Book Review: Economic Theory
Economic Theory in Retrospect. M. Blaug, Heinmann Education. Second Edition £2.75.
This work by Blaug, who formerly taught economics at Yale University and is now Professor of the Economics of Education at the University of London Institute of Education, will be both useful and harmful, depending on how it is used. Students who treat it as a source for “potted” versions of economic theories and accept uncritically the author’s comments on those theories will often be misled. Those who take very careful note of the author’s warnings in his Preface to the Revised edition and use the book as he intended may find it useful. Blaug writes:
“In order to encourage students to doubt all commentators, including the author of this book, this edition like the first one contains detailed Reader’s Guides to cover major works in the history of economic thought. But as some reviewers of the first edition felt that these were more welcomed as heaven-sent cribs than as stimuli to consult the original writers, I should warn readers again that the Guides are neither summaries nor precis; they are running commentaries and more concerned with what the great economists might have meant than what they actually said. In short, they are especially designed to be provocative . . .”
When it comes to Marxian economics the reader should certainly challenge some of Blaug’s comments and interpretations. A few examples will illustrate this.
Discussing Marx’s description of the poverty and inequality of the early nineteenth century, Blaug writes that “it would be absurd to believe that the conditions described . . . reflect exploitation of labour rather than the low output per head of the working population”.
Blaug’s own explanation is that “the deplorable material standards of most working people . . . had more to do with the birth pangs of industrialization than with capitalist methods of organising production”, and that “living standards of the British working class could not have been raised significantly even by a perfectly egalitarian distribution of income”.
This was and still is the line of propaganda used by the defenders of capitalism. It would be interesting if Blaug “the commentator” (as distinct from Blaug the defender of capitalism) would explain what it was other than exploitation which enabled the rich, and in many cases idle, members of the capitalist class, to avoid sharing the poverty—after all the output of most of them wasn’t even low !
Blaug’s observations may also indicate that he thinks Marx aimed at egalitarian capitalism — which really is absurd. What Blaug has to meet is Marx’s proposition that in a Socialist system of society the output of useful articles will be greatly increased.
On page 279 Blaug has a fifteen line comment on Chapter 19 of Marx’s Capital Vol. I. (Chapter 17 in the Allen and Unwin translation).
Blaug writes:
“Chapter 19 plays hard and fast with the distinction between labour and labour-power. ‘Labour is the substance and the immanent measure of value, but has itself no value’.”
Blaug’s comment on this is that Marx meant “that the worker has no value, it is only his services that are valuable”.
Marx didn’t say or mean what Blaug says he meant. He was dealing with the question whether what the worker sells is his labour or his labour-power, not, as Blaug seems to think, whether the worker sells himself. In that chapter Marx argued that it is labour-power that the worker sells and that is an embodiment of value (the quantity of labour necessary for its production). It is not his labour, or work, that the worker sells.
Blaug’s quotation is immediately preceded by the following which ought to have made Marx’s view clear.
“That which comes directly face to face with the possession of money on the market is in fact not labour, but the labourer. What the latter sells is his labour-power. As soon as his labour actually begins, it has already ceased to belong to him; it can no longer be sold by him.”
Some of Blaug’s book deals with Volume II and Volume III of Marx’s Capital. Unlike Volume I, which was completed for publication in his lifetime, the later volumes (and other material published after his death) were left incomplete, some of it in the form of mere notes. Engels who edited Volumes II and III drew particular attention to this in his Prefaces. In the Preface to Vol. Ill Engels wrote, for example, “nothing was available but a first draft, and it was very incomplete”. Some of the chapters were so incomplete that Engels left them as they were being unable to take on the task of getting them in proper shape. It is therefore often difficult to decide how far Marx’s first notes were really considered judgments. Blaug is not unaware of this but seems not always to have made due allowance for it.
In his ten line comment on ten chapters of Volume III (Page 290) Blaug makes statements which, to the reader not familiar with the originals may seem to indicate that Marx in Volume III was repudiating what he wrote in Volume I about the effect of an overissue of inconvertible paper currency on the general price level.
Fortunately, in this case, Engels spotted the possibility of misunderstanding and inserted a note in Vol. III pointing out that the material in Chapter XXXIII dealt only with the position in Britain at a time when the currency was primarily gold coin and convertible Bank of England notes, and not with the different situation of an inconvertible paper currency, the latter being as stated in Volume I. The note reads a follows:
“Inconvertible bank notes are not taken into consideration at all here; inconvertible bank notes can become universal means of circulation only under conditions in which they are actually backed up by National credit, as is the case of Russia at present. In that case they fall under the laws of the inconvertible National paper money, which have been developed already in Vol. I, Chapter III 2
The chapter of Volume I referred to set out Marx’s view that, in accordace with the labour theory of value, the doubling of an issue of inconvertible paper currency merely serves to double the price level.
Blaug deals with Keynes and the neo-Keynesians in Chapter 15 and here his method shows its weakness. In thirty pages he gives a running commentary on Keynes and his critics and commentators, indicating here and there his own reservations. It might have been more useful if he had separately provided his own considered views on Keynesian theory and its practical application in the past thirty years.
H.