What do you think?
Rate this book
Understanding Capital: Marx’s Economic Theory
Understanding Capital is a brilliantly lucid introduction to Marxist economic theory. Duncan Foley builds an understanding of the theory systematically, from first principles through the definition of central concepts to the development of important applications. All of the topics in the three volumes of Capital are included, providing the reader with a complete view of Marxist economics.
Foley begins with a helpful discussion of philosophical problems readers often encounter in tackling Marx, including questions of epistemology, explanation, prediction, determinism, and dialectics. In an original extension of theory, he develops the often neglected concept of the circuit of capital to analyze Marx’s theory of the reproduction of capital. He also takes up central problems in the capitalist equalization of the rates of profit (the “transformation problem”); productive and unproductive labor and the division of surplus value; and the falling rate of profit. He concludes with a discussion of the theory of capitalist crisis and of the relation of Marx’s critique of capitalism to his conception of socialism.
Through a careful treatment of the theory of money in relation to the labor theory of value, Foley clarifies the relation of prices to value and of Marx’s categories of analysis to conventional business and national income accounts, enabling readers to use Marx’s theory as a tool for the analysis of practical problems. The text is closely keyed throughout to the relevant chapters in Capital and includes suggestions for further reading on the topics discussed.
Foley begins with a helpful discussion of philosophical problems readers often encounter in tackling Marx, including questions of epistemology, explanation, prediction, determinism, and dialectics. In an original extension of theory, he develops the often neglected concept of the circuit of capital to analyze Marx’s theory of the reproduction of capital. He also takes up central problems in the capitalist equalization of the rates of profit (the “transformation problem”); productive and unproductive labor and the division of surplus value; and the falling rate of profit. He concludes with a discussion of the theory of capitalist crisis and of the relation of Marx’s critique of capitalism to his conception of socialism.
Through a careful treatment of the theory of money in relation to the labor theory of value, Foley clarifies the relation of prices to value and of Marx’s categories of analysis to conventional business and national income accounts, enabling readers to use Marx’s theory as a tool for the analysis of practical problems. The text is closely keyed throughout to the relevant chapters in Capital and includes suggestions for further reading on the topics discussed.
200 pages, Paperback
First published November 13, 1986
14 people are currently reading
227 people want to read
About the author
Duncan K. Foley
14 books12 followersDuncan K. Foley is an American economist. He is the Leo Model Professor of Economics at the New School for Social Research and an External Professor at the Santa Fe Institute. Previously, he was Associate Professor of Economics at MIT and Stanford, and Professor of Economics at Columbia University.
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 5 of 5 reviews
October 22, 2017
A great analysis of all Marx’s Capital volumes. The analysis is concise and eloquent, without leaving out major details of the volumes. This book builds the reader to understand where Marx was coming from. In Capital, rather than looking at how capitalism appears to be, Foley explains that the point of Capital is to describe the regularities. The focus is on the way the system of capitalism functions, rather than the current way capitalism seems to be.
Capitalism is just one form of social interaction. Foley points out that with capitalism, everyone is part of a complex division of labor web that requires interdependence, while contemporaneously allows everyone to assume self-reliance and individualistic private property. The seeming contradiction creates a problem, that people may not know how their efforts impact their social existence.
The social feedback loops to the individual are lost within the capitalist system. Using knowledge as an example, for knowledge may be discovered by the individual, it is a product of a social structure. History and culture determine the bounds of individual behavior, with knowledge being a product of the interaction. Prior knowledge and feedback from the community provides opportunities for the knowledge needed to be discovered, but the implementation depends on the local, tacit knowledge.
Labor expended for the social division of labor is the only form that can create value, while private labor does not have value. If more labor was used in production than necessary, the extra labor has no value. Even worse, the labor inputs have unpaid labor time. Although labor obtains a wage for every hour worker, the worker has to produce more than would be necessary. The extra production has no equivalent wage, hence goes unpaid. The unpaid labor time of production is the surplus value.
The unpaid labor time, surplus value in this view is exploitation for its production is given to a particular class. Surplus value is unnecessary labor time for the individual, exploitation of the individual, but necessary for the expansion of production to fulfil more demand. As the problem with capitalism is the distribution, the system can be altered such that the organization of production distributes the surplus value more appropriately. The reason why socialism is not discussed in Capital, is because there are a variety of ways that the production organization can manifest which depends on the cultural and historical background of the particular society.
Within the structure of capitalism, there is a tendency for the equalization of the rate of profit. The equalization of the rate of profit is not only within the particular industry, but cross-industry. If the profit rate is greater or less than in other parts of the industry or other industries, capital will move to where profit rates are higher and leave where the profit rate is lower. Not only do profits rate to equalize, they tend to fall. Capitalists are in a prisoner’s dilemma, where each capitalist wants to reduce labor time via technical change, but other capitalist figure out how to reduce their labor time’s as well. The reduction of labor time means that there is less opportunity to obtain surplus value, which decreases the overall rate of profit.
There are three major problems with this book (and Capital). The first problem is that uncertainty is not discussed. If capitalist know that their innovations will lead to a lower rate of profit due to competition, they would not innovate. If workers knew the value of their production, they would have a more bargaining power to make demands of the capitalist and reduce exploitation. Uncertainty, is present in the book, but usually with a negative connotation. Only technical change to increase productivity is seen with a positive view.
The second problem is related to uncertainty, as it has to do with knowing the values of socially necessary labor time. Exploitation depends on deriving more labor time than is socially necessary, but the amount of what is necessary is only found out post hoc. Foley does present some number as to how much labor was needed to reproduce the economy, but the amounts are post hoc. Exploitation occurs during the process of production, which creates an inconsistency because the measure of exploitation happen after.
The third problem is that if everything has to do with the social function, what is the social function. Although the social interaction is described, it is used to explain everything away. Meaning, saying something is social is used as pretense to understanding. It seems that the mention of the term is asking for credulity rather than explaining why it actually true. Foley does at times explain why a feature of the economy requires the context to be understood from a social facet, but is not always enough to do justice to the meaning and the context.
This book’s overall structure is to explain Capital, but Foley goes further than that and uses recent research to explain some of the complexity. For example, the falling rate of profit can create a crisis, but Foley points out capitalists can adapt to the lower rate of accumulation without creating a crisis. Many chapters contain additional explanations, usually using simple math to help explain a topic. Great book to understand the classical economic perspective.
Capitalism is just one form of social interaction. Foley points out that with capitalism, everyone is part of a complex division of labor web that requires interdependence, while contemporaneously allows everyone to assume self-reliance and individualistic private property. The seeming contradiction creates a problem, that people may not know how their efforts impact their social existence.
The social feedback loops to the individual are lost within the capitalist system. Using knowledge as an example, for knowledge may be discovered by the individual, it is a product of a social structure. History and culture determine the bounds of individual behavior, with knowledge being a product of the interaction. Prior knowledge and feedback from the community provides opportunities for the knowledge needed to be discovered, but the implementation depends on the local, tacit knowledge.
Labor expended for the social division of labor is the only form that can create value, while private labor does not have value. If more labor was used in production than necessary, the extra labor has no value. Even worse, the labor inputs have unpaid labor time. Although labor obtains a wage for every hour worker, the worker has to produce more than would be necessary. The extra production has no equivalent wage, hence goes unpaid. The unpaid labor time of production is the surplus value.
The unpaid labor time, surplus value in this view is exploitation for its production is given to a particular class. Surplus value is unnecessary labor time for the individual, exploitation of the individual, but necessary for the expansion of production to fulfil more demand. As the problem with capitalism is the distribution, the system can be altered such that the organization of production distributes the surplus value more appropriately. The reason why socialism is not discussed in Capital, is because there are a variety of ways that the production organization can manifest which depends on the cultural and historical background of the particular society.
Within the structure of capitalism, there is a tendency for the equalization of the rate of profit. The equalization of the rate of profit is not only within the particular industry, but cross-industry. If the profit rate is greater or less than in other parts of the industry or other industries, capital will move to where profit rates are higher and leave where the profit rate is lower. Not only do profits rate to equalize, they tend to fall. Capitalists are in a prisoner’s dilemma, where each capitalist wants to reduce labor time via technical change, but other capitalist figure out how to reduce their labor time’s as well. The reduction of labor time means that there is less opportunity to obtain surplus value, which decreases the overall rate of profit.
There are three major problems with this book (and Capital). The first problem is that uncertainty is not discussed. If capitalist know that their innovations will lead to a lower rate of profit due to competition, they would not innovate. If workers knew the value of their production, they would have a more bargaining power to make demands of the capitalist and reduce exploitation. Uncertainty, is present in the book, but usually with a negative connotation. Only technical change to increase productivity is seen with a positive view.
The second problem is related to uncertainty, as it has to do with knowing the values of socially necessary labor time. Exploitation depends on deriving more labor time than is socially necessary, but the amount of what is necessary is only found out post hoc. Foley does present some number as to how much labor was needed to reproduce the economy, but the amounts are post hoc. Exploitation occurs during the process of production, which creates an inconsistency because the measure of exploitation happen after.
The third problem is that if everything has to do with the social function, what is the social function. Although the social interaction is described, it is used to explain everything away. Meaning, saying something is social is used as pretense to understanding. It seems that the mention of the term is asking for credulity rather than explaining why it actually true. Foley does at times explain why a feature of the economy requires the context to be understood from a social facet, but is not always enough to do justice to the meaning and the context.
This book’s overall structure is to explain Capital, but Foley goes further than that and uses recent research to explain some of the complexity. For example, the falling rate of profit can create a crisis, but Foley points out capitalists can adapt to the lower rate of accumulation without creating a crisis. Many chapters contain additional explanations, usually using simple math to help explain a topic. Great book to understand the classical economic perspective.
January 17, 2023
While Duncan clearly knows the generalities of marxist theory, his analysis of the third volume of Das Kapital is really poor.
Also, his position against Bortkiewicz, Seton, Morishima and Medio's "critiques" is cowardly at best.
Skip this: there are far better introductions to Das Kapital out there.
Also, his position against Bortkiewicz, Seton, Morishima and Medio's "critiques" is cowardly at best.
Skip this: there are far better introductions to Das Kapital out there.
December 20, 2017
some of the "money" stuff is better explained by pk theory but that's not a fault of foley, it's of marx.
solid intro
solid intro
May 30, 2012
Alright, fine, I didn't actually finish this book, but I read enough of it to constitute adding it to my shelf (although I should really just be trading it in to a used bookstore, goddamn this vanity of mine).
Reading Marx can be challenging, at first. Reading guides to Capital Volume I, and re-reading Volume I, were paramount to by comprehending it. Thus, I felt the desire to read Foley, before tackling Volume's II and III.
Poor Foley. He simply isn't good at elucidating the abstruse. This is the second book I've read by him. The former was a popularizing of main stream economic thought. It paled in comparison to 'The Worldly Philosophers' by Heilbroner. And this book too pails in comparison to David Harvey's companion to Capital. Although Harvey's book is a companion, it can be read in isolation.
Foley is attempting to explain all three volumes of Marx's Capital in 160 pages. The first 60 pages discuss Capital Volume I, and the remaining 100 pages, the other two volumes. In regards to the first 60 pages, again, one would be better off reading all 300 pages of Harvey, or even some of the other intro and beginners guides to Capital. Somehow Foley incorporates obscure algebra in places where it ought not to exist, and he has absolutely no flair, flash, or pizazz in his writing. The book is dryer than Arizona, and you'll be bored stiff by the end of chapter 1. Marx may be a difficult writer, and he may require multiple readings, and additional sources, but at least he added in a sense of humor, dynamic explanations, and literary gusto, to much of his works.
I'd say I won't read Foley ever again, but I couldn't anyway because these are the only two books I've ever seen by him.
Reading Marx can be challenging, at first. Reading guides to Capital Volume I, and re-reading Volume I, were paramount to by comprehending it. Thus, I felt the desire to read Foley, before tackling Volume's II and III.
Poor Foley. He simply isn't good at elucidating the abstruse. This is the second book I've read by him. The former was a popularizing of main stream economic thought. It paled in comparison to 'The Worldly Philosophers' by Heilbroner. And this book too pails in comparison to David Harvey's companion to Capital. Although Harvey's book is a companion, it can be read in isolation.
Foley is attempting to explain all three volumes of Marx's Capital in 160 pages. The first 60 pages discuss Capital Volume I, and the remaining 100 pages, the other two volumes. In regards to the first 60 pages, again, one would be better off reading all 300 pages of Harvey, or even some of the other intro and beginners guides to Capital. Somehow Foley incorporates obscure algebra in places where it ought not to exist, and he has absolutely no flair, flash, or pizazz in his writing. The book is dryer than Arizona, and you'll be bored stiff by the end of chapter 1. Marx may be a difficult writer, and he may require multiple readings, and additional sources, but at least he added in a sense of humor, dynamic explanations, and literary gusto, to much of his works.
I'd say I won't read Foley ever again, but I couldn't anyway because these are the only two books I've ever seen by him.
June 10, 2013
Best book on Marx's theory that I've ever read.
Displaying 1 - 5 of 5 reviews