4. The foundations of capitalist economy

The online scientific library « i6doc.com » makes J.Gouverneur’s latest introductory textbook in Marxist economics available in three languages (French, Spanish and English) and, for each language, in two sizes :

- on the one hand, an « A4 » or « quarto » size (267 pages in English), under the title : « UNDERSTANDING  THE  ECONOMY. The hidden face of economic phenomena » ;

- on the other hand, an « A5 » size (389 pages), under the title : « THE FOUNDATIONS OF CAPITALIST ECONOMY. An introduction to the Marxist economic analysis of contemporary capitalism ».

Except for the foreword, some passages of the introduction and the bibliography (included in the « A5 » size only), the two texts are practically identical.

Contents of the textbook

The book provides an introduction to the Marxist economic analysis of contemporary capitalism.

The first six chapters consider the structure of the economy and adopt an essentially static point of view. These chapters analyse successively : 1. the basis of goods and services (namely labour, in combination with nature) ; 2. the basis of prices and revenues (namely value, i.e. labour devoted to the production of commodities) ; 3. the basis of profit and accumulation (surplus value, surplus revenue) ; 4. the basic economic ratios (rate of surplus value, composition of capital, rate of profit) ; 5. the competition for the share-out of surplus revenue between firms and between branches ; 6. the relationships between the capitalist sector and non-capitalist sectors.

The last three chapters adopt an essentially dynamic viewpoint and analyse various aspects of growth. Chapter 7 successively considers the development of mechanization, the contradiction between socialization of production and concentration of capital, the expansion of waged labour and market production, the human and ecological costs of growth. Chapter 8 deals with the conflicts over the rate of surplus value ; it shows that increases in general productivity make it theoretically possible to simultaneously raise profits, real wages and public expenditure. Chapter 9 deals with the problem of crises ; it shows how changes in the balance of forces, combined with the evolution of general productivity, have actually shaped the evolution of profits, real wages and public expenditure in advanced countries since 1950.

The conclusion moves out of the economic framework of the preceding analyses in order to show the various elements (in the socio-economic, political and ideological structures) which combine to make a joint contribution to the reproduction of capitalism.

Thanks to its outstanding pedagogical qualities, the book constitutes a first-class textbook for students and teachers as well as for any interested reader, even without previous knowledge. At the same time, the book expresses many theoretical viewpoints which deserve consideration by specialists.

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Interesting pedagogical features

1. The book systematically combines the qualities of precision and simplicity. Precision, in order to counteract the great deal of fuzziness which too often hovers, over even the most elementary concepts. Simplicity, in order to make the approach accessible to any receptive person, even without any previous knowledge on the subject.

2. Each chapter is complemented with a set of pedagogical devices : a) a summary of the argument; b) a list of the new concepts to be assimilated (all of them are brought together and defined in a lexicon at the end of the book); c) a selection of « theoretical » and « practical » exercises : the former are aimed at checking the assimilation of the material, while the latter enable readers to establish links between theory and present-day realities (the clue to most exercises is given at the end of the book).

3. The book clearly shows the relevance of Marxist economic theory in analysing and understanding many current socio-economic realities. In addition, all the « practical » exercises (« applied knowledge ») spur readers to establish themselves numerous links between theory and present-day realities, whatever the moment and country.

4. All the purely theoretical debates are relegated to appendices. The issues discussed there are simply mentioned in footnotes in the text (with due references to the corresponding appendices).

5. The whole book is written in a very clear, straightforward and neutral style (avoiding all emotional involvement).

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Interesting theoretical features

1. The book systematically relates the visible phenomenon of prices to the hidden reality of value. This simultaneous attention to prices and value makes it possible to draw and underline an essential distinction – which is massively overlooked in current economic literature – between revenue created and revenue obtained (see in particular the syntheses provided in chap.II, 4.2.2, and chap.VI, 5.2.3). The links between prices and value are established by the « money equivalent of value » (see chap.II, 3.2.1).

2. The book underlines the basic influence of both productivity (« development of productive forces ») and power relations (« class struggle » or conflicts between « class fractions »). Both are simultaneously taken into consideration to account for :

3. The book also emphasizes the contradictory aspects of reality, which are mentioned or analysed on numerous occasions (see a synthesis in theoretical appendix 1, § 1.1, d ). For instance : contradiction between the « cost » and « market » aspects of both wages and public expenditure ; contradictory relationships between capitalist and non-capitalist production ; contradictory aspects of mechanization ; contradictory effects of neo-liberal policies ; etc.

4. The book provides an accurate and convincing answer to various common objections, especially the following ones :

5. The book shows the contrasts that exist between Marxist economic theory and standard economic theory (see a synthesis in the Conclusion, § 3.1 and § 3.2). On the other hand, within the Marxist paradigm, the book adopts a certain number of non-conventional viewpoints, especially with respect to the concepts of value, commodity and productive labour (see a synthesis of the non-conventional stands in appendix 1, § 1.2). The traditional viewpoints and those adopted in the book are systematically opposed in the corresponding appendices (see in particular appendices 5, 6, 7, 9).

6. The non-conventional viewpoints adopted combine the advantages of precision and simplicity. On the one hand, they make the theoretical approach more rigorous and coherent. On the other hand, while justified on purely theoretical grounds, some of the « unorthodox » viewpoints have the additional advantages of making the theory simpler and allowing for a much easier quantification of various key-concepts, namely the « money equivalent of value », the value of commodities (reciprocal of total productivity), necessary labour, the rate of surplus value (see appendix 3, § 3.1 and § 3.3 ; appendix 4, 4.3.2 ; chap.III, § 1.4 ; chap.VIII, 2.2.1). Compared to alternative empirical approaches, the methods used to measure these concepts appear to be theoretically more appropriate as well as easier to handle in practice.

7. While focusing on the sector of capitalist enterprises, the book also examines all the other forms of production (enterprises relying on self-employment, public enterprises, non-market public or private services, voluntary organizations, and households) ; it shows their specific features and contradictory relationships with the capitalist sector (see chap.VI). In so doing, it does not restrict itself to analysing an abstract system but contemplates the actual diversity of a concrete society.

8. The book provides a thorough treatment of the « transfers of (surplus) revenue », both within the capitalist sector (see chap. V, § 1.1 and 1.2, and appendix 10) and between capitalist and non-capitalist sectors (see chap.VI, 3.3.1 and 5.2.3). This issue, of crucial importance both for theory and concrete analyses, is quietly glossed over in other textbooks (except for the all too famous « transformation problem », a problem which is actually little relevant to concrete analyses and is widely misinterpreted : the problem in question is tackled in appendix 10).

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Extracts from the table of contents

CHAPTER I : THE BASIS OF GOODS AND SERVICES : LABOUR

1. The material aspects common to all labour

1.1 The labour process or production process

1.2 The micro-economic process

1.3 The macro-economic process

2. The various social aspects of labour

2.1 Labour in the professional sphere

2.2 Labour in the non-professional sphere

2.3 Synthesis and conclusion

Pedagogical devices concerning chapter I

CHAPTER II : THE BASIS OF PRICES AND REVENUES : VALUE

1. The concept of commodity

2. The hidden face of commodities : value

2.1 The nature of value

2.2 The magnitude of value 

3. The visible expression of value : prices

3.1 The nature of prices

3.2 The magnitude of prices 

4. The basis of revenues : new value

4.1 The creation of revenues by present labour

4.2 The creation and distribution of total revenue Pedagogical devices concerning chapter II

CHAPTER III : THE BASIS OF PROFIT AND ACCUMULATION : SURPLUS VALUE

1. The source of profit : surplus labour

1.1 Theoretical demonstration

1.2 General comments

1.3 Theoretical observations

1.4 Statistical evidence on surplus labour

2. The use of profit : accumulation

2.1 The three components of value and price

2.2 The circuit of capital

Pedagogical devices concerning chapter III

CHAPTER IV : THE BASIC ECONOMIC RATIOS

1. Presentation of the three ratios

2. Analysis of the factors affecting the three ratios

2.1 Factors affecting the rate of surplus value

2.2 Factors affecting the composition of capital

2.3 Factors affecting the rate of profit

Pedagogical devices concerning chapter IV

CHAPTER V : COMPETITION FOR THE SHARE-OUT OF SURPLUS REVENUE

1. Distribution of total surplus revenue

1.1 Unequal degrees of mechanization and distribution of surplus revenue among enterprises

1.2 Unequal market power and distribution of surplus revenue among branches

2. Relations between profitable and non-profitable enterprises

2.1 Contradictions between enterprises competing in the same branch

2.2 Contradictions between enterprises operating in different branches

Pedagogical devices concerning chapter V

CHAPTER VI : CAPITALISM AND NON-CAPITALIST PRODUCTION

1. Capitalism and enterprises relying on self-employment

1.1 Specific features of independent enterprises

1.2 Contradictory relations between capitalist enterprises and independent enterprises

2. Capitalism and public enterprises

2.1 Specific features of public enterprises

2.2 Contradictory relations between the capitalist sector and the public sector of commodity production

3. Capitalism and the institutional sector

3.1 Activities of the institutional sector

3.2 Contradictory aspects of public expenditure

3.3 Components of the wage and wage-earners’ consumption

4. Capitalism and the non-professional sphere

4.1 Production by households and voluntary organizations

4.2 Contradictory aspects of domestic production

4.3 Components of the wage and wage-earners’ consumption

5. Labour and incomes in the whole society

5.1 An overview of activities and results produced

5.2 The basis of incomes

5.3 Productive labour and unproductive labour

Pedagogical devices concerning chapter VI

CHAPTER VII : BASIC TENDENCIES AND CONTRADICTIONS OF GROWTH

1. The development of mechanization

1.1 The transformation of production techniques

1.2 The twofold role of mechanization

1.3 The contradictory nature of mechanization

2. The growing contradiction between the socialization of production and the concentration of capital

2.1 The socialization of production

2.2 The concentration of capital

3. The expansion of production, waged labour and markets

3.1 The generalization of the « realm of the commodity »   

3.2 The creation and expansion of waged labour-power

3.3 The expansion of markets

4. The contradiction between the search for private profit and the satisfaction of social needs

4.1 The human costs of growth

4.2 The ecological costs of growth

Pedagogical devices concerning chapter VII

CHAPTER VIII : CONFLICT AND COMPROMISE OVER THE RATE OF SURPLUS VALUE

1. Methods of increasing the rate of surplus value

1.1 Lengthening labour-time

1.2 Reducing necessary labour

2. Compatibility between accumulation, wage-earners’ consumption and public expenditure

2.1 A theoretical approach

2.2 An empirical approach

3. Effects of the internationalization of productive capital

Pedagogical devices concerning chapter VIII

CHAPTER IX : GROWTH AND CRISES

1. Growth before the Second World War

1.1 The socio-economic context

1.2 The cyclical character of production

1.3 The crisis and recession of the1930’s

2. Growth from 1945 to 1974

2.1 The new socio-economic context

2.2 The new features of growth

2.3 The cyclical crisis of 1974-75

2. The structural crisis since 1975

2.1 Stages of the crisis

2.2 Which way out of the present crisis ?

Pedagogical devices concerning chapter IX

CONCLUSION : THE REPRODUCTION OF CAPITALISM

1. The permanent separation of wage-earners from the means of production

2. Repressive and preventive forms of intervention by the capitalist State

3. The integrative role of liberal ideology

THEORETICAL APPENDICES

1. Theoretical viewpoints adopted in the book

2. A brief comparison with national income accounting

3. The money equivalent of value (E)

3.1 Calculating E

3.2 Influences affecting the magnitude of E

3.3 Usefulness of the concept

4. Labour productivity

4.1 Different concepts of productivity and their mutual relations

4.2 Relations between productivity, production, employment and labour-time 

4.3 Measurement of productivity changes

4.4 Influence of productivity on total value

5. The basis of wages and wage differentials

5.1 The traditional approach

5.2 An alternative approach

6. The production of value and surplus value in qualitative terms : the question of productive labour

6.1 The traditional approach

6.2 An alternative approach

7. The production of value and surplus value in quantitative terms : the question of more productive, more intensive or more skilled labour

7.1 The traditional approach

7.2 An alternative approach

8. Additional comments on the basic economic ratios

9. A « law of the falling tendency of the rate of profit »?

9.1 The traditional approach

9.2 A few comments

10. Distribution of surplus revenue between unequally mechanized branches: the law of the equalization of the rate of profit

11. Reproduction schemes

12. On social classes

GLOSSARY

ANSWERS TO QUESTIONS

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How to download or order the book

The online scientific library « i6doc.com » makes J.Gouverneur’s latest introductory textbook in Marxist economics available in three languages (French, Spanish and English) and, for each language, in two sizes : on the one hand, an « A4 » or « quarto » size (267 pages in English), under the title ; « Understanding the Economy. The hidden face of economic phenomena » ; on the other hand, an « A5 » size (389 pages), under the title : « The Foundations of Capitalist Economy. An Introduction to the Marxist economic analysis of contemporary capitalism ». Except for the foreword, some passages of the introduction and the bibliography (included in the « A5 » size only), the two texts are practically identical.

a) Electronic editions

The different versions of the author’s textbook are accessible using the following URLs :

- size A4 (21 x 29.7 cm) :

2005 : Comprendre l’économie (265 p.)

2005 : Comprender la economía (275 p.)

2005 : Understanding the Economy (267 p.)

- size A5 (14.8 x 21 cm) :

2005 : Les fondements de l’économie capitaliste (387 p.)

2005 : Los fundamentos de la economía capitalista (415 p.)

2005 : The Foundations of Capitalist Economy (389 p.)

All these texts can be downloaded free of charge. Each can be published freely, with no royalties to pay (author's royalties or others), but of course without right of exclusivity.

b) Printed editions

Texts in the A5 size are also available in the form of printed books. These are published by Contradictions for the French version, by Diffusion Universitaire Ciaco for the Spanish and English versions (see the bibliographical item above).

The three books can be ordered through the online scientific library « i6doc.com » (info@i6doc.com ). The French book can also be ordered from Contradictions : 2, avenue des Grenadiers (boîte 1), B1050 Brussels or 126, rue Roger Speybrock, F59200 Tourcoing.

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