Karl Marx’s reading of Adam Smith

Cogliano J.F.

Abstract Marx assumes a uniform rate of exploitation throughout Capital, yet the theoretical basis for this assumption and its role in his theory of value are not widely recognised in the existing literature. This article shows that Marx assumed a tendentially equalised rate of exploitation to be the outcome of labour mobility and that he viewed this as a general tendency of capitalist economies. Marx draws extensively on Adam Smith to support his views on labour mobility and the equalised rate of exploitation. The close connection between Smith and Marx on notions of labour mobility is examined here. Understanding the role of labour mobility and the equalised rate of exploitation in Marx’s work holds implications for contemporary approaches to classical-Marxian price and value theory and supports the view that Marx’s theory of value is, in the most general sense, a theory of the allocation of social labour.

Foley D.K.

This paper surveys the development of the concept of socialism from the French Revolution to the socialist calculation debate. Karl Marx’s politics of revolutionary socialism led by an empowered proletariat nurtured by capital accumulation envisions socialism as a “top-down” system resting on political institutions, despite Marx’s keen appreciation of the long-period analysis of the organization of social production in the classical political economists. Collectivist thinking in the work of Enrico Barone and Wilfredo Pareto paved the way for the discussion of socialism purely in terms of the allocation of resources. The Soviet experiment abandoned the mixed economy model of the New Economic Policy for a political-bureaucratic administration of production only loosely connected to theoretical concepts of socialism. The socialist calculation debate reductively recast the problem of socialism as a problem of allocation of resources, leading to general equilibrium theory. Friedrich Hayek responded to the socialist calculation debate by shifting the ground of discussion from class relations to information revelation.

Foley D.K.

Optimal control theory and information technology provide tools with the capacity to implement top-down centralized allocation of resources in complex economies organized through a social division of labor. Twentieth century political and systems thinking, however, emphasize the virtues of bottom-up spontaneously organized systems. Workers’ control can be analyzed as one variety of bottom-up spontaneous organization. Another is peer production, as in the case of open-source software. A model of peer production under the name Lifenet provides some insights into the advantages and limitations of this approach to socialism.

Weber I.M.

AbstractThe debate over theories of the nature of money has recently been revisited in this Journal. This paper shifts the focus from the stuff that is being positioned as money to the social totality. Credit theorists claim that commodity theories of money imply monetary neutrality and a primacy of real analysis. In contrast, this paper argues based on Marx and Smith that, independently of whether money is a commodity or credit, the necessity of money depends on the constitution of the economy in terms of the relation between production and circulation. If social production is constituted through the exchange between private specialised producers, money is not neutral but essential. For Smith, real analysis is nevertheless meaningful, in that, he treats the spheres of exchange and production separately. By contrast, Marx exposes real analysis as commodity fetishism and stresses the mutually constitutive social relations between money, commodity exchange and capitalist production.

Szreter S.

Ramirez M.D.

This article critically discusses the important and relevant—not to mention controversial— views of Ricardo and Marx on the impact of machinery on labor productivity, the organization of production...

Cogliano J.F.

Marx's Capital shows that surplus value can be produced in one industry, yet realized as profit (and possibly revenue) by other industries over the course of circulation. This paper highlights the ...

Mohun S., Veneziani R.

This paper tries to clarify the logical structure of the relationship between labor values and prices from an axiomatic perspective. The famous “transformation problem” is interpreted as an impossibility result for a specific interpretation of value theory based on specific assumptions and definitions. A comprehensive review of recent literature is provided, which shows that there are various theoretically relevant and logically consistent alternative interpretations based on different assumptions and definitions.

Kurz H.D.

AbstractThe paper discusses David Ricardo's analytical achievements. These concern his approach to the theory of value and distribution; his analysis of the effects of different forms of technical progress on income distribution; his analysis of exhaustible resources in terms of differential rent; his discussion of machinery and induced technical progress; and his theory of foreign trade and the principle of comparative advantage. It is argued that Ricardo's analysis has been frequently misrepresented and is a great deal more sophisticated than is commonly acknowledged. There are still ideas in his writings that have yet to be fully explored.

Foley D.K.

This talk examines the popular idea that “economic growth” can continue indefinitely in post-industrial capitalist economies through the shift of labor to “service” sectors, particularly finance and information-based activities, in the light of the classical-Marxian theory of value and the related categories of productive and unproductive labor. As the generally accepted classical theory of land rent exemplifies, many types of income in capitalist economies, including interest, financial fees, speculative trading profits, and intellectual property royalties, arise as parts of the surplus value generated by the exploitation of productive labor appropriated through the assertion of various property rights. The dramatic phenomena of highly profitable “business models” based on network externalities associated with the internet and other information-based technologies do not represent new modes of value production, but modes (in some cases not particularly new) of participation in the pool of surplus value. National income accounting conventions that impute a fictitious output as a counterpart to incomes generated in sectors such as finance, professional and business services, education and health, and government, where there are no market-based measures of output create a distorted and misleading picture of value production and growth in advanced capitalist economies. A clear understanding of the origin of value in the expenditure of productive labor and of surplus value in the exploitation of productive labor is essential to thinking through the problems of post-industrial capitalist growth, distribution, resource conservation, and environmental protection.

Kurz H.D.

The paper discusses the analyses of technical progress, capital accumulation and income distribution elaborated by three major classical economists: Adam Smith, David Ricardo and Karl Marx. The interpretation given is partly inspired by Piero Sraffa's studies in his hitherto unpublished papers. It will be argued that in the classical authors we encounter a sophisticated typology of different forms of technical change and an analysis of the different effects these have. These forms can be analysed in terms of shifts of the inverse relationship between the general rate of profits and wages, or wage frontier. The emphasis will be on Adam Smith's concept of the division of labour, Ricardo's analysis of the substitution of machine power for labour power, and Marx's adaptation of Ricardo's argument to his own analytical framework in terms of a rising organic composition of capital.

Foley D.K.

Ashraf N., Camerer C.F., Loewenstein G.

Adam Smith's psychological perspective in The Theory of Moral Sentiments is remarkably similar to “dual-process” frameworks advanced by psychologists, neuroscientists, and more recently by behavioral economists, based on behavioral data and detailed observations of brain functioning. It also anticipates a wide range of insights regarding phenomena such as loss aversion, willpower, and fairness that have been the focus of modern behavioral economics. This essay draws attention to some of these connections.

Mohun S.

This paper outlines some recent approaches to the construction of an accounting structure which relates observable prices to Marxian labour values. The first is that proposed (independently of each other) by Dumenil and Foley (DF); the second in some sense is a generalization which focuses on gross value produced rather than net value added; and a third imposes some temporal structure upon the second approach. The second two approaches are based on different definitions of labour value from that in the DF approach, and in the paper it is argued that the DF approach is both more theoretically coherent and more practically useful.

Foley D.K.

This paper reviews the historical roots of Marx's labor theory of value and some contemporary contributions to the critique of this theory. Modern commentary on Marx's labor theory of value based on dual system of parallel prices and embodied labor coefficients loses sight of the theory's roots in the philosophy of historical materialism and its function as a theory of money. Recently developed empirical single system approaches, including the New Interpretation that identifies the monetary expression of labor time with the ratio of money value added to living productive labor expended in its production, address these problems, and open the possibility of a progressive research program based on Marx's theory.

Kurz H.D.

Abstract The paper examines evolutionary elements in Adam Smith’s social theory, connecting them to an earlier contribution to natural history by George-Louis Leclerc, Comte de Buffon. It then compares Smith’s analysis with those of Karl Marx and Joseph Schumpeter, who were fascinated by Darwinian evolutionary biology. This comparison demonstrates that while developing evolutionary approaches to the social sciences suitable for their respective subject matter, Marx and Schumpeter drew heavily on Smith’s insights. All three authors aimed to unveil the forces shaping the “process of civilization”, or society’s “law of motion,” along with its associated hazards. They pondered whether this process inherently led to rising living standards, along with “equality, liberty, and justice”, and whether it could derail, ending in a tailspin.