September 23, 2002

· Books

I finally figured out where I’d read that quote I was trying to remember two posts ago, after memory-jogging comments from Chris Bertram and Max Sawicky. (Max’s suggestion, “To understand capitalism, read Marx; to understand socialism, read Marshall” is pithy, but not what I was half-remembering.

The paragraphs I had in mind are by Oscar Lange, and are quoted in Mark Blaug’s Economic Theory in Retrospect (5th ed., pp253-4). Here they are:

Let us imagine two persons: one who has learned his economics only from the Austrian School, Pareto and Marshall, without ever having seen or even heard a sentence of Marx or his disciples; the other one who, on the contrary, knows his economics exclusively from Marx and the Marxists and does not even suspect that there may have been economists outside the Marxist school. Which of the two will be able to account better for the fundamental tendencies of the evolution to Capitalism? To put the question is to answer it.

But this superiority of Marxian economies [sic] is only a partial one. There are some problems before which Marxian economics is quite powerless, while ‘bourgeois’ economics solves them easily. What can Marxian economies say about monopoly prices? What has it to say on the fundamental problems of money and credit theory? What apparatus has it to offer for analysing the incidence of a tax, or the effect of a certain technical innovation on wages? And (irony of Fate!) what can Marxian economics contribute to the problem of the optimum distriubtion of productive resources in an socialist economy?

Clearly the relative merits of Marxian economics and modern ‘bourgeois’ economic theory belong to different ‘ranges’. Marxian economics can work the economic evolution of capitalist society in to a consistent theory from which its necessity is deduced, while ‘bourgeois’ economists get no further than mere historical description. On the other hand, ‘bourgeois’ economics is able to grasp the phenomena of the every-day life of a capitalist economy in a manner that is far superior to anything the Marxists can produce. Further, the anciipations which can be deduced from the two types of economic theory refer to a different range of timeā€¦ [O]ver a long period a knowledge of Marx is a much more effective starting point than a knowledge of Wieser, Bohm-Bawerk, Pareto of even Marshall (though the last-named is in this respect much superior). But Marxian economics would be a poor basis for running a central bank or anticipating the effects of a change in the rate of discount.

Considerably more verbose than I remembered.

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I am Associate Professor of Sociology at Duke University. I’m affiliated with the Kenan Institute for Ethics, the Markets and Management Studies program, and the Duke Network Analysis Center.



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