[lbo-talk] Marxists and marginalists

Jim Farmelant farmelantj at juno.com
Thu Mar 21 14:15:14 PDT 2019

Marx himself was both a great admirer and great critic of the classical political economists, especially Adam Smith and David Ricardo. He was generally disparaging of those economists like Bastiat and J.S. Mill (whose work Marx called vulgar economy) who are seen as precursors of the marginalists. On the other hand, to the best of my knowledge, Marx never wrote on the marginalists per se, although some of the early marginalists, like Jevons, were already publishing during Marx's lifetime. It was left to the next generations of Marxists to deal with the marginalists, including Rudolf Hilferding, who wrote a critical review of B�hm-Bawerk's book, Karl Marx and the Close of His System ((http://mises.org/document/996) (http://mises.org/books/karlmarx.pdf), and later, the Bolshevik, Nikolai Bukharin, who actually studied under B�hm-Bawerk for a while.

A lot of Marxist writing on the marginalists treats their emergence as a reaction to the rise of Marxism. To the extent that is true, the early marginalists were perhaps reacting against the Ricardian socialists whose work was better known at the time, than was the work of Marx and Engels. Either way, the fact that the labor theory of value, which Smith and Ricardo had embraced, could be shown to have socialist implications, was probably one factor in turning economists against it. On the other hand, some of the early marginalists, like Walras, were themselves socialists or had socialist leanings.

Nikolai Bukharin is probably the best known of the early Marxist critics of marginalism. His book on the subject is, Economic Theory of the Leisure Class (http://www.marxists.org/archive/bukharin/works/1927/leisure-economics/).

When he was living in exile, Bukharin spent time attending the lectures and seminars o Bohm-Bawerk, who with Menger, was a founder of the Austrian School in economics, which was one of the leading schools of early marginalism. Bohm-Bawerk, was also known at that time, as a leading critic of Marxian economics, Bukharin viewed marginalist economics, especially of the sort presented by Bohm-Bawerk and Menger, as representing within economic theory the world view of the wealthy rentier class. And indeed many of them, like Schumpeter, did in fact come from that sort of a background. Bukharin also attacked what he saw as the subjectivism of marginalist economic theory. He was not overly impressed with the marginalists' attempts to understand consumption in terms of the notion of marginal utility. (In fact during the 20th century, neoclassical economists spent a good deal of time attempting to refine, and redefine this notion).

Many later Marxist economists have remained highly critical of marginalism and neoclassical economics. The Belgian Trotskyist, Ernest Mandel, in his 1962 book, Marxist Economic Theory, included a critique of marginalism ()http://www.marxists.org/archive/mandel/works/marxist-economic-theory/marginalists.htm).

However, not all Marxist economists have been so harshly critical of marginalism. The Polish Marxist economist, Oskar Lange, found much to appreciate within marginalist economics. His view of marginalism and neoclassical economics is summarized in such statements like:

"If people want to anticipate the development of Capitalism over a long period, a knowledge of Marx is a muchmore effective starting point than a knowledge of [Friedrich von] Wieser, [Eugen von] Bohm-Bawerk, VilfredoPareto or even [Alfred] Marshall (although the last-named is in this respect much superior). But Marxian economics would be a poor basis for running a central bank or anticipating the effects of a change in the rate of discount."


"[I]n providing a scientific basis for the current administration of the capitalist economy �bourgeois� economics has developed a theory of equilibrium which can also serve as a basis for the current administration of a socialist economy. It is obvious that Marshallian economics offers more for the current administration of the economic system of Soviet Russia than Marxian economics does, though the latter is surely the more effective basis for anticipating the future of capitalism."

Lange had started out as a Socialist but during the Second War, he adopted a pro-Soviet stance, becoming close to Stalin, and eventually joining the Polish Communist Party. During the 1930s, he was a major participant in the socialist calculation debates, facing off against Friedrich Hayek. Under Poland's postwar Communist regime, he was a leading proponent (along with other economists like Michal Kalecki, Włodzimierz Brus, and Tadeusz Kowalik) of reforms of Poland's socialist economy, in an effort to make it both more efficient and more democratic. In 1956, in the midst of the turmoil that swept Poland, it seemed for a while that these reformers would get their chance, But Gomulka, who was swept back into power there, was able to stabilize things without having to undertake radical reforms. So these reformers never got their chance to create a democratic market socialism in Poland. Nevertheless, Lange, and his friends, did have an impact on economics as a discipline in Poland and the rest of eastern Europe. There developed a recognition among many economists there that neoclassical economics was something that they could not simply ignore or dismiss, and that it might even have some lessons for how to manage a socialist economy. Lange attempted to reconcile Marxism with neoclassical economics. Lange, for instance, agreed with the marginalist rejection of the labor theory of value. He believed, however, that this did not need to lead to a rejection of what he saw as Marx's most fundamental insights. Thus, he proposed reformulations of Marx's concept of exploitation, that would not require the labor theory of value.

In the Soviet Union, some economists reached conclusions similar to those of Lange, The Soviet mathematician and economist, Leonid Kantorovich (the only Soviet to ever win the Nobel Prize in economics) was one of the founders of a mathematical technique, linear programming, for optimizing economic planning. He came to see the necessity of shadow prices for facilitating rational economic planning under socialism, and he implicitly accepted the need for market pricing, even under socialism. During his own lifetime he had little effect on Soviet economic policy. But he trained a new generation of economists, who would serve as economic advisers to Mikhail Gorbachev, when he undertook perestroika.

Jim Farmelant http://independent.academia.edu/JimFarmelant http://www.foxymath.com Learn or Review Basic Math

____________________________________________________________ Our Hearts Go Out To Denzel Washington go.dedicatedoffers.com http://thirdpartyoffers.juno.com/TGL3141/5c93ff3b764dc7f3b09acst04vuc

More information about the lbo-talk mailing list