Die Neue Zeit
11th October 2010, 18:57
Dr. Michael Hudson needs to be torn apart (http://www.revleft.com/vb/dr-michael-hudson-t137771/index.html)
Classical Economic Rent and Self-Directional Demands (http://www.revleft.com/vb/classical-economic-rent-t103272/index.html)
Although this blog is critical of Michael Hudson's work, I should quote the relevant parts:
http://critiqueofcrisistheory.wordpress.com/responses-to-readers%e2%80%94austrian-economics-versus-marxism/bichler-nitzan-and-hudson-versus-marx/]
Hudson writes: “Classical economists developed the labor theory of value to isolate economic rent, which they defined as the excess of market price and income over the socially necessary cost of production (value ultimately reducible to the cost of labor). A free market was one free of such ‘unearned’ income—a market in which prices reflected actual necessary costs of production or, in the case of public services and basic infrastructure, would be subsidized in order to make economies more competitive. Most reformers accordingly urged—and expected—land, monopolies and banking privileges to be nationalized, or at least to have their free-lunch income taxed away.”
I have not read Hudson’s book Critique from which this quote is taken, but it appears that Hudson is making no distinction between the views he attributes to the “classical economists,” Marx, and his own views. So I will assume at least for this reply that the above quote represents Hudson’s own theory of surplus value.
First, as was true of all pre-Marxist theories of surplus value, Hudson does not refer to surplus value as such but rather refers to surplus value by the name of one of its fractional parts—rent.
[...]
Second, Hudson’s definition of “rent” says that the “rent” or surplus value arises because the capitalists sell their commodities above their (labor) values. Hudson seems to think that if only the law of value were consistently applied as it should be in a “free market economy,” the surplus value, or rather the “rent,” would go away. Commodities would exchange at their labor values, and “unearned income” or exploitation would vanish. Such ideas were widespread among the socialist followers of Ricardo in the days before Marx.
[...]
The question of residential real estate—land plus the value of the houses built on the land—is an area where Marxist theory is incomplete. Marx had originally intended to write a whole book on landed property that would follow “Capital,” but he never got to write this work. While I can hardly fill this void in this reply, I will make a few observations.
Unimproved land is a product of nature and not a product of human labor. It is therefore not a commodity at all. But how can (unimproved) land have a price, which is the form of the value of a commodity, when it has no labor value and is not even a commodity?
The answer is that the price of land is simply a form of ground rent. The price of land arises through the process of the capitalization of the land. In this context, capitalization means that a fictitious or imaginary capital is formed.
[...]
Hudson wrote: “In keeping with his materialist view of history, Marx expected banking to be subordinated to the needs of industrial capitalism. Equity investment—followed by public ownership of the means of production under socialism—seemed likely to replace the interest-extracting ‘usury capital’ inherited from antiquity and feudal times: debts mounting up at compound interest in excess of the means to pay, culminating in crises marked by bank runs and property foreclosures.
“But as matters have turned out, the rentier interests mounted a Counter-Enlightenment to undermine the reforms that promised to liberate society from special privilege.”
Hudson raises an important question here. Didn’t Marx expect that industrial capital would subordinate financial capital to its own needs, helping in this way to prepare the eventual transformation to socialism? But hasn’t the long-term tendency, at least in the imperialist era, been the exact opposite: the growing power of finance capital relative to industrial capital? As our reader pointed out, there is an obvious relationship between Hudson’s views and those of the 19th century American reformer Henry George.
George advocated a single tax on land rents. The most radical bourgeois followers of Ricardo went even further and advocated that the state become the owner of all land.
The idea behind these proposals was that the portion of the total surplus value that consists of rent should be used to meet state expenses. If that were done, the rest of the surplus value, the profit proper, could be kept in the hands of the capitalists. This would raise the after-tax rate of profit and would thus accelerate the development of capitalism.
Such proposals were progressive, because they created the conditions for the most rapid development possible of capitalism. The more the surplus value was concentrated into the hands of the capitalists the more of the surplus value would be transformed into new industrial—real not fictitious—capital. The faster, therefore, the productive forces of capitalist society develop, the faster the material foundations are created for a higher form of society—socialism.
[...]
Therefore, contrary to Hudson, the solution to the modern crises of capitalism is not to free up industrial capital from the oppression of landed property and usury capital but to free the working class from the exploitation of all forms of capital. Hudson is confusing the problems associated with the sunset of capitalist production with the problems that accompanied the morning of capitalist production. Even though sunrise and sunset resemble each other, they are not the same thing.
I may not be a dialectician, but it seems the blogger in his "sunset" remark missed one little dialectical remark made by Marx:
But we all know that competition was engendered by feudal monopoly. Thus competition was originally the opposite of monopoly and not monopoly the opposite of competition. So that modern monopoly is not a simple antithesis, it is on the contrary the true synthesis.
Thesis: Feudal monopoly, before competition.
Antithesis: Competition.
Synthesis: Modern monopoly, which is the negation of feudal monopoly, in so far as it implies the system of competition, and the negation of competition in so far as it is monopoly.
Thus modern monopoly, bourgeois monopoly, is synthetic monopoly, the negation of the negation, the unity of opposites. It is monopoly in the pure, normal, rational state.
Classical Economic Rent and Self-Directional Demands (http://www.revleft.com/vb/classical-economic-rent-t103272/index.html)
Although this blog is critical of Michael Hudson's work, I should quote the relevant parts:
http://critiqueofcrisistheory.wordpress.com/responses-to-readers%e2%80%94austrian-economics-versus-marxism/bichler-nitzan-and-hudson-versus-marx/]
Hudson writes: “Classical economists developed the labor theory of value to isolate economic rent, which they defined as the excess of market price and income over the socially necessary cost of production (value ultimately reducible to the cost of labor). A free market was one free of such ‘unearned’ income—a market in which prices reflected actual necessary costs of production or, in the case of public services and basic infrastructure, would be subsidized in order to make economies more competitive. Most reformers accordingly urged—and expected—land, monopolies and banking privileges to be nationalized, or at least to have their free-lunch income taxed away.”
I have not read Hudson’s book Critique from which this quote is taken, but it appears that Hudson is making no distinction between the views he attributes to the “classical economists,” Marx, and his own views. So I will assume at least for this reply that the above quote represents Hudson’s own theory of surplus value.
First, as was true of all pre-Marxist theories of surplus value, Hudson does not refer to surplus value as such but rather refers to surplus value by the name of one of its fractional parts—rent.
[...]
Second, Hudson’s definition of “rent” says that the “rent” or surplus value arises because the capitalists sell their commodities above their (labor) values. Hudson seems to think that if only the law of value were consistently applied as it should be in a “free market economy,” the surplus value, or rather the “rent,” would go away. Commodities would exchange at their labor values, and “unearned income” or exploitation would vanish. Such ideas were widespread among the socialist followers of Ricardo in the days before Marx.
[...]
The question of residential real estate—land plus the value of the houses built on the land—is an area where Marxist theory is incomplete. Marx had originally intended to write a whole book on landed property that would follow “Capital,” but he never got to write this work. While I can hardly fill this void in this reply, I will make a few observations.
Unimproved land is a product of nature and not a product of human labor. It is therefore not a commodity at all. But how can (unimproved) land have a price, which is the form of the value of a commodity, when it has no labor value and is not even a commodity?
The answer is that the price of land is simply a form of ground rent. The price of land arises through the process of the capitalization of the land. In this context, capitalization means that a fictitious or imaginary capital is formed.
[...]
Hudson wrote: “In keeping with his materialist view of history, Marx expected banking to be subordinated to the needs of industrial capitalism. Equity investment—followed by public ownership of the means of production under socialism—seemed likely to replace the interest-extracting ‘usury capital’ inherited from antiquity and feudal times: debts mounting up at compound interest in excess of the means to pay, culminating in crises marked by bank runs and property foreclosures.
“But as matters have turned out, the rentier interests mounted a Counter-Enlightenment to undermine the reforms that promised to liberate society from special privilege.”
Hudson raises an important question here. Didn’t Marx expect that industrial capital would subordinate financial capital to its own needs, helping in this way to prepare the eventual transformation to socialism? But hasn’t the long-term tendency, at least in the imperialist era, been the exact opposite: the growing power of finance capital relative to industrial capital? As our reader pointed out, there is an obvious relationship between Hudson’s views and those of the 19th century American reformer Henry George.
George advocated a single tax on land rents. The most radical bourgeois followers of Ricardo went even further and advocated that the state become the owner of all land.
The idea behind these proposals was that the portion of the total surplus value that consists of rent should be used to meet state expenses. If that were done, the rest of the surplus value, the profit proper, could be kept in the hands of the capitalists. This would raise the after-tax rate of profit and would thus accelerate the development of capitalism.
Such proposals were progressive, because they created the conditions for the most rapid development possible of capitalism. The more the surplus value was concentrated into the hands of the capitalists the more of the surplus value would be transformed into new industrial—real not fictitious—capital. The faster, therefore, the productive forces of capitalist society develop, the faster the material foundations are created for a higher form of society—socialism.
[...]
Therefore, contrary to Hudson, the solution to the modern crises of capitalism is not to free up industrial capital from the oppression of landed property and usury capital but to free the working class from the exploitation of all forms of capital. Hudson is confusing the problems associated with the sunset of capitalist production with the problems that accompanied the morning of capitalist production. Even though sunrise and sunset resemble each other, they are not the same thing.
I may not be a dialectician, but it seems the blogger in his "sunset" remark missed one little dialectical remark made by Marx:
But we all know that competition was engendered by feudal monopoly. Thus competition was originally the opposite of monopoly and not monopoly the opposite of competition. So that modern monopoly is not a simple antithesis, it is on the contrary the true synthesis.
Thesis: Feudal monopoly, before competition.
Antithesis: Competition.
Synthesis: Modern monopoly, which is the negation of feudal monopoly, in so far as it implies the system of competition, and the negation of competition in so far as it is monopoly.
Thus modern monopoly, bourgeois monopoly, is synthetic monopoly, the negation of the negation, the unity of opposites. It is monopoly in the pure, normal, rational state.