How can Marxist theory be annihilated, destroyed, distorted, castrated? This is a problem that has unanimously fascinated academics for nearly a century. Two of them have managed to turn Marxism into a theory of economic growth and socialism into a recipe for development; to present Marx’s method as the study of empirical models of reality; to deny the law of the tendency of the average rate of profit to fall – previously confused with the rate of surplus value –; to define unemployment as underemployment of manpower and equipment resulting from defective organisation and insufficient demand; and despite all these exploits and many others, to be considered by ‘enlightened opinion’ (even Mr. Bettelheim vouches for them) as ‘great Marxist economists’. In an age that loves records, it would have been unfair not to devote a few pages to these astonishing champions of destruction and falsification, in the name of Marxism, of Marxist theory, namely Messrs. Baran and Sweezy.

Due to lack of space and patience to detail all the enormities they serve us in the span of two works (Baran: ‘The Political Economy of Growth’; Baran and Sweezy: ‘Monopoly Capital’ – both translated into French by Maspéro), we will stick to three themes: the notion of ‘economic surplus’; Marx’s scientific method; monopoly capitalism ⁽¹⁾.

The notion of ‘economic surplus’ is presented in Baran’s book ‘The Political Economy of Growth’; it is the logical outcome of a complete falsification of Marxist theory, the historical origins of which will be read later, which presents Marx’s work as a theory of economic growth and makes socialism a method of development.

To make people believe that white is black, you also have to make them believe that black is white; to achieve the total inversion that consists of turning Marx’s work into a study of growth, while still finding for it a contrast with bourgeois economics, Baran begins by completely reversing the latter, presenting it as opposed to economic growth:

‘In its beginnings, economics was a revolutionary intellectual effort to seek out and to establish the working principles of an economic system best able to advance the cause of mankind.
‘In its later days it has turned upon its own past, becoming a mere attempt at an explanation and justification of the status quo – condemning and suppressing at the same time all endeavors to judge the existing economic order by standards of reason, or to comprehend the origins of the prevailing conditions and the developmental potentialities that they contain (p. 4).
‘(...) current efforts to bring about conditions indispensable for economic development in advanced and backward capitalist countries alike come continuously into conflict with the economic and political order of capitalism and imperialism. Thus to ruling opinion in the United States (but also in some other parts of the capitalist world), the world-wide drive for economic progress inevitably appears as profoundly subversive of the existing social order and of the prevailing system of international domination – as a revolutionary movement that has to be bribed, blocked, and, if possible, broken, if the capitalist system is at all to be preserved’ (pp. 10-11).

The ‘world-wide drive for economic progress’, subversive? One should simply laugh at such nonsense. But let’s pretend to take them seriously.

It is a fact that bourgeois political economy, revolutionary in its beginnings when it sought to break down all barriers to the development of capital ⁽²⁾, subsequently became what we know today, that of the status quo, which precisely means that it regards capitalism as eternal and concerns itself only with its apologia and smooth functioning. But what is the smooth functioning of capital? It is the very opposite of the stagnation suggested by Baran. Marx teaches us in Book I of Capital ⁽³⁾ that the general formula of capital, that is, its most abstract representation (and therefore applicable to all its phases and all its forms, not just some of them), its soul, in short, is the movement M-C-M’, that is, value that begets value. This movement, applied to industrial capital, i.e. to the principal form of capital (the others: usurer’s capital and commercial capital, being only derivative forms), and reproduced constantly in a cyclical manner, becomes accumulation or expanded reproduction; the capitalist is merely the agent of this movement, his economist but its bard:

‘Except as personified capital, the capitalist has no historical value, and no right to that historical existence (...) And so far only is the necessity for his own transitory existence implied in the transitory necessity for the capitalist mode of production. But, so far as he is personified capital, it is not values in use and the enjoyment of them, but exchange-value and its augmentation, that spur him into action. Fanatically bent on making value expand itself, he ruthlessly forces the human race to produce for production’s sake; he thus forces the development of the productive powers of society, and creates those material conditions, which alone can form the real basis of a higher form of society’ (Capital, Book I, Ch. XXIV). ‘Accumulate, accumulate! That is Moses and the prophets! (...) Therefore, save, save, i.e., reconvert the greatest possible portion of surplus-value, or surplus-product into capital! Accumulation for accumulation’s sake, production for production’s sake: by this formula classical economy expressed the historical mission of the bourgeoisie’ (Capital, Book I, Ch. XXIV).

Production for production’s sake is therefore the translation, by bourgeois ideologues, of the movement of industrial capital in search of surplus value. One recognises the ideology of growth, which is nothing more than the transposition, idealisation, and camouflaging by vulgar economics of the iron law that represents the very soul of capital. Any problematic of growth, any presentation of economic growth as an intrinsic good and the ultimate goal of humanity, is and can only be the problematic of capital, just as the old motto ‘liberty, equality’ was and could only be the ideology of petty commodity production and simple circulation. Produce more! Such is the universal battle cry of capital, such is the slogan in the name of which the working classes are enslaved both in the East and West. The ‘world-wide drive for economic progress’ (a pleasant euphemism that might make us smile if it were not used to spread complete confusion among the proletariat) is so un-subversive that it holds power across the entire planet. It has taken the pretty pseudonym of development, even economic progress, to hide its true identity: the frenzied accumulation of surplus value extorted from the proletariat.

This initial falsification by Baran was devised solely to serve as a springboard for a second, even more enormous one, according to which it would be Marx and Engels who took up, from the hands of an impotent bourgeoisie, the torch of economic development:

‘Thus the concern with economic and social change was left to a “heretical” school of economics and social science. Marx and Engels accepted in essence the insistence of the classical economists on capitalism’s giant contribution to economic development. Yet, not wedded to the now dominant capitalist class, and neither “consciously nor unconsciously” compelled to regard capitalism as the “natural” form of society and as the ultimate fulfillment of human aspirations, they were able to perceive the limits and barriers to progress inherent in the capitalist system. ‘Indeed, their approach to the matter was radically different from that of bourgeois economics. While the latter was (and is) interested in economic development only to the extent that it has led to the establishment, and is conducive to the stabilization, of the capitalist order, Marx and Engels considered the capitalist order itself as likely to survive only as long as it did not become a fetter on further economic and social progress’ (p. 5).

The sophism is clever: it is true that in Marxist theory, the ultimate cause of revolution that overthrows a mode of production is the antagonism between the development of productive forces and the relations of production, and that therefore capitalism must die (not on its own, of course) from its own growth; but this can in no way mean that Marx was an apostle of economic growth, studying the capitalist mode of production in terms of the development it allowed or prevented; nor that socialism is a mode of production destined to replace capitalism to allow an even faster accumulation! ‘Development of the productive forces of social labour’, writes Marx, ‘is the historical task and justification of capital. This is just the way in which it unconsciously creates the material requirements of a higher mode of production’ (Capital, Book III, Ch. XV). This higher mode of production cannot have the same goal as capitalism; its task is quite different: to take advantage of this already achieved development to abolish classes, socially manage the productive forces, and reduce the productive effort of each individual to the time necessary to produce only the use values corresponding to the actual, historically determined needs of the species. As for Marxist theory, far from being a treatise on growth, its function is to be an intellectual weapon for the proletariat, allowing it to understand the mode of production that enslaves it, to know its laws, to thus foresee its inevitable collapse while being the historical agent of that collapse, and finally to replace it with the higher mode of production that will be its dialectical negation. To reduce Marx to the level of vulgar economics, to ascribe to socialism a mission that represents the very essence of capital, one cannot imagine a more complete inversion, a more enormous confusion: it is with this sad performance that the book of our ‘great Marxist economist’ begins.

After that, we can obviously expect anything. To support his arguments, Baran sets out to demonstrate that capitalism in its current form sabotages economic development. In developed countries ⁽⁴⁾, he argues in essence, there has been a decline in growth rates corresponding to the emergence of monopoly capitalism; it is because of monopolies that capitalism does not produce all that it could produce; indeed, monopoly capitalism is irrational and anarchic; it prevents technical innovation out of a desire to maximise returns on investment; above all, the monopolistic sectors of the economy make considerable profits, and

‘[t]hus the monopolist and oligopolist grows necessarily more cautious and circumspect in his investment decisions and finds in any given situation little inducement to plow back his profits into his own enterprise’ (p. 134).

As a result of all this, net investment being lower than what it could be, there is a ‘shortfall’ in production due to monopoly capitalism and a waste of net product.

Readers will have recognised in passing the themes of the P.C.F. concerning evil monopolies that squander their profits instead of investing them. We would therefore like to remind all these so-called ‘Marxists’:

1) That there is no need to construct new theories in order to explain the decline in growth rates: the explanation can be found in Marx, Chapter XIII of Book III of Capital, and is called the fall in the average rate of profit. The decline in growth rates is merely the manifestation, at the level of material production, of this fall in the rate of profit ⁽⁵⁾.

2) that net investment is called, in Marxist terms, accumulation of constant capital, and that it therefore represents, as we have shown, the raison d’être of industrial capital;

‘[T]he industrial capitalist becomes more or less unable to fulfill his function as soon as he personifies the enjoyment of wealth, as soon as he wants the accumulation of pleasures instead of the pleasure of accumulation’,

3) that this investment is made up of the surplus value extorted from the backs of the proletariat through excessive working hours and breakneck production rates.

All these curious ‘revolutionaries’ thus reproach capitalism, not for enslaving workers for 50 hours a week, but for not accumulating enough; not for exploiting the proletariat, but for misusing the fruits of that exploitation; not for its essence, but for not being sufficiently consistent with that essence. They do not propose to abolish wage labour and surplus value, but to use them more rationally, even more morally. This is the economic programme of the ‘left’, from the radicals to the national-communists: the left wing of capital.

One recalls Marx’s famous planter’s dilemma: ‘whether they should squander the surplus product extracted by means of the whip from their Negro slaves entirely in champagne, or whether they should reconvert a part of it into more Negroes and more land’ (Capital, Book I, Ch. XXIV). Mr. Baran and the P.C.F. consider themselves Marxists because they rather favour the second solution!

The notion of surplus is merely the culmination and summary of this vision of advanced servants of capital: since capitalism does not produce everything it could produce, we will calculate everything it could produce if it were a good capitalism, well organised, planned, and efficient; and since it does not produce all that, we will have proven that the system is bad and that it must be changed – ‘changed’ obviously meaning replaced by a system capable of producing the maximum, which we christen ‘socialism’.

But before performing this calculation, we must erase even the memory of Marxist theory. This is why Baran defines three different notions: actual surplus, potential surplus, and planned surplus. Let us examine them in turn.

1. – Actual economic surplus: this is the name given by the author to ‘the difference between society’s actual current output and its actual current consumption’ (p. 22). In Marxist terms, this quantity corresponds to the accumulation of constant capital; in bourgeois terms, to net capital formation or net investment: so nothing new. In any case, according to the definition given, such a notion is purely empirical (descriptive, if you will), and therefore does not allow one to explain anything: its theoretical interest is therefore strictly nil. On the other hand, its practical and ideological interest for ‘Marxists’ like Baran becomes apparent when he writes:

‘Actual economic surplus has been generated in all socioeconomic formations, and while its size and structure have markedly differed from one phase of development to another, its existence has characterized nearly all of recorded history’ (p. 72 – emphasis added).

This delightful markedly (another feat, this time in the art of sleight of hand) encapsulates Marx’s entire life and work. Gone are commodities, money, capital, surplus value, gone is wage labour (which, by the way, is a term that Mr. Baran must ignore: not once does it appear in his book): in short, gone is the whole of Marxist economic theory, which, we apologise for reminding you, is that of the capitalist mode of production, and not that of the mode of use of net product (the use of which is, moreover, entirely determined by the mode of production! ⁽⁷⁾) All good Marxists will therefore join us in applauding the uncommon power of abstraction of Mr. Baran: by abstracting from all of Marx’s economic work, he has succeeded in turning him into a theorist of growth!

2. – Potential economic surplus: This second concept is defined by Baran as:

‘[T]he difference between the output that could be produced in a given natural and technological environment with the help of employable productive resources, and what might be regarded as essential consumption. Its realization presupposes a more or less drastic reorganisation of the production and distribution of social output, and implies far-reaching changes in the structure of society. It appears under four headings. – One is society’s excess consumption (predominantly on the part of the upper income groups, but in some countries such as the United States also on the part of the so-called middle classes), – the second is the output lost to society through the existence of unproductive workers, – the third is the output lost because of the irrational and wasteful organization of the existing productive apparatus, – and the fourth is the output foregone owing to the existence of unemployment caused primarily by the anarchy of capitalist production and the deficiency of effective demand (...) the category of the potential economic surplus itself transcends the horizon of the existing social order, relating as it does not merely to the easily observable performance of the given socioeconomic organization, but also to the less readily visualized image of a more rationally ordered society’ (pp. 23-24).

First, we should admire the explanation of unemployment given by the ‘Marxist economist’ Baran: unemployment is due to anarchic organisation and insufficient demand. Let us simply recall here what even Mr. Raymond Aron knows: for Marx, unemployment, which is called relative overpopulation, or industrial reserve army, inevitably results from the rise in organic composition, that is, from the very movement of capital:

‘The law of the proportional decrease in variable capital, and the corresponding decrease in the relative demand for labour, therefore has as its corollaries the absolute increase in variable capital and the absolute increase in the demand for labour in decreasing proportion, and finally, as a complement, the production of relative overpopulation. We call it “relative” because it does not result from a positive increase in the working population that exceeds the limits of the wealth being accumulated, but, on the contrary, from an accelerated increase in social capital that allows it to dispense with a more or less considerable part of its labourers. As this overpopulation exists only in relation to the momentary needs of capitalist exploitation, it can swell and shrink suddenly. ‘By producing the accumulation of capital, and as it succeeds in doing so, the wage-earning class itself produces the instruments of its own retirement or its transformation into relative overpopulation. This is the law of population that distinguishes the capitalist era and corresponds to its particular mode of production’. (Le Capital, Book I, Ch. XXV. Ed. Sociales, Volume III, p. 74. Parts 3 and 4 of Ch. XXV are devoted to relative overpopulation (op. cit., pp. 70–90, translated from French)).

This has nothing to do, of course, with ‘anarchy’ or with demand. Baran also admirably lets us understand the core of his thought when, a few pages later, he talks about the ‘unemployment of human and material’ and the long and painful reconversion ‘of human and material’ (p. 88 – emphasis added). The suffering of these poor machines cannot be overstated! Putting men and material on the same level, seeing unemployment only in terms of the production it causes to be lost, is yet another peak of the technical criticism of capitalism that is characteristic of academic thought.

But let us move on and come to the notion of ‘potential economic surplus’: in short, this is the name given to a pipe dream: potential surplus is what the net product (corresponding to the total surplus value) of capitalist society could be if it were ‘more rational’, if it did not generate unemployment, luxury production, unproductive workers, or waste; in other words, if it were precisely not a capitalist society. The concept of potential surplus therefore sums up the utopian and petty-bourgeois dream of a capitalism free of waste and obstacles to production, exemplary and morally purified. Such a concept is not even empirical like the previous one; it is a wholly imaginary creation. On the scientific level, it therefore has about as much interest as the concept of Santa Claus. Its only usefulness is, once again, ideological: it allows us to synthesise all of Baran’s previous falsifications, that is, to define capitalism not as a mode of production based on wage labour and surplus value, i.e. on the exploitation of the proletariat, but as a poorly organised system that wastes resources, sustains parasites and unproductive elements, and therefore does not invest all that it could invest. One would naturally deduce that socialism... is the opposite, i.e. not a mode of production free of surplus value, wage labour, and the categories that inevitably give rise to them, but a regime that is not anarchic, that does not waste, does not sustain unproductive workers, can invest to the maximum and therefore allow maximum growth, all because it is organised, i.e. planned. It is the third ‘surplus’ that synthesises all this, thus closing the circle of mystification.

3. – Planned economic surplus. This concept, which ‘is relevant only to comprehensive economic planning under socialism’, represents

‘the difference between society’s “optimum” output attainable in a historically given natural and technological environment under conditions of planned optimal utilization of all available productive resources, and some chosen “optimal” volume of consumption. The meaning and contents of the “optimum” involved are essentially different from those attached to this notion in bourgeois economics. They do not reflect a configuration of production and consumption determined by profit considerations of individual firms, by the income distribution, tastes, and social pressures of a capitalist order; (...) ‘Nor does this “optimum” presuppose the maximization of output that might be attainable in a country at any given time. It may well be associated with a less than maximum output in view of a voluntarily shortened labor day, of an increase in the amount of time devoted to education, or of conscious discarding of certain noxious types of production (...) ‘What is crucial is that the volume of output would not be determined by the fortuitous outcome of a number of uncoordinated decisions on the part of individual businessmen and corporations, but by a rational plan expressing what society would wish to produce, to consume, to save, and to invest at any given time’ (pp. 41-42).

In writing this, Baran admits that for him socialism is defined purely and simply by planning: whether this planning decides on a growth rate of 10% per annum or a reduction in the working day, whether or not it coexists with commodities, money, and wage labour, is of no importance; planning is the essence of socialism, whereas disorder and uncontrolled decisions are the essence of capitalism. Let us untangle this skilfully knotted skein:

1) Capitalist anarchy does not mean that each capitalist does as he pleases. Marx’s entire work consists in showing that this anarchy has its iron laws, which are imposed more or less consciously on individual capitals; production is not determined by ‘social pressures’ or ‘uncoordinated decisions on the part of individual businessmen and corporations’; it is exactly the opposite: individual capitals merely obey the immanent laws of capital, which are imposed on them by competition:

‘Free competition brings out the inherent laws of capitalist production, in the shape of external coercive laws having power over every individual capitalist’ (Capital, Book I, Ch. X).

It is therefore the logic of the capitalist mode of production that determines the behaviour of producers, and not the other way around ⁽⁸⁾. Planning in a social formation where the fundamental relations of capital persist can only obey the laws of capital, and the illusions of planners will not change that.

2) As centralisation accompanies the development of capital, competition between smaller-scale capitals disappears, only to reappear at a higher level with increased violence, up to the upper limit constituted by national capital. Marx writes:

‘In any given branch of industry, centralisation would reach its extreme limit if all the individual capitals invested in it were merged into a single capital. In a given society, the limit would be reached only when the entire social capital was united in the hands of either a single capitalist or a single capitalist company’ (Capital, Book I, Ch. XXV).

Trusts and monopolies therefore replace competition between individual capitals within a sector with a certain degree of internal planning within that sector, and competition reappears between trusts, as well as between them and non-monopolised sectors, in order to appropriate the largest possible share of social surplus value. The capitalist State, acting as the executive committee of the joint-stock company of the capitalists of the country (a company that may experience all the internal struggles that joint-stock companies experience), ultimately intervenes to replace competition with national planning of the shares of social surplus value and the country’s production, as competition reappears with even greater violence between national capitals. This overall process is only tendential; it is slow, uneven, and simultaneous; lower levels of competition always persist, but on a more limited scale, and within the margin of manoeuvre left to them by the organisation for a much more important struggle for the whole national capital: when the entire army goes to war, quarrels between soldiers must be tolerated only to the extent that they do not risk harming the interests of the army as a whole. This was true for military warfare: between 1939 and 1945, the Western powers had to organise and plan their war effort – without being socialist for all that. This was true for the reconstruction of capitalist economies in the post-war period. It is true for the international economic war that has been raging again since the 1960s ⁽⁹⁾. In accordance with Engels’ prediction, as socialist society approaches, capitalist society also implements a plan: the organisation of each national capital for the struggle between national capitals.

Since planning is possible in capitalist society from a certain level of capital development (and within national borders), it cannot suffice to define the socialist mode of production. Let us repeat once again that ‘what is crucial’ is the destruction of capitalist relations, the disappearance of commodities, money, and wage labour, together with the reduction of the working day, a fundamental measure, the most concrete expression of the end of wage slavery for part of humanity ⁽¹⁰⁾. All these measures will be taken by the dictatorship of the proletariat, which will intervene despotically in the economy through planning.

Let us conclude: the only purpose of the ‘surplus’ – whatever adjective it follows – is to destroy Marxist theory. In particular, the notions of ‘potential surplus’ and ‘planned surplus’ concentrate within themselves all the lies of the ideology that seeks to define capitalism as an irrational and inefficient system of production, benefiting a handful of big financiers and hindering economic growth, and socialism as an organised system, free of waste and therefore allowing, thanks to planning, maximum economic growth. This ideology is nothing other than the residue of Stalinist political economy; its function is to present the differences between the Russian economy and Western economies as purely and simply differences between the capitalist mode of production and the socialist mode of production. Since Russia was, by axiom, socialist, the differences between the Russian economy and Western economies were necessarily the differences between capitalism and socialism. But what were these differences? Mainly, planning and a high rate of accumulation on the one side, competition and a lower rate of accumulation on the other. It was obviously not in the existence of the fundamental relations of capitalism, commodities, money, wage labour, nor in the relentless exploitation of the working class, that the two social formations could be differentiated! ⁽¹¹⁾

Baran’s book shows that this initial falsification inevitably implies the revision and reversal of the entire theory, from A to Z. That is how it is: Marxist theory – like any consistent theory – forms a whole. To change a single element is to change it entirely; to defend it entirely, we are therefore obliged to defend each element. Those thirsty for novelty who do not understand this take us for purists and aesthetes: they do not understand that the intellectual weapon of the revolution must be fiercely protected if revolutionaries do not want to find themselves disarmed.

It is in their work entitled ‘Monopoly Capital’ that Baran and Sweezy present their conception of the scientific method:

‘Scientific understanding proceeds by way of constructing and analyzing “models” of the segments or aspects of reality under study. The purpose of these models is not to give a mirror image of reality, not to include all its elements in their exact sizes and proportions, but rather to single out and make available for intensive investigation those elements which are decisive. We abstract from nonessentials, we blot out the unimportant to get an unobstructed view of the important, we magnify in order to improve the range and accuracy of our observation. A model is, and must be, unrealistic in the sense in which the word is most commonly used. Nevertheless, and in a sense paradoxically, if it is a good model it provides the key to understanding reality’ (p. 14).

Thus, Marx would have developed a model of English competitive capitalism:

‘Marx derived his theoretical model of the competitive capitalist system from study of Britain, by far the richest and most developed capitalist country of his day’ (p. 6).

However, we are no longer in a competitive capitalist system:

‘We must recognize that competition, which was the predominant form of market relations in nineteenth-century Britain, has ceased to occupy that position, not only in Britain but everywhere else in the capitalist world’ (p. 6).

So, since Marx’s time,

‘...the structure of the capitalist economy has undergone a fundamental change’. [which is] ‘the structural change from competitive to monopoly capitalism’ (p. 72).

Since, in their view, Marx’s analysis no longer applies in the era of monopoly capitalism, our two professors modestly propose to replace it by developing a ‘model’ of monopoly capitalism, thereby betraying their total misunderstanding of the Marxist scientific method in general, and of the role of competition in particular.

Let us first see how far the absurd notion that competitive capitalism and monopoly capitalism are two economic systems with fundamentally different ‘structures’ and therefore different laws (as the authors will endeavour to establish later) can lead us. Baran does not hesitate to equate the transition from feudalism to competitive capitalism on one hand, and the transition from competitive capitalism to monopoly capitalism on the other:

‘the transition from feudalism to competitive capitalism led not only to a vast expansion of the economic surplus but also to the transfer of a large share of it from the feudal landlord to the capitalist businessman, ‘the transition from competitive to monopolistic capitalism has resulted likewise in a tremendous increase of the absolute volume of the economic surplus and in the shift of the control over it from the relatively small capitalist to a few giant corporations’ (‘Political Economy of Growth’, p. 110. The other quotations refer to the work ‘Monopoly Capital’.).

Marx developed a theory of modes of production, explaining that the transition from one mode of production to another can only occur through a violent revolution. Baran replaces modes of production with economic ‘regimes’ ⁽¹²⁾ that succeed one another, sometimes violently, sometimes imperceptibly, and are distinguished not by their relations of production, but by the manner in which they use their economic ‘surplus’. According to Marxist theory, there is only one capitalist mode of production, whose development undergoes successive phases, but whose essence, invariant, is concretely expressed in a production relation known as wage labour. The ‘Marxist’ Baran has undoubtedly forgotten this fundamental truth, but we already know why our professors rush to jump onto the secondary, monopolies: it is because their main concern is to avoid seeing the essential, capital, and the fundamental relation that corresponds to it: wage labour.

This discovery of a new economic ‘regime’ gives Baran and Sweezy the opportunity to offer a new justification for the term ‘surplus’ (it is a new ‘surplus’, without any qualifiers. Is it ‘actual’? Is it ‘potential’? Is it sometimes one, sometimes the other? One thing is certain: the authors themselves do not know):

‘The economic surplus, in the briefest possible definition, is the difference between what a society produces and the costs of producing it (...) in a highly developed monopoly capitalist society, the surplus assumes many forms and disguises [footnote]. It is for this reason that we prefer the concept “surplus” to the traditional Marxian “surplus value,” since the latter is probably identified in the minds of most people familiar with Marxian economic theory as equal to the sum of profits + interest + rent. It is true that Marx demonstrates (...) that surplus value also comprises other items such as the revenues of state and church, the expenses of transforming commodities into money, and the wages of unproductive workers. In general, however, he treated these as secondary factors and excluded them from his basic theoretical schema. It is our contention that under monopoly capitalism this procedure is no longer justified, and we hope that a change in terminology will help to effect the needed shift in theoretical position’ (pp. 9-10, emphasis added).

If we understand correctly, according to Baran and Sweezy, in the era of monopoly capitalism, it is therefore no longer justified to attribute a secondary role to the State, the unproductive, etc..., in explaining capital and surplus value. Yet, there are only two ways of considering this role: – either surplus value is extorted by industrial capital, which purchases labour power at its value in order to extract from it, through its use in the production process, a value greater than its purchase price, thus a surplus value, subsequently distributed as profit of enterprise, interest, and ground rent and finally redistributed to various parasites, including the State, unproductive elements, etc. In this case, the State and the unproductive indeed have only a secondary role, and the ‘surplus’ has no other interest than to introduce confusion. – or, if we want to attribute to the State (as such and not as a capitalist) and to other parasites not a secondary role but an essential one, we must admit that they themselves directly extort surplus value on the back of the proletariat: we would then be very curious to know how they manage to do so. In any case, we would no longer be in a capitalist mode of production but in a ‘monopolist mode of production’ or some other delusional invention whose authors do not dare to openly claim authorship. There is no third solution. In either case, and once again, the ‘surplus’ serves only to forget Marxist theory. Whatever the pretext, any attempt to make competition the distinguishing factor between two fundamentally different and opposing economic systems is foolish for several reasons: 1) because the centralisation of capital, far from eliminating competition, merely depersonalises it, raising it to a higher level and thus making it even more violent; 2) because competition is not an element of the ‘structure’ of capital (to use the authors’ jargon). It is so insignificant that Marx, when studying capital in general in Books I and II, abstracts from it ⁽¹³⁾ only introducing it in Book III when he returns to the surface of the capitalist economy, reconstructing it conceptually:

‘a scientific analysis of competition is not possible, before we have a conception of the inner nature of capital’ (Capital, Book I, Chapter XII).

Competition can indeed only execute the laws of capital; it cannot explain or change them:

‘Competition executes the inner laws of capital; makes them into compulsory laws towards the individual capital, but it does not invent them. It realizes them. To try to explain them simply as results of competition therefore means to concede that one does not understand them’ (Grundrisse; Marx’s remark is directed against Adam Smith.).

Thus Marx will have forewarned us: Baran and Sweezy understood nothing, neither capitalism nor Capital.

If our two professors have such a misunderstanding on the role of competition, it is indeed because they have forgotten to understand Marx’s method. According to their definition, the scientific method would consist in developing models of the reality being studied and then establishing relationships between the elements of the model.

What is a model? It is a schematic representation of the salient aspects of reality observed at a given moment, leaving aside everything that is incidental. What can it provide? In the best case, a good description of the phenomenon, cleansed from the secondary and the accidental. But describing is not explaining. Such a method is empirical; it remains at the level of phenomenal appearance (cleansed, as it were, of accidental dross). But appearance is not scientific truth; on the contrary, ‘all science would be superfluous if the outward appearance and the essence of things directly coincided’ (Capital, Book III, Ch. 48). Moreover, this method is not dialectical: it freezes the observed forms, thereby preventing itself from posing the question of their movement and transformation.

What Marx does is entirely different: it is not a model, but a theory. Marx does not develop a representative schema of English competitive capitalism: he explains the capitalist mode of production and the laws of its development, he makes it a theory, and he illustrates this theory with concrete historical examples taken from the concrete capitalist society at hand (the only empirical verification possible in the social sciences at the very moment the theory is expounded):

‘In this work I have to examine the capitalist mode of production, and the conditions of production and exchange corresponding to that mode. Up to the present time, their classic ground is England. That is the reason why England is used as the chief illustration in the development of my theoretical ideas’ ⁽¹⁴⁾.

Marx therefore does not give us a model but a theory; not a schema but an explanation, along with the discovery of the laws that govern the birth, movement, and death of the capitalist mode of production. Far from contenting himself with merely summarising what he sees, instead he seeks and establishes scientific truth, which is often the opposite of the immediate interpretation suggested by deceptive appearances. To explain, he begins by analysing the elementary form of capitalist social wealth: the commodity, in order to establish from this elementary form the ultimate abstractions thanks to which he will then be able to conceptually reconstruct everything else: value, the very substance of which is labour ‘in general’ (or abstract labour). It is from these ultimate abstractions, i.e. these notions without which no other notion can be explained, that the theory is developed: value makes it possible to explain the concrete forms commodity and money, just as it makes it possible to explain what capital is: value creating value. Value, capital, surplus value, etc. are concepts, that is to say, intellectual instruments, products of the mind, allowing understanding of the concrete forms appearing on the surface of capitalist society, their mutual relations, the laws of their movement and transformation. Theory is the overall explanatory discourse linking in their logical sequence the concepts that are at once its stages and partial summaries, thus allowing understanding of the capitalist mode of production, to know its movement, thanks to the laws brought to light, and therefore to predict the evolution of the concrete forms through which it manifests itself.

The ‘model’ allows neither understanding or predicting: nor is that its purpose. It is the methodological symbol of the deliberate impotence of bourgeois ‘social science’ which, having long since given up on explaining reality, considers itself excused once it has succeeded in schematising and labelling appearances. The authors’ approach is moreover the best example of this impotence. After defining their method, they move on to its application by developing their model of monopoly capitalism. Their reasoning can be summarised as follows: 1) The ‘decisive unit’ of current capitalism is the ideal type ⁽¹⁵⁾ of the large firm (or big business), characterised by the behaviour of its managers, who are in charge of its day-to-day running, recruit their own successors, and ensure the firm’s financial independence through a policy of self-financing. 2) Empirical study shows that the objectives and motivations of managers are as follows: power, growth rate, and company size. 3) Such objectives can only be achieved through very high profit rates – even if personal enrichment is not the fundamental goal of managers ⁽¹⁶⁾. Therefore, the goal of big business is profit. 4) What is monopoly capitalism? It is a system made up of giant firms such as those just described.

This whole approach amounts to defining capital by describing the behaviour of its servants. Even if the description is accurate in places, it does not advance our understanding of the phenomenon one iota. Twenty pages of elaboration on a ‘model’ lead to this remarkable discovery: the objective of big business is profit. But why does it seek to make this profit? Because, Baran and Sweezy tell us, this is what the study of the behaviour of its managers proves. If poor Marx had known about modelling, he would have spared himself a lot of effort: instead of writing thousands of pages, he could have simply defined competitive capitalism as a system of small businesses run by individuals eager to get rich who, by engaging in fierce competition, lower the rate of profit! Explaining capital through its agents is as stupid as explaining the State through its civil servants or scarlet fever through its spots; this is what bourgeois charlatanism has done for over a century.

To complete this methodological fireworks display, our two professors finish constructing their ‘model’ as follows:

Starting the analysis at the level of prices is obviously to forbid oneself in advance from understanding anything; it is to regress, not only in relation to Marx, but even in relation to classical political economy, which, at least, had addressed the problem of value in order to explain prices. The whole of Book I of Capital, which our ‘Marxist’ professors had hitherto been content to demolish piece by piece, is thus now resolutely swept aside en bloc: for them, capitalism is studied at the level of circulation ⁽¹⁷⁾.

Marx had developed a theory of a mode of production; Baran and Sweezy describe a few episodes of circulation. In this, they follow the approach of vulgar economics; but the latter at least has the honesty not to claim to be ‘Marxist’.

With a stupid method, absurd results: as expected, it is obviously at the level of the results, i.e. the ‘laws’ discovered thanks to the application of the Baran-Sweezy method, that the confusion reaches its peak. These results and their demonstration can be summarised as follows: competition, which persists in forms other than price wars, forces monopolies to lower their production costs; however, by definition, monopolies can set their prices at the desired level: therefore, profit margins increase. It logically follows that in monopoly capitalism, profits increase in absolute terms, and in relative terms – that is, relative to national income: this is the law of rising surplus (equated for the situation to profit), valid for monopoly capitalism, and which must be substituted for the law of the tendency of the average rate of profit to fall, valid only for competitive capitalism.

The confusion here is so dense that we must revisit this reasoning in detail, examining it point by point.

According to the authors, monopolies set their prices at the desired level and on the other hand tend to lower their production costs ⁽¹⁸⁾. Therefore, in monopoly capitalism, profit margins increase:

‘[A]s we have argued (...) oligopolies succeed in attaining a close approximation to the theoretical monopoly price’ (p. 67). ‘The whole motivation of cost reduction is to increase profits, and the monopolistic structure of markets enables the corporations to appropriate the lion’s share of the fruits of increasing productivity directly in the form of higher profits. This means that under monopoly capitalism, declining costs imply continuously widening profit margins’ (p. 71).

Such an explanation is worthless because, remaining as expected at the level of phenomenal appearance, it merely summarises the false interpretation suggested by this appearance. It is true that one or a few monopolies can, by preventing the entry of new capital into their branch, escape the equalisation of profit rates (explained by Marx in the 2nd Part of Book III of Capital) and thus secure a monopoly surplus profit; in doing so, they will not have created value, but stolen value created by the labour power employed by other capitals. But in a system of monopolies generalised to all branches, that is, at the global level, such an explanation is stupid because it amounts to saying that the entire system can create surplus profit simply by raising its prices: which means that value can be created in the sphere of circulation.

If they had bothered to read Chapter V of Book I of Capital, the authors would have avoided such absurdity: There, Marx demonstrates impeccably that, no matter how one goes about it, it is impossible to create value in the sphere of circulation ⁽¹⁹⁾. Thirty seconds of reflection would be enough for a child to understand that if, overnight, everyone decided to sell their commodities 10 per cent more expensively (including the commodity labour power), it would not make anyone richer; or, if the only commodity whose price did not change was labour power, then the explanation for increased profit would not lie in monopoly prices but in the increased exploitation of the proletariat, a general tendency of capital in which monopolies as such play no particular role. But Baran and Sweezy are incapable of understanding this: if you make a profit, it is because you sell at a higher price than you buy, of course! This is the political economy of the grocer in all its splendour!

The solution to the problem remains to be found. If the profit margins of giant American companies did indeed experience a statistically significant increase over a long period (we write this without prejudging the actual situation in any way), the explanation could not be found in their cost and price policies, but elsewhere. Where then? Without wishing to treat the problem systematically here, it should be noted that Marxist theory offers several solutions:

a) Monopoly surplus profits: American monopolies escape the equalisation of profit rates of American capital and that of global capital (the latter being more difficult to achieve due to the lower mobility of capital on a global scale). The monopoly surplus profits thus realised can only be achieved at the expense of capital, American or otherwise, invested in non-monopolised sectors, and the rise in monopoly prices is therefore merely the concrete form taken by a transfer of value:

‘The monopoly price of certain commodities would merely transfer a portion of the profit of the other commodity-producers to the commodities having the monopoly price. A local disturbance in the distribution of the surplus-value among the various spheres of production would indirectly take place, but it would leave the limit of this surplus-value itself unaltered’ (Capital, Book III, Ch. 50) ⁽²⁰⁾.

b) Productivity surplus profits: As a result of increased labour productivity, the individual value of a commodity may be lower than its social value; the capitalist only has to sell it at its social value to pocket an additional profit: such surpluses are realised in a branch, either at the scale of the world market or of the national market:

‘Capitals invested in foreign trade can yield a higher rate of profit, because, in the first place, there is competition with commodities produced in other countries with inferior production facilities, so that the more advanced country sells its goods above their value even though cheaper than the competing countries. In so far as the labour of the more advanced country is here realised as labour of a higher specific weight, the rate of profit rises, because labour which has not been paid as being of a higher quality is sold as such. The same may obtain in relation to the country, to which commodities are exported and to that from which commodities are imported; namely, the latter may offer more materialised labour in kind than it receives, and yet thereby receive commodities cheaper than it could produce them. Just as a manufacturer who employs a new invention before it becomes generally used, undersells his competitors and yet sells his commodity above its individual value, that is, realises the specifically higher productiveness of the labour he employs as surplus-labour. He thus secures a surplus-profit’ (Capital, Book III, Ch. XIV).

c) Surplus profits from the export of capital: Marx writes:

‘As concerns capitals invested in colonies, etc., on the other hand, they may yield higher rates of profit for the simple reason that the rate of profit is higher there due to backward development, and likewise the exploitation of labour, because of the use of slaves, coolies, etc. Why should not these higher rates of profit, realised by capitals invested in certain lines and sent home by them, enter into the equalisation of the general rate of profit and thus tend, pro tanto [proportionally, ed.], to raise it, unless it is the monopolies that stand in the way’ ⁽²¹⁾.

All the more so if monopolies hinder equalisation, they can keep the surplus profits thus realised for themselves.

We will not dwell on these explanations, especially the last one, as they are well known (see Imperialism, the Highest Stage of Capitalism). We can be sure that ‘Monthly Review’ will devote a fine article to the centenary of Lenin’s birth; but whether the profit margins of American companies can be partly explained by American imperialism, which is plundering the planet, is something we can believe if we want to, but our two American ‘Marxist’ professors... have forgotten it!

Baran and Sweezy continue their reasoning by writing that the increasing profit margins of monopolies lead to an increase in the mass of profits:

‘And continuously widening profit margins in turn imply aggregate profits which rise not only absolutely but as a share of national product. If we provisionally equate aggregate profits with society’s economic surplus ⁽²²⁾, we can formulate as a law of monopoly capitalism that the surplus tends to rise both absolutely and relatively as the system develops’ (pp. 71-72).

Our two professors clearly imagine they have made a great discovery: because of monopolies, the mass of profits increases. Let us simply recall what Marx writes:

‘Thus, the same development of the social productiveness of labour expresses itself with the progress of capitalist production on the one hand in a tendency of the rate of profit to fall progressively and, on the other, in a progressive growth of the absolute mass of the appropriated surplus-value, or profit; so that on the whole a relative decrease of variable capital and profit is accompanied by an absolute increase of both. This two-fold effect, as we have seen, can express itself only in a growth of the total capital at a pace more rapid than that at which the rate of profit falls’ (Capital, Book III, Ch. XIII (emphasis added)).

Marx therefore established the law of increase of the mass of profits (or surplus value) a century ago; he demonstrated that this is an immanent tendency of capital due to the movement of accumulation: monopolies therefore have absolutely nothing to do with it. Our ‘Marxist’ professors look good now: not only have they discover nothing, but they have even managed to give a false explanation of a law perfectly explained a hundred years ago.

In the authors’ reasoning, the increase in profits occurs not only in absolute terms, but also in relative terms, i.e. ‘as a share of national product’ (see the last passage quoted). Let us overlook the total abdication that, for ‘Marxists’, constitutes the reference to a totally mystified category of bourgeois national accounting, and suppose that it concerns national product in the Marxist sense, i.e. social product ⁽²³⁾, which we will designate by the expression:

Ʃ(V + S)
or: the sum of variable capital and surplus value for one year.

To say that profits increase ‘as a share of national product’ simply means that the ratio
 

ƩS Ʃ(V + S)

increases.

This ratio has nothing to do with the rate of profit, since it does not involve constant capital ⁽²⁴⁾. Its increase can only be another expression, in another form, of the increase in the ratio \(\frac{S}{V}\), i.e. quite simply, of the rate of surplus value! In other words, in the most favourable hypothesis, all that Sweezy and Baran have ‘discovered’ following a tortuous and false line of reasoning is that the rate of surplus value increases, which is, once again, a law established by Marx long ago! But the admirable crowning glory of this Himalaya of nonsense is this: our professors have not even understood that this is what they have ‘discovered’, and imagine that they have established a new law, specific to monopoly capitalism, and contradicting the law of the tendency of the rate of profit to fall ⁽²⁵⁾.

The conclusion of their ‘demonstration’ is as follows:

‘(...) we can formulate as a law of monopoly capitalism that the surplus tends to rise both absolutely and relatively as the system develops. ‘This law immediately invites comparison, as it should, with the classical-Marxian law of the falling tendency of the rate of profit. Without entering into an analysis of the different versions of the latter, we can say that they all presuppose a competitive system. By substituting the law of rising surplus for the law of falling profit, we are therefore not rejecting or revising a time-honored theorem of political economy: we are simply taking account of the undoubted fact that the structure of the capitalist economy has undergone a fundamental change since that theorem was formulated. What is most essential about the structural change from competitive to monopoly capitalism finds its theoretical expression in this substitution’ (p.72).

Here are our final responses to these final absurdities:

a) The law of the tendency of the rate of profit to fall (and not of profit itself, as stated in the third sentence quoted) does not have ‘different versions’ and does not ‘presuppose’ ‘competitive capitalism’ – we have already seen what to make of such a notion. It is linked to the immanent movement of capital, which stems from the rise in the organic composition and thus from the increase in the productivity of labour:

‘This mode of production produces a progressive relative decrease of the variable capital as compared to the constant capital, and consequently a continuously rising organic composition of the total capital. The immediate result of this is that the rate of surplus-value, at the same, or even a rising, degree of labour exploitation, is represented by a continually falling general rate of profit (...) The progressive tendency of the general rate of profit to fall is, therefore, just an expression peculiar to the capitalist mode of production of the progressive development of the social productivity of labour’ (Capital, Book III, Ch. XIII).

b) Likewise, the law of increasing rates of surplus value, which our ‘Marxist’ professors call the ‘law of rising surplus’ because they have not even understood the difference between a rate of profit and a rate of surplus value, was established by Marx as a law of capital in general, and monopolies have nothing to do with it.

c) Finally, there is obviously no need to ‘substitute’ one for the other two laws – the law of increasing rates of surplus value and the law of the tendency of the rate of profit to fall – since they cannot contradict each other, given that they both derive from the very essence of capital and apply to ratios of different magnitudes.

Only incredible academic scribblers can condense so many inanities of all kinds into so few lines. Despite the appalling housing crisis looming in the future Pantheon of bourgeois stupidity, we therefore bet that our two American professors will find the place they undoubtedly deserve there ⁽²⁶⁾.

We lack the courage to recap, as the spirit of synthesis would require, all the nonsense listed – not to mention those we have left out ⁽²⁷⁾. As the reader is also likely to be exhausted by this mountaineering expedition to the heights of academic cretinism, let us content ourselves with borrowing a moral from Lenin. Here is how he concluded a polemic against Tugan-Baranovsky, a professor who had also undertaken to improve Marxism in his own way (the phenomenon is not new...), and who yet knew Marx’s work infinitely better than all the Baran-Sweezys of our time:

‘The puzzled reader may ask: how could a learned liberal professor have forgotten these elementary axioms familiar to anybody who has read any exposition of the views of socialism? The answer is simple: the personal qualities of present-day professors are such that we may find among them even exceptionally stupid people like Tugan. But the social status of professors in bourgeois society is such that only those are allowed to hold such posts who sell science to serve the interests of capital, and agree to utter the most fatuous nonsense, the most unscrupulous drivel and twaddle against the socialists. The bourgeoisie will forgive the professors all this as long as they go on “abolishing” socialism’ (Lenin, Collected Works, Vol. 20, p. 151.).

Just one thing to add: of all these academic woodlice who secure their livelihood and career by patiently gnawing away at revolutionary theory, those who do so while hiding behind ‘Marxist’ quotations and vocabulary are the most dangerous and the most repugnant.