Duncan Foley On Socialist Alternatives to Capitalism

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Barkley Rosser
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So, a couple of weeks ago there was a conference at the New School honoring Duncan Foley, who seems to be gradually retiring, half time to quarter time, I am not sure.  It is my understanding that this conference had a lot of emphasis on Duncan's work on Marxist economic theory, with it organized by Roberto Veneziani and Mark Setterfield.  I did not attend, but heard rumors about it.  As it is, this is the second conference there honoring Duncan.  I attended and presented in the first, which resulted in a festschrift volume in 2013, Social Fairness and Economics: Economic essays in the spirit of Duncan Foley, Routledge, an excellent volume.

The first thing that should be noted is that while Duncan is indubitably one of the leading living theorists of Marxist economics, he does not consider himself to be a "Marxist," but rather a student of Marx, if a deeply sympathetic one.  This is a sensitive matter as he was turned down for tenure at Stanford largely because he was accused of being a "Marxist economist" when he started publishing papers and books on Marxist economics.  He has always sais that his true ideology is his religion, Quakerism, the Friends, with him agreeing with their pacifism, which is not an idea inherent in Marxism, indeed, with many Marxists supporting violent revolution.  Nevertheless, there is probably no living economist who is clearly more important as a deep analyst of Mars's economics, with some of his closest rivals in attendance at this latest conference, such as Anwar Shaikh.

How he got into Marxist economics followed on from his earlier work on general equilibrium theory, which was what got him hired at Stanford in the first place (and he still writes on GET). Indeed, he had been hired at MIT from Yale to teach general equilibrium theory to grad students a la Arrow-Debreu-McKenzie, as this was not Paul Samuelson's cup of tea.  The motive for moving to Marx was the problem posed by fitting money into general equilibrium theory, which is generally done in a purely barter form.  This is also a cover for the problem of how to link micro to macro.  He was especially intrigued by Marx's writings on money in the Grundrisse and in Vol. III of Capital, which became the basis for his later interpretations and studies of this.

Again, I do not know what was presented or what he said at this most recent conference, but he has a working paper at New School from Feb. 2017 on "Socialist Alternatives to Capitalism I: From Marx to Hayek," which arguably shows his most recent thinking, not all that far from some of his earlier views, but more influenced by some of his more recent work on history of thought such as Adam's Fallacy, dealing with Adam Smith as well as Ricardo and Malthus.

Indeed, Duncan starts this paper with a discussion of post-Ricardian socialists such as Bray and Thompson, who proposed replacing money with labor-certificates, thus drawing on Ricardo's use of the labor theory of value. While he also briefly discusses the utopian socialists and Marx's reaction to them, he spends much more time on Marx's critique of this labor-certificate idea in the Grundrisse.  At its bottom, Marx in effect says that labor power's value is only instantiated in capitalist commodity exchange. So these labor-certificates will not really move a society towards socialism.  He also notes that in both Grundrisse, but even more so in the first two chapters of Capital Vol. III, Marx takes a long period position, noting that prices and wages may deviate from labor values even over entire rounds of the business cycle; that is only in the long run that prices oscillate about their natural "prices of production" given by labor values.

He then looks at Marx's own prescriptions for socialism in the 1875 Critique of the Gotha Program.  There are two stages, the first essentially being a mixed economy where workers still work in commodity production with markets, but with the surplus being taken by the state or some other entity led by the workers that would use it for public investment, social welfare, or redistribution.  The higher stage is that pure communism where the state withers away, and distribution is based on "from each according to his ability, to each according to his need," which Duncan notes is not backed up by any detailed institutional or other analysis, essentially a nice slogan.

He talks about the history of the early Soviet Union, noting that the NEP of the early 1920s looked like Marx's own first stage, but that it led to both the emergence of a neo-bourgeoisie as well as a "plodding behind the peasant."  This would be replaced by Stalin's command central planning, which achieved rapid industrial growth in the short run, but stagnated in the longer run.

He runs through Pareto and Barone and then the socialist calculation debate with Lange and Lerner and von Mises and Hayek.  He accurately sees the first two as laying the groundwork for an apolitical general equilibrium theory that could implemented either by a capitalist market or a central planner.  He notes that Lange's market socialist response is essentially an updated version of Barone, but trying to take the von Mises critique about appropriate incentives into account.  He says this is what became the policy of Deng Xiaoping in China, essentially a rerun of the 1920s Soviet NEP.

He ends with Hayek, noting his emphasis on information.  He says that Hayek essentially returns to classical political economy and engages in an "existential" redefinition of commodity production.  I am not sure I agree with this, but that is what he argues.  He makes a final critique of Hayek by noting his ignoring of the distributional question, certainly a valid complaint, and one to keep in mind on this May Day, even if Duncan Foley ultimately leaves us hanging on what are the most promising of socialist alternatives to capitalism today.

Barkley Rosser