I have read your piece in Lekachman; it is very nice. As I was reading it, I realized that I had seen it in MS; but in print things do look much better. By the way, the immediately following article by Samuelson (the second that is) is quite instructive; his remarks on Jean Baptiste Kaldor [Nicholas Kaldor] are both amusing and perspicacious.

On some other stuff later. Must run now to the campus.

Baran to Sweezy

Palo Alto, California, March 3, 1964

I was just settling down to work when your special delivery [Sweezy’s March 2, 1964 letter and comments] arrived containing Chapter 10. I shall not discuss now all the points that are contained in your notes, but feel an urge to go into two, because they seem to me to be of central importance in general, and for the opus in particular.

(1) Imperialism. I am afraid that you are too much influenced by (a) “Gunderism,” and (b) the only too natural tendency to be morally revolted by the history of capitalism or for that matter by history in general. There is after all no doubt that history as long as we have known it has been an uninterrupted process of rape, exploitation and violence. To state that is not to state much. The whole contribution of Marx and the essence of dialectics is to discover where and when all this Schweinerei [swinishness] had an intrinsically progressive element in it, and where it was nothing but an effort to perpetuate a lousy status quo. He may have been too optimistic on that count, but in principle, I think, his position was correct. Read the dithyramb on the achievements of capitalism in the Communist Manifesto, or the magnificent finale of the “Future Results of the British Rule in India”: “When a great social revolution shall have mastered the results of the bourgeois epoch, the market of the world and the modern powers of production, and subjected them to the common control of the most advanced peoples, then only will human progress cease to resemble that hideous pagan idol, who would not drink the nectar but from the skulls of the slain.”13 And somewhere—I don’t have the citation offhand—Engels celebrated the U.S. conquest of California as being a great civilizing act taking this land from the Mexican barbarians. The chief point in all of this is obviously that under capitalism “progress” advances only via evil; it advances nevertheless. As I just said, it could very well be that this advance was overestimated, that the revolutionary force of the evil was thought to lead to the great social revolution sooner—but let us not get into the position of saying all of history was bad and immoral, that capitalism was always nothing but ruination of the now colonial and dependent countries, and that we are “agin it.” Lenin’s approach was to see whether there has occurred a specific change in that process of colonial exploitation which alters its nature and modifies its revolutionary impact. He was not right in all he said, but, I think, he was right in pointing out that the organized, “civilized,” exploitation by corporations etc. contributed a substantial departure from the practices of Lord Clive or the conquistadores of old. His theory has to be re-thought but not rejected out of hand. The crux of the problem, as I see it, is at what point does the creation of the world markets, the “civilization” of the underdeveloped countries etc. become a retrograde development and progressive only in the sense that it promotes liberation movements. Lenin believed that that point was reached with the advent of monopoly in the advanced countries. My guess is that he was basically right. To take the position that it has always been the same brings one to the position that Julius Caesar’s treatment of the Huns and Standard Oil’s treatment of Venezuela differ from each other only in name. And, in general, whether or not a Congolese native thinks that something is shit or not, is of no relevance at all. He could apply this very designation to the Communist Manifesto! Either one sticks to Marxian dialectics or else I don’t know what we are talking about.

(2) Surplus vs. surplus value. If under (1) you are a “revisionist”—under (2) you are too orthodox. The surplus we are talking about is much larger than surplus value. In the first place, the “interpenetration effect” [of production and the sales effort] on which I have been now laboring for weeks, has obviously no room in the surplus value concept. In the surplus value concept the sales effort is a deduction from surplus value even as rent, interest, and government taxes. In the surplus concept as we have been trying to develop it a good deal of productive work is surplus without producing surplus value. Under the surplus value concept how could you classify the man hammering chrome on the automobile to be a surplus producer. If my bread loaves example (which you endorse), and if the Kaysen story (which you cite) make sense, then eo ipso one has to expand surplus value to include such resource utilization which within the Marxian system receives no attention and cannot be even accommodated. This, I thought, was the principal thesis of the opus.*

(3) Irreducible wage. This relates directly to (2). If a subsistence wage is assumed (or, for that matter, any irreducible wage) then clearly (a) the mass of surplus value is a datum, monopoly profits can be only the result of its redistribution (what the monopoly capitalists get, the competitive capitalists lose), and (b) all taxes of government necessarily come out of profits (this remark, by the way, in the Gilman review of Perlo in the Winter 1964 issue of Science and Society). For any reduction of the real wage is ex definitione impossible. Again, I thought, that one of the central theses of the opus is to argue the precise opposite. Monopoly capitalists can increase their profits by reducing the real wage which contains a good deal of surplus (as Sraffa noted), the government can collect taxes not out of profits but out of the real wage (in fact most of them come from that source). In The Political Economy of Growth I made a mistake accepting Kalecki’s classical view of the irreducibility of wages and talking about the profit redistribution. This is wrong, I now think. And surely, there is no point now in talking about the subsistence wage as being the value of labor power; I cannot attach any meaning to it. This is like Arzumanian’s and Bettelheim’s old argument (which the latter, by the way, gave up) that immiseration, etc. consist of workers receiving higher wages alright, but those higher wages being lower than the value of labor power….

But on all of this more (implicitly) when I redo Chapter 10; meanwhile, please react to the above!

[Part of letter crossed out.] Started on another point, but decided to postpone that because of time.

Footnote

* You remember our extensive discussion of the difference between “g” workers and “l” workers. Is there any room for this distinction under the surplus value concept?

Sweezy to Baran

Larchmont, New York, March 4, 1964

I don’t know what I said that could have led you to think that I was worried about the expenses of editing the ms. of opus. Anyway, such was never my intention or preoccupation and I apologize. What does worry me is how to get someone who is good for the job. Vic Bernstein may be the right person, but without ever having had him work on anything I’ve been directly involved with I just don’t know. That was the reason I suggested giving him one chapter to do first and then the rest if we like his work. But if you think this unwise I am not opposed to signing him up for the whole remaining job and turning over to him immediately for study the chapters already edited. Let me know.

On italics, I agree that they have their place, and you will note that I didn’t suggest eliminating them all from the theoretical implications chapter. The only point is that if used several times on every page, they lose their effectiveness, just as the term “fucking” loses its effectiveness when used as it is in the army. And they are more dispensable in some people’s writing than in others’ because the former build the emphasis into the vocabulary and sentence structure. In general, I think you belong to this category.

The enclosed is a reply by Gillman to a note congratulating him on his Science & Society review of Perlo. Just FYI—throw away.14

Glad you thought the Lekachman piece came out better in print. I haven’t perused it in that form.

I’m having a hard time writing the May RoM [Review of the Month] commenting on MR’s first 15 years. In preparation, I have had to read over again some 230 RoMs, and I must say it is not a very agreeable experience. To be quite frank most of that stuff is not very good, and the ones that do stand up are too few and far between to redeem the whole performance. The only consolation is: by whom and where was much better current commentary being produced? Intellectually speaking, the world socialist movement ain’t in too hot shape I’m afraid.

But enough such gloomy thoughts and back to turning out some more second-rate poop.

P.S. The de Gaulle performance in recent weeks, with apparently more to come, really requires a deep analysis. It shows what can be done by a country with strictly limited military power in a situation in which those with much greater military power simply cannot make use of it. Atomic weapons are not good against the USSR because they will bring their own doom, and they are no good against guerrillas period. Thus diplomacy gets its chance, and de Gaulle is showing us what a really fantastic lot of room there is to maneuver in. One would think that the British would get the point and start reasserting their own independence, but, alas, such is the lackey mentality of the British that not even the Labour Party shows any sign of wanting to do so—such at any rate is the impression one gets from recent statements of Wilson. Possibly there is more chance of the Tories acting like men than of Labour anyway.

One problem is now beginning to pose itself: by making full use of strategic deals with the Chinese and the Soviet Union, can de Gaulle realistically hope to put France in a position to challenge U.S. leadership of imperialism even if Bonn should remain under Washington’s thumb? It would have seemed a wahnsinnig [insane] question only a few months ago, but now I’m no longer sure.

Baran to Sweezy

Palo Alto, California, March 5, 1964

Your letter of March 4th just arrived. My impression that you were worried about the expense of editing the opus MS originated in your remark over the phone that “beggars cannot be choosers.” If I misunderstood you, all is well. I fully agree with your idea to give Bernstein one chapter and to see how he handles it. If he should do a good job, we should give him more. What I would very much like to ensure is that someone (he, or, if he should be found wanting, someone else) should go over the entire thing, including the material edited by Jack, simply to provide for continuity and uniformity of the editing job.

The attached is the new, and, I hope, not too far from the last version of Chapter 5. I am only a few days off schedule, but would not complain if the chapter would now disappear from my “field of worries.” Please, go over it, and if you think that it is in close-to-final shape, you could give this chapter to Bernstein and see what happens. If you want to make changes in it, je vous en prie [please do]; if you think that I should do something more on it, retournez s.v.p.

Am turning now to Theoretical Implications. This looks like a big job but it cannot be helped. “For him whose striving never ceases,/We can provide redemption”…or something very similar to that effect.15

The enclosed clip from the New York Times is very nice, I saw it myself, and used it for footnote. Thanks.

On other things later. My heart bleeds about your being bogged down in MR work; hope you’ll be able to return to opus soon.

Sweezy to Baran

Larchmont, New York, March 7, 1964

I don’t know what I said that could lead you to suppose that I am in danger of falling into “the position of saying all of history was bad and immoral, that capitalism was nothing but ruination of the now colonial and dependent countries, and that we are ‘agin it.“” Such is very far from the position I would advocate. I am fully in agreement with the view stated in the Manifesto that capitalism was—and to a considerable extent still is, since the computer revolution and also atomic energy both stem directly from capitalist war efforts—the great multiplier of the productivity of human labor. I simply do not want to lose sight of or play down the other side of the coin, which is the ruination of the underdeveloped countries. They did not at any time share in the advance, quite the contrary. And they can only share in the advance by overthrowing capitalist hegemony and making its achievements their own. But why should I waste time saying such things to the author of The Political Economy of Growth?

As to Lenin’s use of the term “imperialism,” that is quite another matter. My main point in this connection was a semantic one and as such not terribly important. By identifying monopoly capitalism with imperialism, by giving that name to the latest stage of capitalism, Lenin inevitably suggested that imperialism, in the usual meaning of the term, did not characterize the earlier stages of capitalism. I cited my own intellectual history to support this point. I don’t suggest, or think there would be any point in, an overt criticism of his usage—at least not in the context of the opus. But I do suggest that we avoid that usage and that when we refer to monopoly capitalism we use that term.

I agree with you, of course, that “the organized, ‘civilized’ exploitations by corporations etc. constituted a substantial departure from the practices of Lord Clive and the conquistadores of old.” But what I would not want to do is to lend any support at all to the view that this difference signalizes improvement from the point of view of the mass of the people in the exploited countries. Ex visu of their position in the world, capitalism was always and remains a disaster; as you say it is progressive for them “only in the sense that it promotes liberation movements”—and in the sense that it prepares the knowledge, technology, etc., which those movements need to create higher social forms. But the latter function is now becoming dispensable since it can also be discharged by the socialist countries. If this view of the matter is correct, however, I don’t see how it can be maintained that on the whole and considering the system as of world-wide scope, capitalism becomes retrograde with the coming to dominance of monopoly in the metropoli. It is only about then that liberation movements really get under way, and surely the technological progressiveness of capitalism does not cease at that point. It might perhaps be argued that the turning point to overall regressiveness is reached when socialism is capable of assuring the continued development of science, technology, etc. But this question needs a lot of thought, which I haven’t given to it. In the meantime, I wonder whether this was really a question Lenin had in mind when he wrote Imperialism. I haven’t looked at that work for some time, but my recollection is that what he was primarily interested in was not the consequences for the underdeveloped countries so much as the effects on the advanced countries—their desperate efforts over the spoils with the consequent militarization of their societies (and mentalities), the generation of a labor aristocracy as the basis of reformism, etc.

When I introduced the question of what a Congolese might think, I was not referring to an illiterate tribesman. Ex definitione, he will not be one of our readers. I am thinking of a Congolese revolutionary Marxist, and I am thinking of him merely as a representative of all the revolutionary Marxists in the underdeveloped countries. I believe they are a very important part of the audience we want to reach. So I think it does matter what they think and that we should consciously try to express ourselves in a way to make them feel that we’re on their side. Naturally, that doesn’t mean pandering to their weaknesses, but it does mean conscientious suppression of great-power or “advanced-country” chauvinism.

In re surplus value versus surplus: please don’t misunderstand me: I am not in the least questioning the tremendous significance of the interpenetration effect and the damage it does to the traditional Marxian schema. My critical remarks were devoted to the other part of your presentation. Let me try to restate.

For Marx the value of labor power is determined by a historically conditioned minimum which is enough to enable the working class to live at a standard which, inter alia, will enable it to reproduce itself in the required numbers and quality. But this is in no sense an irreducible wage. It can be reduced, and at certain times and places has been. The result is a deterioration in the labor force, which Marx certainly thought had happened in England since the beginning of the industrial revolution. The other result is to aid profits by deduction to “normal” surplus value. Though the opposite problem, i.e. the rising of wages above the minimum so defined, did not occur to him, I think there is no doubt that to be consistent he would have had to treat it as Sraffa does, i.e. as a case of workers’ sharing in the surplus. I don’t say that we should adopt this way of handling the problem; I am simply arguing for accuracy and consistency in presenting Marx’s own position.

The question of the dividing line between necessary costs and surplus (in our sense) remains, of course. If it were only a matter of deciding what wage to treat as cost, one could perhaps devise a rational answer (though one would have to recognize that au fond [essentially] it would be merely another form of the solution Marx provided with his concept of the value of labor power). But with interpenetration a major factor, as it undoubtedly is, I wonder if any solution is really rational? The concept of what the same output would cost either under competitive capitalism or under planned socialism has many difficulties, not the least of which is that under neither setup would the “same” output be produced. Sometimes I suspect that this problem may be like some in mathematics and logic, one to which there can be no solution. But how is one to get anywhere without the surplus concept. It is all very worrisome.

I hope the foregoing will not simply serve to muddy waters when what you need is exactly the opposite.

Baran to Sweezy

Palo Alto, California, March 9, 1964

I thought about your letter of March 7th, and while I am far from having any definitive ideas on all the problems involved, it may be useful to write out a few lines for the purpose of Selbstverständigung [self-understanding].

In re: Capitalism’s switch-over from a progressive to a retrograde system. Fortunately, it is not mandatory for us at the present time to make a decision on that matter and to commit that decision to print. It would seem to me, however, that the timing of such a switch-over cannot be made to depend on technological progress such as the development of atomic energy, computers, etc. In other words, one cannot say, I should think, that a social order has become a fetter on the development of the forces of production only when such a development has come to an actual or virtual halt or even commenced to regress. If the occurrence of the switch-over were to be made contingent on such a condition, one would probably have a tough time finding in history a suitable example. From what little I have read about feudalism and mercantilism, there was at no time a condition reached when there was an actual cessation of the development of the forces of production. It may have been at one time slower than another, it apparently kept creeping ahead even in the least productive centuries. From what Christopher Hill, Hobsbawm, and a number of other Britishers have written about the 17th century—a century of crisis—it would seem that even then there were more or less significant advances in both aggregate and per capita output.

The way to look at the matter, I imagine, is not to think about the actual rise in productivity of labor, but about the extent to which the opening up of potentialities for such a rise are being made use of within the existing economic and social order. Those potentialities may be a function of scientific development, of virtually accessible economies of scale, of seizable technical opportunities. They may not be translated into practice, or translated into practice only inadequately because the prevailing relations of production either block or effectively discourage such a translation. The conflict between the development of the forces of production and the existing relations of production is thus not a conflict between the prevalent mode of production and the socioeconomic structure, but a conflict between the productive potentialities that are becoming visible, tangible, realizable and existing property relations, political institutions etc. which begin to play a role of a straightjacket in which the development of productive capacities suffocates. For this conflict to become relevant it is obviously not enough that there should be unutilized potentialities in the realm of the forces of production. There must be also visible, tangible and realizable potentialities in the realm of the relations of production. One without the other creates no conflict.

What is more, the latter potentialities do not rise to the surface without the former. “Mankind always sets itself only such tasks as it can solve; since, looking at the matter more closely, it will always be found that the task itself arises only when the material conditions for its solution already exist or are at least in the process of formation…. The productive forces developing in the womb of bourgeois society create the material conditions for the solution of that antagonism” (Marx, Preface to the Critique of Political Economy, in Selected Works, p. 329).

If there is any merit to the above, then it makes eminently good sense to say that the transition of competitive capitalism to a trustified or monopolistic capitalism which took place, broadly speaking, in the last quarter of the 19th century marks the mutation of the system from being preponderantly progressive to being preponderantly retrograde. This not because there has been no further growth of the forces of production under monopoly capital, but because at that time the possibility for arriving at a social order in which the abolition of scarcity could be actually accomplished has become for the first time in history concrete and real. This possibility was created by the work of Marx, by the swelling of the socialist movement; it became sharply illuminated by the Paris Commune. From that point on, the capitalist system became a retrograde system because its sharp edge was no longer turned against an outlived feudal or mercantilist order but against the virtually possible, realizable socialist order. This is not vitiated by the fact that the forces of production continued to develop under monopoly capitalism, although the fact that their most pronounced development under monopoly capitalism was bought at the cost of devastating wars should never be lost sight of.

All this would have some bearing also on the appraisal of capitalism’s impact on the underdeveloped countries. Without the slightest embellishing of the impact of capitalism (or, for that matter, pre-capitalist) penetration and “opening-up” of the now underdeveloped and dependent countries, it can well be said that monopoly capital has also with respect to the underdeveloped countries turned into a more retrograde system than competitive capitalism because of monopoly capital’s role in blocking, preventing, and distorting the underdeveloped countries’ development is particularly pronounced. It strangles the realization of their potentialities very much more than competitive capitalism did. Thus, far from saying that monopoly capitalism constitutes an improvement for the underdeveloped countries, what I am trying to say is that regardless of whether they do or do not receive railroads or electric power stations which they may not have received (or received to a lesser extent under competitive capitalism) monopoly capitalism constitutes also in the underdeveloped world a more reactionary system than pre-monopolistic capitalism. Simply, because now the problems of the underdeveloped world could be solved within one generation given the existing technological possibilities. Stressing this aspect, I think, is at least to some extent the merit of the imperialism theory. It places the accent not so much on the “old-fashioned” despoliation of the colonies and their merciless exploitation for the benefit of the metropolitan capitals, but the systematic prevention in the underdeveloped countries of a progressive development that is now possible. What the U.S. is inflicting now upon Cuba, South Vietnam, South Korea, all of Latin America is in many regards worse, more outrageous than what was done in the days of plain, undisguised robbery and plantation economy.

To come back to what is immediately relevant to the opus: it would seem to me to be justified to say that with the onset of monopoly capitalism economic theory which continued to justify the capitalist system began to justify the unjustifiable, turned therefore more reactionary than it was before. To that extent, I would say, Marx’s benchmark of 1830 was premature although undoubtedly Nassau Senior and Co. were already visible as the harbingers of what was yet to come. This reactionary character of the theory with regard to the whole system was combined at the same time with its making progress in partial comprehension of capitalist reality. This partial sharpening was going together with rising blindness to the totality of the system, to increasing in a […]

[Editor’s note: The letter ends at this point in mid-sentence. It was never mailed and was found on Baran’s desk at the time of his death on March 26.]

Notes

1. ↩ This refers to Sweezy’s chapter “Keynesian Economics: The First Quarter Century,” in Robert Lekachman, ed., Keynes’ General Theory: Reports on Three Decades (New York: St. Martin’s Press, 1964). It is reprinted in Paul M. Sweezy, Modern Economics and Other Essays (New York: Monthly Review Press, 1972), 79–91.
2. ↩ Baran and Sweezy apparently planned to write an Epilogue at this point, after the “Irrational System” chapter. The Epilogue, though, was never drafted.
3. ↩ The comments by Sweezy here were directed at the earlier, longer forty-two page draft manuscript (“A Conceptual Interlude”). The final, nineteen-page partial text (“Some Theoretical Implications,” covering sections 1 and the beginning of section 2) was redrafted largely in response to these criticisms and has been used as the basis for those parts in the text of “Some Theoretical Implications” published in this issue. Hence, Sweezy’s comments are not directly relevant to the revised text in section 1 and the beginning of section 2 of “Some Theoretical Implications” as published here. But they do point to some of the changes that were made there and why, as well as to certain discussions between the authors. For the latter part of the manuscript (after the first few pages of section 2) Sweezy’s comments become directly relevant to the text published in this issue since the manuscript was not revised in those parts. Nevertheless, in a few instances Sweezy’s suggestions with regard to the original manuscript have been incorporated by the editor into the texts for the later sections as well. Where significant changes were made in the manuscript in response to his comments—whether in the final nineteen-page typescript (in the early parts of the text) or through the intervention of the editor (in the later parts of the text)—this is indicated in the endnotes.
4. ↩ Baran revised the analysis here, which had previously focused on the rise of neoclassical economics as a response to the monopoly stage, in the final, partial version. He incorporated Sweezy’s suggested discussion of the rise of bourgeois apologetics based on Marx’s famous “postface” to Capital, and added to that his own treatment of the further transformations in apologetics that occur with the rise of the monopoly stage.
5. ↩ Baran and Sweezy debated this matter in letters over the next few days (see below). Baran subsequently rewrote the opening to “Some Theoretical Implications” to provide a much more comprehensive analysis of the significance of the transition from competitive to monopoly capitalism and of the role of colonialism and imperialism from the fifteenth and sixteenth centuries on, dropping the reference to the imperialist stage.
6. ↩ Baran removed the phrase referred to here from the nineteen-page version that constituted the final, partial version of the chapter.
7. ↩ Baran changed the disputed phrase to “pragmatic, piecemeal approach” in the final version.
8. ↩ Sweezy’s point here was also addressed in his December 5, 1962, letter to Baran, at the time of his first reading of the “Theoretical Implications” chapter. In that letter he wrote: “The role of the autonomous individual and his needs in the traditional theory (indeed in bourgeois ideology generally) will have to be expanded and strengthened. This is a very important matter, and its treatment in the draft is probably the weakest part. There must be some good books on philosophic individualism which would be helpful and supply some badly needed quotes from the great philosophers and social thinkers.” This was rectified in the final, partial draft. Baran was to substantially rewrite this part of the text, making use of C. B. Macpherson’s recently published A Theory of Possessive Individualism (Oxford: Oxford University Press, 1962).
9. ↩ Baran altered the passages referred to here in the final text.
10. ↩ From this point on Sweezy’s comments relate directly to the text as printed here, based on the original forty-two-page draft (“A Conceptual Interlude”), rather than to the shorter nineteen-page final draft of sections I and the beginning of section 2, which had been revised in relation to his comments.
11. ↩ Sweezy’s note here suggests that in his view, when the letter was written, aggregate surplus value and economic surplus were equal under monopoly capitalism (as they were for competitive capitalism), except for that part of surplus embodied in wages. Sweezy here saw this mainly as surplus “captured” by workers (as in Sraffa’s Production of Commodities By Means of Commodities). Baran appears to confirm this understanding in his March 3rd letter. But in replying Baran stressed the fact that under monopoly capitalism such surplus concealed in wages was mainly the product of unproductive expenditures embodied in wage goods, amounting to forced deductions from the wages of workers.
12. ↩ In late 1963 Andre Gunder Frank, who was closely connected with Baran and Sweezy and Monthly Review, was eager to leave Brazil where he had been working since 1962. He had just drafted his early manuscript On Capitalist Underdevelopment, which he had sent to Baran and Sweezy for comments (but which was not published until 1975 by Oxford University Press in India). He had a number of options, but only limited job prospects, and the various plans he was considering involved: returning to the University of Chicago, or moving to Cuba, Mexico, Argentina, or Chile. He wrote a string of letters both to Baran and to Sweezy about his various possibilities, who discussed how to help him. In the end he went briefly to Chile and then to Mexico in 1965. Out of this period arose his classic book Capitalism and Underdevelopment in Latin America (New York: Monthly Review Press, 1967).
13. ↩ This quote from Marx is subsequently used in the final nineteen-page version of the first part of “Some Theoretical Implications.”
14. ↩ This refers to Joseph M. Gilman, “Disarmament and the American Economy,” Science & Society 28, no. 1 (Winter 1964): 63–69 (a review of Victor Perlo’s Militarism and Industry [New York: International Publishers, 1963]).
15. ↩ Here Baran quoted from memory in German from Goethe’s Faust. See Johann Wolfgang von Goethe, Faust I and II (Cambridge, MA.: Surkamp/Insel, 1984), 301, lines 11,936–37.