Theories of Value and Distribution since Adam Smith
Maurice Dobb
Cambridge University Press, 1973.

[Labour History (Canberra), 38, May 1975, pp. 57-59.]

While labour historians munch contentedly on their safe pastures, a controversy rages which, if they were able to cope with anything more demanding than the intricacies of footnoting, should excite them to new tasks and entirely different questions. The dispute concerns ‘capital theory’ and its storm centres are Cambridge in England and Cambridge in Massachusetts. Dobb’s new book cannot be understood outside this discussion because it is intended to approach its central issue through a retelling of the way in which economists have considered capital in the last 200 years.

The point in contention is this: what is capital? Joan Robinson identified the missing link over twenty years ago:

The student of economic theory is taught to write 0 = f(L,C), where L is a quantity of labour, C is a quantity of capital and O a rate of output of commodities. He is instructed to assume all workers alike, and to measure L in man-hours of labour; he is told something about the index-number problem involved in choosing a unit of output; and hen he is hurried on to the next question, in the hope that he will forget to ask in what units C is measured. Before ever he does ask, he has become a professor, and so sloppy habits of thought are handed on from one generation to the next.

If capital has not been quantified, and if it is not equated with capital equipment, then the Marxist definition that capital is a social relationship re-takes the stage. Yet there are ideological reasons why such a definition has to be resisted by bourgeois economists. If capital is a social relations then profit is a product of that relationship, of the class struggle. The rate of profit ceases to be an algebraic puzzle and is conditioned by the relative strength of the contending classes.  Before some rude longhair eventually asked the lecturer which side of the class struggle he was on, and that would prick the bubble of value-free positive economics.

The implications of ‘capital theory’ do not stop with economists and their ilk, but break through the centre of the practice of history, making ‘labour history’ an impossibility, intellectual barren and misguided in its formulation of problems. The import of ‘capital theory’ for so-called social history will be no devastating. In both cases, “capital theory’ directs attention onto the social relations between capital and labour, spotlighting the one-sidedness of ‘labour history’ and the chitty-chattiness of ‘social history’. For this perception to carry maximum effect, the concept of capital as a social relation must be allied to the emphasis that French Marxists are giving to the centrality of the mode of production (social relationships) for a science of history.

For anyone totally unacquainted with ‘capital theory’, this book is not the place to begin. Instead, an earlier volume of Dobb’s, Political Economy and Capitalism (1937), should be read. If that work is difficult to obtain, its core has been reprinted in a Penguin selection of readings, A Critique of Economic Theory, edited by E. K. Hunt and Jesse G. Schwartz. Step two in a reading programme might as well be G. Harcourt’s article in a 1969 issue of the Journal of Economic Literature. From there, it is largely a matter of following one’s nose through the footnoted references, although the witty chapter VII of volume one of Capital should be sampled hereabouts.

Even outside the ‘capital theory’ controversy, Dobb’s latest writing will be of use to teachers. There is an introductory chapter on ideology which needs to be read by everyone in every self-styled discipline. Chapters in Smith, Ricardo, the anti-Ricardians, Mill, Marx and the Jevonians are all masterly expositions, notable for their sparse precision and ease of presentation. Each would make an wonderful addition  to reading guides on the history of economic thought. One important criticism of the new book is that, unlike Political Economy and Capitalism, it makes no attempt to relate changes in economic theory to changes in the political economy of capitalism itself.

Despite his Communist past, Dobb is no longer a Marxist, but his work, along with of the other Cambridge neo-Ricardians, et al., has brought Marxism back to the heart of academic debates. The task of carrying it forward into the study of society remains for others, especially the working class in their practices. Scholarly works will require empirical investigations employing the actualities within Marx’s early dictum that ‘History is the history of class struggle”.