The Power of Profit

Anwar Shaikh The Power of Profit I FIR ST ENCO UNTERED THE W ORK OF ROBERT H EILBRO N ER IN 1967 while I was a graduate student at Columbia University. The history of economic thought was still taught in those days, and The Worldly Philosophers was the gravitational center of this enterprise. Still, it may have been a harbinger of things to come that this particular course was taught in the business school rather than in the economics depart­ ment. Like countless others, I was swept away by Heilbroner’s classic text. Its elegance, its scope, and its grand vision inspired us to look beyond what we were being taught, to the world around us, to other social sciences, and to the classics in these disciplines. It altered the way we saw the world. Itwas the best kind ofeducation. When I subsequently joined the economics department of the Graduate Faculty of the New School for Social Research, I got to know not only Bob Heilbroner but also his (and subsequently my own) mentor, Adolph Lowe. My educa­ tion continued apace. This essay is dedicated to a central question to which Heilbroner returns again and again: Does capitalism have intrinsic patterns, and if so, to what extent can they be modified? I. PROFIT AS THE DRIVING FORCE OF CAPITALISM Capitalism is a mysterious entity. It is so easygoing on the surface and so compulsive underneath. What drives this system? This is the central question of political economy. In his earliest work on the subject, The Worldly Philosophers, Heilbroner focused on the overarching visions o f the great econo­ social research Vol 71 : No 2 : Summer 200 4 371 m ists. The history, structure, and future o f capitalism were the m ain them es. Over tim e, he turned his attention to developing his own analysis o f these sam e issues (Heilbroner, 1976; 1978; 1993). Like all serious inquiry, this led him backward, at least initially, away from answers towards questions. And so, more than 30 years later, he had m oved from concentrating on the past and future o f capitalism to w riting about its nature and logic (Heilbroner, 1985; 13-14). Heilbroner tells us that in his earlier writings he tried to avoid the difficulty of defining the term “capitalism” by focusing instead on markets, on commerce, on business. But he eventually came to believe that this was insufficient, for while business was “an inextricable part of whatever capitalism is,” it still only “represents [its] outward-facing reality.” What came to interest him was a deeper question, concerning that “netherworld in whose grip the activities of business are caught” (Heilbroner, 1985:16), and whose influence propels the capitalist system along its fractal path. This is, of course, Adam Smith’s Invisible Hand, the veiy source of the recurrent economic patterns that are central to classical and Marxian economics. What drives all of this? Smith says that it is native self-interest, that famous natural “propensity to truck and barter.” Marx disputes this. First, because self-interest, as an overriding attribute, is by no means natural. It must be socially constructed, and socially maintained, in order to be elevated to such an exalted status. Second, because capi­ talism is ruled by the profit motive, not mere self-interest. The profit motive subordinates self-interest to its own particular goals, even as it represents itself in the guise of self-interest. On this critical issue, Heilbroner comes down on the side of Marx. “Profit is the life blood of capitalism,” he says. It is the raison d’être of individual capitals, as well as the direct measure o f their prowess. It is also the dominant organizing principle of capitalist soci­ ety as a whole, creating an imperative that repeatedly forces capital­ ists and workers back into the Hobbesian “warre of each against all” (Heilbroner, 1985: 57, 76-77). 372 social research Heilbroner is particularly careful to say that recognizing the dominant role of the profit motive does not lead to a reductive reading of capitalism’s other attributes. In this, too, he is following Marx. I repeat that domination is not rigid determination. There have been critical...