Marx states that the historical role of capitalism is to increase the productive forces, regardless of the human consequences. How does it do that? By increasing the productivity of labor through "innovation and knowledge." His whole discussion throughout Capital on the rising rate of organic composition of capital is about "innovation."
But Marx adds, expanding on the view of Ricardo, that "innovation and knowledge," like the forces of nature add no value to the commodities produced, because they add no labor value to the commodities. They were something the capitalist got free of charge and had no need to advance money capital to purchase.
Today, because of patent laws and the view of "intellectual property" as private property, costs are incurred for royalties, research, training, etc.
But how significant are they as costs of production? By the way, I imagine Marx would place them in the circulating portion of constant capital, sort of an intellectual power similar to electrical power.
The basic flaw in Marxian economics, if there is one, is the technical problem of transforming the labor values of commodities (c+v+s) into prices of production (k+kp"), around which market prices fluctuate due to supply and demand.
Another problem is the accumulation of capital based on expanded reproduction of the total capital, as discussed at the end of Volume II of Capital. This was never definitively completed by Marx or by any other Marxian economist since, except perhaps by Rosa Luxemburg, in her "Accumulation of Capital."
The individuals who have discovered inadequate treatment of innovation as the basic flaw in Marxian economics probably deny that a total capital exists, and view economic phenomenon from the point of view of the individual capitalist (i.e., the economics of "common sense", pragmatism, in Marx's term, vulgar economics). They equate "accumulation of capital" with the economic infrastructure (including knowledge, etc.). They reduce capital to its material aspect, as commodity capital, forgetting (or not comprehending) money capital, and productive capital (the relation between capital and labor power at the point of production.)
Anyway, it's clear they didn't get through Volume 1, Chapter 1, of Capital, anymore than Keynes did.
>From: Doug Henwood <dhenwood at panix.com>
>Reply-To: lbo-talk at lists.panix.com
>To: lbo-talk at lists.panix.com
>Subject: Re: Fwd: Re: Finance and Economics after the Dotcom Crash
>Date: Fri, 21 Dec 2001 14:53:06 -0500
>
>Jesus, for people who like to call other people idiots, they should
>be careful what they say.
>
>>At 1:46 PM -0500 12/21/01, kwalker2 at gte.net quoted:
>>>
>>>From: "Russell Turpin" <deafbox at hotmail.com>
>>>To: fork at xent.com
>>><...>
>>>I enjoyed reading that. Thanks for posting it. I cannot
>>>resist making one comment on the substance.
>>>
>>>Doug Henwood says:
>>>>I'd also like to make the point that there's something
>>>>illusory and fetishistic about the very notion of retirement
>>>>funds. Individuals or families can save for a while, then draw
>>>>down their savings, but societies
>>>>as a whole cannot. Today's retirees can't be sustained using
>>>>yesterday's savings - the money has to come from
>>>>today. Effectively, today's stock buyers are what fund today's stock
>>>>sellers. Just like a public pension
>>>>system, a private one depends on the cross-generational
>>>>transfer of funds from workers to retirees.
>>>
>>>That is one of the most wrong-headed economic claims I
>>>have ever read! It completely ignores what constitutes
>>>economic progress: that the current generation is NOT
>>>beginning from scratch, but is working on a foundation
>>>of accumulated capital, which interpreted broadly, is
>>>the entire economic infrastructure, including the
>>>knowledge distributed in the economic system, and the
>>>knowledge held in the new generation's heads. This base
>>>is provided by the previous generations' savings and
>>>investment. Societies can and do save, in much the same
>>>way an individul or family does. That is such a
>>>critically important aspect of economic history that it
>>>completely flabbergasts me that someone writing on
>>>finance would miss it.
>
>I was talking about savings in monetary form. Of course societies
>progress and prosper on the basis of physical capital and knowledge
>accumulated by previous generations.
>
>I'd attribute this misreading to flawed reading comprehension, but I
>think it's symptomatic of the fact that fellows like this can't tell
>the difference between money and ideas, or money and machines.
>
>>>From: ThosStew at aol.com
>>>Message-ID: <4d.166ad11e.2954b82c at aol.com>
>>>Date: Fri, 21 Dec 2001 11:07:08 EST
>>>Subject: Re: Finance and Economics after the Dotcom Crash
>>>To: FoRK at xent.com
>>>
>>>In a message dated 12/21/2001 10:36:26 AM, "Russell Turpin"
>>><deafbox at hotmail.com> writes:
>>>
>>>>That is such a
>>>>critically important aspect of economic history that it
>>>>completely flabbergasts me that someone writing on
>>>>finance would miss it.
>>>
>>>
>>>Probably because of his Marxism. Marxism's fundamental flaw,
>>>IMHalf-bakedO,
>>>is that it ignores the roles of innovation and knowledge as assets and
>>>factors of production. The logic of the Marxist critique of
>>>capitalism--especially the inevitability of trusts and monopoly, the
>>>pre-condition for the radicalization of the urban proletariat--works only
>>>in
>>>an economy where innovation is minimal.
>
>It's news to me that Marx and Marxists are ignorant of the roles of
>innovation, knowledge, and competition. Sure there are some Marxists
>who adhere to a teleology of inevitable trustification, but not all,
>and certainly not me.
>
>Doug
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