Let me begin with a summary of Mandel’s introduction. Mandel is a master at synthesizing and clarifying arguments, if only pointing to the existing literature and adding his own argument to the debates (after this reading is completed we should move onto his two volume work in order to better understand his own ‘reading’ of Marxian economic theory). Mandel reminds us that, whereas Volume I dealt with production – i.e., in ‘the factory’, and Volume II moves out into the question of how production is related with circulation – i.e., market, Volume III then moves to the level of the over-all dynamics of capitalism in their totality. It should be stated, though, that this is a collection of disparate notes assembled and published posthumously by Engels – thus there is a quality of incompleteness to the work which how Mandel explains the reason for so many controversies arising from this specific Volume.
Throughout the earlier texts we saw how Marx highlighted various points of contradiction that, though deprived of full theoretical/analytical explication due to the necessary assumptions that underlie the analysis, reveal or open into larger systemic contradictions. For example, in Vol. I, Marx showed that if one followed classical political economy, that within their own terms a gigantic social contradiction of increasing wealth and increasing proletarianization would occur. In Vol. II we saw cycles that were interwoven with turnover cycles (the infamous passage where Marx switched between the terms “cycle” and “crisis” – see page 284 of Vol II), or problems in the reproduction process of capital (e.g., Vol II, p. 157). Vol. III’s central problematic, according to Mandel anyway, is showing “that [the] inherent mechanisms [of capitalism], which cannot be overcome without abolishing private property, competition, profit and commodity prodction (the market economy), must lead to a final collapse. (11)” Marx embarks on this project by, following classical political economy, theorizing the forms into which the social surplus-value (value) is distributed and the corresponding social relations.
Marx wants to show how the ruling class “participate[s] in the distribution of the total mass of surplus-value produced by productive wage-labour, and how these specific economic categories are regulated (12)." The main divisions line up as:
o Ruling class (4): Industrial capitalists / Commercial Capitalists / Bankers / and Capitalist Landowners
o Revenue (5): wages / individual profits / commercial (and banking) profits / interest / and land rent
o Which can be reduced to (3) basic categories: wages / profits / land rent
What brings this together, seemingly mediating this process, is the rate of profit and more specifically a tendency in which the rate of profit tends to equalize between all capitals. From this Marx posits his infamous theory of the tendency of the average rate of profit to decline.
One distinction that will be important to keep in mind as we move through the text is the difference between profit and surplus value – the social surplus value which is redistributed to capitalists, thus not deriving directly from the exploitation of the labor-power that they themselves have put directly to work, and; surplus profit, which does not participate in the “general movement of equalization of the rate of profit. (12)” The former clarifies the socio-economic implications of the organic composition of capital in regards to this average and percentage redistribution (15-16). Mandel expands on this category of surplus-profit later in his introduction as well (see 56-63, see in particular Mandel’s own controversial position on this, footnote 89 on p. 61). Generally speaking, this distinction thus brings to light three important points that Mandel discusses:
- 1) value is social and not individual in character, and thus those with lower/higher organic compositions of capital compared to the social average waste or economize (respectively) socially necessary labour.
- 2) equalization is a tendency, not a permanent reality – which opens into a matrix of flux/reflux between capitals and thus introduces the issue of unevenness as a general process (uneven in growth, in technical innovation, etc
- 3) And most complicated of all, the transformation problem (relation between profit and its tendencies, with surplus-value and its socially mediating function). This gets dividing into two classes of posthumous responses to Vol III:
a) What Mandel calls the ‘feedback’ problem: wherein economists have faulted Marx for supposing (implying) that only produced commodities are being ‘transformed’ by the equalization tendency, and not the input ‘prices’ of the commodities necessary for production. Mandel responds to this by saying that Marx has been read incorrectly: “prices of production of raw materials, like all other inputs bought by capitalists currently occupied in production, are unchangeable data. They cannot vary though ups or down of current production…The capitalists have to pay a given price for thme, which does not change a posteriorir as a function of what is occurring during a given year in the field of final surplus-value redistribution. (24)” Furthermore, “The formation of prices of production, i.e., the calculation of the average rate of profit, is not a constantly moving process. It is linked to the overall realization of surplus-value of all (most) of the commodities currently produced. That is why a minimum time-span must be assumed before one may speak of a new average rate of profit replacing a previous one. (24)”
b) The infamous transformation problem: wherein people have tried to solve the issue of how values become prices (i.e., creating a Marxian model of a functioning capitalist economy). Mandel responds that “Values are quantities of labour, and have nothing to do with money prices as such. The equalization of the rate of profit between different branches of production occurs through the transfer of quantities of surplus value from one branch to another. Again, quantitites of surplus-value are quantities of labour (surplus labour) and not quantities of money. (27)” Mandel, in his characteristic clarity, sums up the problem as such: “What is really involved in this controversy is whterh the ‘transformation problem’ concerns the immediate move from essence to appearance, in other words to the process of production and circulation in day-to-day reality, or whther – as I would strongly maintain – it is only a mediating link in the process of cognition, which does not yet deal with immediately verifiable, empirical data, i.e. market prices. (28-29)” This last statement not only clarifies the issue, but also expresses Mandel’s ability to engage with debates of Marxian economics while not losing sight of the distinction between Marx’s conceptual/theoretical project and the somewhat reified project of trying to turn this into an economic system as such.
I’m trying not to get bogged down too much in this intro, so to wrap this up, the last section of the Mandel intro that I found really helpful was his discussion of crisis-theories, including the theory of the declining rate of profit (and subsequent debates emerging from it). It is worth quoting Mandel’s summary of Marx’s theory wherein he summarizes its three components:
“Since that  part of capital which alone leads to the production of surplus-value (variable capital, used to buy labour-power) tends to become a smaller and smaller part of total capital, because of the  fundamentally labour-saving tendency of technical progress – the gradual substitution of dead labour (machinery) for living labour – and  because of the gradual increase of the value of raw materials in that of total output: since, in other words, the organic composition of capital in its value expression tends to increase, there is an inbuilt tendency for the average rate of profit to decline in the capitalist system. (29-31)”
I found this to be a succinct summary of the aspects of the theory. Additionally, Mandel links this to general crisis theories emerging out of Marxian theory – in particular that this tendency for the rate of profit to decline is the general crisis – understood via the notion of overproduction – which Mandel rejects, at least as a singular causal explanation. He then describes his own reading:
“In the framework of Marxist economic theory, crises of overproduction are simultaneously crises of over-accumulation of capital and crises of overproduction of commodities. The former cannot be explained without pointing to the latter; the latter cannot be understood without referring to the former. This means that the crisis can be overcome only if there occurs simultaneously a rise in the rate of profit and an expansion of the market…(42)”
His summation of the (1) disproportionality theory of crisis (Hilferding), the (2) under-consumption by the masses theory (Moszkowska) and (3) over-accumulation theories of crisis is great. For Mandel – crisis is the integration of all these aspects – not one singular causal origin that then sets the system into crisis, and shows how dynamic the system is – thus emphasizing his infamous long-wave theory of capitalism, summarizing:
“It follows that the law of the tendency for the average rate of profit to decline is less a direct explanation for crises of overproduction properly speaking, than a revelation of the basic mechanism of the industrial cycle as such: in other words, an uncovering of the specifically capitalist, i.e. uneven, disharmonious, mode of economic growth, which unavoidably leads to successive phases of declining rates of profit, and recuperation of the rate of profit as a result, precisely, of the consequences of the previous decline. (51)”
Ok, off to the text (and skipping over the Engel’s Preface).