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Commons commenting on Marx and Proudhoun

Commons provides a short discussion to contrast Karl Marx (communism) and Pierre Joseph Proudhon (anarchism) in Institutional Economics.  His point in writing about these two authors is to continue to flesh out the idea of theory of efficiency versus an economic theory of value. This is section eight in the chapter of efficiency and scarcity pages 366 to 378.  Commons wants us to understand that Ricardo and later Marx led us to a theory of efficiency and not a theory of value.  This is not in itself a negative as a theory of efficiency is important to Commons. However, Commons wants us to understand that a theory of efficiency as espoused by Ricardo and Marx is only half the story of a theory of value.  Marx is the real part of the story in this section with some attention paid to Proudhon.

As usual, Commons points out both the advanced and faults in the various thinkers he is addressing. Marx, Commons writes, did improve on Ricardo and others by replacing a subjective use value with an objective use value that can be measured in human labor hours and in physical units.  This allowed an advance towards a modern theory of efficiency.  The problem is that, in Commons reading, Marx combines ideas of scarcity and efficiency into his theory of "value".

Marx was worried about the large factory system and the capitalist owners.  In Marx's view, Commons wrote that "capitalists to the owners of the hive extracting honey by means of their control of government" (pg. 371).  Marx was focused on the need for a rationing system of resources, there would be no bargaining transaction unlike Proudhon.

Proudhon, Commons Writes, was basing his theory of anarchy on a willing buyer and seller.  This would be similar to the idea in the Anglo American common law of reasonable value as used by Commons.  Proudhon needed to eliminate the idea of the state (government) because it would be used by one side or the other to gain power.  Proudhon was also against the power of the large business, the large farmer and landlord.  Proudhon wanted everyone to have access to some capital and production and to engage in cooperative market and cooperative credit.

Why spend time on these two authors? I believe he did this because what he wanted to show was an evolution of ideas.  Commons, to me, did not believe authors were wrong per se but brought some value to any discussion even if it confused some of the issues.  The real endpoint that Commons wants to reach is that authors like Proudhon and Marx confuse scarcity and productivity gives a double meaning to many concepts which confuse things.  Commons wants to separate productivity from efficiency so that there is a clear idea that at one level managerial transactions lead to the concept of efficiency of the engineers and that bargaining transactions lead to the concept of scarcity.  These ideas are frequently confused and given double meaning by many authors including Marx and Proudhon.  At the end of the section, Commons reaffirms again the important of the output of managerial transactions in output and input and the income and outgo of the bargaining transaction which were confused by Marx.

For myself, I continue to read various sections of Commons to try and understand each point he is trying to make and putting those points in the larger context. It is an ongoing journey.

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