Monday, May 25, 2015

Malthus on Nominal Wage Rigidity

And some people think that downwards nominal wage rigidity is a product of modern economies from the 20th century:
It very rarely happens that the nominal price of labour universally falls; but we well know that it frequently remains the same, while the nominal price of provisions has been gradually increasing. This is, in effect, a real fall in the price of labour; and during this period, the condition of the lower orders of the community must gradually grow worse and worse.” (Malthus 1798: 34–35).
This appears in the Reverend Thomas Malthus’ (1766–1834) famous An Essay on the Principle of Population (which is available here) already in the first edition of 1798, but also in subsequent editions (e.g., Malthus 1803: 14–15).

Presumably money wages were not as inflexible downwards as they are today, but in Malthus’ time were apparently still relatively inflexible enough to merit comment as though this was reasonably well known.

Now the evidence would strongly suggest that in the mid-Victorian period money wages were rather more flexible than they are now, so, with the development of capitalism and the growth of a large class of urban workers (or what Marxists call the reserve army of labour, the body of unemployed and under-employed in capitalist society), had nominal wages become more flexible than in Malthus’ day?

At any rate, by the 1880s and 1890s we can see strong evidence that money wages, even if they had become more flexible by the 1860s, had attained a strong degree of inflexibility downwards, as discussed in these posts:
“Nominal Wage Rigidity in the US and the UK 1865/1880–1913,” December 16, 2014.

“UK Average Money Earnings 1880–1913,” December 14, 2014.

“British Money Wages in the 1873–1896 Deflation,” December 10, 2014.
BIBLIOGRAPHY
Malthus, Thomas Robert. 1798. An Essay on the Principle of Population. J. Johnson, London.
https://archive.org/details/essayonprincipl00malt

Malthus, Thomas Robert. 1803. An Essay on the Principle of Population. J. Johnson, London.
https://archive.org/details/principleessayon00maltrich

Saturday, May 23, 2015

Prolegomena to the Study of Marx’s Capital

The basic facts are these. Marx published volume 1 of Capital in German in 1867, but only volume 1 of Capital was published in Marx’s lifetime. The rest were edited and published by Engels. No English translation of volume 1 appeared in Marx’s lifetime.

Furthermore, there were a vast group of manuscripts that Marx worked on in the course of his life reflecting his work on Capital, and along with Marx’s published economic writings and those published by Engels we can list all these works as follows:
(1) Marx, Grundrisse der Kritik der Politischen Ökonomie (Outlines of the Critique of Political Economy), manuscript, 1857–1858.
About 800 manuscript pages by Marx on political economy which were not even published until 1939 (Wheen 2001: 227). This formed the basis of A Contribution to the Critique of Political Economy (1859) (Sperber 2014: 421).

(2) Marx, A Contribution to the Critique of Political Economy (1859).
This was Marx’s initial, long-awaited work on political economy, but was a great disappointment to most of his followers (Wheen 2001: 237–238). Much of it was incorporated into the first volume of Capital.

(3) Manuscript of 1861–1863
A large manuscript of 1,500 pages (Wheen 2001: 258) which included Marx’s analysis of the history of economy thought which later appeared as Theories of Surplus Value.

(4) First Draft of Capital:
Manuscript of 1863–1865
A first draft of Capital. Marx took the first 40% and revised it in a fresh draft and published the first German edition of Capital from it in 1867 (Sperber 2014: 421).

(5) volume 1 of Capital in German published in a first edition of 1867 (by Meissner, Hamburg). This is available here:

The first German edition seems to be here:
Marx, Karl. 1867. Das Kapital: Kritik der politischen Oekonomie (1st edn.). O. Meissner, Hamburg; L. W. Schmidt, New York.
https://archive.org/details/daskapitalkritik67marx
(6) Second Draft of Capital:
Manuscript II for Book II (1868–1870)
Manuscripts for Books II and III (1867–1871)

(7) volume 1 of Capital in German published in a second edition of 1872–1873 with additions and changes by Marx.

(8) volume 1 of Capital in a French translation in 1875, with a number of changes to and corrections of the first German edition by Marx.

(9) third Draft of Capital:
Manuscripts for Book III (1874–1878)
Manuscripts for Book II (1877–1881)

(10) volume 1 of Capital in a third German edition with corrections and notes from the manuscripts of Marx and from the French translation edited and published by Engels in 1883.

(11) volume 2 of Capital edited and published by Engels in July 1885 in German.

(12) the first English translation of volume 1 of Capital in two parts in 1887 after Marx’s death in this edition:
Marx, Karl. 1887. Capital. A Critical Analysis of Capitalist Production. Volume I (in 2 volumes; trans. from 3rd German edn. by Samuel Moore and Edward Aveling). Swan Sonnenschein, Lowrey & Co., London.
There seems to be a reprint of the first part (that is, vol. 1) of the 1887 English edition of volume 1 of Capital but published in 1889 here:
Marx, Karl. 1889. Capital. A Critical Analysis of Capitalist Production. Volume I (trans. from 3rd German edn. by Samuel Moore and Edward Aveling; ed. Friedrich Engels). Appleton & Co., New York, and S. Sonnenschein & Co., London.
https://archive.org/details/capitalcriticala00marx
The second part (that is, vol. 2) of the 1887 English edition translated by Samuel Moore and Edward Aveling seems to be available here:
Marx, Karl. 1887. Capital. A Critical Analysis of Capitalist Production. Volume I (vol. 2; trans. from 3rd German edn. by Samuel Moore and Edward Aveling; ed. Friedrich Engels). Appleton & Co., New York, and S. Sonnenschein & Co., London.
https://archive.org/details/capitalcriticala02marxrich
(13) volume 1 of Capital in a fourth German edition edited by Engels using the English edition of 1887 and published in 1890.

(14) volume 3 of Capital edited and published by Engels in November 1894 in German.

(15) Theories of Surplus Value, part of the Manuscript of 1861–1863 but which was first published in 1905–1910 and which is considered Volume 4 of Capital.
There were also these revised English translations of volumes 1, 2, and 3 of Capital by Ernest Untermann in the early 1900s:
Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1907. Capital. A Critique of Political Economy. The Process of the Circulation of Capital (vol. 2; trans. by Ernst Untermann from 2nd German edn.). Charles H. Kerr & Co., Chicago, and Swan Sonnenschein & Co., London.

Marx, Karl. 1909. Capital. A Critique of Political Economy (vol. 3; trans. Ernst Untermann from 1st German edn.). Charles H. Kerr & Co., Chicago.
Let us review the circumstances preceding the publication of the first volume of Capital.

In 1863 Marx abandoned his Manuscript of 1861–1863 (from which was later taken the Theories of Surplus Value) and started the new Manuscript of 1863–1865 which was a first draft of volumes 1, 2 and 3 of Capital. However, Marx then abandoned the first draft of volume 1 and started again in 1865, so that the published volume 1 was written after drafts of volumes 2 and 3, as Marx himself says in a letter to Sigmund Schott of 3 November, 1877:
Dear Sir,

My best thanks for the packages. Your offer to arrange for other material to be sent to me from France, Italy, Switzerland, etc. is exceedingly welcome, although I feel reluctant to make undue claims on you. I don't at all mind waiting, by the by, nor will this in any way hold up my work, for I am applying myself to various parts of the book in turn. In fact, privatim, I began by writing Capital in a sequence (starting with the 3rd, historical section) quite the reverse of that in which it was presented to the public, saving only that the first volume—the last I tackled—was got ready for the press straight away, whereas the two others remained in the rough form which all research originally assumes. ….

Your most obedient Servant,
Karl Marx
(letter from Marx to Sigmund Schott of 3 November, 1877; Marx and Engels 1992: 287).
In 1865 Marx completed a first draft of volume 3 (McLellan 1995: 304) and then turned to a fresh draft of volume 1, which was in fact a second draft of that first volume (as pointed by Michael Heinrich here).

In February 1866 after being pressed by Engels, Marx agreed to finish and publish volume 1 first (McLellan 1995: 306). He promised to send the first parts of the manuscript to the publisher in November 1866 (McLellan 1995: 306) but took the full manuscript to Hamburg himself in April 1867 (McLellan 1995: 306).

It is likely that, under pressure from Engels to produce a work in defence of communism, Marx’s ideological commitments skewed volume 1 so that it presented capitalism in the worst light possible and an extreme and dogmatic defence of the labour theory of value, which, in view of his work on the draft of volume 3 of Capital, he knew to have severe problems, such as the transformation problem.

As has been pointed out time and again, Marx never bothered to publish volume 2 and 3 of Capital in his lifetime, and the suspicion is that he never did so because he was unsatisfied with his attempts to defend the labour theory in volume 3.

Now Volume 2 of Capital was published by Engels in German in 1885, but even though Marx had revised Volume 2 in the early years of the 1870s Engels preferred to use the first draft of 1864–1865.

What of Volume 3? The manuscripts for Volume 3 from 1864–1865 were in a draft and fragmentary form (Vollgraf and Jungnickel 2002: 68). Engels began editing volume 3 for publication around 1885 but it took him nearly 10 years before that volume was published in 1894 (Vollgraf and Jungnickel 2002: 40). In 1993, Marx’s main 1864–1865 manuscript for volume 3 of Capital which Engels used was published and allowed scholars to compare this with what Engels published in 1894 (Vollgraf and Jungnickel 2002: 36).

Vollgraf and Jungnickel (2002) analyse Engel’s editing and the changes he made to the text, and some of their results are as follows:
(1) Engels’ changes to Marx’s material on the law of the falling rate of profit, including his three chapters and subdivisions, suggested that this work was much more structured and complete than it in fact was (Vollgraf and Jungnickel 2002: 47, 62). The way Engels’ editing obscured Marx’s views on the falling rate of profit is also described by Michael Heinrich here. Heinrich argues that the idea that Marx’s theory of crisis was based on the law of the falling rate of profit is a misinterpretation of Marx’s thought that has arisen from Engels’ editing of the third volume of Capital.

(2) in Chapter 7 Engels missed a number of pages of Marx’s discussion (Vollgraf and Jungnickel 2002: 48).

(3) Engels transformed Marx’s tentative notes for further development into the main text of volume 3, giving the impression that some statements were Marx’s final views on certain issues when they were not (Vollgraf and Jungnickel 2002: 49).

(4) Engels added a considerable amount of material: the material that is marked by Engels as his own comes to about 6% of the main text (Vollgraf and Jungnickel 2002: 53), but there is also material added by Engels but not marked as by him. Engels added Chapter 4, a large part of Chapter 43, additions on the profit rate, historical data from after the 1860s, illustrations from newspapers, and source references (Vollgraf and Jungnickel 2002: 53).
Vollgraf and Jungnickel (2002: 68–69) argue that, given Engels’ additions and modifications to volume 3, the authorship of that work should be rightly ascribed to both Marx and Engels.

BIBLIOGRAPHY
Desai, Meghnad. 2002. Marx’s Revenge: The Resurgence of Capitalism and the Death of Statist Socialism. Verso, London. pp. 74-83

Heinrich, Michael. 2013. “Crisis Theory, the Law of the Tendency of the Profit Rate to Fall, and Marx’s Studies in the 1870s,” Monthly Review 64.11 (April).

Levine, Norman. 1975. The Tragic Deception: Marx contra Engels. Clio Books, Oxford and Santa Barbara.

McLellan, David. 1995. Karl Marx: A Biography (3rd edn.). Macmillan, London.

Mandel, Ernest. 1990. “Introduction,” in Karl Marx, Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London. 11–86.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.

Marx, Karl and Frederick Engels. 1992. Collected Works. Volume 45. Marx and Engels 1874–1879. Lawrence & Wishart, London.

Mehring, Franz. 1962. Karl Marx: The Story of His Life (trans. Edward Fitzgerald). University of Michigan Press, Ann Arbor.

Müller, Manfred, Jungnickel, Jürgen, Lietz, Barbara, Sander, Christel and Artur Schnickmann. 2002. “General Commentary to Marx’s Manuscript of ‘Capital’, Book 3 (1864/65),” International Journal of Political Economy 32.1: 14–34.

Sperber, Jonathan. 2014. Karl Marx: A Nineteenth-Century Life. Liveright Publishing Corporation, New York.

Vollgraf, Carl-Erich and Jürgen Jungnickel. 2002. “‘Marx in Marx’s Words’? On Engels’s Edition of the Main Manuscript of Book 3 of ‘Capital,’” International Journal of Political Economy 32.1: 35–78.

Vygodskii, Vitalii. 2002. “Discussion: What was it actually that Engels published in the years 1885 and 1894? On the Article by Carl-Erich Vollgraf and Jürgen Jungnickel Entitled ‘Marx in Marx’s Words?’” International Journal of Political Economy32.1: 79–82.

Wheen, Francis. 2000. Karl Marx. Fourth Estate, London.