Economic development under capitalism

Image: Cyrus Saurius


The solution to the problem of economic development was proposed in a very simple statement: “Workers of the world, unite!”


What does a theory of economic development consist of? What do your attributes need to be? What do you intend to explain? Why is there a diversity of theories of economic development? What is the place of a theory of development in a political world? Why can no theory of development be interest-free? What are the interests behind a theory of economic development? Why are there theories of development and theories of growth? What relationships can we observe between the existence, reproduction and expansion of real economies and a theory of development? Is it possible for a theory of development that is not political? And, being political, which interests can it serve: private or collective? It was this “brief” set of concerns that gave rise to this great adventure: investigating theories of economic development from theories of “value”. The objective was to verify if Economics, as a science, can serve as an auxiliary instrument in overcoming the struggle for existence among men, so that one day, finally, the human ideals of freedom can be established in a real way, and not only formally. , equality and reciprocity. That is, the article discusses the relationship between economic development and capitalist development.

This introduction may seem a little arduous because it seeks to introduce an issue that has long been abandoned by orthodox economics. It is about the “political aspects of economic theory”, a term that also refers to the title of Myrdal's book. Like him, we believe that it is not possible to formulate any plausible economic theory without seriously considering “value assumptions”, including within the framework of economic development theory. We believe that Myrdal's contribution to economic theory has not yet been fully understood, especially with regard to his study of the political aspects of economic theory. However, as the author himself warns in the preface, from 1953: “[…] Value assumptions cannot be established arbitrarily: they must be pertinent and significant for the society in which we live. To begin with, they must be formulated in concrete terms of economic interests actually pursued by groups of people, and of real human attitudes towards social processes. Under no circumstances should value assumptions be represented, in realist inquiry, by the kind of general and abstract principles which economists in our great tradition of natural law and utilitarianism use to bridge the gulf between objective science and politics. …]” (MYRDAL, 1984, p. 5)

In this article, our starting point was also a premise of value. It has two aspects. The first is related to the category “value” itself, value as a substantive element, economic value, not as exchange value, nor as price, but as a completion of the social utility of the products of human work. We peremptorily reject the utilitarian value premise, based on the empirical finding that social functions are much more adequate to explain human behavior than the immediate sensations of pleasure and pain. The second aspect, derived from the first, places the value category as an intermediary element between economic interests and civilizing ideals (“Social Value”), or the civilizing degree possible to be achieved (the effective realization of equality, freedom and fraternity ‒ the latter in the sense of reciprocity, that is, equality in social relations, due to the lack of forms of exploitation or expropriation among men).

We present our premise based on the contrast between two ways of thinking about economic precepts. The utilitarian premise that can be expressed as follows: if the theory of economic development, which is based on a theory of substantive value (value as an attribute of human labor power), reveals forms of exploitation and expropriation of man by man; therefore, one has to replace such a theory with another one where such problems do not exist; a theory of value in which all surplus produced in the process of income distribution is eliminated, in order to also eliminate any possibility of distributive conflict.

In contrast, our premise can be expressed as follows: the labor value theory, by revealing economic value (result of social relations established between men and between men and nature), also reveals that its production takes place through forms of exploitation and expropriation of man by man. Therefore, a theory of economic development must necessarily formulate solutions so that the process of creation of social products happens free of forms of exploitation and expropriation of man by man. In this path, perhaps the only way to ensure the elimination of forms of exploitation and expropriation of man by man is through the equalization of income and the consequent equal fulfillment of social needs (economic and political determinations, but always of a collective nature); instead of the satisfaction of individual, private wills.

Social needs are related to the technical stage reached by a society. In contemporary capitalism, such needs are associated with a certain level of education, a certain housing standard, medical and hospital care, cultural production, leisure possibilities, in short, the set and breadth of social functions carried out by specific categories of workers. Individual needs are of a different nature. They are associated with individual wills, individual tastes and preferences. They refer to a particular satisfaction that can be expressed in various ways (joy, sadness, acceptance, denial, etc.), but a satisfaction that cannot be felt directly by anyone other than the person experiencing it.

In this sense, perhaps the only possible way to meet social needs equally, without disregarding individual wills, is to find a way to deal with the real contradictions of money, merchandise and capital (as representatives of value), in addition to those established by utilitarianism. That is, we need to simultaneously deny money, merchandise and capital and, at the same time, accept them, as they constitute the means and forms of a possible sociability at the technical stage reached. We need to deny money in its characteristic of unrestrained personal accumulation, but accept it as an element in the establishment of exchanges and personal choices of satisfaction. Likewise, we need to deny the commodity as an instrument of social domination (the commodity fetish), but accept it as the only form of social utility to satisfy social or individual needs. Finally, we need to deny capital and its endless quest for accumulation, but at the same time, accept it as a producer of surplus, as an end to reproduce, expand and modernize the social productive forces. This is the real problem that a theory of development has to face.

Alternative definition of economic development

What is the possibility of formulating a general theory of economic development? To think about this possibility, we first need to establish a set of premises. The first premise is related to what we call social needs and ways of meeting them. We start from the assumption that given a certain technical configuration there is a set of ways of meeting social needs. At the base of the premise is the idea that as human beings we cannot be denied the fulfillment of a social need, given the conditions for its realization. That is, given a set of techniques, there is a standard of meeting social needs that is possible for all individuals in a society. So that each and every individual can fulfill their social needs without depending on their social position, their income, their spatial location. Finally, of any difference that is the result of the “distinction” provided by the individual unbridled accumulation of wealth.

The second premise is related to the establishment of an equal economic condition for all individuals in a society, regardless of their social functions. Our general proposition for thinking about a theory of economic development can be expressed as follows: equal remuneration for equal social needs regardless of social functions. For, the fulfillment of social needs can only be carried out under equal conditions if all individuals have relatively similar economic conditions. We can now derive an alternative definition of economic development.

Economic development is ultimately the equal fulfillment of the social needs of all individuals in a society. This equality in meeting social needs must necessarily accompany the modernization process derived from economic growth and the evolution of technical progress associated with it.

It is necessary to clarify that the standardization of earnings does not mean the standardization of individuals. It means, above all, the standardization of meeting social needs. The individual needs, tastes and preferences of the individual, or the idiosyncrasy of each being, is thus preserved in its entirety. Because the definition of development stated above does not represent the abolition of money, commodity and capital forms, but reconfigures them in the sense of their social functions.

If the definition of economic development can be expressed in this way, there is both the possibility of formulating a general theory and the proposition of global solutions for our global problems as a humanity. For, starting from the finding that as human beings our social needs are the same, at any time and place, and also from the finding that the technical-scientific-informational Revolution, by providing a significant “annulment of space by time”, it also provided the foundations of a truly worldwide community. This implies that it has made all our problems and solutions common, in human and social terms. This concludes our fourth qualification on a theory of economic development.

The theories of economic development

We do not intend to write a history of ideas or theories of economic development throughout the history of economic thought. Our concern is only to deal with the implications of the two theories of value, the labor theory of value and the utilitarian theory of value, on the configuration and a theory of development and on the policy implications derived from them. In this sense, we will be able to compare whether or not there can be convergence between economic dynamics and economic development, in the parameters of the definition presented above.

Myrdal (1984), made an important contribution both on the theory of value as the starting point of all economic analysis, and on the normative implications derived from it: “[…] The entire history of economic thought is marked by the notion that by resorting to purely logical operations it is possible to formulate, based on empirical observations, the concept of a kind of 'value' that is somehow deeper than the simple exchange value or price. It is believed that this concept should be the starting point of all economic analysis that really tries to penetrate below the surface. It is also generally accepted that value theory has a central significance in the construction of economic-political doctrines. Indeed, the theory of value is always implicit in political outcomes, even when it did not figure explicitly among the premises” (MYRDAL, 1984, p. 26)

The theory of value-work as a core explanation of economic phenomena presents two specifications: that of the classics and that of Marx. Both reflect the idea of ​​revolution, the establishment of a new society and a new form of sociability.

For the classics, the labor theory of value represented the overcoming of the past, of the feudal world, from the establishment of a new form of value, no longer the value associated with land ownership or social titles, but economic value. A situation already present in social reality derived from the historical conditions that promoted the generalization of exchanges. From their theory of value, they also overcame other “imperfect” forms of value representation, such as those derived from physiocracy and mercantilism. According to Smith (1983, p. 357): “The differentiated progress of wealth, in different times and nations, gave rise to two distinct systems of Political Economy, regarding the enrichment of the population. The first may be called the trading system, the second the farming system. I will try to explain both as fully and clearly as possible […].”

In general, in classical economics, development is directly associated with the possibility of producing an economic surplus. The existence of this opens up a set of alternatives for society, making the possibility of economic expansion real. However, for economic growth to take place and, from it, the expansion of productive capacity to occur, it becomes necessary that the surplus is in the hands of a certain class, with certain objectives, which are specific to its class.

The social totality seen by the classics consists of three classes of agents, each with a specific role in the economic dynamics, as well as with a specific income derived from their respective participation in the production process. Landowners offer arable land in exchange for rent and spend their income on manufactured goods. Salaried workers offer labor power in exchange for wages and consume all their wages in the process of reproducing their daily lives. The capitalists, who from an initial endowment of money, hire salaried workers and acquire different means of production, combine them through a certain productive process, obtain a commodity and offer it on the market for sale, making a profit.

Therefore, for the classics, in general, the starting point of the process of economic transformation (development) is associated with an “initial endowment of money”, a surplus. The existence of this, in turn, is associated with the idea of ​​sacrifice. It was only after this sacrifice of present consumption (savings) for increased consumption in the future that the surplus appeared. Primitive accumulation for the classics, as noted by Marx (2017, p. 785), roughly speaking, occurred as follows: “[...] in a very remote time, there was, on the one hand, a hardworking, intelligent and above all thrifty elite. , and, on the other, a swarm of loafers squandering everything they had and even more [...]”.

In this scheme, the responsibility for economic development, that is, for the generation of national wealth (surplus) is the responsibility of a single class: the capitalist class. The role of the landowner class is represented in two ways; consumption (including ostentation), and the increase in rent due to economic growth and the urbanization process, which, by increasing land rents, also increases the cost of living for salaried workers and, consequently, negatively affects the income of the class capitalist. Thesis, presented by Ricardo, based on his theory of land rent. If cultivation extends to land farther from the place of consumption and occurs from lower levels of productivity (due to lower quality of the land), it will necessarily lead to an increase in rent prices and a consequent increase in the population's cost of living. Therefore, the share of landowners in the product will increase, increasing urban wages, a process that will result in a reduction in the share of profits in the total product of the economy. The result will be a decrease in profits and a disincentive to production. At the limit, profits will be zero. In this case, the famous “steady state” of the classics is installed.

Therefore, development for the classics is associated with the productive process, specifically manufacturing production, and with a certain class configuration of economic agents, a configuration where the interests of capitalists prevail. In this sense, the existence or not of economic development depends on the possibility of the capitalist class being able to impose its will on the other classes.

The role of the salaried working class is that of value creation. For, for the classics, roughly speaking, unlike the physiocrats (land) and the mercantilists (accumulation of precious metals), value is created from work. The labor theory of value was a fundamental contribution to the theoretical development of economics as a science.

From it, a scientific approach to the treatment of economic issues was established. For, from it was derived both the cause of value (human work) and a measure of its greatness (hours necessary for the production of a certain product). In this way, it was possible both to justify and to explain the process of exchange and its generalization, the transformation of the product of labor into merchandise, as well as the formulation of a theory of market prices.

The classics also defined that the problems of economic development necessarily involve internal and external aspects of a national economy. Therefore, the analysis must always be conducted considering these two perspectives as complementary. First, the internal organization of a society, that is, the base of its natural resources, the existing or emerging social classes, the relations established between them, public administration (forms of government and political relations). Finally, the national past and its evolution. Second, the external relations that a national economy establishes with other nations near or far.

So do the classics. After analyzing the internal structure, highlighting the role of economic agents, they begin to theorize about external relations. Smith, from the critique of the mercantilist system, elaborated a set of formulations on the advantages of foreign trade and formulated his theory of free trade: “[…] Whatever the countries or regions with which one trades, they all obtain two benefits of foreign trade. This brings out of the country that surplus of the production of land and labor for which there is no demand in the country, bringing back, in exchange, some other commodity of which there is a need [...] does not prevent the division of labor from being carried out to the utmost perfection in any branch of handicrafts and manufacture [...] , 1983, p. 372)

However, it was Ricardo who systematized a theory of international trade based on his theory of comparative advantages, which became the foundation for the formulation of a whole range of international trade theories from then on. It was contested only in the 1950s, through the observation that foreign trade did not lead to a convergence in the remuneration of productive factors between the different countries participating in the world economy: “Contrary to what is inferred from the latter [the traditional theory of trade international exchange], external exchange did not lead to equalization in factor remuneration. On the contrary: it has operated in the sense of enabling the concentration of income in favor of industrialized countries through the long-term deterioration of the terms of trade of countries specialized in the export of raw materials” (FURTADO, 2000, p. 236)

This brief presentation of the classics has three purposes. The first is to show the importance of the labor theory of value as a central element in the thinking of the classics, from which a vast and rich arsenal of instruments for economic analysis was formulated. Second, to show that the methodologies formulated and used by the classics are still important for economic analysis. Third, that the “formulation of normative rules” must be a “central function of theoretical analysis”. This is because, the objective of their analyzes was the “really existing society”, but at the same time it was also “a definition of the society that they maintained should exist” (MYRDAL, 1984, p. 18).

Therefore, even if the classics' idea of ​​development is incongruous with “social value” (understood as the general benefit of all derived from economic growth), they believed the opposite. For them, the labor theory of value, by placing productive work as the foundation of wealth, making the active role of the capitalist in the economic dynamics in relation to other social classes, establishing the market as an infallible organizer of efficient exchanges instead of relations of easement, highlight the advantages of foreign trade and manufacturing production; truly believed that their theory of value acted as a determining element in the foundation of a new society: “[…] enlightened and enlightened society of independent individuals who reason and discuss, barter and exchange, just and deliberate men who see through their own prejudices [...]” (ROTHSCHILD, 2003, p. 18).

One of the most important lessons from the classics is certainly about the relationship between economics and politics. Even within the scope of the doctrine of economic liberalism, the classics formulated a set of normative propositions that could contribute to bringing society to the “common good”. This is because the “common good” is a political determination. Freedom, equality, fraternity, are social values ​​defined as a “common good”, a product of human reason as opposed to our original constitution as animals. In wild nature, the survival of one depends on the annihilation of the other, it is the struggle for existence. In society, this second nature also requires a second survival strategy, which is given to us by the use of reason. Economics would be the science that would give us the means and instruments that would distance us from the struggle for survival, as in nature, and would lead us to a situation in which there was neither violence, nor exploitation and expropriation, in the relations that men establish between itself, in its process of production and reproduction: “The implicit belief in the existence of a body of scientific knowledge acquired independently of all value judgments is, as I see it, naive empiricism. Facts do not organize themselves into concepts and theories just by being contemplated; indeed, except within the framework of concepts and theories, there are no scientific facts, only chaos. There is an inescapable element to priori in all scientific work. Questions must be asked before answers can be given. Questions are an expression of our interest in the world; they are basically value judgments. Value judgments are thus necessarily covered at the stage when we observe facts and make theoretical analysis, not just at the stage where we draw political deductions from facts and value judgments” (MYRDAL, 1984, p, 4-5) .

However, Economics as a science took another path. As Myrdal (1984, p. 23) points out, the “[…] result of the efforts of several generations of economists in order to find norms of economic policy […]” developed and perfected “a nucleus of positive economics”. From then on, “[…] the general thesis that economic science, in order to be scientific, should refrain from seeking to establish political norms […]” (MYRDAL, 1984, p. 24) came to be accepted.

The replacement of the philosophy of natural law by utilitarianism, through the marginalist revolution, completely altered the understanding of economic processes and their relations with society. An evolution of the philosophy of natural law much more dangerous and evil for the "common good". The maximum of human needs would no longer depend on human action, but only on the autonomous and automatic action of market forces in their search for a “state of equilibrium”. This state would reflect an optimal income distribution according to the marginal productivity of each factor, regardless of the social situation of each agent (rich or poor, capitalist or wage earner).

According to Furtado's analysis (2000, p. 49), “[…] the uncomfortable idea of ​​the classics that the remuneration of work and capital were of a different nature [...] would totally disappear”, and economic development “would be in a good mood of some citizens”, morally determined by the concepts of waiting (expectation of future profit) and sacrifice (savings): “The theory of economic development that can be extracted from the neoclassical model is simple and is formulated as follows: the increase in productivity of the work (which is reflected in the rise in real wages) is a consequence of capital accumulation, which, in turn, is dependent on the anticipated rate of return on new capital and the offer price of savings. Capital accumulation, causing an increase in real wages, would tend to increase the share of wages in the product and, therefore, to reduce the average rate of return on capital. Now, by reducing the 'demand price' of capital, there would be a disincentive to savings and, consequently, a reduction in the pace of capital accumulation. We thus go back to the theory of stagnation. Strictly speaking, the ideas of profit, accumulation, development, do not fit into the neoclassical model except as consequences of moving away from the equilibrium position. In this, the remuneration of the capital has to be equal in all its applications, corresponding to the interest rate. As long as there are profits, that is, remuneration for capital, in a given sector, above the average, it should be deduced that the optimal allocation of productive resources has not been reached, since it would be possible to increase the productivity of a factor by displacing it from one to another sector. As accumulation, that is, net investment, only takes place in the face of an anticipated profit, it is evident that the optimal use of resources can only be defined in terms of a stationary economy” (FURTADO, 2000, p. 50-51 ).

Perhaps the closest analysis to the proposition of a truly social theory of economic development was proposed by Marx, in his work Capital. Starting from the labor theory of value, he really reaches the essence of the contradiction between the capital social relation and the establishment of “Social Value”, as a “common good”. His theory of exploitation reveals the difference between what is essence and what is appearance in the capitalist mode of production. His theory of capitalist accumulation reveals the always unequal and combined form of production and reproduction of capitalism through the socialization of work and the private appropriation of its result. His theory of the industrial reserve army shows how individuals only represent an exchange value in the social process, employed when they serve capital, unemployed when they lose their usefulness. In general, his theory reveals how everything and everyone becomes hostages of production for the sake of production and accumulation for the sake of accumulation, instead of production serving to satisfy human needs. These appear more as a side effect of the production than as its main objective.

After Marx, neither the heterodox nor the orthodox strands managed to formulate any theory that was not based on: “[…] the idea that the economic process represents the economy of a personified society that tries to obtain the maximum of the available resources, working in this way for a common purpose, remained the generally accepted form of reasoning in economics and governed the formulation and proof of its political doctrines. It will be found that, in essence, all these doctrines serve to indicate what is most 'economical' from society's point of view” (MYRDAL, 1984, p. 27).

Keynes consolidated this way of thinking economics through the condition of macroeconomic equilibrium given by the identity between savings and investment. In the short term, the Keynesian multiplier becomes synonymous with growth and development. In the long term, based on the dynamization of the model carried out by Keynesian economists, the problem of growth (or development) consisted solely of finding a rate that would proportionally balance variations in income and productive capacity.

There is also a set of approaches that we will not explore in this item, such as institutionalism and evolutionary economics, for example. Not because they are not important or interesting. On the contrary, they present relevant contributions mainly relating Economics to politics. However, in terms of development theory as defined in this article, they point to the same results as the Keynesian dynamic models. In other words, they do not solve the incompatibility between Economy and “Social Value”.

As Mandel (1982, p. 26) put it, the history of capitalism is “[…] at once the history of its internal regularities and unfolding contradictions […]”.

the capitalist development

To make the debate clearer and more purposeful, we must first consider that the theme of development, as it has been treated so far in economic thought, with the exception of Marx, and in a certain sense of the classics, means development in capitalism and of capitalism. Therefore, if capitalism is an expanding system riddled with contradictions, its development, or a theory of development designed for it, will also result in a theory with such contradictions.

In this respect, the development of capitalism can be understood as the development and combination, in certain proportions, and according to its historical stage, of mercantile capital, industrial capital and banking capital, with certain implications on its dynamics. The contradiction between capital and labor is constant throughout its existence and is reflected: both in the configurations of the capital accumulation process (forms of realization of absolute and relative surplus value and the implications of technical progress on the extent of extraction of the same); and in the unequal distribution of the product, always maintaining the separation of classes between capitalists and salaried workers.

Thus, each stage of capitalism corresponds to a particular form of accumulation that gives it a specific dynamic. In a very comprehensive way we can separate such stages as follows. The era of merchant capital or mercantilism dates from the 1970th to the mid-XNUMXth centuries. The era of industrial capital, from the mid-XNUMXth century onwards from the English Industrial Revolution to the third quarter of the XNUMXth century. The era of financial capital, supported by the Technical-Scientific-Informational Revolution of the mid-XNUMXs, which is still in full swing. Each of these stages corresponds to a certain development of the value form (increasingly dematerialized), a particular dominant process of accumulation (commodity accumulation, industrial accumulation, fictitious accumulation), and a certain configuration of income distribution, always unequal, since it corresponds to the respective participation of the factors in the total product.

Apparently, of these three major stages, only the industrial stage allowed for some income distribution that was less unfavorable to the working class. Especially, in periods when it was able to organize itself and, through struggle (sometimes violently, others through “legal” means), implement or change a certain arrangement of labor legislation (as, for example, in XNUMXth-century England) . Or, also, in periods of intense economic growth of capitalism, as was the case of the Golden Age in the XNUMXth century, which resulted in the construction of the “American dream”.

However, in common, all these eras keep, reproduce and expand the basic contradiction of capitalism that is based on its social relations of production: salaried work based on merit.

Perhaps, still, one of the best references to analyze the issue of development in capitalism and capitalism is the book “Modern economic growth”, by Kuznets, published in 1966. In it, the author presents his ideas about the nature of economic growth since the English Industrial Revolution until the beginning of the 1960s, work that was carried out from a large statistical base. As Rischbieter, presenter of the book in the Brazilian translation of 1983, highlighted, the renowned American economist Paul Samuelson stated that it was thanks to Kuznets’ research that it was possible to “formulate certain general uniformities about development” (both in the USA and in other advanced nations of the world). world). So it is also a book about economic development. So far, it is perhaps the statistically broadest and most theoretically profound analysis ever carried out by economic orthodoxy on the subject.

Chapter four of Kuznets' book, which deals with the “distribution of product and income”, is both a confirmation of the analysis carried out in the previous chapters and of chapter XXIII of book I of Capital, entitled “the general law of capitalist accumulation”. Note that Kuznets makes his analysis in the golden age of capitalism. He confirms that in the course of economic growth the “shares of national income, personal income and disposable income in gross national product decline”, despite “sustained increases in total and per capita” (KUZNETS, 1983, p. 114). The aforementioned author credits this reduction to two factors: 1) “amplitude of progressive income taxation”; and 2) “provision of free benefits” (expansion of social services offered by the State, medical and educational, for example). This partly reflects the reality of the welfare state.

Kuznets (1983, p. 132), in this chapter, was interested in “studying the effects of economic growth ‒ interpreted as changes in the production process ‒ on the distribution of income by size”, that is, by individuals and by families (main recipients of the economy): “[…] Our main interest is to observe whether, in association with income growth per capita, changes in industrial structure, trends in factor shares and other trends within modern economic growth, there have also been changes in the distribution of income by size, which in turn would have affected the uses of incomes in saving and investment or in different consumption categories […]” (KUZNETS, 1983, p. 132).

Thus, although the author is interested in studying trends in the participation of factors associated with changes in the production process, he starts from an already established value premise: “[...] the comparison of participation in income must adjust to differences in the cost of living […]” (KUZNETS, 1983, p. 133). Its conclusion is that the inequality in participation in income, derived from the sphere of production, increases because the cost of living increases, and also that, in the course of economic growth, the participation of consumption remains even in the face of the increase of lace per capita: “[…] The production process reflects the different living conditions, associated with different functions and levels of condition; any changes in the distribution of income by size, which reflect such differentials in associated and indispensable costs, must be adjusted for their effects. Thus, if, in the process of economic growth, the inequality in the shares that derive from the productive process widens (or narrows) because the differential costs widen (or narrow), such changes cannot be interpreted as expressive trends in the distribution of income” (KUZNETS, 1983, p. 134).

Now let's compare Kuznets' statement with the following quote from Chapter XXIII of Marx's Capital: “[…] But the more or less favorable circumstances in which wage earners are maintained and multiplied in no way alter the fundamental character of capitalist production. . Just as simple reproduction continually reproduces the capitalist relation itself - capitalists on the one hand, wage earners on the other -, reproduction on an enlarged scale, that is, accumulation, reproduces the capitalist relation on an enlarged scale - on the one hand, more capitalists, or larger capitalists; on the other hand, more wage earners. The reproduction of labor power, which must incessantly be incorporated into capital as a means of valorization, which cannot be disconnected from it and whose submission to capital is only veiled by the change of the individual capitalists to whom it is sold, constitutes, in reality, a moment of the reproduction of capital itself. The accumulation of capital and, therefore, the multiplication of the proletariat” (MARX, 2017, p. 690).

For Kuznets inequality widens or narrows, it is never resolved. And it is not resolved because “the production process reflects the different conditions of life, associated with different functions and levels of condition”, according to the author himself. For Marx, who noted in his analysis a hundred years earlier the same process as Kuznets, inequality cannot be resolved because “the fundamental character of capitalist production”, whether in simple or expanded reproduction, is the continuous reproduction of the capitalist relationship itself, that is , the capitalists and their profits, on the one hand, and, on the other, wage-earners (who represent and import to capital only the cost of their reproduction; a value that regulates wages).

Kuznets' premise of value, “the different conditions of life, associated with different functions and levels of condition”, is neither relevant nor significant for society. Well, it distances itself from the “common good”, from “well-being”, from “Social Value”, in short, from the relationship of reciprocity that must exist between economic income and the satisfaction of social needs. Myrdal's analysis constitutes a crystal clear synthesis of the comparison set out above: "While, for example, many economists, especially in the early days, felt called to the equity or desirability of the prevailing distribution of income and wealth, others tried to prove the opposite and indicate reforms that, if adopted, would replace the dominant system with a more equitable one. In recent decades economists have often tried to sidestep the issue entirely, assuming, for example, the existence of an equitable distribution of property and income. This premise is sometimes made to cover all "non-economic" value judgments about distribution as well, a method used by those who distrust "purely economic" solutions to the problem of correct distribution. The hypothesis formulated so that the theorist is free to establish rules of exchange, production, taxation and all such matters as he thinks can be isolated from the problem of distribution and so treated independently of political premises” (MYRDAL, 1984, p. 25).

Kuznets' conclusion, epitomized in his famous inverted-U curve, is another misleading idea about realizing the “common good”. For, in the context of the real contradiction of the capital/work relationship, the fullness of the social values ​​of freedom, equality and reciprocity cannot be realized. The author reveals that income inequality is a condition of capitalism that can sometimes decrease and sometimes increase, depending on the stage of development of capitalism, but without ever being resolved. That is, in the initial stages of the economic growth process, income inequality increases, but as the non-agricultural (non-A) sectors begin to determine the economic dynamics and, as technical progress is internalized as a productive factor, income inequality tends to decrease: “[…] It seems plausible to admit that in the growth process the most remote periods are characterized by a balance of opposing forces, and that they may have increased for a certain time the inequality in the distribution by size of total income , as a result of the rapid income growth of the non-A sector and the greater inequality existing therein. It is even more plausible to argue that the increasing reduction in income inequality observed in developed countries has come from a combination of decreasing intersectoral inequalities in output per worker, a declining share of property incomes in total household incomes, institutional changes that reflect decisions related to social security and full employment [...]” (KUZNETS, 1984, p. 145)

The conclusions presented in this item concern the incompatibility of carrying out economic development, in the sense of the real establishment of the “Social Value”, in the context of the contradiction of the capital/labor social relation, for a national economy. The same conclusions can be applied at the level of relations between countries, that is, in terms of the world-economy. We do not dwell on this discussion. To summarize, even if very crudely, the general conclusions of conventional economic theory, it suffices to show that since the premises for explaining international relations between countries are the same as those for the national economy, that is, those based on the remuneration of factors based on their respective participations in the production process, adding the premise of technical progress as an international public good (“world stock of useful knowledge ‒ source potentially accessible to all countries”, as expressed by Kuznets), the result of conventional theory is a harmonious economic progress between the nations. The end result would be a convergence of international income towards a situation of equilibrium of general welfare among all nations.

Like Chesnais (1996), we understand that globalization should be thought of as part of the process of internationalization of capital and its valorization: “The degree of interpenetration between capitals of different nationalities has increased. Cross-international investment and cross-border mergers and acquisitions engender highly concentrated offer structures worldwide [emphasizing] the financial aspects of industrial groups and [imprinting] a financial logic to the capital invested in the manufacturing and services sector” (CHESNAIS, 1996, p. 33).

This mobility and autonomization of the accumulation process in the face of the different forms of capital existence have a very high political and social price. First, the loss of power by the State to discipline and regulate the growth and development of national economies. The State becomes hostage to the logic of capital. Therefore, by becoming a prisoner of the logic of financialization, if you do not completely lose your ability to make public policies, your political autonomy becomes quite limited.

This “way of being” of contemporary wealth does not present conditions for a socially oriented development, first of all, “[...] represents the adequate and perverse modality of accumulation in the new capitalism (MARAZZI, 2011, p. 54). For Carcanholo and Nakatani (1999, p. 302): “[…] speculative capital does not present conditions to sustain a new era in capitalism, which lasts for decades and which historically reorganizes the world according to its interests, which can establish a new sustainable international division of labor, which guarantees acceptable levels of economic growth and which allows minimally bearable living conditions for a reasonable portion of the world's population. The epoch of the predominance of parasitic speculative capital can only prevail during a period, greater or lesser, marked by deep and recurrent financial crises and, on the other hand, by a polarization never seen before in the history of capitalism: magnificent material wealth on the one hand and deep and growing misery in much of the world.”

That said, the only real solution to the real problem of economic development and its central issue, income distribution, was proposed in a very simple statement, still in 1848, that is, 173 years ago: “Workers of the world, uni -you!".

*José Micaelson Lacerda Morais He is a professor at the Department of Economics at the Regional University of Cariri (URCA).


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