Mario Cocoy Neo-Marxist Theory, Marx, and the Accumulation of Capital Since the Second World War, political economy has not played as important a role as in the past in the great debates within Marxist movements. Works of economic theory have hardly been read outside of a narrow circle of specialists and have left few traces in the theoreti- cal discussions within the movements. A list of Marxist writers on political economy whose works are known to a relatively large number of activists would be very short, at least until the beginning of the 1960s. Three names would stand out: Sweezy, Dobb, and Baran. It is not by chance that the label of ‘‘neo-Marxist’’ has been applied to their works, so that they appear to be the only inheritors of the tradition of Marxist political economy. Within the German student movement, for example, Baran and Sweezy seem to be the two theoreticians whose works have been best received and most widely read. But the rather unreflective acceptance of these thinkers also has involved to some degree the post facto ration- alization of certain conceptions, widespread in the student movement, of the integration of the working class into bourgeois society, and has showed the lack of theoretical alternatives within the movement. The theoretical implications of neo-Marxism were already visible in Sweezy’s Theory of Capitalist Development and in Baran’s works, ' but it was above all in Monopoly Capital that these implications were thoroughly developed. Among other things they involved a closeness to the positions of the ‘‘academic left,’’ Keynesian in inspiration (Joan Robinson, Alvin Hansen, Michal Kalecki, Josef Steind]),? visible in a revival of underconsumption theory and an interpretation of Marx that eliminates the labor theory of value and the laws of accumulation, while holding to the Marxist theory of the political structure of capitalism. Mario Cogoy, “Les théories neo-marxistes, Marx et I'accumulation du capital,”’ pp 396-427 in Les Temps Modernes 29: 314-315 (September-October 1972). Translat- ed with permission. a12 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY Baran and Sweezy had different grounds than the Keynesian Left for rejection of the labor theory of value and Marx’s laws of accumulation. For while the Keynesians rejected the Marxian analysis of accumula- tion as without scientific foundation, Baran and Sweezy hold that this analysis was valid for the competitive period of capitalism but had ceased to be so with the formation of a monopolistic market structure. The Keynesian Left and Baran and Sweezy agreed, however, in think- ing that the objectively obsolete parts of the Marxist analysis could be replaced by modern academic analysis, without any great harm to the still relevant aspects of Marxism, such as the theory of underconsump- tion. As a result, these aspects could be freed from the obsolete ele- ments, and allowed to achieve their true significance. This is why Baran and Sweezy approached the academic left, and particularly the work of Joan Robinson, not only in their undercon- sumption theory but also in their interpretation of Marx. Their work thus questions whether Keynesian analysis can be integrated into a Marxist theoretical structure. Baran and Sweezy appear to answer this question in the affirmative, but without explicit reflection on the meth- odological legitimacy of this integration. It could be said that it is only recently that Marxists have become aware of an alternative to neo-Marxism in political economy. Alterna- tives had not been nonexistent, at least in preliminary forms, during the 1950s, but they were almost entirely ignored and were never debated widely within the movement. Paul Mattick can today be considered the most consistent of those who have maintained a position based on the labor theory of value, reaffirming the validity and fundamental impor- tance of that theory and developing a theory of accumulation that rests on the tendential fall of the rate of profit. But while his writings are already relatively old it is only now that they are beginning to be discussed outside of specialist circles. Mattick’s contribution clarifies the need for the elaboration of a theoretical alternative to neo-Marxism, which must be based on the following points: (a) The theory of value is an instrument for the analysis of accumu- lation and total social reproduction. It is not a theory of relative prices; the academic critiques directed at the theory of value (and in particular that which considers that the monopolistic structure of the market has abolished the conditions for the validity of the theory of value) rest on a fundamental incomprehension of Marx’s theory: they attribute the cen- tral role to empirical exchange relations (prices), while for Marx it isSUMMER 1987 13 the social relations of production (between wage-labor and capital) that are the true objects of the theory of value. (b) Not only is the theory of value not modified by state intervention into the economy and by the development of waste production, but rather the function of the state and the growth of the unproductive sector flow from the dialectic of value and of the laws of capital accumulation. A position based on the labor theory of value must therefore empha- size the importance of a reading of Marx that is clearly articulated as an alternative to Keynesianism, and that explores the implications of value theory for social conflict, centering the discussion on the concept of exploitation and on the antagonistic relation between labor and capital. The elaboration of such an alternative theory will, in my opinion, demonstrate the existence of deep analogies between neo-Marxism and Left Keynesianism. This will be shown in a comparison of the theoreti- cal structure of Baran and Sweezy’s book with those of such authors as Robinson and Steind1, on the one hand, and by the development of an alternative Marxist model, on the other. A simple comparison will not suffice for a choice among these alternatives. But it can show how the difficulties of Left Keynesianism with the interpretation of the process of capital expansion (valorization) appear also, in a different terminological guise, in the neo-Marxist theoretical schema. A model based on the labor theory of value will serve also as a point of comparison providing a starting point for a new interpretation of Marx opposed to that of the Keynesian Left and of neo- Marxism. II The model that Joan Robinson develops in connection with her inter- pretation of Marx? can serve as a point of departure for our study. Having, like Baran and Sweezy, denied any validity to the labor theory of value, and with it to the Marxian laws of accumulation and of the tendency of the rate of profit to fall, she extracts two concepts from Marx’s theory, exploitation and underconsumption, and attempts to show that they correspond to two aspects of modern economics, the theory of imperfect competition and that of effective demand.* Robin- son dedicates a part of her study to the discovery of the common basis of these two theories, which correspond to the Marxist categories of exploitation and underconsumption. The basis she discovers, however,14 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY is quite different from Marx’s. The theory of imperfect competition as an explanation of profit margins is used by Joan Robinson to furnish the elements of a theory of distribution. It does not, however, clearly determine the distribution of national income between labor and capital, providing only a set of limits on the determination of distribution, which in the final analysis is effected by forces external to the theory, such as the intensity of compe- tition and the level of trade-union organization. In Robinson’s view, Marx’s theory of exploitation has this same character.> The theory of imperfect competition asserts the existence of a rela- tion between profit margins and the elasticity of demand to the extent that, if excessive capacity is the normal condition of the market, mar- ginal costs do not rise with increasing production as much as they would in the case of the full employment of resources assumed by perfect competition. In other words, if the marginal cost curve is relatively flat, profit margins do not decrease by much even in the case of a relatively large increase of production. If the assumption of price manipulation is added, the capitalist has a choice of two strategies. He can either lower his prices and put a larger quantity of his products on the market, or sell a smaller number and try to make up the difference with higher prices. The choice depends on the elasticity of demand for his products. The higher the elasticity, the lower the prices permitting maximum profits and the greater the quantity produced. Conversely, if elasticity is low, profits will be maximized by a high price and a smaller quantity of product. It follows that the greater the elasticity the lower the profit margins and the more favorable the distribution is to labor, given the prices of wage-goods. Robinson herself recognizes that the analytical power of this theory is not very satisfactory. The model presupposes excess capacity, but does not define its degree. The relation between capacity and profit margin is such that ‘‘the lower the level of utilization, the higher the gross margin required to bring in any given level of profits.’’® Thus to obtain a given rate of profit, the capitalist must attempt to combine a certain gross profit margin with a certain degree of productive capac- ity. Nothing, however, guarantees that the level of production that will yield the desired profit margin will correspond to the requisite utiliza- tion of resources.? Much depends on what the capitalists consider a ‘reasonable’ rate of profit® and, in the last analysis, the theory does not permit the exact determination of the distribution of income be- tween labor and capital.? Robinson believes therefore that it can be