Are Marx and Keynes Compatible? Pt 6

In its December 2010 edition, Monthly Review published two letters by Paul Baran and Paul Sweezy to one another. One, dated May 2, 1960, by Baran deals with “the economic surplus” and its relationship to Marx’s surplus value. The other letter is by Sweezy to Baran dated September 25, 1962. In his letter to Baran, Sweezy has some very interesting things to say about the work of John Maynard Keynes and about monopoly and economic stagnation. This week, I will examine Baran’s letter to Sweezy, and next week I will deal with Sweezy’s letter to Baran.

Baran’s surplus

In “Monopoly Capital,” Marx’s category of surplus value was replaced by what Baran and Sweezy called the “the economic surplus.” Ever since “Monopoly Capital” was first published in 1966, there has been much confusion over whether “the surplus” is simply another term for surplus value or something else. If “the surplus” is simply another term for surplus value, what is gained by renaming the most important economic category in all of economics? If “the surplus” is something other than surplus value, what exactly is its relationship to surplus value?

Baran’s 1960 letter to Sweezy sheds some light on the question of “the surplus” and how it relates to surplus value. In his letter to Sweezy, Baran writes that the “surplus” was indeed something more than simply another name for surplus value, though he admitted he was having difficulty defining exactly what “the surplus” actually is. “We want to show,” Baran wrote, “that the sum total of profits, interest, rents + (and this is crucial!) swollen costs of distribution + advertising expenses + PR + legal departments + fins and chrome + faux frais [incidental operating expenditures] of product variation and model changes = economic surplus, and that this economic surplus increases both in absolute and relative terms under monopoly capitalism.”

But Baran then admits that he was having trouble defining “the economic surplus” in a precise way. “What it does hinge on, however,” Baran wrote to Sweezy, “is what you have called ‘vision’ combined with conceptual clarity. I think we have the former but I am having a dog’s time now with the latter [emphasis added—SW].”

The problem is, in my view, that Baran was mixing up different ideas under the catch-all concept of the “the economic surplus.” The result was “vision” without “conceptual clarity.”

Read more …

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