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A Historical View of Economic Categories

by Dilip Simeon, 5 November 1998

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Mainstream, Vol XXVI No. 35 June 11, 1988

Dilip Simeon

The founder of neo-classical economics, Alfred Marshal, defined economics as the study of man “in the ordinary business of life” . It is not surprising that he should have referred to life as a business - his choice of phrase is but an example of the uncritical ideological reflexes of capitalist society which characterizes much of ‘social science’. When we are urged to “Be Indian, Buy Indian”, is not ‘being’ equated with ‘buying’? When state policy is proclaimed as being neither Right or Left, but merely ‘Good for India’ (all states exult in patriotic virtue), does not this mystical abstraction serve as an ideological cloak for the accumulation of capital, as a mode of representing the interest of a part of society as its collective interest? Does it not serve to remind us that the very notion of the Good is tending towards global uniformity and subject to IMF approval? Dominant trends in social science treat as axioms such phrases as “the productivity of Capital”, the “Good for the Nation”, the “Greatest Good of the greatest number”, the “ Growth of the economy”, etc. all of which serve to obfuscate still further the object of their investigations.

In an essay on Marxian economics —she presumes there is such a thing— Joan Robinson dismisses Marx’s method as “Hegelian stuff and nonsense” and then goes on to speak of the ‘productivity’ of capital, reducing the latter sometimes to machines and sometimes to applied science and technology. She goes on to appeal for the necessity of liberating capital from private ownership, as if its alien and despotic character were not its very essence. The plot thickens. It is clear that we need to look critically at the language of economics and to look outside its domain, because to ask the apologist of the status quo for clarifications of basic questions is like expecting to comprehend the inner universe of the asylum by asking its inmates to write textbooks of grammar.

The so-called political science reduces the definition of the nation-state to an arithmetical sum of geographical, demographic and social attributes with no apparent links between them. Similarly, common-sensical economics refers us to three “factors of production”, Land Labour and Capital, understood not merely as three forms of distribution of revenue, but as three independent sources of value creation, working harmoniously together. Marx referred to this conception sarcastically as the ‘Trinity formula’ and said of these ‘factors’, that “they have about the same relation to each other as lawyers fees, red beets, and music.” Denoted thus by the Trinity formula, capitalism appears as “an enchanted, perverted, topsy-turvy world, in which Monsieur le Capital and Madame la Terre do their ghost-walking as social characters and at the same time as mere things” . Marx stresses that it is an illusion to derive ground-rent simply from the earth, or wages simply from labor, but that these forms of distribution presuppose modern, capitalistically modified landed property and modern wage-labor. Land and labor in this simple form are common to all modes of production, whereas capital is a definite social relation, belonging to a definite historical formation of society.

Paradoxically, the same common-sense that treats capital as a thing, a mere natural factor of production, also tells us that capital creates wealth, that money somehow magically begets more money, and that profits spring automatically from the difference between the cost price and the sales price of commodities. Marx on the other hand, refers to capital as being ‘productive’ only in the one sense of its being the ruling social relation of the bourgeois mode of production, a relation which enforces surplus labor in a disguised form and develops the social productive forces. But by no means does ‘it’ add to value of commodities or create value. To confound capital with labour as two equivalent ‘factors of production’ is to confuse the energy behind the whiplash with the motive power provided by the horse. Its real ‘productivity’ lies in its insatiable hunger for surplus-value. Thus, questions such as “what is wealth” and “what are the factors of production?” resolves themselves further into the question, what is productivity?” and this cannot be dealt with except historically.

An economy is purportedly a population engaging in production. But the former invariably breaks up into classes and interest groups which do not always co-exist harmoniously. And as it engages in the reproduction of its social life, it does so within given forms of state and property relations, sociocultural institutions, etc. These are always historico-specific, and we cannot collapse them together under such phrases as the “life of the Nation”, if for no other reason but that the nation -state itself is merely one of these historico-specific forms. To draw a straight line backward in time, deriving a simple connection between the glorious Present and the ‘golden’ ages of Antiquity is to vulgarize history beyond recognition. Thus, “Indus Valley to Rajiv Gandhi” is as ridiculous a connection as “Mohenjodaro to Zia-ul-Haq”, “Plato to Papandreou”, and “Big Chief Sitting Bull to Ronald Reagan.”

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