The Production Of Commodities And The Structure Of Production

I have a working paper at the Munich Personal RePEc Archive (MPRA). MPRA does not have a peer-review process. Here is the abstract:

Abstract: Consider a model of the production of commodities by means of commodities. This article illustrates how to construct a Hayekian triangle with such a model, in the case with circulating capital. Capital-theory paradoxes, specifically the reswitching of techniques, have implications for such triangles. The use of such triangles to tell the stories that Austrian economists want to tell cannot be sustained. The switch point that is normal in a reswitching example, from a mainstream neoclassical perspective, has perverse Hayekian triangles. The switch point that is perverse from a mainstream perspective has Hayekian triangles consistent with the Austrian story about how a decreased time preference rotates the triangle to lengthen the structure of production.

The History Of The Soviet Union Is Inconsistent With Marxism

1.0 Introduction

You can tell a history of the Union of Soviet Socialists Republics in which events are inconsistent with Marx's theory of history.

2.0 Bolshevik Revolution

Marx, like Adam Smith and Walt Rostow, had a stages theory of history. Feudalism was succeeded by capitalism, and capitalism is to be succeeded by socialism. Socialism is to arise first in the most advanced capitalist countries. (The theory of history is not my favorite part of Marxist theory.) Russia, in 1917, was a semi-feudal country with peasants as the largest class. I guess China was the same, before Mao. A Marxist would not expect socialism to start successful in either country.

I have some caveats. Marx's 1881 letter to Vera Zasulich speculates on the possibility of socialism in Russia. I am aware that Lenin had an argument about how socialism can start with the weakest link in the age of imperialism. But he still expected his revolution to be supported by revolutions in advanced capitalist countries. And, for a moment he seemed to be right, what with the Spartacist revolution in Germany, the Bavarian Socialist Republic, and Hungary.

3.0 Socialism In One Country

Stalin came up with the idea of socialism in one country. That country was still quite backward, not an advanced capitalist country. Is the championing of the Soviet Union by communists in advanced capitlist countries what Marxists would wnat? The Soviet Union presented an alternative. But shouldn't their priority be building socialism at home? And their cause was weakened when the Soviet Union behaved like other great powers in Hungary in 1956 and in Czechoslovakia in 1968.

4.0 Khrushchev's Secret Speech

Khrushchev denounced Stalin in his 'secret' speech of 25 February 1956. He came up with the concept of the cult of personality. What is that from a Marxist perspective? History is supposed to be determined, ultimately, by contradictions in material conditions. How can the mistakes of one leader be so important?

5.0 Gorbachev's Voluntarism

I do not understand the collapse of the Soviet Union. I think of the fall of the Berlin Wall in 1989 and the dissolution of the Soviet Union in 1991.

As I understand it, Gorbachev and other members of the Politburo acquiesced in the dismantling of the Soviet Union. Poor performance pointed out the need for reforms. Nevertheless, I find it strange that political leaders can decide that the system they preside over has no legitimacy like that.

Steve Paxton provides an account of how the fall of the Soviet Union was a triumph for Marx's theory of history.

Marxist Mathematicians

I have been looking at Marx's notes to himself, late in life, on the calculus. Marx relied on an out-of-date textbook, J. L. Boucherlat's 1828 Elementary Treatise on the Differential and Integral Calculus, as well as other out-of-date primary texts.

The foundations of calculus were a mess at that time. Marx was totally correct about that. Echoing Bishop Berkeley, Marx finds that the mathematicians were operating with fractions of the form 0/0. He tried to make sense out of this.

Unbeknownst to Marx, the foundations were being relaid in his day. I will mention the epsilon-delta definition of a limit, the construction of the real numbers as Dedekind cuts, and Cantor's set theory. I suppose Fourier series goes into this story. Marx never knew about any of this.

Some, sympathetic to Marx, argue that he treated the derivative as an operator.

Some mathematicians have been Marxist and socialists. These views have influenced their activities in developing mathematics, at least to the extent of the settings in which they did their mathematics. For this post, I am not going to sort through mathematicians in the Soviet Union or in China. I limit myself to a few in the United States.

• I know little of Chandler Davis' mathematical work. He lived from 1926 to 2022. The University of Michigan fired him in 1954 for refusing to cooperate with the oppression being practiced by the House UnAmerican Committee (HUAC). He went to jail for six months and then into exile into Canada.
• F. William Lawver was an expert in category theory, including its use to describe Hegelian dialectics. He was dismissed in 1971 partly for his political activities.
• David Schweickart has written a number of books outlining how socialism might be implemented. He is both a philosopher and a mathematician. I am not sure that he is a Marxist.
• I know of Stephen Smale principally through his horseshoe map, which is a canonical model for dynamical systems. He won the Fields Medal and denounced the United States for invading Vietnam.
• Dirk Jan Struik (1894-2000) could not get a job in Holland, partly due to his political commitments. He ended up at MIT. Struik co-founded and taught at the Samuels Adams School, one of several institutions set up to teach workers. These, of course, were illegally shut down by the government. HUAC went after Struik himself, and MIT chose the route of cowardice. He applied Marxist ideas to the sociology of mathematics, a field he helped create. He co-founded Science and Society. He also praised Marx's work on the foundations of calculus.

I will not be surprised if others know of more examples.

Reswitching And Other Capital-Theoretic Paradoxes In A Variety Of Models

Apparently, it is part of my project to construct explicit numeric examples of the rewitching of techniques and capital-theoretic paradoxes in a range of models. Here are some examples I have produced:

• The reswitching of techniques in a capitalist economy with non-competitive markets.
• The reswitching of the orders of efficiency and of rentability in a model with extensive rent.
• The reswitching of techniques in a model with extensive rent.
• The complete reversal of the orders of efficiency and rentability in a model with extensive and intensive rent (See region 11 in the example).
• The reswitching of techniques in a model with extensive and intensive rent and with multiple (two) agricultural commodities.
• The recurrence of truncation and reverse labor substitution without the reswitching of techniques.
• Capital-reversing in an example with fixed capital and scarce land.

This post is one of my summary posts.

I Did Not Invent The Concept Of Fluke Switch Points

I find myself writing about generic switch points, fluke switch points, anomalous switch points, fake switch points, normal switch points, and 'perverse' switch points. I do not seem to have definitions with the precision of those in mathematical analysis.

A switch point is a fluke when any perturbation of some parameters, such as coefficients of production, destroys defining features of the switch point. The concept of a fluke goes back to the 1966 symposium on capital theory in the Quarterly Journal of Economics:

"If, by a fluke more than one switch of technique happened to take place at exactly the same point, the nonzero columns [of the matrix formed by the difference of two Leontief matrices] would be more than one" (Pasinetti 1966: 511).

Other participants recognize this fluke case in which four wage curves intersect at a switch point, with processes replacing one another in two industries:

"'Adjacent" techniques on two sides of a switching point of a switching point will usually differ from each other only with respect to one activity" (Bruno, Burmeister, Sheshinski 1966: 542).

Two wages curves tangent at a switch point is another fluke case. A perturbation leads to either the reswitching of techniques or of one cost-minimizing technique around the rate of profits at which the switch point formerly existed. Other fluke cases arise when a switch point exists at the maximum wage or the maximum rate of profits:

"Cases with multiple roots or cases in which the curves cross only at end points... These ... are cases which one technique can be ignored since it is dominated" (Bruno, Burmeister, Sheshinski 1966: 534).

Pierangelo Garegnani recognizes the possibility of the fluke case with two wage curves tangent:

"The possibility that, at r^* and r^**, the two wage curves touch without intersecting is excluded...” (Garegnani 1966: 567).

Fluke switch points exist in both models of single and joint production. Vienneau (2021) examines fluke switch points in pure fixed capital models, while Vienneau (2022) partitions a parameter space, with fluke switch points, in a model of extensive rent. Vienneau (2024) looks at fluke switch points in a model of non-competitive markets with single production. The characterization of fluke switch points is useful for analyzing structural economic dynamics with a choice of technique.

References

Bruno, Michael, Edwin Burmeister, and Eytan Sheshinski. 1966. The nature and implications of the reswitching of techniques. Quarterly Journal of Economics 80(4): 526-553.

Garegnani, P. 1966. Switching of techniques. Quarterly Journal of Economics 80(4): 554-567

Pasinetti, Luigi L. 1966. Changes in the rate of profit and switches of technique. Quarterly Journal of Economics 80(4): 503-517.

Vienneau, Robert L. 2021. Fluke switch points in pure fixed capital systems. Centro Sraffa working papers n. 48.

Vienneau, Robert L. 2022. Reswitching in a model of extensive rent. Bulletin of Political Economy 16(2): 133-146.

Vienneau, Robert L. 2024. Characteristics of labor markets varying with perturbations of relative markups. Review of Political Economy 36(2): 827-843.

Surveys Of The Cambridge Capital Controversy

'Neoclassical' economists accepted, in the third quarter of last century, that the theories they teach and apply have no rigorous foundation. They are illogical and incoherent. Why does that not matter? This presents a puzzle.

Many have surveyed or responded to the Cambridge Capital Controversy. Here are some surveys and responses:

• Jack Birner. 2002. Cambridge Controversies in Capital Theory: A Methodological Analysis. Routledge.
• Mark Blaug. 1974. The Cambridge Revolution: Success or Failure?. London: Institute of Economic Affairs. (I stumbled upon this negative review in the History of Political Economy.)
• Christopher Bliss. 1975. Capital Theory and the Distribution of Income. Elsevier North-Holland.
• Edwin Burmeister. 1982. Capital Theory and Dynamics. Cambridge University Press.
• Avi J. Cohen and G. C. Harcourt. 2003. Whatever happened to the Cambridge capital theory controversies. Journal of Economic Perspectives 17(1): 199-214.
• Avinash Dixit. 1977. The accumulation of capital theory. Oxford Economic Papers 29(1): 1-29.
• Roger W. Garrison. 2006. Reflections on reswitching and roundaboutness. In Money and Markets: Essays in Honor of Leland B. Yeager (ed. by Roger Koppl). Routledge.
• G. C. Harcourt. 1969. Some Cambridge controversies in the theory of capital. Journal of Economic Literature 7(2): 369-405.
• G. C. Harcourt. 1972, 2022. Some Cambridge Controversies in the Theory of Capital. Cambridge University Press.
• Daniel Hausman. 1981. Capital, Prices and Profits. Columbia University Press.
• Andrés Lazzarini. 2011. Revisiting the Cambridge Capital Theory Controversies: A Historical and Analytical Study. Pavia University Press..
• Joseph E. Stiglitz. 1974. The Cambridge-Cambridge controversy in the theory of capital: a view from New Haven. Journal of Political Economy 82(4): 893-903.
• Leland B. Yeager. 1979. Capital paradoxes and the concept of waiting. In Time, Uncertainty, and Disequilibrium: Exploration of Austrian Themes (ed. by M. J. Rizzo). Lexington Books.

Harcourt (1972) is my favorite of these surveys - an utterly conventional view. I disagree with much in many of these surveys and responses. But those who have never been exposed to the CCC will learn something from any of them.

To Read Adorno's Minima Moralia Requires Understanding Of Marx

Well-known contributions to philosophy in Europe and America in the twentieth century are often divided into analytical and continental philosophy. Analytical philosophers often state their arguments with formal reasoning and notation, while concentrating on narrow points. How do you know that you have not always used 'green' to mean grue? Continental philosophers provide a more intuitive reasoning and focus on larger issues such as culture. Gender is performative. I take no issue to those who argue that the division is not well-defined. I lean more towards the analytical side, albeit I try to reject logical positivism.

Sometimes, when I read postmodernists - another ill-defined term - I can follow, but I do not retain much. I find intriguing Lukacs' essay on reification, in which he builds on Karl Marx's work on commodity fetishism and vulgar political economy. I have more use for Foucault's post structuralism than Derrida's deconstruction. I find Antonio Gramsci insightful, which is no surprise for somebody building on Piero Sraffa. Herbert Marcuse has a point about instrumental reason in the service of a system that is irrational as a whole. I am never sure when Slavoj Zizek is joking.

But here I want to focus on Theodor Adorno and his 1951 book Minima Moralia: Reflections from Damaged Life. I could not make much out of his book, Negative Dialetics. I have yet to read The Dialetic of Enlightenment.

As I poorly recall, Minima Moralia has a narrative arc, although it takes some work to perceive it. I was surprised at passages that presume an understanding of technical terms in Marx's political economy. I note a few here.

Here Adorno rejects some concepts of a post-capitalist society because they continue commodity fetishism:

"Sur l'Eau. He who asks what is the goal of an emancipated society is given answers such as the fulfillment of human possibilities or the richness of life. Just as the inevitable question is illegitimate, so the repellent assurance of the answer is inevitable, calling to mind the social-democratic ideal of the personality expounded by heavily-bearded Naturalists of the 'nineties, who were out to have a good time. There is tenderness only in the coarsest demand: that no-one shall go hungry any more. Every other seeks to apply to a condition that ought to be determined by human needs, a mode of human conduct adapted to production as an end in itself. Into the wishful image of an uninhibited, vital, creative man has seeped the very fetishism of commodities which in bourgeois society brings with it inhibition, impotence, the sterility of the never-changing. The concept of dynamism, which is the necessary complement of bourgeois 'a-historicity', is raised to an absolute, whereas it ought, as an anthropological reflex of the laws of production, to be itself critically confronted, in an emancipated society, with need..." -- Adorno: 155-156.

Adorno draws on the concept of fetishism in other places. I do not know that the above passage is consistent with Marx and Engels in The German Ideology.

In this next passage he uses the concept of the organic composition of capital to write about how working class consciousness is dimmed:

"Puzzle-picture. Why, despite a historical development that has reached the point of oligarchy, the workers are less and less aware that they are such, can be surmised from a number of observations. While objectively the relation of owners and producers to the productive apparatus grows ever more rigid, subjective class membership becomes all the more fluctuating. This tendency is fostered by economic development itself. The organic composition of capital demands, as has often been noted, control through technical experts rather than through factory owners. The latter were the counterpart, as it were, of living labour, the former correspond to the share of machinery in capital. The quantification of technical processes, however, their dissection into minute operations largely independent of education and experience, makes the expertise of these new-style managers to a large degree illusory, a pretence concealing the privilege of being appointed. That technical development has reached a state which makes every function really open to all - this immanently socialist element in progress has been travestied under late industrialism. Membership of the elite seems attainable to everyone. One only waits to be co-opted... ...Preference goes to those who fit in most exactly...That technical forces might permit a condition free of privileges is accredited by all, even those in the shadow, to the social relations which prevent it. In general, subjective class-membership today shows a mobility that allows the rigidity of the economic order itself to be forgotten..." -- Adorno: 193-194.

And, for the last passage I select, Adorno writes about the law of value and, again, the organic composition of capital:

"Novissimum organum. It has long been demonstrated that wage-labour formed the masses of the modern epoch, indeed created the worker himself. As a general principle the individual is not merely the biological basis, but the reflection of the social process; his conciousness of himself as something in-itself is the iI1usion needed to raise his level of performance, whereas in fact the individuated function in the modern economy as mere agents of the law of value. The inner constitution of the individual, not merely his social role, could be deduced from this. Decisive here, in the present phase, is the category of the organic composition of capital. By this the theory of accumulation meant the 'growth in the mass of the means of production, as compared with the mass of the labour-power that vivifies them'. If the integration of society, particularly in totalitarian states, designates subjects more and more exclusively as partial moments in the network of material production, then the 'alteration of the technical composition of capital' is prolonged within those encompassed, and indeed constituted, by the technological demands of the production process. The organic composition of man is growing. That which determines subjects as means of production and not as living purposes, increases with the proportion of machines to variable capital... Only when the process that begins with the metamorphosis of labour-power into a commodity has permeated men through and through and objectified each of their Impulses as formally commensurable variations of the exchange relationship, is it possible for life to reproduce itself under the prevailing relations of production..." -- Adorno: 228-229.

My understanding of the organic composition of capital is straightforward. I take it to be the ratio of constant capital to variable capital, evaluated either with labor values or with prices of production. I do think about the physical composition of capital goods and of issues associated with depreciation. But I certainly do not go into the cultural effects that Adorno writes about.