Capitalism, Conflict and Inflation. Bob Rowthorn. Lawrence and Wishart. Paperback £3.95.
I used to think that Rowthorn was God. This dubious notion came to me via a third-generation xerox of something he wrote about bourgeois and Marxist economics. As well as hurting my eyes, it convinced me that he had cut through debates in the Conference of Socialist Economists in a way that had escaped the rest of us.
The piece reappears as the first essay in this collection, under the title Neo-Classicism, Neo-Ricardianism and Marxism. So I approached the book — which deservedly won the 1980 Isaac Deutscher Memorial Prize — with some nostalgia. I do not think this coloured my judgement.
Certainly Neo-Classicism... was no road to Damascus trip second time round. But it is still an important essay — the sort of thing that New Left Review calls 'seminal'. It tried to expose Neo-Classicism as ideology, to assess how far Sraffa's followers have demolished it and to outline the main insights of Marxist economics.
Eight years on, most of it holds up well. The section on Neo-Classicism is still the best introductory critique for students. The evaluation of Neo-Ricardianism is sound (and remarkably sober for the early seventies). And, while I now think searching for the differences between Marxist and bourgeois economics is like chasing the end of the rainbow, Rowthorn's answer at least stressed the right things — power relations in the factory — at the right time. Theory develops partly by polemics.
But the treatment of Neo-Classicism is one sided. It is not just an apology for capitalism. It is that, but it also contains real (scientific, if you like) insights into the system. It is wrong to dismiss it as nothing more than an 'epistemological obstacle' (p. 24).
It is also a shame that Rowthorn has not added a postscript. Since the article first appeared, some people have used Sraffa to argue against the labour theory of value (Steedman) and others have interpreted Rowthorn's emphasis on what goes on inside the factory gates (or 'production') in a way he never intended — and then used it to label some of his other work 'Neo-Ricardianism' (Fine and Harris). Rowthorn is understandably impatient with this debate. But I think the influence of Neo-Classicism... obliges him to stick his oar in.
I have spent some time on this first essay because it is the most influential. I will deal with the others more briefly before making some general comments.
Rowthorn's own summary and assessment of Imperialism in the Seventies is fair. 'It shows how the pattern of overseas expansion was very uneven during the fifties and sixties. The big firms of some countries, such as Britain and the United States, relied mainly on overseas investments as a way of penetrating foreign markets, whereas those of other countries, such as Germany and Japan relied mainly on exports ... However, the essay predicted that such differences were temporary and that the 1970s would see a dramatic change when German, Japanese and other hitherto national firms began investing on a large scale overseas. Events have amply confirmed this prediction. The essay also predicted that overseas investment would lead to friction between the major capitalist powers and concluded that the seventies would be a period of growing inter-imperial rivalry. Events have not really confirmed this ...' I would add that it may well happen in the eighties.
Britain in the World Economy was Rowthorn's contribution to Britain's Economic Crisis (1974), a pamphlet which has played an important role in discussions about an 'Alternative Economic Strategy'. This section was probably the best and is still worth reading. I cannot think of a better AES-type analysis of the international dimension.
Late Capitalism is a long review of Mandel's book of the same name. It is far and away the best discussion of the book I have seen, and I think Rowthorn is right nine times out of ten. Anyone who has attempted the almost Herculean task of reading Mandel's book carefully and critically should also look at this piece. It is a model of a good review article.
Inflation and Crisis tries to relate inflation to capital accumulation. It argues that price rises are the outcome of expansionary state policies aimed at promoting accumulation when profits are falling. The result is pressure towards ever more inflation, which leads the state to shift priorities and go for contractionary policies to stabilise the currency. The piece seems timely. Thatcher is today crashing the industrial sector of the economy supposedly to fight inflation. But her aim is really to weaken the labour movement and radically restructure industry to jack up profits and competitiveness. 'Inflation fighting' is three parts ideological floss. The essay also includes the starry-eyed argument that more militancy would have improved UK economic performance by forcing capital to modernise. Come off it, Bob!
Conflicts, Inflation and Money offers a framework for understanding inflation in which class struggle, demand, employment, taxation, foreign trade and monetary conditions are all related in a coherent and sensible way. It is a framework — not a theory — and does not consider accumulation as such. So its relation to the argument in Inflation and Crisis is not brought out clearly. Unnecessary maths also makes it hard going for most people. But it is worth the effort.
Marx's Theory of Wages discusses Marx's writings on the topic against the background of Ricardo's. It argues that Marx took more from Ricardo than is generally thought, and that his mature writings are less coherent about wages than most friendly commentators suggest. I am sure Rowthorn is right about Ricardo and he raises some interesting issues. But he makes too much of minor inconsistencies between different formulations of Marx's. The most disappointing thing, however, is that the essay stops where it does — it was planned as an introduction to something on the 'social wage'. That would probably have been fascinating.
Apart from a slight piece on Luxemburg and militarism, the only other essay is Skilled Labour in the Marxist System. Its main purpose is to show that skilled labour can be 'reduced to' (or expressed as a multiple of) unskilled without reference to wages. This is essential if values are to be independent of incomes, and Rowthorn does it neatly. But the most interesting product of the exercise is a way of looking at relations between the capitalist and state sectors in terms of labour flows.
To take a simplified example, suppose capitalists are taxed to finance a nationalised steel industry, which sells its output at cost. There is a 'labour flow' from capital to the state of the value of constant capital plus workers' consumption in the steel industry (c+v), and a 'return flow' of this plus the surplus labour put in by steel workers (c+v+s). Private sector profits then include surplus labour performed by state employees. This is a helpful approach, which has since been used elsewhere (Gough).
Clearly, a number of these themes recur throughout the collection. As Rowthorn notes, all the essays 'deal with classical themes of political economy such as imperialism capitalist development, or inflation', and, 'they are united by a common thread, which is their emphasis on the importance of power and conflict in capitalist economies' (p. 1). Hence the title.
But there is another unifying element — a theoretical opponent who pops up time and again. Ernest Mandel shares top billing in Late Capitalism and plays a supporting role (usually as friendly villain) in the Preface, Imperialism in the Seventies and Marx's Theory of Wages. I will not discuss the specific disagreements. (I think Rowthorn is right most times, but then he is choosing the ground). But I will finish by contrasting the strengths of Rowthorn — a maverick member of the Communist Party — and Mandel — a man he describes publicly as a hero of his youth and the Pope of the Fourth International.
Rowthorn's main strengths are that he knows bourgeois economics backwards and makes the best use of it; that he always uses the best data around; that his arguments are invariably logical and consistent with the facts; and that he writes simply and clearly. For a first-rank Marxist economist, Mandel is weak on all these counts. His main strengths are the enormous scope of his vision; his ability to relate everything to everything else; seemingly limitless energy; and the ability to publish clever ideas at machine gun speed. For a first ranker Rowthorn is weak on these. Most people's idea of a genius is someone who comes up with loads of exciting ideas, many of them wrong but one or two truly brilliant. That is Mandel. Another definition is the capacity for taking infinite pains. That is Rowthorn. Both have much we can learn from.