On the Marxian entrepreneur: Karl Marx's abandonment of the doctrine of exploitation under industrial capitalism

Abstract

My concern is Marx's perspective on the functioning capitalist's role with regard to technological and technical change. I first trace out Marx's minimization of the capitalist's responsibilities with regard to basic and applied science and the uncertainties attached thereto. As for innovation proper the ‘determinism’ usually attributed to Marx is less justified. It emerges that the doctrine of exploitation, as it applied to the industrial or ‘functioning’ capitalist, was under threat even before publication in 1867 of volume I of Capital. The threat emanated from Marx's own recognition, whilst composing that volume, of decision-making by the owner-entrepreneur with regard to innovation in the face of uncertainty. The exploitation doctrine, I shall show, was in effect restricted by Marx to joint-stock organization.

Keywords:

• determinism
• entrepreneurship
• exploitation
• Marxian economics

Notes

¹This paper is based on Chapter 14 and the conclusion in Hollander (2008).

²Uncertainty which can ‘be reduced to an objective, quantitatively determinate probability, can be reduced to complete certainty by grouping cases. … [M]easurable uncertainties do not introduce into business any uncertainty whatever’ (Knight 1964, 231–2).

³There is though no hint of any such modification in the Prefaces to the reprints of Risk, Uncertainty and Profit in 1933, 1948 and 1957. That work was evidently constrained to a stationary economy.

⁴Schumpeter later revised his original perspective, in the light of ‘the obsolescence of the entrepreneurial function’ within the giant, bureaucratized, firm where ‘so many things can be strictly calculated that had of old to be visualized in a flash of genius’ (Schumpeter 1950, 131–2).

⁵Rosenberg (1974, 717–18) draws on Capital vol. 1 to demonstrate the theme that ‘the handicraft and manufacturing stages of production lacked the technological basis which would permit the application of scientific knowledge to the solution of problems of industrial production. This essential technological basis emerged only with modern industry’.

⁶The complex interdependence is captured by Rosenberg (1974, 714) who has pointed out that, in Capital vol. 1, ‘science does not … function in history as an independent variable’, Marx adopting ‘a Toynbeean “challenge-response” mechanism to account for the emergence of high productivity societies, in which the changing requirements of industry and the altering perception of economic needs … provide the stimulus to the pursuit of specific forms of scientific knowledge’ (Rosenberg 1974, 725). At the same time, the ‘demand-induced’ approach to science is contingent on ‘the ability to apply science to the productive sphere [which] turns upon industry's changing capacity to utilize such knowledge’ (Rosenberg 1976, 129).

⁷More accurately, ‘anticipated improvements’ (see section IV). But whence the ‘anticipated improvements’? I surmise that an entrepreneur who wishes to stay in business may well be obliged to install them himself to forestall or counter imitators. If this is the case, the two concerns with imitation and obsolescence are, in fact, united.

⁸For a modern discussion of relevant issues with respect to ‘technological expectations’, see Rosenberg (1982, 104–19).

⁹Noteworthy too is Marx's further remark that under socialist organization allowance for insurance would also be required: ‘At most one could say that, even apart from capitalist production, the producers themselves might have certain expenses, that is, they would have to spend a part of their labour, or of the products of their labour in order to insure their products, their wealth, or the elements of their wealth, against accidents, etc.’ (Marx 1991, 282).

¹⁰The observation applies to credit granted private as well as joint-stock firms. See this article (section V) regarding ‘credit offer[ed] to the individual capitalist’.

¹¹One text appearing in the Economic Manuscripts raises a complexity. In the discussion of cyclical recovery mechanisms we encounter a surprisingly positive evaluation of the monied interest which benefited from bankruptcy of firms; for these ‘parvenus into whose hands … stocks and shares fall cheaply’ are said to be ‘mostly more enterprising than [the] former owners’ (Marx 1989b, 127). Might Marx have altered his view on the character of the monied interests between 1861–1863 and 1865–1866, when the materials constituting Capital vol. 3 were largely composed? It may be relevant that the negative perspective of the monied interest in Capital vol. 3 relates to their acquisition of the real assets of bankrupt industrial firms of the traditional kind, whereas the more positive perspective of the Economic Manuscripts refers specifically to the acquisition of stock, implying joint-stock operations.