NOTE ON SOCIALIST PLANNING 2

Posted: 21st gennaio 2018 by rivincitasociale in Another America is possible, Economia
Commenti disabilitati su NOTE ON SOCIALIST PLANNING 2

Comment on « Economic planning, computers and labor values » by W. Paul Cockshott and Allin Cottrell, January, 1999

(see: http://ricardo.ecn.wfu.edu/~cottrell/aer.pdf )

(For the Note on socialist planning 1, see the article on « Marginalist socialism or how to chain oneself in the capitalist cavern », referenced in the Addenda to the Table of content of my book entitled Synopsis of Marxist Political Economy freely available in the Livres-Books Section of www.la-commune-paraclet.com )

The commendable purpose of the article by Paul Cockshott and Allin Cottrell is to prove that socialist planning is feasible. For that they propose to use a bit of Oskar Lange and a bit of Strumilin. Oskar Lange was well-intentioned, he thought that if Marginalism were a science it would also apply to socialism. In so doing, he contributed in denaturing Soviet Marxist planning. This contention had a fatal flaw which is easy to detect in the light of my contributions to Marxism: Marginalism cannot deal with the ex ante/post hoc problem, it cannot reconcile micro and macroeconomics. Adding Strumilin, namely a socialist macroeconomic level, does not solve the problem simply because the authors use individual supply and demand curves to account for consumers’ preferences. In so doing, they can never approach market prices that will tend toward an exchange value equivalence, not even with all the corrections retroactively managed by the planning authority. In fact, they end-up being infra-Keynes.

As explained in my Marxism, Keynesianism, Economic Stability and Growth (2005), the great Cambridge economist knew Marx’s work. He knew that the capitalist market left to its own « animal spirits » was self-destructive, in other words its ex post equilibrium was never compatible with a socially harmonious and dynamic growth. He thus advised State intervention to ensure aggregate demand – without it you can never approach real prices for consumers’ goods – and aggregate productive demand through public interventions and ownership. Furthermore, he advocated the management of money and credit in order to pre-empt and control inflation as well as institutional savings and credit creation.  For Keynes, full-employment was conceived as a determining variable in a set of interdependent variables.

 

Marginalists had been aware of the ex ante/post hoc problem ever since the beginning. They attempted to curtail it by incorporating August Walras’s advice: distinguish between social economy and economics, and let the first determine the social objectives to be implemented thanks to the equations formalised by the latter. But, as we said above, this only works with a Social State which adequately intervenes in the socio-economic sphere. The best illustration of this could perhaps be seen by looking at the very successful implementation of the French Indicative and Incitative Planning, at least up to the dismantling  of the trade barriers. Maurice Allais denounced this global policy change as the « 1974 fracture ».

In their article entitled « Economic planning, computers and labor values » published in January, 1999, W. Paul Cockshott a Computer scientist and Allin Cottrell an Economist, have produced a valiant attempt to show the feasibility of socialist planning based on the Law of Value. Unfortunately, they know very little about Marx’s work and Marxist problematiques. Their treatment of the subject rests mainly on academic writings produced by various Marxologists and other academic Marginalists. None the less, they succeed in refuting the puerile and ideologically motivated critiques levied by the latter, for instance those formulated by Hayek and by Samuelson. They make a good use of their knowledge of computer potency as applied to economic planning. In short, their article merits to be discussed, especially at the light of a correct understanding of Marx’s Labor Law of Value and of his Equations of Simple and Enlarged Reproduction, in bourgeois parlance of stationary equilibrium and dynamic equilibrium.

Therefore, the First Task is to explain the misunderstandings of the Marxist Labor Law of Value generalized since the contributions offered by Tugan-Baranovsky and by Bortkiewicz. The Second Task is to clear out these misunderstandings or rather conscious forgeries. This allows us to understand the practical success of Soviet planning up until Stalin’s death and even up until 1960. It also allows the understanding of the capitalist road traveled by the Liberman- Khrushchev clique and the eventual internal collapse of the USSR. (1) The Third Task is to present the arguments made in this article and the main critiques it deserves. The Fourth Task is to salvage the good elements that can be taken from it in the light of the scientific Labor Law of Value.

First Task: explaining the misunderstandings of the Marxist Labor Law of Value.

Marx’s Magnum Opus, Das Kapital, was planned in four volumes or Books. Only the first volume was written, published and edited by Marx himself. The other books were published by the aging Engels with the help of others far less reliable Jewish characters, in particular Kautsky and  Bernstein, two notorious renegades. More often than not, this editing of selected drafts written by Marx was tendentious: In retrospect, you could explain the confusion created around some of Marx’s main concepts and theories if you were to assume a conscious falsification engineered by the higher circles of the intelligence agencies  –  German and Austrian in particular (2) – with the supervision of Böhm-Bawerk, that is to say of the first main falsifier of Marx. This comes to no surprise since dominant classes always oppose their own inegalitarian and obscurantist narratives to science as the Pythagorean and Socratic scholar Plato’s clearly explains in his Republic.

Book One deals mainly with the dual character of any commodity, including labor power as a commodity, namely use value and exchange value. It shows that the exchange value of labor power is the only universal meter with which to establish the commensurability or relative real prices of all commodities among themselves. It shows that profit is equal to the exploitation of labor power since its use value is employed by the Owner of the Means of production over and above the time necessary to produced the Means of consumption socially needed to reproduce the labor power expanded in the production process.  This is to be done taking into account the social reproduction of the worker in his/her household. It analyses the various historically dominant forms of extraction of surplus-value, namely absolute surplus-value, relative surplus-value or the conjunctural intensity of work, productivity or the structurally acquired intensity, and finally social surplus-value. At this stage, Marx cannot fully analyse the structural increase of the intensity of work or productivity – i.e., the dominant capitalist form of the extraction of surplus-value – but he already clears the way on this crucial subject with a farseeing analysis of the generalized introduction of machines in the capitalist production process.

Book Two deals with the Reproduction process. It started with the function of production correctly written as : c + v  + pv = p, where « c » is the constant capital or the capital « used-up » in the immediate production process, « v » the variable capital or the exchange value of the labor power – or wage -, « pv » the surplus-value or profit, and « p » the product which can either be Means of production (i.e., constant capital ) or the Means of consumption necessary to renew « v ».  Having established the scientific function of production and having understood the parametric constraints for the socio-economic reproduction process thanks to his critique of the Physiocrats and others – Smith, Sismondi’s annual revenue, Quesnay’s Tableau etc –, Marx established the scientific Equations of Reproduction. He did this both for Simple Reproduction – stationary equilibrium – and for Enlarged Reproduction – or dynamic equilibrium.  All the necessary elements are provided in Book II, although the editing allowed for later falsifications despite Marx’s comments elsewhere and, in particular, despite the crucial chapter in Book I entitled « The last hour of Senior ». This chapter provides the basis for the correct understanding of commensurability even taking into account intensity and productivity changes.

Book Three deals with rent – absolute and differential rent -, profit and salary, namely what appeared to Marx as the three main forms of revenues necessary to understand class struggle and class alliances. At this stage of the writing, Marx was still in a Smithian and Ricardian context but nevertheless these early drafts were eventually included in Book III. Other early drafts such as those dealing with the tendency of the rate of profit to fall, were also included. They were immediately followed by drafts pointing to the opposite tendency, though the usual Marxologists only refer to the first tendency … But sadly such was Kautsky’s editing and such is the rigor of so many academics and other commentators. When Book III of Capital was published, the mischievous pitre Böhm-Bawerk chanted a paean of victory. His pretention was that Volume III was logically contradicting the Marxist Labor Law of Value – i.e. the otherwise irrefutable scientific demonstration of exploitation as the origin of capitalist profit such as it was exposed in Book I. This forgery, which was swallowed whole by all except our Bolshevik comrades, rested on the draft formulation of the so-called « transformation problem ». We will come back on this subject below.

Book Four was supposed to deal with the History of the Discipline. This is to be taken very seriously given Marx’s reformulation of the scientific method exposed by Kant in his Critique of Pure Reason . Although in the Grundrisse Marx alluded to his new reading of Hegel, for the masterful exposition of Capital Book I it is clear that he reformulated Kant’s « steady state » view in a historical and dialectical fashion. Marx’s « concrete-in-thought » is Kant’s historicised « a priori concept » away from Hegel mystifications (for instance the irrational Hegelian « unity of opposites » see my Methodological introduction ). As the great Marxist Paul Lafargue explained, he did this with his profound philosophical knowledge including that of the work of G. Vico. The emphasise was now placed on the distinct and parallel working of the method of investigation – also effectively accomplished through the unfolding of historical becoming – and of the method of exposition. Book I of Capital is the best illustration of this method of exposition relying on the safe grounds secured by the historically and scientifically attained investigation of reality by History itself. As Marx wrote in Capital Book I, the capitalist mode of production clarified the exchange value problem that had remained obscure to Aristotle. The Greek philosopher had vainly attempted to explain how a tripod could be traded for a bed. Marx’s concluded that Aristotle’s relative blindness was due to the slavery context in which he lived , a context which obscured the role of the exchange value of labor power as the universal meter with which to establish the commensurability of all commodities among themselves.

This leads us to the exposition of the devilishly forged so-called « transformation problem». 

Second Task : clearing up the main misunderstandings and forgeries imposed from outside on Marx’s Labor Law of Value.

We leave aside here the futile if pernicious manipulations of the work produced by the « Young Marx » as opposed to the work produced by the « Mature Marx ». These manipulations aimed mainly at reducing Marx to a mere forerunner of the sociology of knowledge à la Karl Mannheim. The verbose shibboleths – particularly that of the infiltrated G. Lukacs and many others of this ilk – led Louis Althusser to insist on what he called Marx’s Epistemological Break, namely his arriving at the science of Historical materialism – as opposed to bourgeois historism and sociology. The Labor Law of Value exposed in Capital Book I being for Althusser, Marx’s main achievement. Similarly, Althusser insisted on the ontological and epistemological differences between Historical materialism and bourgeois Humanism.

What Althusser failed to see however was that the texts written by the Young Marx provided one essential contribution with refutes all attempts to manipulate him, namely his definitive critique of exclusivism without which the Triptych of Emancipation – religious, political and Human emancipation – is not conceivable.  However, Althusser clearly saw the elements of the scientific understanding of exchange and use values in the Young Marx, particularly in the Parisian manuscripts of 1844. In this important text, Marx realised that competition would automatically cancel its ups and downs in the mid and long terms, so that the scientific explanation for prices or exchange values necessarily lied elsewhere. Similarly, he provided the first crucial criticism of Smith – i.e., Smith’s realisation that capitalists cannot explain the genesis of profit. He did the same for  Ricardo, in particular for his skewed understanding of « paper currency » confused for a universal mean of exchange when this character only belongs to the exchange value of labor power. Human labor is the only factor of production capable to produce commodities even through the production of Means of production, be they machines or Artificial Intelligence softwares. Money in all its forms is only a general mean of exchange, which means that it also needs to be explained with recourse to a universal standard of value.

As far as economic planning is concerned the main falsification rests on the so-called « transformation problem ». In a nutshell, here it is. For this nasty little economic question as Marx called it in a letter to Engels, he was specifically dealing with the Smithian-Ricardian problem – left unsolved by Torrens – namely how to distinguish between absolute and a differential rents. Absolute or feudal rent referred to pre-capitalist modes of production involving the use of land in which, as Marx notes, land appears to be an « irrational economic category ». Differential rent referred to agricultural capitalism. As I have shown (3) the real question to resolve here is that of capitalist productivity. In the drafts used for Book III, which were later clarified in the 1970s by the  publication of 3 crucial letters from Marx to Engels, Marx tried to understand the transition from feudalism to capitalism especially in the countryside. He naturally started from the Smithian-Ricardian distinction between both forms of rent. As the capitalist mode of production was already politically dominant, he assumed the mobility of capital which equalises the production conditions intersectorially. We can illustrate the so-called transformation problem of exchange values in prices of production in this fashion, giving two enterprises A and B:

Original Value Scheme:

A = c (80 euros) + v (20 euros) + pv (20 euros) = p (120 euros)

B = c (60 euros) + v (40 euros) + pv (40 euros) = p (140 euros)

On this basis Marx notes that the mobility of capital would lead to an average rate of profit, hence the formation of prices of production (pp) different from the initial values. Here is the result reformulated taking into account the averaging of the rate of profit. 

Price of production Scheme:

A = c (80 euros) + v (20 euros) + pv (30 euros) = p (130 euros )

B = c (60 euros) + v (40 euros) + pv (30 euros) = p (130 euros)

Böhm-Bawerk took this working hypothesis – which by the way formulated a very important problem to resolve both for economic analysis and for class alliances – as a definitive answer. He accordingly denounced a « lethal logical contradiction » between Book I, which focused on exchange values, and Book III which resorted to prices of production. Since in a new cycle of production the prices of production would define the new (c +v), the system was contradictory. Böhm-Bawerk then idiotically pretended that because he had « demonstrated » this « ex ante/post hoc » problem, he had « destroyed Marxism roots and branches ». In fact, as I demonstrated, he only displayed his own malicious ineptitude since, as it turned out, the ex ante/post hoc problem does not concern Marxism at all but is instead inherent to all bourgeois economic theories. This is simply because none of them are able to reconcile micro and macroeconomics. It was a pity that Bukharin, who had understood the crucial importance of the Book I chapter on « The last hour of Senior », did not solve the underlying problem. This problem has little to do with rent and a lot to do with the coherent integration of productivity within the Equations of Simple and Enlarged Reproduction. Fortunately, I did solve this problem and cleared away all these and other bourgeois manipulations of Marx’s work.

We notice that based on the critiques levied by Böhm-Bawerk, Tugan-Baranovsky and Bortkiewicz – and then emulated  by all others, including Piero Sraffa –, the central but entirely misunderstood productivity problem quickly masked the original question which dealt with absolute rent versus differential rent or agricultural profit. This was due to the mesmerizing induced by the simplistic Marginalist reasoning conducted in terms of increasing/decreasing returns and of economy of scale. There is no denying that the Marginalist-Marshallian graphs do actually produce a visual hallucination on beginners despite their obvious logical flaws.  Once you accept these, you are ready to start the journey to win a pseudo-Nobel Prize in the « dismal discipline ».

If you assume that enterprises engaged in the production of similar products do so in different terms but without understanding the Marxist Law of Productivity, you will simply reproduce Marx original Value and Price of production Schemes provided above. But if you rigorously apply the Marxist Labor Law of Value – in the light of the teaching of the chapter of Capital Book I entitled « The last hour of Senior » – you would quickly realize that this is wrong. This is because the four elements of the function of production would not be homogenous, not even for the initial scheme provided in value terms. This can be checked in dealing simultaneously in euros and in quantity terms.  We rewrite the original Value Scheme by making some needed assumptions:

1 ) Enterprises A and B produce similar products, or products with high elasticity.

2 ) The labor time is the same namely a 8-hour day

3 ) We assume a competition regime ( Consumers are free to choose and above all capital mobility is unrestrained; the last condition would suffice in any case.)

4 ) Finally, we assume that both A and B produce with different conditions of production.

As Marx showed these can be rigorously analysed in terms of the main ratios inherent to the function of production. First, the organic composition of capital, which is noted v/C, where C = (c + v). This includes the exchange value designation of technological inputs; these cannot be provided exogenously as bourgeois economics does, simply because technology, including the science of organisation of the production and labor processes, are themselves traded on the market. The next essential ratio is the rate of exploitation of the labor power or rate of surplus-value, namely the relationship of overwork to the work socially necessary to reproduce the labor power expanded in the production process; this is noted pv/v. The third is the rate of profit hence the relationship of the surplus-value extracted over the capital used in production; this includes the crystallised labor in « c » and in « v » and is noted pv/(c+v). Finally, both in money – euros – and in quantitative terms – products –, the result « p » embodies the earlier three components of the function of production, hence:  c + v + pv = p.  Suppose that « p » is a Mean of production (Mp), we can rewrite the Original Value Scheme in the following way:

A = c (80 euros/80 Mp) + v (20 euros/20 Mp) + pv (20 euros/20 Mp) = p (120 euros/120 Mp)

B  = c (60 euros/60 Mp) + v (40 euros/40 Mp) + pv (40 euros/40 Mp) = p (140 euros/140Mp)

We now analyse these functions of production in quantitative terms to check if this makes sense as far as productivity is concerned. As taught by Marx in the chapter on « The last hour of Senior », all the elements of the function of production must be coherent. As shown in Capital Book I, any commodity can be used  as a particular mean of exchange although money remains a general mean of exchange because it is more practical, whereas the labor power is the only possible universal standard of measurement of exchange value. We thus can express the functions of production in our Original Value Scheme in terms of Mp. We then realise that the whole thing is wrong, because for the same 8-hour of production time the enterprise B would be more productive with a lower organic composition of capital. This becomes glaringly clear if we follow Marx’s ingenious comparing method which consists in taking «C » in A and B equal to 100. Dealing with a totally capitalist setting this cannot be. What this tells us is that, in their example, the measure of productivity is wrong.

We then need to establish a scientific Law of Productivity before we return to the so-called transformation problem.  A rise of productivity implies that with the same labor power given in use value terms, an enterprise will be able to produce more of a given product in t2 compared to t1 for the same production time. Therefore the unit value of the product will be inversely proportional to the productivity rise. Note that given the change in the organic composition of capital, this does not imply the same number of physical workers.

Let us illustrate. We now take the enterprise A for a 8-hour day in t1 and t2. T1 represents the original conditions for productivity and by definition t2 involves a productivity increase of ¼. To ease comparison between t1 and t2, we take C = (c+v) = 100 euros for both in exchange value terms. In use values or quantitative terms the organic composition in t1 and t2 will differ due to the evolution of the unit price or unit value. We now have an objective mean to check the coherence of our reasoning, namely in quantitative terms. We assume that the quantity of Mp produced in t1 is 120 Mp and therefore the increased quantity in t2 will be 150 Mp. In t1 the unit value will be 1 Mp = 1 euro and in t2, 1 Mp = 0,80 euro. The coherence within the function of production in t1 and t2 gives you the following result:

A in t1 = c (80 euros/ 80 Mp) + v (20 euros/20 Mp) + pv (20 euros/20 Mp) =  p (120 euros/120 Mp)

A in t2 = c (84 euros/105 Mp ) + v (16 euros/20 Mp)  + pv (20 euros/25 Mp ) = p (120 euros/150 Mp)

Note here that the productivity change is given empirically for «p » in t1 and by deduction given the definition for t2; this also applies to (c + v). And, in fact, if you assume full-employment this remains true in money terms because there would then be no inflation in t2 respect to t1. Once you have the organic composition of capital, you can complete « pv » in t2 namely 25 Mp which would correspond to the competition hypothesis. But this would not do. You need to arrive at this result in exchange value terms that is to say internally. In exchange value terms if you do away with the competition hypothesis – translating in an average rate of profit – there only remains the internal coherence of the function of production as a way of checking or, better, the internal coherence of the ratios involved, v/C, pv/v and pv/(c+v).

In other words, for the same labor day and with the same labor power expressed in quantity – or use value – terms, but with a better organic composition of capital, A will produce more Mp in t2 compared to t1. This is only possible if there is a law regulating the relationship between the organic composition of capital (v/C) and the rate of surplus value (pv/v). I stated this Marxist Law of Productivity, essential for the understanding of the capitalist mode of production, on the basis of Marx’s work understood in its own terms – that is to say, away from bourgeois and other manipulations and forgeries. The Marxist Law of Productivity states that from t1 to t2 there is an inverse relationship between the organic composition of capital ( v/C ) and the rate of surplus value (pv/v) based on the same labor power (v ) expressed in quantitative terms and taken for the same labor time.

By the way, this sends us back to Marx notions of « abstract labor » and « socially necessary labor ». These two concepts are scientifically far away from Smith’s crude notion of generalised « simple labor » presumed on the idea of the widespread logic embodied in the pin factory. Reducing every type of labor to an expression of « simple labor » is a naive and primitive way to deal with the homogeneity of labor power, an attribute necessary for it to operate as a universal standard of measurement. Note that in the early drafts dedicated to the so-called « transformation problem », Marx assumed « simple labor » which is incompatible with productivity changes, thus indicating that his drafts were still initial investigations conducted within the context of Smith-Ricardo. And, of course, this is undeniably confirmed by the fact that the problem was formulated in order to deal with the different forms of rent.

Let us sum up:

Here is the Initial exchange value scheme:

A = c (80 euros) + v (20 euros) + pv (20 euros) = p (120 euros)

B = c (60 euros) + v (40 euros) + pv (40 euros) = p (140 euros)

The Price of production Scheme was written as:

A = c (80 euros) + v (20 euros) + pv (30 euros) = p (130 euros )

B = c (60 euros) + v (40 euros) + pv (30 euros) = p (130 euros)

The correct productivity Scheme is simultaneously given in money and quantitative terms. Of course, the unitary value – or real price – is ¼ lower in t2.

The Productivity Scheme with a productivity increase in A of ¼ is written as:

A = c (84 euros/105Mp) + v (16 euros/20Mp) + pv (20 euros/25Mp) = p (120 euros/150 Mp )

B = c (36 euros) + v (9 euros) + pv (9 euros) = 54 euros/ 54 Cn 

The rate of profit is organically derived from the equations of productivity, hence : pv/(c+v) = 0.2

Before we return to the initial rent problem we can already dispose of Böhm-Bawerk’s ineptitudes and forgery and of the shibboleths build by tutti quanti on this fraudulent basis starting with Tugan-Baranowsky/Bortkiewicz and up to Sraffa and all the « simultaneous resolution » theoreticians.

To understand this at a glance, we only need to place our function of production in the contest of Simple Reproduction. We should underline the fact that Marx had stated that the problem should be analysed in this specific context because it provides a fully coherent framework, without any random escape. We therefore provide both main Sectors, Sector I (Means of production or Mp) and Sector II (Means of consumption or Cn). We assume identical v/C and pv/v for both in t1.

Situation in t1:

SI: c1 (80 EUR/80 Mp) + v1 (20 EUR/20 Mp) + pv1 (20 EUR/20 Mp) = M1 (120 EUR/120 Mp)

SII: c2 (40 EUR/40 Cn) + v2 (10 EUR/10 Cn) + pv2 (10 EUR/10p) = M2 (60 EUR/60 Cn)

Here are the Equations of Simple Reproduction as analysed in Book II of Capital and synthesised by Bukharin:

M1 = c1 + c2

c2 = v1 + pv1

M2 = (v1 + pv1) + (v2 + pv2)

Note that here v/C and pv/v are the same in both sectors. In some of his important drafts in which he was still enmeshed in the false Smithian-Ricardian transformation problem, Marx took this to be a special case. However, once the productivity problem is solved, this is no longer the case because, although the productivity rate might change between Sector I and Sector II, this is done in a coherent fashion that maintains the coherence of the Marxist Labor Law of Value.

Imagine now that in t2 the productivity of Sector I increases ¼ while that of Sector II remains unchanged. Assuming SR with full employment – for instance through the reduction of the working week – hence stable real prices i.e. exchange values, we would have:

Situation in t2:

c1:84 euros                   v1:16 euros                   pv1:20 euros                = M1:120 euros

105 Mp                               20 Mp                                  25 Mp                         = 150 Mp

 

c2:36 euros                         v2:9 euros                     pv2:9 euros                = M2:54 euros

36 Cn                                        9 Cn                                       9 Cn                       = 54 Cn (45Mp)

 

As shown in my Synopsis of Marxist Political Economy – in which I also developed the Marxist quantitative theory of money while introducing credit, investment and saving – Enlarged Reproduction remains fully predictable in exchange value terms, provided the intersectoral proportional symmetry enshrined in the underlying SR is maintained.

As a matter of fact this explains why Stalin’s socialist planning was so efficient in practical terms. His rules were mainly these: A) Use Marx’s parametric constraints for reproduction, i.e. the Equations of SR and ER. B ) Try to solve the productivity problem – Paul Sweezy even asked Einstein to try but the great physicist failed albeit he agreed that the Marxist system was still superior to bourgeois economic theories, see his article entitled « Why socialism ? » (May 1949) first published in: http://monthlyreview.org/2009/05/01/why-socialism. While doing this, always use the greatest productivity possible and adjust your planning accordingly in a pragmatic fashion, always keeping in mind the parametric reproduction constraints which can be approached in quantitative terms. C) To accelerate industrial and economic growth initially acquire the machines and technology from outside, including the engineers necessary to operate them, but meanwhile give precedence to the production of Sector I, i.e. Means of production for Means of production. This involved extracting agricultural surpluses in order to earn the foreign currencies needed. The nascent USSR was still part of the European Monetary System. It also implied the accelerated development of socialist agriculture thanks to the development of sovkhozes and kolkhozes in order to guarantee the protection of the agricultural proletariat in the making. This also freed up the manpower necessary for the developing industrial sectors. Given that agricultural machines remained strictly State-owned this accelerated the transition to the socialisation of the countryside, a process backed-up and sanctioned by constitutional changes; D) In applying this socialist planning give precedence to the raising of the general standard of living of the population in parallel with the rapid industrialization of the country. In effect, it is this rapid rise in standard of living that explains the popular support for the Revolution despite the great initial sacrifices demanded from the citizens. E ) The egalitarian wage policy, further supported by life-long access to quality education, made the operation of the system easier. As far as productivity is concerned, it amounted to a real civilisation leap forward, exactly what Marx’s had in mind when referring to the systemic socio-economic « moral conditions ». As we will see, all this was lost with the adoption of so-called « Marginalist socialism », which was imported in the USSR by the Liberman-Khrushchev clique.

At this point, we can return to the initial Smithian-Ricardian problem, namely that of absolute versus differential rents. Again the solution is provided by Marx himself in his ground-breaking analysis of comparative modes of production. On the basis of Althusser’s crucial contributions, Pierre-Philippe Rey showed the importance of these analyses for the understanding of the transition from one mode of production to another but was not able to conclude. (The English readers will have indirect access to PP Rey’s contributions through the work of Aidan Foster-Carter on comparative modes of production). The key is the understanding of the coexistence of various modes within the context of the dominance by one particular mode of production. For instance, the transition from feudalism – absolute rent – to capitalism – differential rent or productivity. If the free exchange of commodities is legally insured in a given SF, then fatally the greatest productivity imposes its rules. Hence, feudal or absolute rent was condemned because the only way it had to compete against agricultural capitalist « rent » was to pressurise its labor force thus quickly reaching a physiological and « moral » barrier. If you take into account the coherence of the given Social Formation and its insertion within the World Economy, you arrive at the scientific understanding of the Ricardian « comparative advantages » and at the scientific refutation of the « unequal exchange » fallacies.

As you can see, this general problem becomes clear only when you understand the Marxist Law of Productivity and when, on that scientific basis, you re-elaborate Marx’s analysis of the forms of extraction of surplus-value. As I have shown, absolute surplus-value is the dominant form of extraction for the pre-capitalist modes of production mainly based on an agricultural and craft economy. This should not belittle the essential contributions made by these modes of production in developing better means of production. For instance, during the Palaeolithic and Neolithic for the development of an astronomical science of time which was of paramount importance for these early rural civilizations; for the development of fire, tools, domestication of animals, development of cereals etc . But these crucial innovations where slow paced. They should be analysed as civilisational changes – implying various Eras and Ages, for instance Stone, Bronze, Iron Ages etc. Relative surplus-value, understood as conjunctural intensity, is a transmodal form of extraction because it depends on the intensity of human labor independently from the organic composition. However, structural intensity or productivity is the dominant form of capitalist surplus-value extraction and it implies the structural use of machine, technology and work organisation – pin factory, Taylorism, modern so-called micro-Taylorism, etc. Finally social surplus-value extraction is the dominant form of socialist-communist surplus-value extraction. Extraction will continue but class exploitation will cease because the extraction of social surplus-value will then be mastered collectively to produce the collectively decided list of priorities assigned to the Plan by way of « socialist democracy », that is to say by way of a multilayered citizens’ decision making process.

It becomes clear that feudal forms – i.e. absolute rent – can be protected by law according to the state of class alliances. For instance P P Rey noted that some pre-capitalist agricultural forms survived in France up to 1956. However, these different forms of value extraction that still coexist in the world today, do so under the dominance of the capitalist mode of production. Concretely this means that both the feudal landlord and the capitalist farmer do exchange their goods on the same agricultural market. The dominance of capitalist agricultural farming is then manifested and enforced in the exchange or circulation sphere, its products being less expensive because of its superior productivity. At bottom, it is a productivity problem. Despite residual protection – property forms, States subventions, trade barriers etc – absolute rent is condemned. This is because the only way it can fight against the predominance of capitalist agriculture is by extracting more labor power through the rising duration and intensity of labor, or by blocking or rather attempting to delay the introduction of capitalism in the agricultural sphere. These tactics are politically relevant especially as the country-side appears everywhere to be over-represented in the Senate or higher chamber, but they are eventually doomed to fail. The agrarian reforms and thus the workers-peasants alliance naturally became major evolutions ever since the emergence of the capitalist mode of production.

This disposes of the old illusion according to which land was an « irrational economic category». In effect, it is no longer the case as soon as you understand the absolute surplus-value form of extraction. It is even less irrational as soon as you understand the mechanism by which different modes of production can coexist for a while but under the irresistible dominance of one of them, namely that with the greatest productivity. This can be stated differently by saying that capitalism made it clear that scarcity (4) is not a natural given but, in the last analysis – as even Léon Walras recognized in the first edition of his Eléments – it is « socially produced. » As I have shown, this opens the way to the scientific understanding of ecology, what I called Ecomarxism. The rapid industrialisation of the first Fatherland of Socialism, backed-up by the collectivisation process of agriculture under Stalin and Mao showed that the Bolsheviks had understood this transition problem perfectly well. Much more than Eric Wolf, for instance.

Unfortunately Böhm-Bawerk was successful in establishing his forgery as an evidence for too many academics, including those who pretended to be Marxists. Paul Lafargue and the Bolsheviks were exceptions, although they were unable to solve the crucial question of productivity integrating it coherently into the SR-ER Equations.

Enter Tugan-Baranovsky and Bortkiewics. They took Böhm-Bawerk’s argument and tried to provide a solution within that falsified framework. Their attempt is the epitome of a model traded for reality. Basically, they proposed to use quadratic equations. In doing so, they ignored the incoherence in terms of the productivity of the functions of production proposed for Sector I and Sector II, and for their own addition, Sector III. This ignored the main requirement necessary to qualify as a formalisation of the question respectful of the scientific coherence of the Marxist Labor Law of Value. To put it in another way, their solution was not respectful of the homogeneity of the various components of the functions of production in terms of the exchange value of labor power.

Hence, they took functions of production with plausible but random ratios for v/C and pv/v. They then assumed that for the SR situation the Mp used for constant capital and the Cn used for variable capital had to be renewed. This had to be done simultaneously in order to avoid the logical pitfall of the price of production pseudo-solution. Hence, they introduced a Third Sector, that of Gold. This is ridiculous because the size of this sector is artificially given by the necessity to formulate the problem in a quadratic form. Furthermore, since you then need the same number of unknowns as of functions, Gold was used as the unit of account which made it possible to resolve the quadratic system. Voilà! This is the « best » example of the heuristic fallacy by which the Model substitutes for the Reality to be analysed. As Marx had stated, the problem had to be solved within the rigorous constraints furnished by Stationary equilibrium, namely the Equations of Simple Reproduction. We have shown above how this is done scientifically while respecting the Marxist Labor Law of Value.

This is how the simultaneous resolution was formalized:

c1 + v1 + s1 = c1 + c2 + c3

c2 + v2 + s2 = v1 + v2 + v3

c3 + v3 + s3 = s1 + s2 + s3

This simultaneous resolution solution had a great academic success. Of course. Aside from our Bolsheviks comrades, it influenced almost everyone else from pseudo-Marxists to Marginalists. Naturally, without excluding the verbose post-Sraffa neo-Ricardian crews. Sraffa however took the precaution to state that his own attempt laid out in his book « Production of commodities by means of commodities » was only a prolegomenon attempt. The secret of Sraffa – who had taken his cue from Gramsci’s comment on Ricardo’s recalling Marx’s 1844 emphasise on global demand … – was clearly stated in his title. In effect, to maintain the homogeneity in term of labor power – as demanded by classical political economy even before Marx – labor power was understood as a standard « basket of commodities ». This was a fallacious way to state that the exchange value of labor power was equal to « the time socially necessary to reproduce it ». What Sraffa could not ignore was that this is true in general terms but does not explain the genesis of profit. That is to say the extraction of surplus-value, namely capitalist exploitation. But this is exactly where it hurts. As we saw, if you cannot scientifically relate the rate of surplus-value (pv/v) to the organic composition of capital (v/C), there is no way out.

We should, however, note that the same fate that befell Böhm-Bawerk’s purported refutation of Marx falls squarely on the simultaneous resolution proposal: The alleged refutation does not apply to Marxism – if only because they ignored what it is – but paradoxically it applies perfectly to bourgeois economics. Hence, lo and behold, contrary to Böhm-Bawerk’s anti-Marxist allegation, the ex ante/post hoc fatal contradiction applies to all forms of bourgeois economics because they cannot coherently link micro and macroeconomics and they cannot deal simultaneously with quantities and with prices.

This can be stated in a more immediate fashion: To draw the Supply curve one needs to provide a Demand table in prices; vice-versa, in order to draw the Demand curve, you need to provide a Supply table in prices. Then you cross both curves and voila! You get your equilibrium or market price. This hallucinated puerility is not only supposed to be scientific but moreover it is supposed to provide the best way to allocate resources to reach macro-economic reproduction! This pretention does not even allow for the fatal skwedness introduced by the fact that the allocation of resources would then answer a private accumulation motivation – « acquisitive mind » – instead of a socially rational allocation of the resources of the community for the benefit of the whole community. Adding the miraculous effect of the « invisible hand » to achieve this socially beneficial macroeconomic result is the sort of lunatic ideological wishful thinking that is abundantly confuted by facts. It suffices to glance at the social inequality and humongous wastes in a context in which basic social needs are not satisfied. In short, it is not true that where there is a need the market will produce a supply, it only does this when the demand is cash worthy – and, at a minimum, superior to the cost of production.

The paradox does not stop here. The fact is that whereas Bolsheviks, and in particular Lenin and Bukharin, rejected this simultaneous resolution approach as a scholastic estrangement from Marxism and especially from Capital Books I and II – i.e., the Labor Law of Value and SR-ER Equations –, bourgeois Marginalist theoreticians resorted to it in various shapes and forms in order to solve their own damning ex ante/post hoc problem. Léon Walras tried his luck by proposing that the Supply/Demand curves are established by a series of trials and errors (in French « tâtonnement ») which he illustrated by his metaphors of the « criée » and that of the «  agitated lake ». He then went on proposing that the macro-economic problem was resolved by imagining such a tâtonnement in a « market of the markets ». Note that these puerile attempts do not deal at all with the main initial problem, namely the ex ante/post hoc problem inherent in the Supply and Demand curves!!!

Fortunately, August Walras admonished his son Léon pointing out that one should never forget social economic objectives. The Lausanne economist concluded that one should distinguish between Economics conceived as a hard science and Social economy conceived as a social science, the latter providing the social objectives to be worked-out « scientifically » by the first. This idea was later consciously denatured by Joseph Schumpeter who knew perfectly well that the ex ante/post hoc problem was not solvable within bourgeois theory, hence his fundamental pessimism with regard to the historical survival of the capitalist system. He simply chose to arbitrarily turned the problem into an economic ontological and methodological dichotomy. Being in the nature of things, it was thus beyond questioning! Unfortunately, the great social Walrasian economist Maurice Allais, also an exemplary citizen, accepted this. Consequently, he rightly called for European Community Preferences to off-set the predictable damages induced by free-trade; however, because of his Walrasian understanding of the labor market, he never came to understand the logic of the 35-hour Reduction of the Working Week implemented by Jospin’s « gauche plurielle » exemplary government. This forced me to set the record straight despite my admiration, which I did in the Note ** of my Marxism, Keynesianism, Economic Stability and Growth. (2005). This note led to a belated but necessary understanding of the true unemployment and under-employment statistics away from the ILO’s official and reductionist labor statistics. According to the ILO official methodology, one only needs to work one hour during the last survey to be taken off the unemployment statistics …

But things got worse with the bourgeois theoreticians. The most « awakened » among them knew that they were using their same old reversing and mystifying method already used against Marx. This method was backed by their behind-the-scene selection of the intelligentsia, especially academic crews. They continued in their efforts to establish the plausibility of their theory, abusing the appearance of common sense furnished by the market metaphor. Simultaneously, they strengthen their control over the discipline transforming it into a dismal science upheld by many (Apuleius’s) donkeys rewarded with tenure and pseudo-Nobel Prizes. Their role is to maintain the plausibility of the narratives adjusting them from time-to-time in order to correct the inevitable and increasing discrepancy between these ideologically based narratives and reality. If science was squarely – empirically ? – based on epiphenomena, it would be reduced to a simple description. Instead, following the model established by the biblical religious falsifications –  at bottom most is taken without acknowledgment from old Sumerian texts – plausible economics narrations consciously abuse the human cognitive mind of the ordinary people with the malicious class and cast-oriented intend to block the road to science.

Hence, Alfred Marshall was instrumental in fostering the visual hallucination embodied in his supply and demand graphs. But, as Hicks recognised, he was still dealing with only two commodities. When he used « corn », he essentially intended it to mean the consumption basket of the labor force. This was still dangerous because it sent one back to the basic elements of the function of production, and this would remain the case even if you write it in the Marginalist fashion as y = f(c, v), namely as the product being a function of capital and labor inputs. Capital and labor in the function of production inevitably send you back to the parametric constraints of macroeconomic equilibrium, namely the SR Equations. Hicks thus tried his luck importing the quadratics trick in order to extend Marshall’s dual system to 3 commodities and eventually to n commodities. But he was honest enough to understand and to warn that his attempts were partial at best. Unfortunately for him, as he was finishing this work, Keynes published his General Theory of employment, interest and money (1936). Note the full title of Keynes’s book. Hicks’s contribution had to wait for the rebirth of regressive neoliberal economic theory after the death of Keynes. This happened mainly in the United-States especially in the post WWII regressive and reactionary parking maintained in the Chicago University. Hicks was thus instrumental in what became to be known as the neoclassical synthesis something nicknamed as « bastard Keynesianism » by Joan Robinson and others in Cambridge UK.

Irving Fisher, an American disciple of Böhm-Bawerk, tried to falsify things further. His goal was to erase the socio-economic foundations of class struggles and class alliances which, as we saw earlier, were the object of Marx’s Book III of Capital. He imagined a way to mask the difference between rent, profit (and interest), and salary. It consisted in amalgamating all into his own concept of « income stream ». Hence all, capitalists industrials or bankers, salesmen, workers or farmers and even housewives were all turned into capitalists busily trying to maximise their flows of income through their preferences in investment choices and risk calculations.

This would not even deserve a comment were it not for the fact that it has become a major tenet of mainstream economic « science », albeit few still dare to mention Fisher’s name except for the Fisher Chain. Indeed, it turned out that Fisher was wrong on all his predictions – for the Great Depression, for the Recession within the Depression of 36-37 which he did not see coming, and for the « income stream » dynamic as embodied by the banking system before the 1933 Glass Steagall Act, which finally segregated deposit banks and credit unions from commercial banks. Starting as a rich inheritor he ended-up ruined. Thus, in the end, he became a fervent advocate of the so-called 100% Money System. In his mind, this could eliminate the fractional banking system, something that would not help much since it would continue to rest on his tautological and teleological money and money circulation theory. Quite simply, Fisher’s system rested on the initial Marginalist fallacy of the Supply and Demand curves, a fallacy extended to the macroeconomic level through his own « income stream » falsification.

Yet, one can understand the fascination exercised by the simultaneous resolution solution on the academic crews. You needed to deal with n commodities and do so equally at the macroeconomic level – not to mention the formidable problems of coherently introducing income structures and inflations … as Hicks himself recognised. The fathers of modern lunatic neoliberalism understood quickly that this attempt was bound to lead to some form of economic macroeconomic regulation. Indeed, Tugan-Baranovsky’s attempt was sold as a synthetic « socialist » solution … After all this is the ontological crux of the Model, i.e. the reproduction of constant and variable capitals in t1 and t2 , assuming a stationary or SR context.

The Fascist Austrian-Jew von Mises was the most enraged demagogue and ideologue in that respect. He influenced von Hayek and Milton Friedman as well as what is known as the Chicago Boys School and the members of the Société du Mont Pélerin – with the exception of the classical Walrasian Maurice Allais.

For von Mises all forms of planning are bad, especially the capitalist German WWI planning. This is simply because it showed in a very concrete fashion how efficient planning was in order to reach specific objectives while controlling prices. In war time, available resources need to be mobilised, hence the usual capitalist waste is considered harmful for national security. This also explains his hatred for Keynes which was even worse than his hatred for the Bolsheviks. His critique boils down to affirming that the unregulated « market » was the best way to allocate resources but, of course, he never offered any proof, aside for believing in the « invisible hand » … and in the automatic regulation of demographics through social inequality. (5)

To understand his philo-Semite fascistic ideology, you only need to glance at his book entitled Socialism, where the argument is made. There, he also affirms that public health-care actually creates sickness and debilitates the general population; according to him, health is a matter of Will – and, should we add in more concrete terms, of access to private hospitals. It is clear that this Fascist Austrian-Jew had in mind a right-wing biblical world order that would emulate the cast system. As we know, in today’s India, half a billion Dalits die on average at 40 or 42-year of age, they cannot afford to be sick … ( see pp 476-477 of his book Socialism in https://mises.org/library/socialism-economic-and-sociological-analysis , as well as the whole barbaric philo-Semite Nietzschean chapter entitled « Compulsory social insurance » starting at p 475. Incidentally, Amartya Sen’s rubbish, according to which the Indian market economy would do better that the Chinese planned economy, simply because of the allegedly better circulation of information, is now clear for everyone to see. The same could be said comparing the Social or Welfare States’ socio-economic and cultural and ethico-political performances with the current neoliberal ones.)

Incidentally, the worse of all neoclassical « bastardized » version was given by Robert Solow in his article of 1956 for which … understandably … he got the Nobel Prize analog in the dismal science conferred by the very tendentious Swedish Bank. Solow’s contribution – as well as Samuelson’s – was an attempt to depart from the economic regulation proposed by Cambridge UK – Keynes, Sraffa, Joan Robinson etc. To this group must be added Harrod and Domar although the first, the earliest biographer of Keynes, was, lo and behold, from Oxford. Solow simply proposed to do away with the full-employment condition that was at the center of Keynes’s General Theory post-World War II intellectual revolution in the field. It went hand-in-hand with Lord Beveridge’s concept according to which social safety nets were the best countercyclical tools apart from being inalienable social fundamental rights.

Solow simply proposed to write the function of production a y = f (K, L) where K is capital and L, labor, but L being here at whatever level one wishes. The idea being that if the labor market was fluid and flexible enough the market would quickly find its « razor-hedge equilibrium», and necessarily so when labor would be at its « physiological level ». Thus no State regulation was needed since full-employment would result from the operating of the Solowian market. Of course, such a « physiological level » is nothing other than a crass Malthusian ineptitude to say the least. As we know, half a billion Dalits comrades have a longevity of 40 to 42 years in present day India … In one of her song, the French singer Coralie Clément warned that when falling down one could still dig his/her way down below. (« Sais-tu que lorsque on touche le fond, on peut toujours creuser. » https://www.youtube.com/watch?v=7IuS1CBHZKg )

Eventually free-trade deals conjugated Solow’s ineptitudes with global neoliberal competition. With Marginalism, labor is a factor of production like any other, hence labor’s wage is always equated with the « individual capitalist salary ». The Human side of labor is totally pushed aside of the equation, particularly its need to reproduce itself within households that fatally have different sizes. And so are its needs to survive during period of inactivity caused « through no fault of its own » such as unemployment, sickness and old-age. When labor competition is waged on the basis of Solow’s physiological level or individual wage without any « differed salary » or any universal access to social public services, social catastrophe is sure to follow accompanied with a real downward spiral.

Yet, today, this irrational and inhuman competition is embodied in the official anti-dumping definition enshrined in the WTO and integral part of all free-trade deals. This downward spiral is poorly masked by the rise of the speculative financial sector and its over-representation in the Marginalist GDP which is ontologically incapable to differentiate between the speculative and the real economies. In the USA, this sector was at around 3 % of GDP before the abrogation of the Glass Steagall Act in 1999 and is now navigating close to 9 %. One can check The Body Economic : why capitalism kills , (2013), in the Section Critiques de Livres-Book reviews of www.la-commune-paraclet.com . Note that Marxists are internationalists and would applaud global fair-trades deals with both hands as long as the three components of the « global net revenue » of the household would be integrated in the anti-dumping definition together with the precaution principle for the environment. By the way, together with the reaffirmation of the peaceful « most favored nation principle », this would unleash an unprecedented era of global prosperity and peace.

Solow’s consciously engineered regression did not only concern post-war economic regulation especially through the freeing (sic ) of the labor market from any constraints and rigidities. It also aimed at pre-empting Harrod’s attempt to dynamise Keynes’s stationary system through the taping of Soviet works on planning. But the question is: How do you maintain the appearance of a dynamic system if you take away the « visible hand » (Chandler’s apt expression) of regulation or planning? You simply cheat on productivity which Marginalism cannot even comprehend aside from economy of scale – and increasing/decreasing returns. Hence, Solow, who is very Stalinian in this respect, knows the importance of productivity. But he can only introduces technology exogenously into his equations. Of course, this is inept and fraudulous since technology is priced – or rather valued – on the market. But, Solow, like others, could hide the vacuousness of this theory through the ab/use of some mathematics.

The heydays of economic regulation in the UK were reached with Prime Minister Wilson. After that, the dismantling of the tariffs by the GATT and the multinationalization of productive capital initiated a retreat from Keynesianism. For one thing, nothing was done to counter the extroversion of the Economic Multiplicator, and therefore to preserve the coherency of the Social Formation, the key to Keynesian regulation in an inter-State system. Not surprisingly, the domestic efficiency of State intervention started to dwindle. Ironically, when the function of production controversy was played between Cambridge UK – Keynesians and neo-Ricardians – and Cambridge USA – the regressive « bastards Keynesians » Samuelson and Solow through student proxies -, the Bretton Woods System was starting to crumble: As we know, the Writing had been on the Wall for some time, Harry Wight having won against Keynes at the Savannah Conference … Yet, ineptitudes remain ineptitudes. In the end, both Cambridge Schools were on the same Marginalist grounds as far as the function of production was concerned. They only differed in their understanding of the « market of the markets », or, to simplify with an image, on how much of August had to be added to Léon Walras … Today, given my contributions, both Cambridge Schools would not last 10 minutes, even with the help of all so-called economic Nobel Prizes. I renew my challenge here, demanding the right to respond.

Ironically, this simultaneous resolution ineptitude – including the Marginalists’ version of it  – was criticized by Hayek . He noted that the simultaneous calculations would have to be carried-out for every single transaction, something unfeasible given the sheer calculating power implied. This critique triggered the refutation attempted by Paul Cockshott and Allin Cottrell in the article which we will discuss in detail below.

To conclude this section, let us emphasise that the components (c+v) of the function of production led naturally to the structure of SI and SII, namely the necessary reproduction of the Mp and Cn used. This also tells us that we can include all the sub-sectors that we want under either SI or SII according to their productive or consumptive nature (for details see my Synopsis of Marxist Political Economy ). Given the sheer strength of socialist statistics derived from the correct SR-ER settings, trans-sectoral filières can also be easily managed.

Third Task: Presenting the argument of the authors and the main critiques it deserves.

The authors refute the argument according to which the fall of the Soviet Union testifies to the veracity of the bourgeois opponents’ critiques for whom Socialism was theoretically flawed and practically unworkable. They want to show that « a viable alternative to capitalism and the free market » (p 1) still exists. Accordingly, they deal with the most vociferous and, nowadays, most academically respected critiques, namely von Mises, Hayek and Samuelson. This makes their approach interesting. Their starting point is Lange and Strumilin: « From Lange (1938) we take up a modified version of the trial and error process, whereby market prices for consumer goods are used to guide the allocation of social labor among the various consumer goods; from Strumilin we take the idea that in socialist equilibrium the use-value created in each line of production should be in a common proportion to the social labor time expanded.» (p 1)

The measure of value they propose is labor time, indifferently from the necessary coherence among the ratios v/C, pv/v and pv/(c+v). As far as I know, one of the first bourgeois thinkers who reduced Marx’s Labor Law of Value to labor time, in abstraction from any changes in duration and intensity as rigorously done in Capital, Book I, was Benedetto Croce in his work entitled Historical materialism and the economics of Karl Marx published in the very early 1920s. The functions of production are written accordingly, namely as linear functions integrated in a matrix. The general equilibrium, be it stationary or dynamic, is supposed to be given by the equality of all the use-values produced in all the lines of production with the total or social labor time expanded. For the authors, this equality derives from the labor tokens, that is to say from the entitlement of each worker – correctly assuming an egalitarian wage system – to the social wealth collectively produced «after deduction of taxes to offset the communal uses of labor time: accumulation of means of production, public goods and services, support of those unable to work. » (p 2)

The difficulty here is to reconcile the market allocation of available resources with the attainment of prescribed final production objectives. They recall the argument offered by von Mises to prove the unfeasibility of socialist planning. A measuring unit would be needed and labor time could not after all play this role because « labor-time calculations necessarily leads to the undervaluation of non-reproducible natural resources and that there is no rational way (other than via a system of market determined wage rates ) of reducing labor of different skill levels to a common denominator » (p 2)

The authors were not impressed by von Mises’s argument: « We can only summarize out (our) responses here. If one uses marginal labor time as a measure of cost, that takes into account the growing difficulty in obtaining non-reproducible resources. In addition, planners could decide to devote resources to the research into alternatives, the use of solar power instead of oil for instance. Furthermore, there is no reason to believe that any real market furnishes an optimal solution to such problems. As for the non-homogeneity of labor, one can in principle treat skilled labor in the same way as any other product, evaluated in terms of the training time required to produce it. » (p 2)

The authors would be correct here if only they had applied the productivity ratios integrating them into the SR-ER Equations. As we have shown above, the functions of production would then remain coherent through and through in quantity and value-price terms as well as in labor time. This result is achieved in two ways : Either with identical ratios v/C and pv/v in all sectors or else with different ratios – different sectoral productivity rates – which strictly respect the Marxist Productivity Law. However, this cannot be understood in the Smithian-Ricardian-Neo-Ricardian terms the authors propose, that is to say as the difference between « simple labor » and « complex labor », this last being evaluated as a sum of « simple labor ». In Capital, Book I, Marx uses the correct Marxist concept of « abstract labor » and the related concept of the « socially necessary labor » needed to reproduce it. Labor time serves to measure the productivity of labor given the organic composition of capital and the related rate of exploitation.

The critiques laid out by von Mises presumed that theoreticians would remain prisoners of the original critique laid out by Böhm-Bawerk. He thus believed to be on safe grounds whereas, as we can see, he neither understood the Marxist Labor Law of Value nor the rent problems. Nor did any other bourgeois economists because it is clear that the idea of scarcity, that is alleged here in relation to labor time, refers to the so-called but confused Ricardian rent. We disposed of these silly arguments above and also pointed out that Léon Walras recognised that scarcity is socially produced. It remains that, because they ignore both the Marxist Law of Productivity and the Marxist parametric constraints provided by the SR-ER Equations, the authors are unable to provide a real and coherent solution.

This shows clearly in the difficulty met when trying to harmonise prices with their understanding of labor token. It again boils down to the ex ante/post hoc logical flaw. Concretely, this appears in the inherent confusion over the illegitimate dual role of the labor token, as a measurement unit and as a unit of account. This is far from trivial. Indeed, even if we were to ignore for the time being the mechanism of profit extraction and the problem of the measurement of the surplus-value extracted, it is clear that this confusion between labor time as a quantity – the use-value of the labor power – and labor-time as the unit of account – or exchange value – plays exactly the same puerile role as gold in the originally proposed simultaneous resolution scheme.

Furthermore, the arrangement of the numerous linear functions of production in a matrix clearly show that the reproduction mechanism is not understood at all. The recourse to Lange’s here amounts to the substitution of the Smithian « invisible hand » with the consumer’s preference expressed in the consumers’ market. This presumably includes not only household consumption but also what could be called here « productive consumption ».

Without any comprehension of the necessary relationships between v/C and pv/v, we would have a situation like this:

c1 + v1 + ?1 = xP

c2 + v2 + ?2 = yP

…………………….

cn + vn + ?n = nP

This looks like Marx’ s initial price of production scheme, where xP, yP, nP are assumed in a random fashion. This then begs the question of how one determines the rate of profit – which should be identical assuming the mobility of capital. Of course, the authors addressed this question and did so thanks to their recourse to modern computing power. This is a nice trick to refute the critique that Hayek addressed to the simultaneous resolution method. But, as we will see, this is nothing other than a neat refutation of an otherwise puerile objection which, in any case, had nothing to do with Marx’s own Reproduction Equations. It remains at this stage that the real reproduction of the stationary system is not ensured. The structure of Simple Reproduction (SR) is not respected. Yet, the matrix and the use of labor time offers a « mathematical » solution, but an economically meaningless one.

Let us first deal with the authors’ refutation of Hayek’s objection and then we will look at how they deal with the extraction and measurement of profit.

Böhm-Bawerk, von Mises, Hayek, Milton Friedman and all these sad and overrepresented crews have conferred  to themselves a biblical mandate to obscure the road to science. Elsewhere you see this with Leibnitz versus Descartes and Giordano Bruno, with Gödel’s versus Turing etc. Examples abound and constitute a rather sad testimony to the cast and class selection process operated behind the scene to keep citizens in a state of preserved obscurantism. (« In 1872, Emile Boutmy created Sciences-Po with a clear mission: « Forced to suffer the law of the more numerous, the classes which see themselves as higher classes can only preserve their political hegemony invoking the right of the more able. In this way, behind the collapsing defensive wall made of prerogatives and traditions, the flow of democracy will be met by a second line of defense made of shining and useful merits, of superiority resting on imposing prestige, of capacity that only folly could push aside. »(translation mine) In Quelques idées sur la creation d’une Faculté d’enseignement supérieur, 1871 (sic), in Piketty, 2013, p 782. Note that Boutmy was at least still speaking in terms of Republican merit achieved through the tough examinations granting access to the Grandes Ecoles. Note that « merit » is now strictly a function of the over-representation of the philo-Semite Nietzschean crews and of obscene tuitions fees. Samuel Huntington and his Trilateral Commission had called for the return to « the deference to (self-conferred ) Authority », in effect to a new Index, backed-up by high tuition fees and by the strict control of the « flows of communication » together with the recourse to the Nietzschean Hammer i.e., Patriot Act and all …Their narratives being so vacuous you can easily understand why …)

However,  as Nietzsche, their syphilitic grand master albeit flanked by many archconservative and lunatics rabbis, warned in his Thus spoke Zarathustra, these characters often end-up believing themselves in the a-scientific narratives they have cooked-up in order to preserve their own self-elected cast’s privileges. Nietzsche himself ended-up in pray of folly emblematically hanging on the neck of the wounded horse crying « Pity! Pity!» In terms of my Marxist psychoanalysis theory, I defined these characters as « pitres », others with less understanding of the stakes have used the adjective « agis », i.e. agitated. (See the Livres-Books section of www.la-commune-paraclet.com )

Von Mises hated all forms of planning and especially German WWI planning as well as, later, Keynesian economic regulation. Quite simply, this was because it showed the undeniable superiority of planning per se in reaching fixed objectives while minimizing waste. The inescapable trends towards the centralisation and concentration of capital embody the two main laws of motion of capital. The superiority of planning allied with the laws of motion of capital, would fatally lead to the demise of private property as the dominant agent of resources allocation masked by the magic of the « invisible hand » of the market. Contrary to von Mises, the pessimistic Schumpeter was convinced that this outcome was inevitable, although he believed that it could be delayed for a while through what he called « creative destruction ».

As far as he was concerned, Hayek was determined to undercut the enthusiasm unleashed by the simultaneous resolution method among centrist and center-left socio-democrat politicians and academics. It gave some « mathematical » plausibility to socio-economic planning, a trend powerfully legitimized by the successful Bolshevik Revolution of 1917 and, a contrario, by the crises engendered by the booms and busts economy and soon by the Great Depression. The common sense among sensible people was that unemployment happened « through no fault » of the unemployed workers themselves,  and that it was somehow morally reprehensible to see a minority live in an unprecedented prosperity in the midst of gigantic wastes, mass poverty … and long soup lines …

Oscar Lange had greatly reinforced this plausibility by defending what he called Marginalist socialism. Lange was entirely wrong but at least he was well-intentioned. He simply believed that if, as academics would have it, Marginalism was a science, then its applications should be universal and it could thus be applied to socialist planning. In so doing, Lange – with Stalin’s support – created an intellectual counter-hegemony, one which opened the road to the victory of Popular Democracy in Eastern Europe – i.e., to the transition form imagined thanks to Gramsci’s contribution for the more developed East Bloc countries. As I have shown elsewhere, once Stalin was no longer in charge, Lange’s well-intentioned marginalism quickly deteriorated in the hands of the likes of Liberman and Khrushchev, ultimately leading to the internal collapse of post-Stalin Soviet revisionist socialism. The convoluted history of the Eastern Bloc countries cannot be fully understood in abstraction from the contradictions created by this brand of Marginalist socialism. And by the need to maintain a strict defensive unity of the East Bloc within the framework of nuclear deterrence. The room for manoeuvre was thus reduced while the Marxist Paradigm and its efficient scientific tools were being betrayed. This over-determining Bloc logic was similarly felt by De Gaulle in France and ultimately led to the privatisation of the French Central Bank – 1973 – and to the slow demise of the very successful French Indicative and Incitative Planning.

The so-called right-wing libertarian Hayek wanted to block this new alternative to economic planning, especially as it had been initially implemented with success in the East Bloc Popular Democracies. He came up with a simple argument: The number of calculations required by the simultaneous resolution would be so tremendously high, the resolution having to be done for each exchange (selling/buying) that it would be practically impossible to carry it out. Especially since a modern economy includes millions of products, each including many inputs, sometimes by the hundreds. In the 80s, the Soviet planning organs had to deal with more than 24 million products.

The Marxist answer to these ineptitudes is to note that this academic shibboleth has nothing to do with Marx, neither with the problems raised by the coexistence under dominance of different modes of production, nor with productivity increases, nor with the necessary parametric constraints of the SR-ER Equations. In other words, it has nothing to do with the underlying scientific question. Furthermore, when the SR-ER Equations are dealt with in exchange value terms – with the correct Marxist understanding of money – the exchange values of all the components of the functions of production are perfectly predictable and sectoral, subsectoral and filières aggregates will allow for real-time controls and adjustments. The eventual changes of parametric constraints are now themselves understood and can be dealt with. These controls and adjustments are the only planning calculations needed. Given the marvelous power of bar-codes, the tracking in both quantity and value-price terms could be had in real-time  – with the necessary safety measures needed to avoid foreign interferences. (Remember the CIA disruption of Allende’s Chile.)  No time or computer power would be necessary to determine market prices simultaneously for each selling-buying! However, the Marxist Quantitative Theory of Money and Credit, which I laid out, would have to be taken seriously and elaborated upon following the choice of socialist epoch one wishes to implement. Otherwise, the price epiphenomenon would soon create confusion especially if full-employment were not maintained – or, more likely today, if the considered socialist economy were facing an embargo.

Our authors did not benefit from a correct understanding of Marx’s theory. Enmeshed into their matrix framework and into their confused labor time concept, they bravely used their computer knowledge to refute Hayek. Their technical argument is interesting. First, because they are very demanding. They want a method which could «carry out the above sort of calculations in a full disaggregated detail » (p 2) To be feasible the Plan must be worked out in full details, horizontally at the enterprise level and vertically. They note: « This general point is confirmed by Yun (1988:55), who states that as of mid-1980s Gosplan was able to draw up material balances for only 2,000 goods in its annual plans. When the calculations of Gossnab and the industrial ministries are included, the number of products tracked rises to around 200,000, still far short of the 24 million items produced in the Soviet economy at the time. This discrepancy meant that it was « possible for enterprises to fulfill their plans as regards the nomenclature of items they have been directed to produce, failing at the same time to create products immediately needed by specific users » » (p 2) They note further assumes that « in a 10 million product economy each product is assumed to have on average 631 direct inputs. » (p 5) They conclude that « taking compute time alone into account, even the multiprocessor would take  seconds, or over three thousand years, to produce a solution for an economy of 10 million products.» (idem) But they add « If, however, we take into account the sparseness of the matrix (i.e. the high proportion of zero entries, when it is specified in full detail) the problem becomes more tractable » ( p 6) Even taking into account memory need, they « conclude that the computation of labor values is eminently feasible » (p 6)

This is a beautiful demonstration and we will draw on it at the end of the article when we will apply the Marxist Labor Law of Value – productivity and SR-ER – to the regulation of a modern capitalist economy, namely an economic system in which the competition plays its role but remains over-determined by the SR-ER Equations.

For now, however, we note that the computing for a real socialist planning based on Marxism would be much simpler and faster simply because the Marxist functions of production are predictable – once you know v/C, you can deduce pv/v, at least up until the given framework – Marx called it the « moral conditions » i.e. civilisational conditions – is maintained. This also facilitates the introduction of new products, knowing the exchange value of the inputs needed. The two main sectors (SI and SII), which correspond to the components of the function of production, are easily decomposed in as many sub-sectors as we need. Beside, given the potency of the Bar Code technology, the Plan would have instantaneous online data and could quickly provide all the readjustments needed – overtime etc –

Furthermore, we know that a full-employment situation is easily attained through the recourse to the reduction of the working week, a mechanism that could even be managed with the flexibility imagined by Emile Pacault. With full-employment there would be no structural inflation and therefore monetary policy would be easy to manage, provided one uses the Marxist quantitative money theory – see the Synopsis – and provided one carefully differentiates between money, which together with institutional savings, serves to facilitate the exchanges implied by the current SR-ER Equations, and credit which is needed for the investments called for by Enlarged Reproduction. In this case, investments would have to be sectorally and proportionally symmetrical with regard to ER. In this way, sectoral expansion going hand-in-hand with sectoral contraction will be avoided, something that cannot be done with capitalism, a system in which decisions to invest are solely motivated by private profit. Given the online data, it would also be highly feasible to track the various filières and to provide the needed trans-industrial and trans-sectoral adjustments.

Incidentally, this flawed capitalist structure explains the recurrent crises known as Trade cycles as well as the structural crises which are needed from time to time to clean up the excesses of capitalism, an economic system that is always inherently speculative.

However, the main problem for planning is not the amount of calculations. Incas’ Quipus or knotted  bands did wonders because the system was largely predictable, being based on absolute exchange values and on geographic decentralisation. Consequently it was more easily manageable. (Decentralisation and specialisation are more powerful than sparseness in a highly centralised but crowded system with all its possible errors and bugs. This explains the pragmatic role of the Ministries in charge of various industries in the USSR. This was once called and theorised as the Socialist International Division of Labor.)  In the last analysis, the main problem to deal with is the congruence of prices and values, both use and exchange values.

This is how the authors propose to manage this problem within the simultaneous resolution system. « The central idea is this: the plan calls for production of some specific vector of final consumer goods, and these goods are marked with their social labor content. If planned supplies and consumer goods coincide when the goods are priced in accordance with their labor values, the system is already in equilibrium. In a dynamic economy, however, this is unlikely. » (p 3)

Let us first deal with the stationary equilibrium system proposed keeping in mind that neither productivity nor SR-ER Equations are taken into account. The matrix would look like this (I actually we only need two entries to make the point):

First (random ) situation:

A ) c1 (160) + v1 (40) + pv1 (40) = p1 (240)

B ) c2   (80) + v2 (20) + pv2 (20) = p2 (120)

240  +        60  +          60  =        360 (total capital)

 

When one takes C = (c+v) = 100 in A and B, one shows to have understood Marx’s comparing method. Hence his use of time in the measurement of the exchange value of labor power. This implies that one takes into account the ratios v/C and pv/v, which is not the case with our authors. Here, the ratios are the same in A and B and therefore it is straight forward. I have shown above that, once you have solved the Marxist Law of Productivity, this should no longer be regarded as a specific case. It can be used here because it is visually clearer. Stated otherwise, there never were any ex ante/post hoc problem in this case and therefore this identical ratios situation was used by Marx to understand the parametric constraints of Simple Reproduction in Book II of Capital. The labor units are homogenous in all the components of the functions of production.  It would look like this:

Second (C= (c+v) =100) situation:

A ) c1 (80) + v1 (20) + pv1 (20) = p1 (120)

B ) c2 (80) + v2 (20) + pv2 (20) = p2 (120)

160   +      40    +         40  =        240 (total capital)

If I were to follow the definition given by the authors for stationary equilibrium, the functions of production or enterprises or sectors  – it is like you want – A and B, would be given by the Plan. All components of the functions of production would be given in labor time equivalents and this would appear to work IF AND ONLY IF  v/C and pv/v are equal throughout AND if a strict labor norm applies. This implies that the differential intensity of work  would be banned. Moreover, the Plan would have to set the rate of profit exogenously.

None of this is very likely. You could easily turn the profit rate problem around by taking your function of production empirically for a whole cycle of production and adjusting it accordingly until you get the full picture for the whole cycle. Once this is done, you can continue operating in exchange value terms, but then the market in the bourgeois understanding of this term would be not be useful. (If by « market » we mean the expression of consumers’ preferences, this could be more usefully exercised by integrating consumers’ inputs before a product is massified for consumption and large amounts of money are lavished in marketing to shape consumers’ preferences … not to speak of Veblen’s elaborate strategies imagined to induce competition even among middle-class households with regard to the perceptions of their relative standard of living  … )

Of course, this appears clearly once you have grasped the Marxist Law of Productivity and realized that the rate of profit emerges organically. Given the parametric constraints, what changes are the volumes of profit not the rate of profit which remains identical throughout. A more productive enterprise will easily corner the market for a given product due to its cheaper unit price. This distinction between volume and rate is at the root of the two main laws of motion of capitalism, namely centralisation and concentration of capital. In a given system, once you know v/C, you can derive pv/v and hence the rate of profit v/(c+v) – which is organically known, in any case. If there is full-employment and if monetary policy were to be managed rationally – see the Synopsis – then exchange values and prices would match. As a matter of fact, the working week under socialist planning is at least as low as is needed for medical reasons; however, in a socialist economy, the needs to be satisfied collectively are potentially as large as the society desires – or as large as it can afford. Full-scale robotization would never appear as a threat to the citizens qua workers, employees and collective owners of the Means of production, on the contrary.

This being said, the authors’ proposal would not work. Their labor time concept pretends to decompose and account for « complex labor » which then destroys the necessary assumption of identical conditions of production. Furthermore, their random matrix presentation does not ensure that the SR Equations – stationary reproduction of the system – are respected. Without these Equations, values – or real prices – are by definition undetermined because, over the entire cycle of reproduction, overall demand and supply are needed to reach this result. This is what is implied by the sociologically given supply or demand tables used by the Marginalists to draw their laughable curves… This is quite serious because the trial and error – the Lange part of this matrix game – in other words the incessant simultaneous resolution would give a different impression. Yet, because they are not set in a given SR setting, the prices given would always be random and a real solution would never be reached. This is a real problem because without a real equality between value and the labor unit, the Plan cannot operate correctly. As a matter of fact, this is why Soviet planning operated in quantitative terms, the Net Material Product, with a rather poor understanding of money and especially of credit at least after the disappearance of the great Marxist theoretician, Stalin.

But all this was already abundantly demonstrated. Paul Sweezy had honestly published the initial articles necessary to deal with the transformation problem although, unfortunately, at the time he did not have the benefit of Marx’s letters to Engels that clarified the rent context of the presumed « transformation » problem. Modern and honest scholars like Paul Sweezy  and Arghiri Emmanuel showed that it was impossible to reach a scientific resolution of the problem because no version succeeded in keeping an homogenous labor unit. (6) But, of course, they all used some version of the simultaneous resolution method which had nothing to do with Marx’s problem in the first place, and they totally ignored the crucial issue of productivity. Even if you assume that v/C and pv/v are the same and that a strict labor norm is applied but without respecting the underlying SR Equations, you will always turn round and round in this strange noria … which has nothing to do with scientific Marxism.

The authors recognise the added difficulty when one thinks in terms of dynamic equilibrium. Their solution is straightforward. Disequilibrium would manifest itself through a difference between prices and labor-value. In other words, some enterprises or sectors would have used more « labor time » than the market can clear. They then introduce an harmony function and … balancing stocks!!! The harmony function would be used to reallocate resources to suppress limiting constrains for production. « The algorithm draws on techniques developed in simulated neural networks, in particular upon the notion of an harmony function » Smolensky, 1986).» (p 6) They add: « marginal harmony is a declining function of output, which encodes the notion that deficits are a more serious problem than surpluses are a benefit » (p 6) It looks like dealing with Dr. Pangloss only that with such balancing stocks ready to use he would probably have avoided his sad end … However, in terms of calculations, they do not tell us how the balancing stocks are accounted for and priced; only that one supposes – wrongly – that labor time remains homogenous from t1 to t2 as well as it is presumed to be from sectors or enterprises A and B … The accounting books of capitalist enterprises – as well as scientific Marxist Labor Law of Value theory – tells a different tale: namely, that stocks are priced not according to their original prices but according to their – or that of other elastic products – current exchange values or prices, which send us back to the current context of production.

Furthermore, we can easily see by now that the confusion of « labor time » with « abstract labor » and with « socially necessary labor » makes it impossible for the Plan to correctly readjust the system.  These two Marxist concepts imply the taking into account of productivity differentials.  Again, as was the case for stationary equilibrium, the matrix structure recalculations – substituting wrongly for trials and errors – do not even lead to real prices over the long term – as is at least done concretely with capitalist competition , as noted by Marx in his 1844 Parisian manuscripts . This is simply because the SR-ER structures are not respected and the final – or aggregate demand and supply needed to reach real prices is by definition excluded by the matrix writing. These problems cannot be alleviated by the aggregation in a reduced number of sectors derived « from the 1987 US input-output table along with the BEA capital stock figures for the same year » (page 13). It turns out that the logic of the regrouping goes along with the reallocation of an extra dozen rows. This manipulation is imposed by the necessity to write the matrix with the same number of columns and rows. Incidentally, the reallocations of some rows send us back to a very substantive problem, namely how to deal with the autonomisation of bureaucratic and other such tasks, i.e. the economic role and function of public bureaucracy. In a confused reading of Marx, these sectors are referred to as « unproductive labor » whereas this expression should correctly be read as «indirectly productive labor ». Indeed, Marx immediately illustrated with the example of the role played by teachers in the formation of the labor force.

Note also that the sources of the dynamic equilibrium are said to be 3:

«First case: population and labor supply are growing at a compound percentage rate (ΞΞ y -1), while production technology is static.

Second Case: Population and labor supply are static, but labor-augmenting technical change is proceeding in such a way that the labor input requirement for each commodity is falling at a compound rate of b per period.

Third Case: This combines the two previous cases: growth in labor supply at rate g and technical progress at rate b. »

These three cases would be fully understood and managed when dealing with Marx’s SR-ER Equations Schemes. But one needs to take my contributions into account, namely the coherent insertion of productivity differentials in the SR-ER Equations and the intersectoral symmetrical proportion of investment in SI and SII in order to avoid expansions-contractions. (See the Synopsis which also deals with the Marxist Quantitative theory of money and credit etc).  The question of available stocks of raw and intermediary materials can be addressed domestically – installed overcapacity, overtime, stocks, etc – or through imports. This sends us back to the theory of the insertion of the Social Formation (SF) within the World Capitalist Economy. More specifically for a Planned Economy – leaving out embargos here – this sends us back to the question of the rate of change or the availability of foreign currency or gold etc. But, of course, the most serious objective is to keep track of the productivity changes and how they influence not only prices-values but also quantities and hence the SR-ER structures. Of course, a socialist planning would always strive for the greatest microeconomic productivity and the greatest macroeconomic competitiveness possible, if only because this frees labor power and allows for the production of different goods and services required by the community, taking into account the freeing of time through paid holydays and the recurrent reduction of the working week necessary to further the general human emancipation process.

Our authors do not see this in this light. Their confused – non-homogenous – « labor time » Smithian-Ricardian pseudo concept leads them to fall into the arms of Samuelson and Weizsäcker pseudo-critiques of the Marxist Labor Law of Value. (7)

First, being swept away with the powerful computing possibility to reallocate « labor time » until an equilibrium between prices and values is reached, they criticise Samuelson and Weizsäcker for using an average rate of profit. In their mind, if complex labor decomposes in a sum of simple labor ( labor time ), hence rates of profit can be different from enterprise to enterprises and sectors to sectors. These two Marginalist authors have the same confused « labor time » understanding of the law of value and use the same linear algebra method. They do not want to recognise that the rate of exploitation pv/v remains the sole scientific explanation for the genesis of profit, and for its specific form, given the corresponding organic composition of capital or v/C . Therefore, they are obliged to give the rate of profit exogenously or, in the case of a planned economy, to give it exogenously as marked-up profit. In both cases, it is a uniform rate – we saw that competition understood as capital mobility imposes it in any case in the mid-long term.

But our authors are under the puerile Smithian-Ricardian illusion that complex labor can be simply decomposed into a certain amount of (constant) labor time, simply measured by time. In my Tous ensemble (1998), I have noted how Jean Fourastié attempted to understand this by tracking the prices of mirrors because a mirror was a product with an almost unchanged form of production up until the beginning of the XX century. Fourastié took the laborer working time as his basis of measurement (« le travail du manoeuvre »). They simply extend this puerile method to the understanding of different technologies which would be decomposed similarly!!! We have already explained why this is puerile and only sends the reader back to the beginning of this essay – i.e. the problem of coherently inserting productivity within the SR-ER Equations both in quantities, prices or values and time. This disposes of the otherwise damning critic laid out by Arghiri Emmanuel in the essay quoted above (see Note 6 below)

On this basis, they attempt to reformulate  Sraffa’s reswitching of techniques, namely that it might be possible to remain more productive with less advanced technologies. Of course, if you assume that the mobility of capital should also be the rule under socialist planning, albeit capital would be collectively or State owned, this is impossible.  We already showed this when we dealt with the transition of absolute feudal rent to capitalist agricultural rent, a demonstration which can be extended to the so-called Ricardian rent and comparative advantages theories.

This is how it would work for our authors. It is a perfect example of the puerility induced by the primitive concept of « labor time ».

« For instance a contractor might employ 2 men with pneumatic drills to dig the ditch, or one man with an earth moving machine.

Method______direct labor______indirect labor______total time

Old                        100                              100                                 200

New                      50                                125                                  175

In term of labor-time accounting, the new method is superior, it saves society 25 hours of labor. Costing in money terms is likely to give a different result. Suppose that an hour’s labor adds a value of £ 7.70 to the product, while a laborer is paid £ 3.00 per hour (fairly realistic values for British industry in the late 1980s). In term of money cost we obtain:

Method______direct labor______indirect labor______total money cost

Old                        100 x £ 3                   100 x £ 7.50                    £ 1050.00

New                      50 x £ 3                      125 x £ 7.50                     £ 1087.00

In monetary terms the old technique is cheaper. This is because the contractor pays only for part of the labor expanded by his workers while he pays for the whole cost of the labor embodied in machines. From the standpoint of labor time minimization the bourgeois calculation appears socially irrational, though profitable. » (p 10)

One notes the incredible confusion between living and past labor – so necessary to understand surplus-value and profit. Labor power is the only commodity which simultaneously displays both attributes, living and past or crystallised labor. Constant capital ( «c») is past labor and variable capital (« v») is also past labor because when the worker enters into the physical location of production his/her labor force has already been renewed. But this « v» or reconstituted labor power is also living labor. The over-work or surplus value (« pv » ), necessary to generate profit, expresses the addition by living labor to the value of the product, an addition that is pocketed by the owner of the Means of production.  If you look at the money cost scheme, you would take away the whole logic of productivity which is precisely that of establishing productivity as the dominant form of extraction of the capitalist mode of production. It does so simply because it is more profitable to do so, namely that during the same time worked and with the same labor power – not in terms of money but in use value terms, namely what it takes to reproduce that labor power – but with better technology – including machines, organisation etc – the Owner of the Means of production produces more of a given product and at a proportionally lower price. Otherwise, why would the capitalist bother? Note that taking into account the socialist norm of basically equal pay for all workers – Jules Guesde was perfect on this – the logic of productivity remains both for the quantity produced and for the relative exchange values or prices in the system. In effect, the necessary training of the labor force being freely accessible with socialist education, the salary scale would make no sense except partially in the early stages of the transition period, which would still involve some forms of  material incentives. As we can easily see, the confusion over « labor time » is lethal. It has nothing to do with Marx’ s scientific Labor Law of Value.

At the root of this is the necessity to deal logically with the production situation in t1 and in t2 using a coherent measuring unit. They use primitive « labor time » and as we saw they pretend to offer a more flexible planning system doing this, simply because they could do away with a uniform rate of profit. Their misunderstanding of the issue has at least an advantage in that it sends us back to their starting point in Samuelson/Weizsäcker. In their laughable contribution, these two Marginalist authors simply confuse the transition of a production system from t1 to t2 for a matter of synchronisation. In so doing, as we will show, they childishly and arrogantly confuse fixed capital with circulating capital. In the function of production, circulating capital is used to assess the exchange values of capital – Paul Sweezy called it « used-up » capital.

Our two authors note: « They argue that in a rationally planned society, where class exploitation is abolished, all goods should be « valued » or priced at their « synchronized needed labor cost». Such rational plan prices will, in general, not be proportional to sums of undated labor content, but will be expressible in the manner of bourgeois prices, provided that an appropriate profit rate is used.» ( p 8)

It is worth reproducing the full quote of Samuelson and Weizsäcker here with interpolated clarifications:

« In an economic system where all goods are ultimately producible by labor … if the rate of profit were always zero, the competitive equilibrium prices would be exactly equal to the total embodied labor required for each good … (sic! Obviously they do not know what they are taking about because the function of production would be c + v = p which even Smith refused. Zero profit is not part of the discussion and clearly has nothing to do with equilibrium). If, however, there is a positive interest or profit rate, labor will not receive a real wage large enough to buy all the consumption goods producible by labor in a stationary synchronised equilibrium … (again this is pure fantasy in Marxist terms, even if you reward capitalists for their labor: even a stationary system needs to produce the right amount of Means of production and Means of consumption !!!) …(W)ith positive interest the prices will no longer be proportional to the respective embodied labor contents. (actually they are if you correctly  account for productivity, see above) Thus, if the same historic labor total, say, 1 labor, is needed for either a liter of grape juice or for a liter of wine, but for wine the labor is needed 2 time-units earlier, rather than only one-time unit earlier as for grape juice, the ratio of wine to grape juice price will not be P2/P1 = 1/1, but will instead vary with the profit rate period r, being P2/P1 =  /1(1+ r) = (1+ r) … Thus grape juice and wine have equal « value » since they both involve unit labor inputs; but their bourgeois « prices » differ from the Marxian values because the former calculate labor requirements, dated by when they occur and carried forward at nefarious compound interest. » (SW, p. 312) ( idem Note 7).

This shows you exactly what bourgeois pseudo-Nobel Prizes in economy are worth. Here, the good poor Samuelson and his helper … are not even able to make the difference between fixed capital and circulating capital. The famous and oft reedited textbook is far worse. (In fact, Samuelson never went past a silly « lump-sum of labor theory» also he recognised that Piero Sraffa – who did not solve the problem of the homogenous unit of account, whereas I did -, would have deserve the Nobel Prize for economics twice.)

One more remark is needed to fully understand the confusion attached to the idea of reswitching techniques. This has to do with systemic logic and its possible disruptions either through great economic crises, through wars or even through huge natural catastrophes. Any socio-economic system relies on a Social Formation (SF). This term is preferable to that of Nation or Nation-State – as Marx specified in his short draft on « method ».  A Social Formation is the class structure in which exchange value is formed; this is why the modern Nation-State was coterminous with the capitalist mode of production. But given that capitalism is inherently international in reach and scope, this implies a series of mediations to insure a more or less correct insertion of the SF in the World Economy. Hence, the SF logic is the dominant logic for the formation of exchange value. The rate of change of the currency and the external balances of the SF make this crystal clear. Even multinationals – and transnationals – have to deal with this reality although they can push for a « minimal neoliberal State».  When changes happen, notably through the introduction of higher – and sometime lower – productivity, they happen within this SF systemic logic. Having in mind the term « moral » in the sense of the « moral sciences », Marx refers to this systemic logic as the prevailing moral conditions. To avoid confusion, I prefer to refer to the stage of civilisation reached in a given SF. It also helps define the various epochs of redistribution traveled by the capitalist mode of production. For instance, the liberal capitalist State, the Welfare State, the neoliberal State – and even the corporatist –fascist State.

One example would suffice to make the point clear: The conditions afforded to the laboring masses. Under the Welfare State, institutional saving and progressive income taxes effectively enshrined a new level of civilisation based on a specific structure for the « global net revenue » of the households. This would include the « individual capitalist salary », the form prevailing under classical liberalism; to this was later added a « differed salary » in the form of the paycheck contributions needed to finance unemployment insurance, public pension schemes etc. Were then also added income and other taxes according to the fiscal policy adopted by the Welfare State. These taxes were needed to pay for the public infrastructures and services necessary to serve the common good and to insure an increased standard of living for all citizens. This fiscal portion would in part come back to the households in the form of equal or rather universal access to public infrastructures and services. The structure was backed by an anti-dumping definition to regulate foreign trade.

Today, the civilisational regression induced by neoliberal economics – otherwise termed by G. Bush Sr.  « voodoo economics » and « social justice » by the various Rawls, Giddens et al . – is based on the dismantling of the Welfare State and of the Labor Code. The« global net revenue » of the households recognised that it was a duty for the State to ensure full-employment and thus to take care of the people who happened to be unemployed or sick or incapacitated « through no fault of their own». Today, the new anti-dumping definition excludes any reference to the minimal labor rights recognised by the ILO and to minimal environmental criteria. This unleashes a ferocious global competition among all workers, including the so-called American « middle class »and the half-billion Dalits of India who have a longevity of around 40/42 years. Global – Malthusian – competition is thus waged on the basis of a brutal and nonsensical regression to the sole cost of labor – i.e. individual salary – confused with the cost of production. Quite simply, the Humanity of the worker and of his/her household is irrationally negated and trampled upon.

This is non-sensical because the reproduction of the worker both as labor power and as worker depends on sexual reproduction inside households with fatally different sizes. Labor power can never be rationally conceived as a simple factor of production like any other factor of production. Nor can it be conceived, like Marginalists do, as a factor of production liquefied ( 8 ) in money term and traded on the global Stock Exchanges 24-hour a day. Thinking globally in terms of cost of labor – individual salary – induces the destruction of the labor code and of all the other social protections – health-care, education etc . At the same time, this induces an economic spiral downwards. This negative spiral cannot be reversed by Pigou’s gimmicks which he called the Wealth Effect. As the House Effect version of Greenspan made clear, the spending of the 1 % on top will not sustain an harmonious social formation although, with speculation and convenient change in national accounting, the GDP might look like it is increasing!!! Momentarily at least, as the subprime crises illustrated.

The Labor Code and the Social State, over and above the minimal level formally guaranteed by the « monarchical » ILO, are the main moral or civilisational conditions. Incidentally, the ILO was born from the Versailles Treaty and thus from the fear inspired to the Western bourgeoisies by the nascent Soviet Union. The affirmation or negation of these social rights strongly affect the systemic logic and the mediations implemented by the SF to deal with the external economic realities. Note that in 2013-2014 the US and EU GDPs were modified to add around 3% to 3.5% thanks to an evaluation of fiscal evasion and the of the underground economy, drugs, prostitution and some arms procurements … Hence, the current and very moderate growth of GDP actually masks a real « negative growth » … and, furthermore, a job destructive one. The West is now specializing in so-called « shitty jobs », a further proof of the growing discrepancy between the evolution of productive forces and that of the relations of production.

One can look at Cuba during the early stages of the Transition in Peace Time. From one day to the next, the supplies of oil from the USSR dwindled as well as the refined products – including gasoline – produced on the sunny Socialist Island. The leadership was able to implement a return to ancient practices – cart driven by horses or oxen – to defend the independence of the proud socialist country. The micro-economic productivity and above all the macro-economic competitiveness were greatly affected. Cuba resisted because its leadership had succeeded in transforming Cuba into a very scientifically developed country and a very attractive tourist destination. This was especially true in the health-care sectors and sub-sectors. By accepting a lower standard of living, they could still preserve these essential socio-economic conquests as well as national independence. They could do this thanks to these sectors and to the foreign currency they earned. But, as much as the Che, the leadership has always been clear on the fact that the greatest productivity affordable should be adopted whenever it was systemically possible. This is very different from the economic illusion created by Sraffa’s idea of reswitching of techniques as is well illustrated by the fallacious example provided by our two authors which we discussed above.

They must however be commended for their use of their computing knowledge in confuting Hayek’s argument. The needed calculations are possible. However, no more than Hayek do they realise that it has little to do with economic planning, with computing power and with the simultaneous resolution method.

But this begs the question of how we deal with the fact that a modern economy includes around 20-30 million products, many with a great number of inputs. There are two main ways of dealing with this question. First, within a Marxist Labor Value System,  with its known moral or parametric conditions. And, secondly, within a capitalist system – and its various epochs of redistribution – which implies that we accept the fact that competition, properly understood as capital mobility, is the main characteristic of the system. Hence prices are epiphenomena that cannot be understood by themselves but must instead be understood via the over-determining exchange value system prevailing behind market prices. (On this crucial subject see the last section of the Synopsis.)

In the first case, that of socialist planning, the v/C and pv/v relationships are known or predictable and so are the SR-ER Equations. As a matter of fact, it is possible on this basis to calculate the cost of introduction of brand-new products mainly by looking at what it takes for the necessary investment in terms of constant and variable capitals. Given the moral conditions of the system, the rate of surplus-value, pv/v, is easily derived. Real consumer choice is not mainly achieved through the haphazard market but uphill through the conception and testing of prototypes, which are concretely tested within households and/or enterprises and then eventually massified in order to quickly answer social needs according to a priority list devised through the operating of socialist democracy. (On this question see the chapter on Cuba in my Pour Marx, contre le nihilisme, in the section Livres-Books, as well as the section For Cuban socialism in www.la-commune-paraclet.com )As a matter of fact, once the first wave of massification is completed, the renewal of existing stocks would be done by short runs or craftsmanship dedicated to products of higher quality and with a longer « product life cycle », thus contributing to the accumulation of the real collective wealth of nations. It will then be possible to let the individual consumer’s preferences blossom.

In this case, the mains issues concern the management of money and credit through the Marxist quantitative theory of money and credit, the lineaments of which I stated as early as 1998 in my Tous ensemble and later developed in my Synopsis of Marxist Political Economy.

An economic science is an economic science if and only if it applies to all modes of production. Marx had started a path-braking analysis of comparative modes of production for precapitalist and capitalist modes also touching on Socialist planning, for instance in his Critique of the programme of Gotha. We should then be able to apply the Labor Law of Value to understand the concrete operating of the capitalist market with its various mediations. These mediations include prices, private investment and accumulation, money and credit – both being confused and amalgamated by bourgeois economics – as well as profit, classical interest and speculative interest which are also confused etc. For instance, what is the economic significance of the Roe with respect to the « real economy » ?

In the concluding part of my Synopsis I did show how the unconscious but socially real working of market competition is governed – Althusser would say over-determined – by the underlying SR-ER Equations. However, since we are dealing with private capitalist accumulation, there will always be an equilibrium – post hoc – but it will never coincide with a socially maximized equilibrium. At times, it becomes a « cemetery equilibrium ». The invisible hand is presumed on a logical fallacy, namely that the market will always provide a supply where there is a demand. Of course, this is only true when the demand is cash-worthy. Too many essential social needs are not met in bourgeois society amidst great inequality of incomes and tremendous waste of resources.

Furthermore, private accumulation leads to the laws of motion of capitalism, namely concentration and centralisation of capital. The end of the pre-eminence of the small shops and family enterprises had been announced by Marx, Hilferding, Lenin, Hobson and even Means in his 1920s essay on the American Big corporations. This process is propelled by the rapid introduction of innovations. These are massified in waves thus forming the basis for the otherwise confused « Kondratieff cycles ». For instance, the automobile, an epitome of an intermediary sector, was first hand-made and then massified. When it was massified the implications were tremendous for the whole socio-economic system, especially as it was still labor intensive. This is generally referred to as Fordism and Taylorization. The same can be said about domestic utilities, avionics, transport etc . There are all examples of classic intermediary sectors. However, today, both new and intermediary sectors tend to be highly capital intensive.

Moreover, the private accumulation also explains the fatal recurrence of the Trade cycles. Private investments are not driven by the need to maximise social good but instead to maximize private profit. The proportional sectoral symmetry necessary to maintain harmonious ER Equations is not part of the game, unless you allow for some sort of bourgeois – Keynesian – State intervention. The result is a fatal expansion in some sectors and contraction in others with the complication induced by the management of foreign balances – trade and invisibles.

As far as socialist planning is concerned, the predictability of the system and its concrete and conceptual decentralization in sectors, subsectors, filières and geographic areas make the necessary calculus much easier. In effect, the bar codes marvel can be used to track each product online allocating necessary resources to the industries, subsectors and filières etc. If money and credit are well mastered, the adjustments are quite easy to implement. Moreover, non-performing enterprises would be placed under higher managerial controls or even be fused with better performing enterprises. But this would be done respecting proper relationships between Head Office and Branch-plants as well as respecting an optimum presence over the whole SF territory. This is the object of the Socialist Domestic and International Division of Labor that went hand-in-hand with an harmonious relationship between the urban centers and the countryside. This socio-economic planning was quite advanced in the USSR although with perhaps unnecessarily big and geographically concentrated combinates and mining monocities.

We are now able to conclude. We are impressed by the effort made by these two authors to defend the idea of socialist planning. In dynamizing Keynes, Harrod had drawn greatly from Soviet experience, albeit such as it was after the coming to power of the Liberman-Khrushchev’s clique. So were the best English historians who devised the concept of backward planning to correct foreword planning. (See the important « Note 9 » of my Book III, Marxism, Keynesianism, Economic Stability and Growth, 2005) The Plan fixed the mid and long terms objectives and readjusted as it went.  It is unfortunate that they did not have the benefits of my clarifications and contributions to Marx’s work. Like so-many others, they are the unconscious victims of a series of falsifications starting with Böhm-Bawerk and Bortkiewicz and Tugan-Baranovsky.

In the end, their concept of labor time is wrong because it does not lead to an homogenous unit of measurement as many knew at the time this article was written – for instance Paul Sweezy and Arghiri Emmanuel. Sraffa was conscious of the fact that his life-long work provided only a prolegomenon. His production of commodities by means of commodities is only a rephrasing of Marx’s « socially necessary labor ». But this does not help much if you do not or want not to derive surplus-vale (pv) from variable capital (v ) given the conditions provided by the organic composition of capital (v/C), i.e., if you do not face the question of the orderly genesis of profit derived from over-work (in terms of the use-values produced ) and from surplus-value ( in terms of the exchange values produced.) After Sraffa, the so-called neo-Ricardians became an unbearable chattering class hiding their rubbish reasoning behind matrix manipulations… For instance, Passinetti who looks like a Catholic scholar sent to Sraffa just like the Rosicrucian Leibnitz had been sent to Descartes when he was dying in Paris … In effect, these people helped delegitimize real Marxist analysis in Italy and pushed for the adoption of the ruinous and regressive so-called Social Pact of 1992 – just as the PCI had committed hara-kiri …

It is in this perspective that I feel entitled to ask them to read my contributions to Marxism before they repeat what they so lightly wrote in conclusion of their essay, namely:

« A question may well suggest itself to the reader: Are we not being supremely arrogant in supposing that we have come up with an adequate scheme for central planning where the «best minds » in the USSR failed over a period of, say, 25 years? » (p 15) They hasten to add: « (That is, from 1960 or so, when the issue of reform of the planning system emerged, until the late 1980s when this whole conception was abandoned in favor of a transition to the market.) » (p 15)

I have addressed this issue in my essay on Socialist marginalism listed in the Addenda of the table of content of my Synopsis and available in the International Political Economy section of www.la-commune-paraclet.com . Over-representation and false representation destroyed communism from within. Particularly when the tandem Liberman-Khrustchev took over and imposed their own brand of Marginalist socialism in the USSR. Mao quickly called them « capitalist roaders » and « revisionists ».  He was right. The issue was that they were abandoning the Marxist paradigm. Althusser made the same point – see my essay in Download Now in the Livres-Books section of www.la-commune-paraclet.com .

We can simplify in this way: With only 2 Five-Year Plans, Stalin modernised the country and turned it into a world superpower capable to defeat Nazifascism alone and capable to keep its ground against the USA despite having lost 27 million people during the Great Patriotic War, just because he was a true Marxist. (This explains why he is demonized mostly by those exclusivists he saved from the clutches of the Nazifascists; these crews, once over-represented in the USSR as they are in the USA today, are now typically wont to blame Stalin for the crimes committed by the midget Soviet-Jew Yeshov. Yeshov infiltrated the KGB just like Sade had infiltrated the Section des Piques to foster Terreur and then blame the best revolutionaries, among whom Robespierre and Saint-Just, and discredit the French Revolution. ) He reasoned in terms of the Marxist Labor Law of Value – Capital, Book I – and in terms of SR-ER Equations (Book II of Capital). We pointed out that if you consider v/C and pv/v identical in all sectors the Labor Law of Value is flawlessly applicable. It thus acted as a very good and concrete model. The problems induced by different productivity levels and by money and credit were dealt with in pragmatic terms but the greatest reliance was always placed on the quantity side: The so-called Net Material Product. Stalin called for the greatest productivity whenever possible in order to quickly modernise the country and to raise the economic performance as well as the standard of living of the citizens. He famously called for the alliance of American pragmatism with Revolutionary romanticism.  His last book on socialist planning is one of the best ever written on the subject keeping in mind the fact that the productivity question was not solved yet. (see:  https://www.marxists.org/reference/archive/stalin/works/1951/economic-problems/ch04.htm )

The change of paradigm, i.e., to Marginalist socialism, was devastating. It suppressed the reasoning in term of values. Worse still, it created a social hypocrisy within the leading class which eventually led to Khrushchev’s lies about Stalin – on the subject see the late exposition of these lies by the US academic Grover Furr but also my earlier comments on Yeshov etc. The system compensated the economic disruption caused by the Marginalist paradigm by a reinforcement of the command and control system that went hand-in-hand with privileges for the Party and State cadres and with less respect for the status of women in society. In effect, these remained the two main but emblematic deviations still defended by Gorbatchev in his book entitled Perestroika!!!

Of course, you cannot defend a Marxist system by relying on the Marginalist paradigm – which as we have seen is built on a series of falsifications cooked-up against Marxism. In the end, even a Molotov ended-up pretending that he could have become a great capitalist manager, just like his brother-in-law, had he lived in the USA: quite an aspiration and quite a dream for a Communist who had been a top leader of the USSR for decades, isn’t it? As I explained, despite Marx’s contribution to the critique of exclusivism, the loyalty of these people laid elsewhere and particularly after the auto-proclamation of Israel in 1948. Perhaps to differentiate between the good and the evil, it is useful to remember the great comrade Chou En Laï’s answer to Khrushchev who had told him that he had betrayed his class of origin. Chou simply replied  « It is true, we both did ».

One Western Marxist was very clear on the fact that since Marxism was a science, Marxists had to think within the Marxist paradigm: This was none other than Antonio Gramsci. Personally, I repeat that Marxism is science and vice-versa or else I would not lose my time with it. I know, through the puzzle theory explained in my Methodological introduction , that my contributions are scientific. I am still waiting for attempts at refutation provided I’ll be granted the right to answer. (9)

Paul De Marco,

San Giovanni in Fiore (CS), December 14, 2017

NOTES:

1 ) For a brief but rigorous analysis supported by many quotes see  W.B. Bland, The restoration of capitalism in the Soviet Union, Second Edition, 1995; First published Wembley 1980, in http://www.oneparty.co.uk/html/book/ussrindex.html

2 ) Marx had married a Westfallen princess and a model for all socialist person and women in particular. His brother-in-law was eminently positioned in the Prussian government and his hatred and persecution of Marx is well known as is that of the mainstream rabbinical Jewish community. Bortkiewics worked for the Customs. And Tugan-Baranovsly was a Russian like Bakunin. Finally Böhm-Bawerk was an Austrian ideologue deeply involved with others like Menger, von Mises, Cournot, Walras, Fisher etc in the task of falsifying Marx’s work and in forging a king of plausibility for Marginalism. Marginalism was developed as a set of recipes adjusted from time to time to help manage the capitalist system emphasising microeconomics,  that is to say the preeminent role and needs of the private enterprises as understood by their private accounting system. As we have seen, macroeconomic adjustments being always achieved on the back of the preeminent adjustment variable, namely the proletariat and the ordinary citizens.  Note that the « Nouveaux Economistes » – pitres like Jean Tirole, Cahuc et al. – are now selling a microeconomics without any reference to macroeconomics (sic!), a recipe tailored-made to serve the emerging Stateless classes and their transnational firms. They have no time for logical coherence and luckily for them they operate in private institutions. Perhaps someone will ask Jean Tirole the same question asked to Janet Yellen about inflation. At least, we will get a laugh out of all this rubbish.

3 ) See for instance my Tous ensemble or in English my Livre-Book III entitled Marxism, Keynesianism, Economic Stability and Growth (2005). This Book III provided the examples used by Marx himself. It was also the first book to announce the economic-financial crisis which unfolded in 2007-2008.

4) Léon Walras mentioned the social over-determination of scarcity in a footnote of the first edition of his Eléments. This disappeared in later editions. Jean-Paul Sartre was considered as a « compagnon de route » of Marxism. He was well-intentioned but was still thinking in Walrasian terms; in particular, he thought that communism would bloom only with the disappearance of scarcity. Mao’s China furnished a splendid example to the contrary showing that it was instead function of the egalitarian social redistribution of labor and wealth. One can call this a Marxist rendition of Ranke’s phrase according to which « every epoch is as near to god ». Although he stated that the material conditions of existence precede Essence, the existentialist Sartre wrongly thought in an Idealist fashion that the point of departure for Thought was in the false opposition between Being and Nothingness, thus abstracting from the real dialectical distinction to be made between Being and Chaos. I send the reader back to my Methodological introduction in the Livres-Books section of www.la-commune-paraclet.com

5 ) Von Mises, Hayek, the notorious right-wing « libertarian », and all this neo-fascistic neoliberal crew do share one pre-supposition with the crude positivist Karl Popper, namely that, at bottom, human and social behavior as well as science cannot be rationally explained. As we know, Reason implies Human equality if only because, as Hegel pointed out, any discourse presupposes a common « inter-subjectivity space ». Popper goes so far as stating that scientific achievement can only be explained in terms of « miracles » … just as the « market » for the neoliberals. This is magical thinking or, in terms of Levy-Strauss’ contribution, the result of primitive synthetic thought as opposed to analytical thought. As we all know, it gets worse with the « efficient market » variant of this plain lunacy. Of course, the danger is that if nothing can be scientifically explained, brute force will set the rules of the game. Which is exactly what they foolishly really strive for. This is dangerous: As I explained elsewhere the logic of exclusivism is implacable. This influences their treatment of the formalisation of the problems to be analysed: More often than not, these formalisations are conceived to lead to predetermined conclusions. They are narrative supports or forgeries. Socrates denounced the venal use of sophism and likewise Kant that of paralogism.

6 ) See Paul Sweezy. See also the rigorous article by Arghiri Emmanuel entitled entitled « La question de l’échange inégal » in L’Homme et la société, No 18, 1970. In the same source, see also the interesting reply by Christian Palloix. In formal scientific terms, Emmanuel was right, except that he was not dealing with Marxism any longer but rather with the deformation imposed by Böhm-Bawerk and Tugan-Baranovsky and Bortkiewicz and others. The same applies to Paul Sweezy. Yet, many understood – for instance Palloix who had worked for the French planning commission – that the unequal exchange theory was moralistic and false. Emmanuel’s and other critiques to Marx were disposed off definitively once I demonstrated the origin of the falsifications and above all once I demonstrated the Marxist Law of Productivity which maintains the homogeneity of the socially necessary labor used. Marx was vindicated. From there, ER was conceivable and also the Marxist Quantitative Theory of Money and Credit.

7 ) See « New Labor theory of value for rational planning through use of the bourgeois profit rate », Proc. Nat. Acad. Sci. USA, Vol. 68, No 6, 1192-1194, June 1971.

8 ) This Marxist concept has nothing to do with the belated pseudo-concept of « liquid society » proposed the the Polish-Jew Zygmunt Bauman. As I have shown – again of late in my Synopsis – the liquefaction of work, as a factor of production like any other, sends one back to J.B. Say manipulation of Ricardo’s « paper currency »; he was aiming to express all factors of production in monetary terms so as to hide the essential distinction between capital and labor; he did this with the intention to occult the origin of capitalist profit in the exploitation of labor power. The emergence of the Stock Exchange and of today’s global markets illustrates the point perfectly well: today, workers and employees can be fired according to the ups and downs of the Stock Exchange and of the global market just with a mouse click. Bauman’s pseudo-concept cannot even qualify as a useful description of society, it is more akin to the pseudo-filo-Semite Nietzschean (Italian …) pseudo-concept of « multitudes » (Nietzsche was using the word « rubbles » -, that is to say the narrative of a shapeless and subordinated mass conceived to mask any sociological distinctions among the « populace » and, needless to say, to occult class consciousness.

9 ) See the ridiculous censorship by poor and despicable unscientific characters like G. Ugeux, for instance, in  http://rivincitasociale.altervista.org/negation-de-mon-droit-de-reponse-odieuse-censure-philosemite-nietzscheenne-en-france-et-au-journal-le-monde/  .  This qualifies as the most disrespectful negation of academic deontology but it was nevertheless perpetrated with the complicity of Columbia University and of the newspaper Le Monde. This is the result of over-representation and false representation. Lest we forget, the main contributions offered by Marx are : 1 ) The definitive critique of exclusivism, without which no democracy and no human emancipation is understandable; and 2 ) the Marxist Labor Law of Value.

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