Edited by Fred Moseley, Brill, Leiden and Boston, 2016. 987pp., €299,00 / $387.00 hb
ISBN 9789004223509
Reviewed by Hans G Despain
The historical-critical edition of the complete writings of Marx and Engels are now available in the Marx-Engels-Gesamatausgabe (MEGA) in 114 volumes. Importantly, these include the previously unpublished economic manuscripts of Marx. These manuscripts demonstrate the evolution and revisions of Marx’s thought and theories, and the reformulations of the volumes of Capital. Especially revealing are the manuscripts that Engels used when compiling his editions of volumes 2 and 3 of Capital. We now have a clear picture of what Engels was working with, and what he included and excluded in his published editions. Of special interest are Marx’s economic manuscripts of 1864-65, which were the source for Engels volume 3 of Capital.
Ben Fowkes has translated the 1864-65 manuscripts to English for the first time. Fred Moseley edited and provides a masterful Introduction and comparison of Marx’s manuscript and Engels’ edition. The more sweeping assessments from Moseley are that Engels performed a much more heavy-handed editing than Engels himself reveals. Nonetheless, Moseley believes that Engels is remarkably true to the intention of Marx. Not everyone will agree. There is now an urgent need for Marxist scholars to re-read Engels’ editions in relation to Marx’s manuscripts.
Regardless of whether one believes Engels was a heavy- or light-handed editor, or whether Engels retains the intentions of Marx and interprets Marx’s theories accurately, it is not likely that there is much here to change a Marxian scholar’s own interpretation regarding the contested aspects of Volume 3 of Capital, such as the role of the tendency for the rate of profit to fall, the transformation problem and its ‘best’ solution, etc. Thus, the importance of this English edition of Marx’s economic manuscripts of 1864-65 is not that it will settle disputes in Marxian political economy. Instead, the importance of these manuscripts will be that it will generate a flurry of renewed interest in Volume 3 of Marx’s Capital.
Moseley informs the reader that Engels’ editing was an impressive accomplishment, but makes Marx’s manuscripts appear more complete and better organized than they actually were. Moseley insists that Engels does not misrepresent Marx’s overall logical structure, and nor does he change any points of emphasis (with one exception of Engels’ Part 5).
The translator, Ben Fowkes, has provided a very useful Appendix that lists the pages in Marx’s manuscripts that are not included in Engels’ Volume 3 of Capital. He has also marked the text with <> and ><, which signal, respectively, what is included and excluded by Engels.
Marx’s manuscripts are divided into seven chapters, which are subdivided into various sections, along with awkward breaks in the text. Engels’ Volume 3 of Capital turns Marx’s seven chapters into seven parts, and converts Marx’s sections and breaks into chapters, along with several added chapters and sections which were written by Engels as he deemed necessary. In all, there is a total of 52 chapters in Engels’ edition.
Moseley points out that four of Marx’s chapters (Engels parts) were in “almost finished form,” specifically Marx’s Chapters Two, Four, Six and Seven. Marx’s Chapter Three was logically coherent, but not in any “finished” or “almost finished” form (19). Marx’s Chapter One was in rough draft form, and Chapter Five very rough with parts that are merely a collection of notes and quotes.
In Chapter One Marx develops the core concepts of total profits and the rate of profits as they relate to Volume 1 of Capital’s concepts of surplus-value and the rate of surplus-value. Chapter Two shows that the competition between capitals for maximizing profits (the upper bound determined in the process of production of surplus-value as described in Volume 1) generates a process of the equalization of the rate of profit. Marx further develops a modification to the concept of price (which of course becomes the basis of the infamous transformation problem).
Chapter Three sets out to demonstrate that the Chapter Two processes that lead to the equalization of profits simultaneously generate additional complications. Capital accumulation in pursuit of profits and in the competitive market process generates the formation of an increase in the mass of profits and the tendential equalization of profits, along with simultaneously the tendential fall in the rate of profits.
In the first three Chapters of the manuscripts Marx establishes the motive force and power of capitalist production, and capital accumulation as the pursuit of profits (by means of producing surplus-value); nothing gets produced unless it is expected to generate a profit. The profit-enforced process of production leads to cost-minimizing techniques of production that generate an initial increase in the rate of profit for the capital that initiates the technique first, but which simultaneously decrease the average rate of profit by increasing the proportion of constant capital in the organic composition of capital. The initiator of new techniques of production achieves profits greater than the “social average,” but competition between capitals makes the new technique “universal and subjects it to the general law.” This creates “A fall in the profit rate” that is “completely independent of the capitalists’ will” (373).
The profit motive generates the general tendencies of equalization of average profit rates and tendential fall in the profit rate that become major factors in the boom and bust cycle movement of capital accumulation.
Moseley suggests the primary motive of Marx in the manuscripts of 1864-65 is the distribution of surplus-value, whereas Volume 1 is primarily concerned with the production of surplus-value. It is clear that chapters 4 through 7 of the manuscripts of 1864-65 are directly focused on the distribution of surplus-value.
In Chapter 4 Marx shows that merchant capital (e.g. retailers, advertisers, etc. who create no value) shares in the profits of productive capital (who do create value). The source of the profits does not change. “Just as unpaid labour directly creates surplus-value for productive capital, so also does the unpaid labour of the commercial wage-labourer create a share in that surplus-value for mercantile capital” (402) Likewise, “money-dealing capital” creates no value, but participates in a portion of profits by exchanging different forms of currency during the circulation process. According to Marx: “Money-dealing does not form hoards, but it supplies the technical means for hoard formation” (426).
Hoard formation of money gives rise to potential booms and busts, i.e. crisis. Money hoard formation is shown to be generated by the next important class that participates in a share of surplus-value, namely interest-bearing capital. In Chapter 5, Marx analyzes this interest-bearing capital and interest as a payment, along with credit. Marx argued that there is no systematic general law that governs the rate of interest. Instead, the rate of interest is determined by the demand and supply of loanable capital. Because interest appears to rise up from money itself, interest is highly fetishistic. Marx insists that its possibility is directly manifest from production of surplus-value, and unpaid labor.
In Chapter 6, Marx analyzes the landed-property and rent. Marx shows, against Classical political economy, that rent is a capitalistic phenomenon. Differential rents, whether from difference in fertility (type I) or from capital intensity (type II) tend to disappear, by means of capital mobility and competition. Absolute rents emerge from the ability of an “alien force” restricting investment which functioning capital is not able to overcome. “And it is an alien power and a barrier of this kind that landed property confronts capital over its investment in the land, or that the landowner confronts the capitalist” (749).
In Chapter 7, Marx underscores that his analysis throughout the presiding chapters demonstrates that surplus-value comes from the production process, its source unpaid, or surplus, labor. The distribution of surplus-value is divided between money-dealing capital, merchant capital, interest-bearing capital, landed capital, and functioning capital. Thus, whereas Volume 1 establishes the class struggle between workers and capitalists, Volume 3 is a story of a class struggle between capitalist classes (and petite capitalist classes) themselves.
There is a remarkable coherence between all three Volumes of Capital. It is a story of class struggle between workers and capitalists over the production of surplus-value (Volume 1), and between capitalist classes themselves regarding the distribution of surplus-value (Volume 3). It is a story of expanded reproduction (Volume 2), but an expanded reproduction (i.e. economic growth) riddled with tendencies toward centralization, inequality, instability, and crises.
Although Marx remains an indispensable source for understanding capitalism, his writing and theories are uneven and incomplete. The challenge for Marxian political economy is to continue developing theories of political economy inspired by the deep and powerful ontological and epistemological insights Marx provides with his theories of value and surplus-value. Volume 3 or the manuscripts of 1864-5 are crucial to this effort, and afford inspiration for understanding mechanisms within the structure of capitalism that generate tendencies toward centralization, inequality, instability, crisis, and the class war among the capitalist (and petite capitalist) class itself.
Thus, are there advantages to Marx’s manuscripts of 1864-65 over Engels edited version of Volume 3? Moseley suggests that there are not many. Engels’ version is a better organized and more readable text. Nonetheless, Moseley points out that it is important to underscore that Marx’s texts are uneven and unfinished. Marx’s Chapters Two, Four, Six and Seven were in the most finished state, and Engels published these sections with relatively minor editing and stylistic organization respectively as Parts Two, Four, Six, and Seven in his edition.
Marx’s Chapter 1 and Chapter 5 (especially section 5) were very unfinished and Engels’ editing required a heavier hand. Chapter 3 was somewhere in between mostly-finished and very-unfinished. In his introduction Moseley details the editing that was performed by Engels. Moseley concludes that even in the cases of the very unfinished Chapters of Marx, Engels “mostly did not change the content of what Marx wrote, (with a few exceptions, as discussed [in Moseley’s introduction]” (41).
The most important edits by Engels that Moseley identifies include the following. A ‘supplement’ that was left out which was intended to transition Chapter 1 to Chapter 2 which helps to clarify Marx’s notion of the “organic composition of capital”. Engels excluded several important paragraphs in Chapter 2 regarding the turnover time of capital. Engels excluded a key paragraph that clarified Marx’s meaning of “cost price.” Engels inserted a sentence in Chapter 3, and failed to distinguish his own words from those of Marx, which suggests the falling rate of profit is secular trend. The most significant is perhaps Engels editing in Chapter 5, Section 5, which in addition to misleading the reader as to the roughness of these pages, gives a misleading emphasis on the credit system, and distracts from the issue of interest-bearing capital and the rate of interest. Moseley contends that most of the pages on credit do not belong in Volume 3, and would have been placed by Marx into an unwritten Volume 4 regarding the ‘process of competition.’ Finally, Engels changes Marx’s title in a way that perhaps distracts the full aim of the work.
Marx’s manuscripts of 1864-65 will initiate a flurry of interest from Marxian scholars to Marx’s theories of capitalism. 150 years after they were written, Marx’s analysis remains deeply insightful and remarkably relevant. His theories on the falling rate of profit, interest-bearing capital and absolute rent envisage tendencies toward centralization, and towards the emergence of a (relatively) few very large capitalists “competing” among masses of petite capitalists in an abiding competitive war for a portion of surplus value. The result is inequality, wealth for the few, instability and the perpetual immanence and necessity of crisis. Although they are 150 years old, Marx’s manuscripts of 1864-65 explain more about contemporary political economy than 95 percent of today’s economic literature.
21 July 2017
'According to Marx: “Money-dealing does not form hoards, but it supplies the technical means for hoard formation” (426).
Hoard formation of money gives rise to potential booms and busts, i.e. crisis. Money hoard formation is shown to be generated by the next important class that participates in a share of surplus-value, namely interest-bearing capital.'
Cutting off that quote gives the wrong impression. I merely check the translation of this passage in vol.3, in German it reads:
Der Geldhandel bildet nicht die Schätze, sondern liefert die technischen Mittel, um diese Schatzbildung, soweit sie freiwillig ist (also nicht Ausdruck von unbeschäftigtem Kapital oder von Störung des Reproduktionsprozesses), auf ihr ökonomisches Minimum zu reduzieren, indem die Reservefonds für Kauf- und Zahlungsmittel, wenn für die ganze Kapitalistenklasse verwaltet, nicht so groß zu sein brauchen, als wenn von jedem Kapitalisten besonders.
1981 ed. (p. 437) translates this as:
Money-dealing does not form hoards, but it supplies the technical means for hoard formation, in so far as this is voluntary (and not the expression of unoccupied capital or of a disturbance in the reproduction process), thus reducing it to its economic minimum; for the reserve fund of means of purchase and payment, if managed on behalf of the capitalist class as a whole, does not need to be so great as if each capitalist had to keep his fund separately.
A bit unclear translation perhaps. Marx is saying that money-dealing supplies the technical means to reduce hoard formation to its economic minimum. So I definitely also don't make sense of your following lines that hoard formation "gives rise to potential booms and busts, i.e. crisis" etc.
It seems we might interpret the importance of this passage differently.
Money-dealing capital tends to quicken the turnover of monetary transactions, so as long as all is "voluntary" hoards are reduced. However, capitalist development is never smooth, transactions become ‘involuntary,’ money-dealers become stuck with various currencies, whereby hoards form (in fact the possibility, probability, indeed necessity of hoard formation first from money-dealing, secondly and more importantly from credit and banking, gives rise to the financial system).
Money-dealing capital facilitates means of payment, it is the prototypal M – M', and the basis of the capitalistic credit system which is the archetypal M – M'.
My emphasis is simply on hoard formation. To be sure, when I state “Hoard formation of money gives rise to potential booms and busts, i.e. crisis” I do not intend to imply this is money-dealing, in fact it is requires a double development, first the development of the credit system (which Marx addresses in Chapter 5 of the Manuscripts, albeit inadequately); second the development of the financial system (which Marx does not theorize).
The financial system was first analyzed rigorously by Rodolf Hilferding. My comment on the relation between hoard formation and crisis is based on the hoard approach of especially Suzanne de Brunhoff and Duncan Foley and Japanese Marxism of Tomohiko Sekine, Shigekatsu Yamguchi, Makoto Itoh, and Costas Lapavitsas. The contemporary financial system emerges from real accumulation (i.e. M-C…(P)…C’-M’) to money-dealing, interest-bearing, credit, banking and the financial system. Each of these developments lessens the importance of the “productive” purpose of borrowing, or the M – M’ becomes more remote from M-C…(P)…C’-M’.
What is interesting to me is that in the hoard approach, money-dealing – credit – finance are not parasitical to capitalism, but an integral element of capitalist production. As early as Chapter 4 of the Manuscripts of 1864-65, Marx is underscoring the formation of hoards. Money-dealing reduces hoards, but if and only if no bottlenecks arise. If a bottleneck arises (i.e. if currency trade becomes “involuntary”) instead of reducing hoards, hoards are ironically amplified. There is a quite spectacular parallel in contemporary derivative trading, derivative trading and shadow banking reduce risk for individual market participants, but amplify the risk at the macro level (and of course the agent left to deal with this crisis is the financial authority, or central bank).
What Marx is saying in (Engels’) chapter 19 of Volume 3 is that money-dealers emerge and “voluntarily” provide currency exchanges to facilitate (especially international) trade. The currency exchange becomes ‘involuntary’ when the money-dealer fails to receive the exchange rate needed for a profit. This has happened to me. When I was unable to get the exchange rate in Chinese currency in one trip to China, I decided to return home with a pocket full of Chinese currency, and simply wait for my return to China the next year. Now if I was unable to keep that hoard, my transaction becomes ‘involuntary’ and under some sort of financial distress (this is the basis of some sort of financial crisis, in this example merely a personal financial crisis).
Marx is pointing out that money-dealing does not produce surplus-value, but does participate in the distribution of surplus-value. Moreover, he is emphasizing that money-dealing capitalist do facilitate an increase surplus-value production. This occurs because the “functioning capitalists” do not need to keep the hoards in various currencies, freeing up funds for an expansion in production of the functioning capitalist (this is also why they are willing to give a portion of surplus-value to the money-dealing capitalist). Marx is implicitly underscoring that the disconnect between M – M’ and M-C…(P)…C’-M’ is a layer of antagonism, a potential for disruption in reproduction! In fact, as I underscore in my review, the major theme of Marx’s entire Manuscripts of 1864-65 is outlining the layers of antagonisms and contradictions between the various forms of Capital and types of capitalists. Thus, it is not just a war of labor and capital (Volume 1), but a war between capitalists themselves for portions of surplus value (Volume 3); Marx does say that each new form of Capital does facilitate the capacity of functioning capitalists to expand production, whereby the war between capitalists is carried out in the context of the tendency for the mass of profits to increase, while at the same time there is a process that equalizes the rate of profits, which simultaneously generates the tendential decrease in rate of profit. All this manifests bewildering antagonisms in the reproduction of the system.
Hans G. Despain wrote:
"capitalist development is never smooth, transactions become ‘involuntary,’ money-dealers become stuck with various currencies, whereby hoards form"
Marx here explicitly excludes those involuntary hoards.
Hans G. Despain wrote:
"(in fact the possibility, probability, indeed necessity of hoard formation first from money-dealing, secondly and more importantly from credit and banking, gives rise to the financial system)."
Marx is saying that money-dealing does not form hoards, ie it already takes the existence of hoards for granted.
Hans G. Despain wrote:
"My emphasis is simply on hoard formation. Hoard formation of money gives rise to potential booms and busts, i.e. crisis [… I]t requires a double development, first the development of the credit system (which Marx addresses in Chapter 5 of the Manuscripts, albeit inadequately); second the development of the financial system (which Marx does not theorize)."
Again, the existence of hoards is already taken for granted – hoarding does not come about as a result of the credit or financial system.
As Marx in Capital v.2 (p. 261) rather writes: 'With the development of the credit system, which necessarily runs parallel with the development of large-scale industry and capitalist production, this money no longer functions as a hoard but as capital, though not in the hands of its proprietor, but rather of other capitalists at whose disposal it is put.'
By the way, in the chapter on money-dealing he's simply speaking about precious metals, and excludes credit and banking.
Hans G. Despain wrote:
"If a bottleneck arises (i.e. if currency trade becomes “involuntary”) instead of reducing hoards, hoards are ironically amplified."
Marx just says, en passant, that a bottleneck eg due to a disturbance of the reproduction process (and not money-dealing itself) causes involuntary hoards (and those he explicitly excludes from his analysis), but not anything about that they would be amplified.
Hans G. Despain wrote:
"The currency exchange becomes ‘involuntary’ when the money-dealer fails to receive the exchange rate needed for a profit. This has happened to me. When I was unable to get the exchange rate in Chinese currency in one trip to China, I decided to return home with a pocket full of Chinese currency, and simply wait for my return to China the next year. Now if I was unable to keep that hoard, my transaction becomes ‘involuntary’ and under some sort of financial distress (this is the basis of some sort of financial crisis […]"
But as an individual you were not engaged in money-dealing. If a money-dealer decides not make a trade, he's not engaged in money-dealing, ie he sits on the money so it stays as a hoard (which he didn't form to begin with). If he makes the trade with a loss, this obviously cannot result in the formation of a hoard.
An important point is also that paper/credit currencies cannot form hoards ("cash" money means gold or silver).
In my attempt to understand the grounds of this exchange, according to your interpretation … what in Marx causes the hoards (which you claim are "taken for granted")?
It is very difficult for me to understand: "Again, the existence of hoards is already taken for granted – hoarding does not come about as a result of the credit or financial system."
So I simply do not understand your notion of hoard.
In mainstream theory if there is a change in the demand for money, prices adjust and people's behavior passively accommodate these price adjustments. Marx emphasizes hoard formation, i.e. stocks of the money commodity that do not circulate. Thus, for Marx the demand of money is not stable and the price of money does not necessarily adjust the demand of money, which sharply differentiates Marx from the quantity theory of money position of his time and today.
Hoards as stocks of the money commodity that do not circulate, would mean that hoards can most certainly manifest in money-dealing, credit, and finance.
The quote of Marx begins as such: "Money-dealing does not form hoards" [etc.]
I read this as meaning that hoards are already in existence before money-dealing, i.e. they are not the result of money-dealing. A couple of pages earlier (p. 435) Marx mentioned causes for hoards:
"The capitalist production process, and trade in general, even on the basis of pre-capitalist modes of production, lead to the following results.
Firstly, the accumulation of money as a hoard, in this case as the section of capital that must always exist in the money form, as a reserve fund of means of purchase and payment. This is the first form of the hoard, as it reappears in the capitalist mode of production and generally comes into being with the development of commercial capital, at least for the use of this capital. In both cases this applies as much to international circulation as to domestic. This hoard is in constant flux, constantly spilling out into circulation and returning from it. The second form of the hoard is that of idle capital temporarily unoccupied in the money form, together with newly accumulated money capital that has not yet been invested. The functions that this hoard formation itself makes necessary start with its storage, book-keeping, etc."
Additionally, hoards can form due to a disturbance in the capitalist reproduction process, but Marx leaves that aside. Whereas you seek their cause rather in a disturbance of money-dealing, not even in the normal development of money-dealing.
Hoards can still manifest with the emergence of money-dealing, but they are not caused by it, but rather are reduced by it to their economic minimum.
Marx elsewhere indeed emphasized hoard formation in contrast to the quantity theory. But the hoards we were speaking about here are actually just "reserve fund of means of purchase and payment", "constantly spilling out into circulation and returning from it", which should be distinguished from hoarding proper as discussed in ch.3 of vol.1. Examples of the latter are the burying of gold under the ground or turning gold coin into luxury items (of gold).