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VALUE, GROWTH, AND ECONOMIC POLICY: Essays in Tribute to Adolph Lowe / Vol. 50, No. 2 (Summer 1983)

Edward Nell, Guest Editor
Arien Mack, Journal Editor

Adolph Lowe’s work has not only been truly interdisciplinary, but also within economics he weaves together several major and usually divergent strands of thought. The interdisciplinary aspect of his work arises from the historical and philosophical argument that economics cannot be isolated from politics -indeed, economic theory cannot be adequately conceptualized except as Political Economics. For while “poverty” and “free” markets -harsh competition- rendered economic variables largely predictable in the nineteenth and early twentieth centuries, affluence, labor unions and the development of administered pricing have produced many kinds of discretionary opportunities, at least for large firms, well-to-do households and strong unions, with the result that economic outcomes are frequently no longer automatic or predictable.

The problem of value is not held in much esteem in contemporary economic thought. The term has acquired an antiquarian cast, conjuring up disputes as remote from current concerns as the Methodenstreit of a century ago. Indeed, I would venture that most economists today do not even see the need for a “theory” of value, as distinct from a theory of price, and would in fact be hard pressed to explain the difference between the two.

Schumpter’s suggestion to separate Marx’s work into the components belonging to the various social sciences and to incorporate those which would survive a careful examination has been rejected by exponents of critical theory. Marx’s thought was not considered to be compatible with the division of labor in modern science. His theory centered around a concept of social totality which a specialized isolation into “fields” would negate systematically. It is this emphasis on social totality, which political reasons aside, has accounted for Marx’s attraction, and has contributed to the broad discussion and reading of Marx since the middle of the 1960s. Marxism has seemed to make room for the critical generalist, overcoming the “idiotism” of narrow specialization and its inherent apologetic function.

One of the paradoxes of the labor theory of value as it was formulated by Marx’s classical predecessors was that it seemed self-contradictory when applied to the exchange of labor for a wage. If labor is the sole source of value, then it would seem that a certain amount of labor should have the same value, whether it is purchased directly for a wage or already embodied in a commodity. In a capitalist society, though, the wages paid for a certain amount of labor must be less than the value of the commodities in which the amount of labor is embodied. Otherwise neither profit nor rent could exist.

The work of Adolph Lowe can be considered a milestone in the construction of a theoretical framework in which the stability of full employment as well as its attainment become inseparable from the ex-ante planning of sectoral proportions. At the same time, the ex-post planning of the adjustment path is required whenever the initial quantitative assumptions turned out to be incorrect. The remarkable characteristic of Lowe’s approach consists in the fact that it permits formulating an argument for planning under important conditions of economic maturity. This point is rather important because most works on planning have, so to speak, subsumed the historical fact that socialist planned economies grew out of a social transformation of hitherto “backward” societies.

Recent developments in the advanced capitalist countries have begun to inspire discussion in broad circles of something that Marxists have sensed all along: the possibility that beneath the cycles of boom and slump lies a long-term adverse trend, pointing the way toward crises of increasing severity and ultimately a general crisis in the system as a whole.

Any proposed “alternative” theory of macroeconomic policy must address the obvious issues. It must explain how inflation and unemployment can occur together now, whereas in the past they tended to be mutually exclusive. It must also show who gains and who loses in the process -which is to say, not only how the overall distribution of income affected, but also which sectors of the economy prosper and which lag behind or become depressed. Finally, and most important, it must delineate the effects of state activity, and show how and where it can be manipulated so as to alter the inflationary/recessionary working of the economy.

In countries which are today economically advanced, development as a systematic and continuous process which involves the whole society starts off with the birth and expansion of modern-factory based industry. Modern industry constitutes the sector of production which induces the development of all other sectors.

Growing difficulties in Western industrial economics show that there is once again a crisis of economic policies and strategies. Behind this lies a crisis of economic thought, evidenced in the contrast between faith of “supply side” economists and the now-confounded hopes of reformist “Keynesian” economic thinkers. Such crises in policy and thought are not new in economic history.

“The object before us, to begin with, material production. Individuals producing in society -hence, socially determined individual production- is of course the point of departure.” Given this commitment, the sphere of production must be at the center of any attempt to understand the laws of motion of society. It would appear all the more compelling to choose the same point of departure for the particular social praxis, interlinked with theory, that we designate as planning.


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