DISCUSSING CAPITAL A CENTURY AND A HALF LATER

by R.Mohan
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(19-09-17) :  We are living a rather rare society, which is actively discussing 150 th anniversary of publication of Volume 1 of Das Kapital, the magnum opus of Karl Marx , which saw the light of the day, with tireless effort of his celebrated colleague, Frederich Engels.England after the decline of feudalism saw the beginning and expansion of competitive capitalism. In its early stages, when, the condition of the working class was miserable, inventions were giving impetus to production in a great measure and the motto of Accumulate, Accumulate and Accumulate became the Moses and Prophet of capitalism.

Capitalism was a new mode of production which inspired development of economic theory.  A large body of literature, which is nomenclatured as "Classical Political Economy" came into being. The Physiocrats, William Petty, Adam Smith, David Ricardo and Thomas Robert Malthus are a few leading lights of this school. Their works, however, have largely remained in the scholarly realm and have seldom touched the day to day political life. But Karl Marx, who came after them, seems to have lit a lamp, which is flickering (long after publication of his works) notwithstanding  the strong headwinds of counter thoughts blowing against it. One of the Nobel Laureates, who has written a best selling economics text book for undergraduate students, Paul Samuelson, called Marx  "A Minor Post Ricardian". Nothing can be farther from reality. Das Kapital, in its three volumes is the best analytical survey of capitalism. It introduced how money that comes to market to purchase labour which is a commodity sold by the proletariat, generates more money in the process of production and exchange. This, Marx stated, was made possible through making worker to work more than what is socially necessary to sustain. The extra value, produced thus, is what Marx famously terms as "Surplus Value". It is this Surplus Value, when expressed as a ratio of Constant (machinery, plant etc) and Variable (raw material) Capital, constitutes the Profit. When competitive capital competes for accumulation in an environment of technological progress, the ratio of Constant to Variable Capital increases. This, when it happens faster than the rise in Surplus Value, results in a tendency of profits to fall in the long run, which would create a crisis for capitalism. Marx also visualised a situation of counter tendencies to this also.

Marxian economics has been put to severe criticism for this hypothesis. Critics eloquently point out that In the long run, profits did not fall and capitalism did not fall into a terminal crisis. Writers like George. N Halm, called this as "Law of Falling Rate of Profit". But Marx did not lay down any iron law. He perceived a tendency and discussed about counteracting tendencies. Capital in its imperialist stage got cheap raw material and a wider market for its products. This staved off the crisis for alonger time as vividly described by Rosa Luxembourg in her book Accumulation of Capital (1914).

After all, Marx had visualised booms and busts in the form of business cycles very early. Modern economists have revived the discussion on "Secular Stagnation" after post-2008 financial crisis. Capital has changed its from and content in a substantial manner from what it was in 18th and 19th century England. More than brick and mortar capital, it is now the globe trotting finance capital, in search of quick speculative profits. Marx was famously correct in saying that capitalism in its crudest form was against humanism. Capital came with blood and dirt from all its pores. Unfortunately in socialist reconstruction of late 1920s in the Soviet Union, lot of blood was shed in collectivisation of farms which is described as Socialist imitation of capitalist appropriation of farmlands ( the process of primitive accumulation) in its early , stages.

To summarise, Marx is the most debated among scholars as well as in the political field. The interest in Marxian economics substantially revised in the post -2008 financial crisis. But it did not result in revival of  interest in the Soviet or East European models. Marian economics has caught and continues to catch the imagination of analysts and thinkers, whatever be its predictions.

More than anything else, Marx was much more than an Erudite Scholar of Political Economy. He was an activist who incurred the wrath of the State on many occasions. He practised resistance even as he theorised and analysed the  system. This aspect is noteworthy because this was also intensely debated in Kerala in early 1970s. EMS challenged the legendary economist Joan Robinson on how to describe Marx. EMS wrote an article in the journal Social Scientist ( Volume 1, No 2, September, 1972), titled, "How not to Study Marx", elucidating his position of viewing Marx as more than an erudite scholar of political economy. ( Joan Robinson  a regular visitor to Kerala was a leading economist who challenged the dominant neo- classical stream in economics with forceful logic and reason. The other side could not answer the pointed questions raised by her. It is yet another matter that the skewed brains of Economics Nobel Awarders could not consider her for the prize she richly deserved) She  replied through a paper published by Centre for Development Studies, Thiruvananthapuram (Working Paper No 10, February, 1973, titled "Marxian Economics Today", www.cds.edu). In the paper, she opined that the statement that in the long run capitalism will be replaced is a truism. According to her, in the long run everything gets replaced and what is relevant is In the interregnum what is done. She is critical of thinkers who quote profusely from Marx’s writings rather than develop a strategy unique to their country.

Kerala continues to be the torchbearer of such rare  debates about Marx much after  the fall of Soviet Union and East European communist states. It is not known whether there are such debates in Peoples Republic of China on 150 th anniversary of publication of Das Kapital.