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«Ernest Mandel 2 An IntroductIon to MArxIst EconoMIc thEory contEnts IntroductIon by Doug Lorimer I. thE thEory of VAluE And surplus VAluE Social ...»

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An Introduction to



Ernest Mandel

2 An IntroductIon to MArxIst EconoMIc thEory


IntroductIon by Doug Lorimer

I. thE thEory of VAluE And surplus VAluE

Social surplus product

Commodities, use value and exchange value

The Marxist theory of alienation

The law of value

Determination of the exchange value of commodities

What is socially necessary labour?

The origin and nature of surplus value

The validity of the labour theory of value

II. cApItAl And cApItAlIsM

Capital in precapitalist society

Origins of the capitalist mode of production

Origins and definition of the modern proletariat

The fundamental mechanism of capitalist economy

The growth in the organic composition of capital

Competition leads to concentration and monopoly

Tendency of the average rate of profit to decline

The fundamental contradiction in the capitalist system and the periodic crises of overproduction

III. nEo-cApItAlIsM

The origins of neo-capitalism

A permanent technological revolution

The importance of armament expenditures

How crises are ‘amortised’ in a recession

The tendency to permanent inflation

‘Economic planning’

The state guarantee of profit

–  –  –

Ernest Mandel (1923-95) was the most influential exponent of Marxist economic theory in the Western world during the second half of the 20th century, and is best known for his masterful two-volume work Marxist Economic Theory (1962) and his brilliant Late Capitalism (1972).

In the former, he demonstrated that it was possible, on the basis of the contemporary data, to reconstitute the whole economic system of Karl Marx 100 years after the first publication of Marx’s Capital. In the latter work, Mandel provided an explanation of the causes of the 20-year “wave” of rapid growth of the world capitalist economy after World War II, which also demonstrated that it would soon be followed by an indeterminately “long wave” of much slower economic growth, and recurrent social and political crises in the developed capitalist countries.

Late Capitalism also provided the first comprehensive analysis of the new features of global capitalism that emerged in the post-war period and that are still with us today — transnational corporations as the dominant form of capitalist business organisation, the enormous growth of the services sector, the crucial role of state expenditure in propping up an economic system marked by financial instability, long-term stagnation punctuated by speculative booms, mindless consumerism and accelerating environmental destruction.

This pamphlet, which was first published in French in 1964, provides a concise exposition of the elementary princples of Marxist economic theory. In the first section, Mandel elucidates the basic categories of Marx’s economic doctrine from the emergence of the social surplus product to the labour theory of value. In the second section, he explains the basic laws of motion of capitalism and its inherent contradictions. In the final second, he applies these to some of the new features exhibited by the new stage of imperialist capitalism that emerged after the second world war, which at the time he termed “neo-capitalism”.

In his more mature work Late Capitalism, Mandel abandoned this term in favour of the designation “late capitalism”, explaining in the introduction to 4 An IntroductIon to MArxIst EconoMIc thEory that work that the designation “neo-capitalism” could be falsely “interpreted to imply either a radical continuity or discontinuity with traditional capitalism”.

Instead, Mandel stressed that the “era of late capitalism is not a new epoch of capitalist development [but] merely a further development of the imperialist, monopoly-capitalist epoch” with “the characteristics of the imperialist epoch enumerated by Lenin” at the beginning of the 20th century remaining “fully valid for late capitalism”. I. thE thEory of VAluE And surplus VAluE In the last analysis, every step forward in the history of civilisation has been brought about by an increase in the productivity of labour. As long as a given group of men barely produced enough to keep itself alive, as long as there was no surplus over and above this necessary product, it was impossible for a division of labour to take place and for artisans, artists or scholars to make their appearance. Under these conditions, the technical prerequisites for such specialisation could not possibly be attained.

socIAl surplus product As long as the productivity of labour remains at a level where one man can only produce enough for his own subsistence, social division does not take place and any social differentiation within society is impossible. Under these conditions, all men are producers and they are all on the same economic level.

Every increase in the productivity of labour beyond this low point makes a small surplus possible, and once there is a surplus of products, once man’s two hands can produce more than is needed for his own subsistence, then the conditions have been set for a struggle over how this surplus will be shared.

From this point on, the total output of a social group no longer consists solely of labour necessary for the subsistence of the producers. Some of this labour output may now be used to release a section of society from having to work for its own subsistence.

Whenever this situation arises, a section of society can become a ruling class, whose outstanding characteristic is its emancipation from the need of First presented at an educational weekend organised by the Paris Federation of the United Socialist Party in 1963 and subsequently published in Les Cahiers du Centre d’Études Socialistes, February 1964.

6 An IntroductIon to MArxIst EconoMIc thEory

working for its own subsistence.

Thereafter, the labour of the producers can be divided into two parts. A part of this labour continues to be used for the subsistence of the producers themselves and we call this part necessary labour; the other part is used to maintain the ruling class and we give it the name surplus labour.

Let us illustrate this by the very clear example of plantation slavery, as it existed in certain regions and periods of the Roman Empire, or as we find it in the West Indies and the islands of Portuguese Africa starting with the 17th century, on the great plantations which were established there. In these tropical areas, even the slave’s food was generally not provided by the master; the slave had to produce this himself by working a tiny plot of ground on Sundays and the products from this labour constituted his store of food. On six days of the week the slave worked on the plantation and received in return none of the products of his labour. This is the labour which creates a social surplus product, surrendered by the slave as soon as it is produced and belonging solely to the slavemaster.

The work week, which in this case is seven days, can be divided into two parts: the work of one day, Sunday, constitutes necessary labour, that labour which provides the products for the subsistence of the slave and his family;

the work of the other six days is surplus labour and all of its products go to the master, are used for his sustenance and his enrichment as well.

The great domains of the early Middle Ages furnish us with another illustration. The land of these domains was divided into three parts: the communal lands consisting of forest, meadows, swamps, etc.; the land worked by the serf for his own and his family’s subsistence; and finally, the land worked by the serf in order to maintain the feudal lord. The work week during this period was usually six days, not seven. It was divided into two equal parts: the serf worked three days on the land from which the yield belonged to him; the other three days he worked on the feudal lord’s land, without remuneration, supplying free labour to the ruling class.

The products of each of these two very different types of labour can be defined in different terms. When the producer is performing necessary labour, he is producing a necessary product. When he is performing surplus labour, he is producing a social surplus product.

Thus, social surplus product is that part of social production which is produced by the labouring class but appropriated by the ruling class, regardless of the form the social surplus product may assume, whether this be one of natural products, or commodities to be sold, or money.

Surplus value is simply the monetary form of the social surplus product.

The Theory of Value and Surplus Value When the ruling class appropriates the part of society’s production previously defined as “surplus product” exclusively in the monetary form, then we use the term “surplus value” instead of “surplus product”.

As we shall see later on, however, the above only constitutes a preliminary approach to the definition of surplus value.

How does social surplus product come into existence? It arises as a consequence of a gratuitous appropriation, that is, an appropriation without compensation, by a ruling class of a part of the production of a producing class. When the slave worked six days a week on a plantation and the total product of his labour was taken by the master without any compensation to the slave, the origin of the social surplus product here is in the gratuitous labour, the uncompensated labour, supplied by the slave to the master. When the serf worked three days a week on the lord’s land, the origin of this income, of this social surplus product, is also to be found in the uncompensated labour, the gratuitous labour, furnished by the serf.

We will see further on that the origin of capitalist surplus value, that is to

say, the revenue of the bourgeois class in capitalist society, is exactly the same:

it is uncompensated labour, gratuitous labour, which the proletarian, the wage worker, gives the capitalist without receiving any value in exchange.

coMModItIEs, usE VAluE And ExchAngE VAluE We have now developed several basic definitions which will be used throughout this exposition. A number of others must be added at this point.

Every product of human labour normally possesses utility; it must be able to satisfy a human need. We may therefore say that every product of human labour has a use value. The term “use value” will, however, be used in two different senses. We will speak of the use value of a commodity; we will also talk about use values, as when we refer, for example, to a society in which only use values are produced, that is to say, where products are created for direct consumption either by the producers themselves or by ruling classes which appropriate them.

Together with this use value, a product of human labour can also have another value, an exchange value. It may be produced for exchange on the market place, for the purpose of being sold, rather than for direct consumption by the producers or by wealthy classes. A mass of products which has been created for the purpose of being sold can no longer be considered as the production of simple use values; it is now a production of commodities.

The commodity, therefore, is a product created to be exchanged on the market, as opposed to one which has been made for direct consumption. Every

8 An IntroductIon to MArxIst EconoMIc thEory

commodity must have both a use value and an exchange value.

It must have a use value or else nobody would buy it, since a purchaser would be concerned with its ultimate consumption, with satisfying some want of his by this purchase. A commodity without a use value to anyone would consequently be unsaleable, would constitute useless production, would have no exchange value precisely because it had no use value.

On the other hand, every product which has use value does not necessarily have exchange value. It has an exchange value only to the extent that the society itself, in which the commodity is produced, is founded on exchange, is a society where exchange is common practice.

Are there societies where products do not have exchange value? The basis for exchange value, and a fortiori for trade and the market place, is constituted by a given degree of development of the division of labour. In order for products not to be directly consumed by their producers, it is essential that everybody should not be engaged in turning out the same thing. If a particular community has no division of labour, or only its most rudimentary form, then it is clear that no reason for exchange exists. Normally, a wheat farmer has nothing to exchange with another wheat farmer. But as soon as a division of labour exists, as soon as there is contact between social groups producing different use values, then exchange can come about, at first on an occasional basis, subsequently on a more permanent one. In this way, little by little, products which are made to be exchanged, commodities, make their appearance alongside those products which are simply made for the direct consumption of their producers.

In capitalist society, commodity production, the production of exchange values, has reached its greatest development. It is the first society in human history where the major part of production consists of commodities. It is not true, however, that all production under capitalism is commodity production.

Two classes of products still remain simple use value.

The first group consists of all things produced by the peasantry for its own consumption, everything directly consumed on the farms where it is produced.

Such production for self-consumption by the farmer exists even in advanced capitalist countries like the United States, although it constitutes only a small part of total agricultural production. In general, the more backward the agriculture of a country, the greater is the fraction of agricultural production going for self-consumption. This factor makes it extremely difficult to calculate the exact national income of such countries.

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