Sunday December 21st, 2014, 6:14 pm (EST)

Critique of Heinrich: Marx did not Abandon the Logical Structure

Heinrich’s article is mainly about the falling rate of profit and crisis theory, but another important point has to do with Marx’s logical method in Capital, and in particular with the levels of abstraction of capital in general and competition. Heinrich argues that Marx encountered difficulties in the Manuscript of 1861-63 concerning this logical structure, and as a result of these difficulties, Marx abandoned this logical structure in the final versions of Capital.

I argued in a 1995 paper that Heinrich is wrong about Marx abandoning the logical structure of capital in general and competition after 1863 (Moseley 1995). Capital in general and competition refer to the two main levels of abstraction in Marx’s theory – the production of surplus-value and the distribution of surplus-value. The key point of this logical structure is that the production of surplus-value is theorized prior to the distribution of surplus-value; i.e. the total amount of surplus-value is determined (by the total surplus labor) prior to its division into individual parts (first the equalization of the profit rate across industries and then the further division of the total surplus-value into commercial profit, interest, and rent). The pre-determined total surplus-value is taken as given, as pre-determined (as a “limit”; see below), in the subsequent theory of the distribution of surplus-value; i.e. in the division of this pre-determined total surplus-value into individual parts.

With respect to the “transformation problem”, in Marx’s theory of prices of production in Part 2 of Volume 3, the total surplus-value produced in a year is taken as a predetermined given, as determined in Volumes 1 and 2, and this predetermined total annual surplus-value is used to determine the annual rate of profit (R = S / [C + V]), which in turn is a determinant of prices of production (PPi = (Ci + Vi) (1 + R). As a result, the predetermined total surplus-value is distributed to individual industries in such a way that all industries receive the same rate of profit.

Marx first developed this logical method in the Grundrisse, and he credited Hegel for the inspiration for this aspect of his logical method (specifically, Hegel’s logic of the Concept and the moments of Universality and Particularity) (Moseley 2011). Marx further developed this logical method in the remarkable Manuscript of 1861-63, in which a fortuitous reading of Rodbertus’ book on Ricardo’s theory of rent stimulated Marx to develop his own theory of rent, which in turn required that he develop his theory of prices of production and the equalization of the rate of profit, which he did in this manuscript. He also drafted in this manuscript for the first time his theory of interest and commercial profit. (Moseley 2009). Then in the Manuscript of 1863-65, Marx wrote a full draft of his theory of the distribution of surplus-value (which later became Volume 3 of Capital), and this theory continued to be based throughout on the same logical method of the pre-determined total surplus-value taken as a presupposition. There is no difference between the Manuscript of 1863-65 and the Manuscript of 1861-63 in Marx’s theory of the distribution of surplus-value; the same theory, based on the prior determination of the total surplus-value, is presented in a more developed form (Moseley 2002).

I have written extensively (see References) about the substantial textual evidence in all the drafts of Capital to support this interpretation of Marx’s theory of the production and distribution of surplus-value (capital in general and competition). Heinrich has not yet responded to these papers.

The main argument that Heinrich presents to support his interpretation is that the average rate of profit is supposed to be determined at the level of abstraction of capital in general, but the average rate of profit cannot be explained without competition, and thus the distinction between these two levels of abstraction “breaks down”.

However, it is not true that the average rate of profit cannot be explained without competition. As discussed above, Marx’s theory explains the average rate of profit without appeal to competition – by the aggregate ratio of the total surplus-value produced in the economy as a whole to the total capital invested, and the total surplus-value is determined at the level of abstraction of capital in general by the total surplus labor in the economy as a whole. This determination of the average rate of profit by this aggregate ratio does not depend in any way on competition; competition plays no role in this determination. What competition does is enforce the equalization of the rates of profit in individual industries to the social average; but this social average is determined by surplus labor, not by competition.

Marx emphasized this point in the following passage from Part 4 of Vol. 3 (NB: from the Manuscript of 1863-65, after the alleged abandonment of this method in 1863).

“If the limits of value and surplus-value are given, it is easy to perceive how the competition between capitals transforms values into prices of production and still further into commercial prices, transforming surplus-value into average profit. But without these limits, there is absolutely no way of seeing why competition should reduce the general rate of profit to one limit rather than to another, to 15 per cent instead of 1,500 percent.” (C.III: 429; emphasis added)

And a similar passage from Part 7 of Vol. 3:

We have thus an absolute limit for the value component that forms surplus-value and can be broken down into profit and ground-rent; this is determined by the excess of the unpaid portion of the working day over its paid portion, i.e. by the value component of the total product in which this surplus labor is realized. If we call this surplus-value whose limits are thus determined profit, when it is calculated on the total capital advanced, as we have already done, then this profit, considered in its absolute amount, is equal to the surplus-value, i.e. it is just as regularly determined in its limits as this is. It is the ratio between the total surplus-value and the total social capital advanced in production. If this capital is 500 … and the surplus-value is 100, the absolute limit to the rate of profit is 20 percent. The division of the social profit as measured by this rate among the capitals applied in the various different spheres of production produces prices of production which diverge from commodity values and which are the actual averages governing market prices. But this divergence from values abolishes neither the determination of prices by values nor the limits imposed on profit by our laws... This surcharge of 20 per cent … is itself determined by the surplus-value created by the total social capital, and its proportion to the value of this capital; and this is why it is 20 percent and not 10 percent or 100 percent. The transformation of values into prices of production does not abolish the limits to profit, but simply affects its distribution among the various particular capitals of which the social capital is composed … (C.III: 998-1000; emphasis added)

There is no “difficulty” here, at the end of the Manuscript of 1863-65, nor none hinted at. The rate of profit is determined without appeal to competition. Competition only equalizes, it does not determine; i.e. it does not explain why the rate of profit is 15% instead of 1500%.

The main textual evidence that Heinrich presents to support his interpretation is that Marx no longer used the term “capital in general” in his writings after 1863.

But this is very weak and unpersuasive textual evidence. The fact that Marx stopped using the Hegelian term capital in general, in an effort to popularize Capital, does not mean that Marx abandoned the logical structure of capital in general and competition. Capital in general and competition were Hegelian terms for the two main levels of abstraction of the production and distribution of surplus-value. Marx definitely continued to maintain the two levels of abstraction of the production and distribution of surplus-value, and thus he continued to maintain the logical structure of capital in general and competition.

Furthermore, in the later drafts Marx used several synonyms for capital in general, like “the general formula for capital”, “capital as such”, “the inner nature of capital”, and most frequently simply “capital”. In addition, Marx continued to use the term competition frequently in the later drafts, which suggests that the logical structure of his theory was still the two levels of abstraction of capital in general and competition, even though he didn’t use the Hegelian term “capital in general” for the first level.

Further evidence against Heinrich’s argument is that Marx never once mentioned this “difficulty” in the Manuscript of 1861-63, nor anywhere else in his published manuscripts, and never once stated that he was abandoning capital in general and competition and changing the fundamental logical structure of his theory. I do not find it plausible that a rigorous scholar like Marx, who had a Ph.D. in Philosophy, with a specialty in logic, and who discussed his logical method quite a bit in his manuscripts, would change the fundamental logical structure of his theory (the production and distribution of surplus-value and the prior determination of the total surplus-value) without ever writing about this fundamental change in his notebooks, nor about the problems that allegedly led to this fundamental change.

Therefore, I conclude (as I did in my 1995 paper) that Heinrich is mistaken on this very important methodological point – Marx did not abandon the logical structure of capital in general and competition because this structure corresponds to the two main levels of abstraction of the production and distribution of surplus-value, which Marx definitely did not abandon in the later drafts of Capital.

I look forward to Heinrich’s response and to further discussion of this important methodological issue.

Refenences

  1. Moseley, Fred 1995, ‘Capital in General and Marx’s Logical Method: A Response to Heinrich’s Critique’, Capital and Class, 56: 15-48.
  2. Moseley, Fred 1997, ‘The Development of Marx’s Theory of the Distribution of Surplus-Value’ in New Investigations of Marx’s Method, edited by in F. Moseley and M. Campbell, Atlantic Highlands NJ: Humanities Press.
  3. Moseley, Fred 2002, ‘Hostile Brothers: Marx’s Theory of the Distribution of Surplus-value in Volume 3 of Capital’ in The Culmination of Capital: Essays on Volume 3 of Capital, edited by G. Reuten and M. Campbell, London: Palgrave.
  4. Moseley, Fred 2009, ‘The Development of Marx’s Theory of the Distribution of Surplus-Value in the Manuscript of 1861-63’ in Re-reading Marx: New Perspectives after the Critical Edition, edited by R. Bellofiore and R. Fineschi, London: Palgrave.
  5. Moseley, Fred 2011, ‘The Whole and the Parts: The Early Development of Marx’s Theory of the Distribution of Surplus-value in the Grundrisse’, Science and Society, 75, 1: 59-73.
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