Utility Maximization A Tautology?

Economists proved over half a century ago that certain stories are unfounded in the theory. For example, one might think that if some workers are involuntarily unemployed, a drop in real wages would lead to a tendency for the labor market to clear. The Cambridge Capital Controversy revealed some difficulties. In response, some economists turned to the Arrow-Debrue-McKenzie model of intertemporal equilibria in which it is not clear that one could even talk about such concepts. The Mantel-Sonnenschein-Debreu theorem shows that this model lacks empirical content. Utility theory provides a closure for some models. Formally, one can demonstrate the existence of equilibria under certain assumptions. But existence does not get one very far.

My purpose of this post is to note that some saw utility theory as a useless tautology at the time of the marginal revolution:

"It is interesting, in this connection, that the earliest critics saw in the theory of marginal utility what we have called a behaviourist theory of choice ... and used exactly the same arguments against it which will be used below against this latter version. Thus [John] Cairnes wrote about Jevon's theory: 'What does it really amount to? In my apprehension to this, and no more - that value depends upon utility, and that utility is whatever affects value. In other words, the name "utility" is given to the aggregate of unknown conditions which determine the phenomenon, and then the phenomenon is stated to depend upon what this name stands for.' Jevon's theory was believed to say no more than this: 'that value was determined by the conditions which determine it - an announcement, the importance of which, even though presented under the form of abstruse mathematical symbols, I must own myself unable to discern'. Some Leading Principles of Political Economy, 1874, p. 15.

[John] Ingram took the same view in A History of Political Economy, 1888, ed. by Ely, 1915, p. 228 and passim. Cairnes, Ingram, and other early critics of marginal utility had, however, directed their criticism also against the mathematical method generally, and the discussion went soon into other channels. The marginalists met the criticism by claiming to be proponents of logical and mathematical method and their tautological psychology thus escaped its well-deserved criticism." -- Gunnar Myrdal (1953) The Political Element in the Development of Economic Theory (trans. by Paul Streeten, Routledge & Kegan Paul, p. 231.

Obviously, Cairnes and Ingram could not have known about results demonstrated a century later. Utility theory manages simultaneously to not say anything about market phenomena, to not be good armchair theorizing, and to be empirically false at the level of the individual.

Elsewhere

• Solidarity Federation
• Francisco Nunes-Pereira and Mário Graça Moura. On the survival of a flawed theory of capital: mainstream economics and the Cambridge capital controversies, Cambridge Journal of Economics. Concludes mainstream economists continue to use flawed aggregate production functions because of an instrumentalist methodology and conformism.
• . Colin Rogers. Whitehead’s fallacy of misplaced concreteness and the unfortunate uselessness of all monetary-macro theory micro-founded on Walrasian-Pareto general equilibrium theory, Cambridge Journal of Economics. Argues that neo-Walrasian general equilibrium theory cannot support monetary theory, despite the practices of mainstream economists.
• Theo Santini and Ricardo Azevedo Araujo. Vertical integration, technical progress and structural change,Cambridge Journal of Economics. Builds on the theory of vertical integration to develop measures of technical progress.
• The Levy Institute podcast. John Harvey talks to James Galbraith in the first episode.
• Reading Capital with comrades, a podcast. I'm not sure lectures work in this format.
• Pitchfork Economics, a podcast.
• An interview with Nick Hanauer and his new co-written book.

Two Special Cases For The Labor Theory Of Value

1.0 Introduction

A simple labor theory of value holds in two special cases.

1. The rate of profits in the system of prices of production is zero.
2. The vector of direct labor coefficients is an eigenvector of the Leontief input-output matrix corresponding to the maximum eigenvalue.

I do not know if I've worked through this alone before. A more rigorous approach would prove the uniqueness of the solution.

2.0 The Setting

Suppose a capitalist economy is observed at a given point in time. n commodities are being produced, each by a separate industry. Suppose the technique in use can be characterized by a row vector a₀ and a n x n square matrix A.

The jth element of a₀ is the amount of labor directly employed in the jth industry in producing one unit of a commodity output from that industry. "We suppose labour to be uniform in quality or, what amounts to the same thing, we assume any differences in quality to have previously been reduced to equivalent differences in quantity so that each unit of labour receives the same wage…" - Piero Sraffa (1960). I guess the idea is that relative wages are more or less stable.

The jth column of A is the goods used up in producing one unit of a commodity output. For example, suppose iron is produced by the first industry and steel is produced by the second industry. a_1,2 is then the kilotons of iron needed to produce a kiloton of steel. Assume that every good enters directly or indirectly into the production of each commodity. Iron enters indirectly into the production of tractors if steel enters directly into the tractor industry. Assume a surplus product, also known as a net output, exists.

2.1 Quantity Flows

Let y be the column vector of net outputs and q the column vector of gross outputs, both in physical terms. In Leontief's work, y is taken as given. Gross outputs and net outputs are related as:

y = q - A q

Or:

q = (I - A)^-1 y

The labor force needed to produce this net product is:

L = a₀ q = a₀ (I - A)^-1 y

One might as well take units in which labor is measured to be such that this labor force is unity. Employment is such that the net output is produced, the capital goods in producing the net output are reproduced, the capital goods used in producing those capital goods are reproduced, and so on.

2.2 Labor Values

Let e_j be the jth column of the identity matrix. The labor force needed to produce this net output is:

v_j = a₀ (I - A)^-1 e_j

That is, the (direct and indirect) labor needed to produce a net output of one unit of the jth commodity is v_j. The row vector of labor values is:

v = a₀ (I - A)^-1

(I could put an aside here about geometric series and an infinite sum of labor time, assuming the current technology was used forever in the past.)

The employment needed to produce a given net output is the sum of the labor values of the individual commodities in net output, v y. One can think of this post as showing one way of decomposing the observed net output and employed workers. With this way of thinking, no assumptions have been made about returns to scale.

Labor values support one way of doing accounting in models like this. One could ask about how much employment would have decreased or increased if final demand had been decreased or increased by some specified quantities of specified commodities.

2.3 Prices of Production

Take y as numeraire. At any time, market prices are such that different industries are making different rates of profits. Under competitive conditions, without barriers to entry in the various industries, a kind of leveling process is going on.

One can imagine a vector of prices such that this leveling process is already completed with the observed technique and wage. Let p be that row vector of prices of production, with all industries obtaining the same rate of profits:

p A (1 + r) + w a₀ = p

where r is the rate of profits and w the wage. That is, p is a price vector consistent with the observed technique and wage. Since y is numeraire, one has:

p y = 1

The point is to show that prices of production are labor values in special cases.

3.0 The First Special Case: No Profits

Assume that the rate of profits is zero. The claim is that prices of production are labor values.

First, consider the equation for the numeraire:

v y = a₀ (I - A)^-1 y = a₀ q

By assumption, the amount of labor employed is one unit. So using labor values for prices satisfies the equation for the numeraire. Furthermore, if the rate of profits is zero, the wage is unity. (One might do a bit of algebra here.)

I want to show:

v A + a₀ = v

But this is true if and only if:

a₀ = v (I - A)

Or:

a₀ (I - A)^-1 = v

But this is the definition of labor values. So if the rate of profits is zero, prices of production are labor values.

4.0 The Second Special Case: Equal Organic Compositions Of Capital

Suppose that:

a₀ A = λ a₀

where λ is the eigenvalue with the maximum modulus. By the Perron-Frobenius theorem, this eigenvalue is positive and less than unity. All of the elements of the vector of direct labor coefficients are positive.

Under this special case, the solution to the price equations is:

p = v

and:

r = R (1 - w)

where:

R = (1 - λ)/λ

Suppose:

v = (1/(1 - λ)) a₀

By the definition of labor values:

v (I - A) = a₀

Or:

(1/(1 - λ)) (a₀ - a₀ A) = a₀

Using the special case assumptions, one has:

(1/(1 - λ)) (a₀ - λ a₀) = a₀

Thus, in this special case, labor values are directly proportional to direct labor coefficients.

I want to show:

v A(1 + ((1 - λ)/λ)(1 - w)) + w a₀ = v

Or:

(1/(1 - λ)) a₀ A((1/λ) - ((1 - λ)/λ)w) + w a₀ = (1/(1 - λ)) a₀

Or:

(λ/(1 - λ)) a₀((1/λ) - ((1 - λ)/λ)w) + w a₀ = (1/(1 - λ)) a₀

But the left-hand side is simply (1/(1 - λ)) a. So labor values are prices of production in the special case. Furthermore, prices of production do not vary with distribution in this case.

5.0 Conclusion

Suppose the organic composition of capital does not vary among industries. That is, the vector of direct labor coefficients is the specified eigenvector of the Leontief input-output matrix. So prices of production associated with the observed technique and net output are labor values. How does capital obtain profits in this special case? This is Marx's question in the first volume of Capital.

Objections to the lack of realism of this special case and to the conditions needed to define prices of production are not on point. If you have a theory explaining returns to capital, it should apply in this special case. The question, I gather, is more salient if you think there is something fair about commodities being priced at labor values.

The answer cannot be entrepreneurship, since the returns to entrepreneurship are a non-equilibrium phenomenon. For half a century, economists have known that the answer cannot be supply and demand of capital. For that answer, one must have a unit in which capital can be measured independently of prices. I suppose one can create a self-consistent model with intertemporal utility maximization by households, including households whose income is entirely from returns to ownership. But the mechanics of how such a model works disagree with traditional notions of substitution and scarcity.

A valid answer, it seems to me, must invoke some concept of power. This answer need not be exactly Marx's. The Post Keynesian theory of growth, in which large corporations set the rate of growth, might be part of an answer applicable in some times and places.

Orwell Remembers Revolution

Pablo Picasso's Guernica

This post has long quotations, as is typical of a commonplace book.

Where did socialism work? In Barcelona, Spain, and, more generally Aragon and Catalonia, from August 1936 to April 1937. This was the anarchist version, and was resisted by all governments, including the Soviet Union.

The right staged their coup against the Republic in July 1936. Orwell went to Spain in December, and he wanted to kill fascists. He describes it as almost happenstance that he ended up in the militia under the Party Of Marxist Unity (POUM). This party contained, among others, followers of Trotsky and did not follow Stalin's line. Orwell describes how he found Barcelona:

"This was in late December 1936, less than seven months ago as I write, and yet it is a period that has already receded into enormous distance. Later events have obliterated it much more completely than they have obliterated 1935, or 1905, for that matter. I had come to Spain with some notion of writing newspaper articles, but I had joined the militia almost immediately, because at that time and in that atmosphere it seemed the only conceivable thing to do. The Anarchists were still in virtual control of Catalonia and the revolution was still in full swing. To anyone who had been there since the beginning it probably seemed even in December or January that the revolutionary period was ending; but when one came straight from England the aspect of Barcelona was something startling and overwhelming. It was the first time that I had ever been in a town where the working class was in the saddle. Practically every building of any size had been seized by the workers and was draped with red flags or with the red and black flag of the Anarchists; every wall was scrawled with the hammer and sickle and with the initials of the revolutionary parties; almost every church had been gutted and its images burnt. Churches here and there were being systematically demolished by gangs of workmen. Every shop and café had an inscription saying that it had been collectivized; even the bootblacks had been collectivized and their boxes painted red and black. Waiters and shop-walkers looked you in the face and treated you as an equal. Servile and even ceremonial forms of speech had temporarily disappeared. Nobody said 'Senior' or 'Don' or even 'Usted'; everyone called everyone else 'Comrade' and 'Thou', and said 'Salud!' instead of 'Buenos dias'. Tipping was forbidden by law; almost my first experience was receiving a lecture from a hotel manager for trying to tip a lift-boy. There were no private motor-cars, they had all been commandeered, and all the trams and taxis and much of the other transport were painted red and black. The revolutionary posters were everywhere, flaming from the walls in clean reds and blues that made the few remaining advertisements look like daubs of mud. Down the Ramblas, the wide central artery of the town where crowds of people streamed constantly to and fro, the loudspeakers were bellowing revolutionary songs all day and far into the night. And it was the aspect of the crowds that was the queerest thing of all. In outward appearance it was a town in which the wealthy classes had practically ceased to exist. Except for a small number of women and foreigners there were no 'well-dressed' people at all. Practically everyone wore rough working-class clothes, or blue overalls, or some variant of the militia uniform. All this was queer and moving. There was much in it that I did not understand, in some ways I did not even like it, but I recognized it immediately as a state of affairs worth fighting for. Also I believed that things were as they appeared, that this was really a workers' State and that the entire bourgeoisie had either fled, been killed, or voluntarily come over to the workers' side; I did not realize that great numbers of well-to-do bourgeois were simply lying low and disguising themselves as proletarians for the time being." (Chapter I)

Orwell finds equality within the militia, despite ranks and orders:

"At this time and until much later the Catalan militias were still on the same basis as they had been at the beginning of the war. In the early days of Franco's revolt the militias had been hurriedly raised by the various trade unions and political parties; each was essentially a political organization, owing allegiance to its party as much as to the central Government. When the Popular Army, which was a 'non-political' army organized on more or less ordinary lines, was raised at the beginning of 1937, the party militias were theoretically incorporated in it. But for a long time the only changes that occurred were on paper; the new Popular Army troops did not reach the Aragon front in any numbers till June, and until that time the militia-system remained unchanged. The essential point of the system was social equality between officers and men. Everyone from general to private drew the same pay, ate the same food, wore the same clothes, and mingled on terms of complete equality. If you wanted to slap the general commanding the division on the back and ask him for a cigarette, you could do so, and no one thought it curious. In theory at any rate each militia was a democracy and not a hierarchy. It was understood that orders had to be obeyed, but it was also understood that when you gave an order you gave it as comrade to comrade and not as superior to inferior. There were officers and N.C.O.S. but there was no military rank in the ordinary sense; no titles, no badges, no heel-clicking and saluting. They had attempted to produce within the militias a sort of temporary working model of the classless society. Of course there was no perfect equality, but there was a nearer approach to it than I had ever seen or than I would have thought conceivable in time of war.

But I admit that at first sight the state of affairs at the front horrified me. How on earth could the war be won by an army of this type? It was what everyone was saying at the time, and though it was true it was also unreasonable. For in the circumstances the militias could not have been much better than they were. A modern mechanized army does not spring up out of the ground, and if the Government had waited until it had trained troops at its disposal, Franco would never have been resisted. Later it became the fashion to decry the militias, and therefore to pretend that the faults which were due to lack of training and weapons were the result of the equalitarian system. Actually, a newly raised draft of militia was an undisciplined mob not because the officers called the private 'Comrade' but because raw troops are always an undisciplined mob. In practice the democratic 'revolutionary' type of discipline is more reliable than might be expected. In a workers’ army discipline is theoretically voluntary. It is based on class-loyalty, whereas the discipline of a bourgeois conscript army is based ultimately on fear. (The Popular Army that replaced the militias was midway between the two types.) In the militias the bullying and abuse that go on in an ordinary army would never have been tolerated for a moment. The normal military punishments existed, but they were only invoked for very serious offences. When a man refused to obey an order you did not immediately get him punished; you first appealed to him in the name of comradeship. Cynical people with no experience of handling men will say instantly that this would never 'work', but as a matter of fact it does 'work' in the long run. The discipline of even the worst drafts of militia visibly improved as time went on. In January the job of keeping a dozen raw recruits up to the mark almost turned my hair grey. In January the job of keeping a dozen raw recruits up to the mark almost turned my hair grey. In May for a short while I was acting-lieutenant in command of about thirty men, English and Spanish. We had all been under fire for months, and I never had the slightest difficulty in getting an order obeyed or in getting men to volunteer for a dangerous job. 'Revolutionary' discipline depends on political consciousness — on an understanding of why orders must be obeyed; it takes time to diffuse this, but it also takes time to drill a man into an automaton on the barrack-square. The journalists who sneered at the militia-system seldom remembered that the militias had to hold the line while the Popular Army was training in the rear. And it is a tribute to the strength of 'revolutionary' discipline that the militias stayed in the field-at all. For until about June 1937 there was nothing to keep them there, except class loyalty. Individual deserters could be shot - were shot, occasionally - but if a thousand men had decided to walk out of the line together there was no force to stop them. A conscript army in the same circumstances - with its battle-police removed - would have melted away. Yet the militias held the line, though God knows they won very few victories, and even individual desertions were not common. In four or five months in the P.O.U.M. militia I only heard of four men deserting, and two of those were fairly certainly spies who had enlisted to obtain information. At the beginning the apparent chaos, the general lack of training, the fact that you often had to argue for five minutes before you could get an order obeyed, appalled and infuriated me. I had British Army ideas, and certainly the Spanish militias were very unlike the British Army. But considering the circumstances they were better troops than one had any right to expect." (Chapter III)

When Orwell gets leave in April 1937, he finds Barcelona is back to normal, but with some omnious overturns. He reflects on his time in the POUM militia:

"The essential point is that all this time I had been isolated - for at the front one was almost completely isolated from the outside world: even of what was happening in Barcelona one had only a dim conception - among people who could roughly but not too inaccurately be described as revolutionaries. This was the result of the militia-system, which on the Aragon front was not radically altered till about June 1937. The workers' militias, based on the trade unions and each composed of people of approximately the same political opinions, had the effect of canalizing into one place all the most revolutionary sentiment in the country. I had dropped more or less by chance into the only community of any size in Western Europe where political consciousness and disbelief in capitalism were more normal than their opposites. Up here in Aragon one was among tens of thousands of people, mainly though not entirely of working-class origin, all living at the same level and mingling on terms of equality. In theory it was perfect equality, and even in practice it was not far from it. There is a sense in which it would be true to say that one was experiencing a foretaste of Socialism, by which I mean that the prevailing mental atmosphere was that of Socialism. Many of the normal motives of civilized life - snobbishness, money-grubbing, fear of the boss, etc. - had simply ceased to exist. The ordinary class-division of society had disappeared to an extent that is almost unthinkable in the money-tainted air of England; there was no one there except the peasants and ourselves, and no one owned anyone else as his master. Of course such a state of affairs could not last. It was simply a temporary and local phase in an enormous game that is being played over the whole surface of the earth. But it lasted long enough to have its effect upon anyone who experienced it. However much one cursed at the time, one realized afterwards that one had been in contact with something strange and valuable. One had been in a community where hope was more normal than apathy or cynicism, where the word 'comrade' stood for comradeship and not, as in most countries, for humbug. One had breathed the air of equality. I am well aware that it is now the fashion to deny that Socialism has anything to do with equality. In every country in the world a huge tribe of party-hacks and sleek little professors are busy 'proving' that Socialism means no more than a planned state-capitalism with the grab-motive left intact. But fortunately there also exists a vision of Socialism quite different from this. The thing that attracts ordinary men to Socialism and makes them willing to risk their skins for it, the 'mystique' of Socialism, is the idea of equality; to the vast majority of people Socialism means a classless society, or it means nothing at all. And it was here that those few months in the militia were valuable to me. For the Spanish militias, while they lasted, were a sort of microcosm of a classless society. In that community where no one was on the make, where there was a shortage of everything but no privilege and no boot-licking, one got, perhaps, a crude forecast of what the opening stages of Socialism might be like. And, after all, instead of disillusioning me it deeply attracted me. The effect was to make my desire to see Socialism established much more actual than it had been before. Partly, perhaps, this was due to the good luck of being among Spaniards, who, with their innate decency and their ever-present Anarchist tinge, would make even the opening stages of Socialism tolerable if they had the chance." (Chapter VIII)

Here is something about the atomsphere:

"But besides all this there was the startling change in the social atmosphere - a thing difficult to conceive unless you have actually experienced it. When I first reached Barcelona I had thought it a town where class distinctions and great differences of wealth hardly existed. Certainly that was what it looked like. 'Smart' clothes were an abnormality, nobody cringed or took tips, waiters and flower-women and bootblacks looked you in the eye and called you 'comrade'. I had not grasped that this was mainly a mixture of hope and camouflage. The working class believed in a revolution that had been begun but never consolidated, and the bourgeoisie were scared and temporarily disguising themselves as workers. In the first months of revolution there must have been many thousands of people who deliberately put on overalls and shouted revolutionary slogans as a way of saving their skins. Now things were returning to normal." (Chapter IX)

And then on 3 May 1937, the Assault and Civil Guards attacked the anarchists in Barcelona, starting at the Telephone Exchange which the Anarchists ran. The militia for the POUM was, more or less, on the side of the anarchists. The communists were on the side of suppressing the workers' revolution. The May days changed Orwell's plans and how you got along with others:

"In the hotel the horrible atmosphere of suspicion and hostility had grown worse now that the fighting was over. In the face of the accusations that were being flung about it was impossible to remain neutral. The posts were working again, the foreign Communist papers were beginning to arrive, and their accounts of the fighting were not only violently partisan but, of course, wildly inaccurate as to facts. I think some of the Communists on the spot, who had seen what was actually happening, were dismayed by the interpretation that was being put upon events, but naturally they had to stick to their own side. Our Communist friend approached me once again and asked me whether I would not transfer into the International Column.

I was rather surprised. 'Your papers are saying I'm a Fascist,' I said. 'Surely I should be politically suspect, coming from the P.O.U.M.'

'Oh, that doesn't matter. After all, you were only acting under orders.'

I had to tell him that after this affair I could not join any Communist-controlled unit. Sooner or later it might mean being used against the Spanish working class. One could not tell when this kind of thing would break out again, and if I had to use my rifle at all in such an affair I would use it on the side of the working class and not against them. He was very decent about it. But from now on the whole atmosphere was changed. You could not, as before, 'agree to differ' and have drinks with a man who was supposedly your political opponent. There were some ugly wrangles in the hotel lounge. Meanwhile the jails were already full and overflowing. After the fighting was over the Anarchists had, of course, released their prisoners, but the Civil Guards had not released theirs, and most of them were thrown into prison and kept there without trial, in many cases for months on end. As usual, completely innocent people were being arrested owing to police bungling." (Chapter X)

Orwell goes back to the front, is shot, and goes to the hospital in Barcelona. He is lucky to get out of Spain without, at least, being arrested by the Republican government.

I want to recall that chapters V and X1 are Orwell's attempt to give a historical overview, that is, they are about politics, no longer a memoirist's eyewitness testimony.

Variation On An Example From Schefold

Figure 1: Variation in the Economic Life of a Machine with Technical Progress

This post varies the coefficients of production in an example from Bertram Schefold. I wanted to have 'nice' fractions at a time of zero. Qualitatively, this looks like a previous post.

Reviewers for a recent rejection of an article with another fixed capital example objected to this type of model. I need to relate technical progress to a well-known type (Harrod-neutral, Marx-biased, or whatever) or produce some evidence that this sort of modeling is reasonable.

Table 1 presents the technology for this example. Machines and corn are produced in this economy. Corn is the only consumption good. New machines are produced from inputs of labor and corn. Corn is produced from inputs of labor, corn, and machines. A machine can be worked for two years. After the end of the first year of its working life, it is known as an old machine. I assume each process requires a year to complete and exhibits constant returns to scale.

Table 1: Coefficients of Production for The Technology

Input	Process
	(I)	(II)	(III)
Labor	(7/25) e- σ t	3 e- φ t	(14/5) e- φ t
Corn	(4/25) e- σ t	(4/25) e- φ t	(2/3) e- φ t
New Machines	0	1	0
Old Machines	0	0	1
Outputs
Corn	0	1	1
New Machines	1	0	0
Old Machines	0	1	0

The managers of firms need not run the machine for two years. They could discard the machine after only one year. (I assume free disposal.) I call Alpha the technique in which the machine is run for one year, and Beta the technique in which the machine is run for its full physical year of two years. The managers will be cost-minimizing if they run the machine for only one year if the price of an old machine is negative. Prices are found as prices of production, with an external specification of the wage or the rate of profits.

Figure 1 above and Table 2 below illustrate the analysis of the choice of technique. Until time reaches the pattern over the axis for the rate of profits, it is cost-minimizing to operate the machine for only one year. In Region 2, the machine is operated for two years when wages are low, and for one year when wages are higher. Region 3 is an example of reswitching. Eventually, it is cost-minimizing to operate the machine for two years, for all feasible wages.

Table 2: The Wage Frontier in Selected Regions in Parameter Space

Region	Switch Points	Cost-Minimizing Techniques
1	None	Alpha
2	One	Beta, Alpha
3	Two	Beta, Alpha, Beta
4	None	Beta
5	One	Alpha, Beta

Figure 2 partitions the parameter space such that the characteristics of the variations in the choice of technique technique do not vary within each region. Each region is bounded by thick (non-dotted) lines. Suppose that technical progress in producing and using machines is steady. That is, σ and φ have some fixed values. The dotted line in Figure 2 illustrates a path in logical time for such a thought experiment. The 45 degree line corresponds to the case in which σ and φ are equal, as in Figure 1. The numbering of the regions in Figures 1 and 2 and in Table 2 correspond.

Figure 2: A Parameter Space

Stepping through this example does not provide any qualitative differences from previous posts. Reswitching in models of fixed capital can be manifested as the return of a period of truncation. Around a switch point, a lower wage need not be associated with greater employment for a given net output. And so on.

Bertrand Russell On Bolshevism In 1920

Many to the left of liberals, that is, socialists, communists, and anarchists of various stripes, were opposed to the Soviet Union since its founding. Another example is Bertrand Russell. This is from the preface to his The Practice and Theory of Bolshevism, first printed in November 1920:

"The Russian Revolution is one of the great heroic events of the world's history. It is natural to compare it to the French Revolution, but it is in fact something of even more importance. It does more to change daily life and the structure of society: it also does more to change men's beliefs. The difference is exemplified by the difference between Marx and Rousseau: the latter sentimental and soft, appealing to emotion, obliterating sharp outlines; the former systematic like Hegel, full of hard intellectual content, appealing to historic necessity and the technical development of industry, suggesting a view of human beings as puppets in the grip of omnipotent material forces. Bolshevism combines the characteristics of the French Revolution with those of the rise of Islam; and the result is something radically new, which can only be understood by a patient and passionate effort of imagination.

Before entering upon any detail, I wish to state, as clearly and unambiguously as I can, my own attitude towards this new thing.

By far the most important aspect of the Russian Revolution is as an attempt to realize Communism. I believe that Communism is necessary to the world, and I believe that the heroism of Russia has fired men's hopes in a way which was essential to the realization of Communism in the future. Regarded as a splendid attempt, without which ultimate success would have been very improbable, Bolshevism deserves the gratitude and admiration of all the progressive part of mankind.

But the method by which Moscow aims at establishing Communism is a pioneer method, rough and dangerous, too heroic to count the cost of the opposition it arouses. I do not believe that by this method a stable or desirable form of Communism can be established. Three issues seem to me possible from the present situation. The first is the ultimate defeat of Bolshevism by the forces of capitalism. The second is the victory of the Bolshevists accompanied by a complete loss of their ideals and a régime of Napoleonic imperialism. The third is a prolonged world-war, in which civilization will go under, and all its manifestations (including Communism) will be forgotten.

It is because I do not believe that the methods of the Third International can lead to the desired goal that I have thought it worth while to point out what seem to me undesirable features in the present state of Russia. I think there are lessons to be learnt which must be learnt if the world is ever to achieve what is desired by those in the West who have sympathy with the original aims of the Bolsheviks. I do not think these lessons can be learnt except by facing frankly and fully whatever elements of failure there are in Russia. I think these elements of failure are less attributable to faults of detail than to an impatient philosophy, which aims at creating a new world without sufficient preparation in the opinions and feelings of ordinary men and women.

But although I do not believe that Communism can be realized immediately by the spread of Bolshevism, I do believe that, if Bolshevism falls, it will have contributed a legend and a heroic attempt without which ultimate success might never have come. A fundamental economic reconstruction, bringing with it very far-reaching changes in ways of thinking and feeling, in philosophy and art and private relations, seems absolutely necessary if industrialism is to become the servant of man instead of his master. In all this, I am at one with the Bolsheviks; politically, I criticize them only when their methods seem to involve a departure from their own ideals." -- Bertrand Russell

I have not got very far into this short book itself. Some of the above sounds to me a bit like Richard Wolff. The Soviet Union was an experiment, conducted at great human cost. We should learn from its successes and failures. We can and will do better.