|
|
|
|
|
|
|
|
|
 Posted: Thu Feb 03, 2011 6:45 pm
Part 1 Bourgeois economists prematurely declaring the death of the Marxian Labour Theory Of Value have been at least as frequent, if not more so, than the number of times Marxists have claimed that the next capitalist crisis will be the final one. The notion that labour is the sole source of value has, quite understandably, made a lot of bourgeois economists uncomfortable over the years. Even Adam Smith and David Ricardo, upon almost encountering the first problems in the explanation of how the Law of Value actually functions, have declared the insufficiency of the LTV and thus came to the conclusion that things other than labour must be "causing" value. Smith, for example, came to the false conclusion that since the capitalist and landlord must also derive income from the sale of the commodity, then that must mean that the LTV is only operative in the "early and rude state of society." Ricardo pointed out that what Smith had really refuted was the thesis that the relative price of commodities is determined by their relative wage cost, not the LTV as such. Moreover, Smith ought to have known this, since his theory of profit clearly shows he was aware that quantity of labour and its value are different things. (I refer you to Kepa M. Ormazabal's "Adam Smith on labor and Value: Challenging the Standard Interpretration" which discusses Smith's error in depth) Ricardo on the other hand came to grief when he tried to reconcile labour values with the observed fact that profit rates tend to average out across industries - and hence that the profits capitalists receive have no prima facie relation to the amounts of living labour employed in the production of commodities. Marx, on the other hand, pointed out that such a fact is is irrelevant with respect to the validity of the LTV. This is explained very lucidly in another paper by Kepa M. Ormazabal, "The Transformation of Value into Competitive Price: Rescuing Marx' Value Theory from Historical Misinterpretation." (Both papers are available in .pdf form, I recommend that they be read, especially the second one. Ormazabal notes that Marx's presentation of the transformation problem in volume 3 of Capital is made in the exact same terms that Ricardo did in Chapter 1, Section IV of Ricardo's Principles of Political Economy:Kepa M. Ormazabal Both in Ricardo and in Marx, the formation of a uniform profit rate is accomplished through a change in the distribution of total surplus value among the capitals that produced it. The outcome of this process is the equalization of the profit rate (which, without this process of compensation, would not be uniform). Precisely, Marx accuses Ricardo of not understanding what he himself has done, which has nothing to do with the determination of value (even less with whether labor determines value), but with transforming an uneven distribution of surplus value among capitals into an even one. Marx’ Transformation is the same as Ricardo’s Transformation and consists in a change in the distribution of exchange value which, in addition to showing nothing about the determination of value, presupposes it. The materialization of exchange value as competitive price is irrelevant for the nature of exchange value itself. .... With Ricardo’s own example in hand, Marx accuses him of not having noted that the seeming refutation of the labor theory of value is not actually such, because the redistribution of surplus value among capitals does not imply that labor does not determine exchange value. Moreover; the logic of Ricardo’s example is shown to be that of a redistribution of value that presupposes that value is already determined. This is why Marx says that there seems to be a contradiction where there is actually none: there seems to be a contradiction between the labor theory of value and a uniform profit rate (so thought Ricardo), but there is none, as Ricardo’s own example shows and as Ricardo himself should have realized. For Marx, that the profit rate is or is not uniform means nothing as to the validity of the labor theory of value: what he wants to stress is, precisely, that the inquiry into the nature of exchange value is logically independent from the particular expressions of exchange value as different types of prices. As is well known, Marx, in taking over the LTV from Smith and Ricardo, gave it his own twist - different interpretations of Marx of the subject of the LTV reduce in the final instance to different interpretations of just what Marx's twist consists of. However, it is generally not questioned that the LTV after Marx now had an unambiguously anti-capitalist thrust, and hence became a frequent target of bourgeois economists, among them Samuelson and Bohm-Bawerk. However, the death of the Marxian LTV has been greatly exagerrated. Barring Bohm-Bawerk's now discredited argument (which still gets rebunked from time to time by Austrian school devotees), the main front against the Marxian LTV has been that of the so-called transformation problem. However, these critiques amount to the most conspicuous example of an ignoratio elenchi that I've ever encountered. Critiques purporting to have the irrefutability of mathematical proof have been made. In a nutshell, the usual claim is (1): that when average rates of profits produced by Marx's transformation procedure are applied to a three-department model inspired by the reproduction schemas in volume 2 of Capital, simple reproduction breaks down. And (2): In volume 3 of Capital Marx notes that in real life, input prices will not be be priced according to values, but priced according to their price of production. And so we have the accusation that Marx failed to transform the inputs. In numerous examples, from Ladislaus von Bortkiewicz to Ian Steedman, have been produced where the inputs are transformed, and the what results from this transformation results in the three aggregate equalities breaking down. Only one can hold, but it will always be both arbitrarily selected and will only hold at the expense of the other two equalities. This has long since been received wisdom, but the attempted refutations do not really address Marx's theory. I was first exposed to the Temporal Single-system Interpretation (TSSI) via Brendan Cooney's Kapitalism 101 blog. Since then, I have read Andrew Kliman's book Reclaiming Marx's "Capital' and I have since come to agree that LTV can only be advanced (and hence validly criticised) on temporal and single-system lines. Another thing I find convincing is that Bortkiewicz's argument (that simple reproduction in the three departments can no longer take place) doesn't gel. Kliman notes that Bortkiewicz's argument is the only one that claims to be a proof that Marx's LTV cannot be right. I reproduce below Kliman's example which debunks Bortkiewicz's attempted debunking of Marx:
Dept c v s w π p s/(c+v) π/(c+v)
1 280 72 48 400 88 440 13.6% 25.0%
2 80 96 64 240 44 220 36.4% 25.0%
3 40 72 48 160 28 140 42.9% 25.0%
Total 400 240 160 800 160 800 25.0% 25.0%
[Grac: I've taken the liberty of converting your examples to code, so that they are easier to read. I hope this does not cause offence.]Where w is value, π is the price of production markup, p is the price of production. It would at first seem that simple reproduction would break down, since e.g. the the price of production of Department 1's output is 440, and the constant capital is valued at 400. However, Kliman points out that this does not necessarily arrest simple reproduction - for one thing, the inputs of period 2 will by definition be bought at the prices of the outputs of period 1. Physical reproduction can take place by the simple procedure of repricing the constant and variable capitals. To take the constant capital of Dept. 1 for example, to keep the same proportions in c/p as in c/w, we reprice Dept 1's constant capital as 308. (280/400 = 0.7; 0.7 x 440 = 30 cool The living labour does not change, so the surplus value is obtained by subtracting the new variable capital input price from the total living labour. Capitalists have residual proceeds (here denoted by r, and derived by subtracting the c and v of period 2 from the p in period 1) which they spend on luxury goods; this amount equals the product of Dept. 3 in period one. So the period two schema is thus:
Dept r c v s w π p s/(c+v) π/(c+v)
1 66 308 66 54 428 102 476 14.4% 27.3%
2 44 88 88 72 248 48 224 40.9% 27.3%
3 30 44 72 54 164 30 1140 49.1% 27.3%
Total 140 440 220 180 840 180 840 27.3% 27.3%
[Grac: I've taken the liberty of converting your examples to code, so that they are easier to read. I hope this does not cause offence.]And it will be seen that Bortkiewicz is debunked and physical simple reproduction can take place. As for the formalizations of Marx's LTV over the years, almost all of them are not formalizations of the genuine Marxian LTV - or of any LTV, for that matter. They involve fallacies known as physicalism and simultaneism, or employ dual systems of prices and values. Models utilizing physicalist and simultaneist assumptions are not LTV at all, they are inherently incompatible with the Law of Value. For reasons of space, here I will only address physicalism and simultaneism, not the dual/single system controversy. That physicalism is a fallacy in connection with the LTV is obvious when you consider the implications. Let's say a worker can produce 20 widgets in 2 hours. Each widget then has an immanent value of 6 labour-minutes. Let's then assume the productivity has doubled and he can make 40 widgets in 2 hours. The labour value then becomes 3 minutes per widget. While the Law of Value states that the value of a widget is halved, under physicalist assumptions, twice as much value has been produced, since twice as many widgets have been made. Simultaneism is essentially stealth physicalism. Input and output values are solved for simultaneously (a good example would be Bortkiewicz's price of production equations) The result is that you have a feedback effect wherein input values are retroactively identical to output values.To illustrate the implications of this, I give an example Kliman himself does. Assume a corn model. 10 bushels of corn are sowed and the harvest consists of twelve bushels. Assume the input corn costs $6 per bushel, output corn costs $5 per bushel. In value terms, while there has been physical growth, there has been no value growth. However, given simultaneist valuation, the input value of a bushel would be $5, and thus it would seem that value has grown from $50 to $60, which is an increase of 20% - exactly the same as the physical amount of growth. As a result, strange things happen when simultaneist assumptions are made in ostensibly LTV models. You can have total profit negative even when surplus labour has been extracted. Conversely, you can also have total profit positive even when no surplus labour has been extracted at all. Surplus labour extracted can even be greater than the total labour performed. Value can both disappear and appear from nowhere. So it should be no surprise that treatments of the Law of the Tendential Fall of the Rate of Profit (LTFRP) and the Fundamental Marxian Theorem (FMT), when based on simultaneist valuation, get results that lead bourgeois economists to declare that the LTV is unsustainable as a theory due to internal contradictions. But, Kliman argues, when temporalist valuation (where input prices are considered to be unalterable data) is used in a single-system context, these anomalies disappear. I found Kliman's explanation of the temporalist FMT especially convincing. Under the TSSI, real profit is always positive when surplus labour is positive, and a negative PNP (Price of the Net Product) will not cause the TSSI FMT to fail. Similarly, not only does the temporalist LTFRP not fail, the Law itself is demonstrated to be ineluctable.Kliman also demonstrates that rigourous hermeneutic methodologies can demonstrate that Marx can be more plausibly interpreted as a temporalist and single-system theorist than the opposite. I would then declare the "internal inconsistency" front in the LTV war to be "won", though it seems to me we'll have years and years of denialism ahead of us. As Michael Harrington pointed out, among bourgeois commentors, "the correct interpretation of Marx is the one which demonstrates he was a blockhead." (Harrington had Samuelson in mind)
|
 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Posted: Thu Feb 03, 2011 6:47 pm
Part 2 Now, I spoke of one "front" in the war over the LTV having been won by our side. This implies the existence of other fronts, or at least of their possible existence. Committed bourgeois economists cannot easily stomach a theory of value which demonstrates that capitalism is based on exploitation and is inherently crisis-prone and so must be scrapped. It can therefore be expected that they will concoct other arguments against the LTV. In a sense they are right to do so, for it does not follow that in internally consistent model is necessarily a correct description of reality in and of itself. And as we expect, new arguments against the LTV are being thought of all the time. I refer especially to the work of Australian economist Steve Keen. Keen wrote a work called Debunking Economics. Keen mostly focuses on debunking the dominant bourgeois paradigm, marginalist neo-classicism - and I recommend that you read his book for those reasons. Now, Keen does devote a chapter on Marx. Keen is one of those economists, like Schumpter and Leontief, who is willing to give Marx his props but at the same time don't believe his LTV is valid. Keen swallows the rigamarole about the Transformation Problem falsifying the LTV. He reproduces one of Ian Steedman's examples in an attempt to convince the reader the LTV is unsound. Now, Steedman's work is the usual simultaneist/physicalist stuff. It thus does not disprove the LTV, because simultaneism and physicalism have sod all to do with the LTV. However Keen does not stop there. He endorses a contention made by Arun Bose in his Marx on Exploitation and Inequality, that the essence of a commodity cannot be solely reduced to labour, but to labour and commodities. And that therefore there will always be an irreducible commodity residue. (Specifically, there is always commodity residue unless r = 0 and w = 1, where w is the wage-rate, r is the profit rate.) One big problem with this is that in Keen's hands, the argument amounts to a bare assertion, since he does not really reproduce Bose's reasoning in depth. I don't have access to Bose's text, so I cannot assess the argument's validity. However, what is clear - and may explain why Keen does not bother giving us Bose's argument - is that Keen regards it as somehow self-evident. He even goes as far to say (not in Debunking Economics however) that "If you believe that commodities can be resolved into labour and labour alone, then you believe in magic." It seems to me at least that Keen is equating value production to production per se. Under Marx, commodities are congealed labour, that is to say, dead labour. To say that there is an irreducible commodity residue, would appear to operate from a definition of "commodity" that differs from that of Marx. While products of labour are as old as man, commodities - products made especially for market exchange - have not always existed, as a matter of historical fact. If the correctness of the argument depends on commodities never not existing, then the argument is patently invalid, no matter how good the logic is. And if it depends on non-Marxian definitions, then to say it debunks a Marxian LTV is to commit a strawman fallacy. While I have not read the original argument, Tsuto Masahiro does give some of the relevant formulae and salient points. Bose uses Sraffian analytical tools and concepts. Now, the big problem while these kinds of models is that they involve our old friends, simultaneism and physicalism. Bose also believes that the FMT can only be proved when the "labour value" approach is abandoned. Now, the TSSI conclusively proves Bose wrong on this count. Bose also defines exploitation in moralistic terms - a palpable regression from Marx to the utopians and to the "True" socialists. So it would appear - at least - that Bose is on shaky grounds. While I don't have access to his arguments, I do know what his premises are. I can supply them on request in case any of you want to tackle the problem yourself, Bose's conclusion is used by Keen as a springboard for his own, and novel, argument against the LTV. Keen notes that there are two proofs in Marx that labour is the sole source of value, a negative proof, and a positive proof based on the dialectic of the commodity. Keen severs what he calls Marx's "labour axioms" from the "commodity axioms," which are as follows (note: text from "A Marx for Post-Keynesians"): Steve Keen The Labor Axioms can be summarized as follows: 1) Value is "socially necessary abstract labor-time"; 2) Under capitalism, when markets are in equilibrium, commodities exchange in proportion to the amount of value they contain; 3) Under capitalism, the ability to perform work, labor-power, has itself become a commodity; 4) In production, labor transfers its value directly to the product, while the commodities used up in production transfer their value indirectly; 5) Labor is unique because of the difference between the commodity sold by workers, labor-power, and the commodity consumed in production, labor itself.5 6) In competitive capitalism, equilibrium prices differ from exchange values, markup on total capital employed, both variable and constant. 7) Axioms 2 and 6 are reconciled by the transformation of values into prices. The Commodity Axioms, 1) The commodity is the essential unity in capitalism; 2) Commodities have two aspects: use-value and exchange-value; 3) Under capitalism, use-value and exchange-value are incommensurable, so that the use-value of a commodity plays no role in determining its exchange-value; 4) Use-value is an objective property of commodities, assessed however from the point of view of the consumer; 5) The exchange-value of a commodity is the exchange-value of the commodities used up in its production; 6) Under capitalism, the ability to perform work, labor-power, has itself become a commodity; 7) Capitalism has two main circuits, the Circuit of Commodity Capital (C--M--C), where the objective is the consumption of use-values, and of the Circuit of Money Capital (M--C--M+), where the objective is the production of surplus value. Keen then argues that Marx's positive proof, based on the Commodity Axioms alone, does not prove that labour is the only source of value. He also accuses of Marx of logical errors, of misapplying his own categories of use-value and exchange value: Steve Keen In the course of his attempt to preserve the Labor Theory of Value proposition that Labor-power is the only source of surplus-value, Marx advanced three propositions which fundamentally contravene his general approach to commodities: that, in the case of the means of production, the purchaser makes use of their exchange-value, not their use-value; that their use-value cannot exceed their exchange-value; and that the use-value of commodity inputs to production somehow reappears in the use-value of the commodities they help create. .... While the argument may appear plausible, in reality it involves a confusion of two distinct attributes of a machine: its cost (exchange-value) and its usefulness (use-value). From a Marxian perspective, depreciation is the writing-off of the original exchange-value of a machine over its productive life. Consequently, the maximum depreciation that a machine can suffer is its exchange-value. As it wears out, both its residual value and its usefulness will diminish, and both will terminate at the same time. How ever it does not follow that the usefulness (the value creating capacity) of the machine is equal to its cost (its depreciation). Though a capitalist will “write-off” the latter completely only when the former has been extinguished, the two aspects are nonetheless completely different and unrelated. There is no reason why the value lost by the machine should be equivalent to the value added. An analogy with labor highlights the fallacy involved in equating these two magnitudes. If workers receive a subsistence wage, and if the working day exhausts the capacity to labor, then it could be argued that in a day a worker “depreciates” by an amount equivalent to the subsistence wage—the exchange-value of labor power. How ever this depreciation is not the limit of the amount of value that can be added by a worker in a day’s labor—the use-value of labor. Value added is unrelated to and greater than value lost; if it were not, there could be no surplus. The argument Keen presents, in both his book and his thesis paper, looks fairly convincing - but so do mathematic "proofs" that 1=2. Now, I must add that Keen in fact positively commits himself to the belief that raw materials and the means of production can create new value - which seems to me the same as "believing in magic". What I find supremely ironic is that Keen in his book continually blasts the marginalists for their individualistic reductionism, yet takes a position that basically denies that value is a social phenomenon and not a natural one. But then again, Keen buys the idea that Steedman's physicalist work somehow disproves the LTV, so it's no wonder he can endorse this other notion. Now, immediately after writing after "Value added is unrelated to and greater than value lost; if it were not, there could be no surplus," Keen makes a statement that he considers his coup de grace: "But don’t take my word for it. Take Marx’s." He then gives a quotation example from Marx's Grundrisse, where it would appear, believe it or not, that Marx himself debunked the notion that labour is the sole source of value. Keen also claims that Marx then supressed his own discovery and relapsed back to his now discredited former hypothesis: Steve Keen As noted above, Marx first developed his dialectical analysis of the commodity while working on the “rough draft” of Capital. He was initially so enthused with this approach that he explored it freely, with almost no regard for how it meshed with his previous analysis. While doing this, he made a statement which correctly applied this new logic and directly contradicted the old, by stating that a machine could add more Value than it lost through depreciation. Table 14.1 is typical of Marx’s standard numerical examples of Value productivity. In that table, surplus-value is directly proportional to labor-power (“variable capital”), and the Value of the total product is the sum of the Value of the means of production, plus variable capital, plus surplus-value. In this analysis, the contribution of non-labor inputs to the Value of output is exactly equal to their depreciation. However, when referring to a similar table shortly after developing his use-value/exchange-value analysis, Marx comments: Karl Marx It also has to be postulated (which was not done above) that the use value of the machine significantly (sic.) greater than its value; i.e. that its devaluation in the service of production is not proportional to its increasing effect on production. (Marx 1857; emphasis added) Keen gives the data Marx was working on. He claims that, since the amount of variable capital is the same in both cases, and the surplus value is not, Marx had just proved that constant capital use-values have the same value-creating capacity as labour-power. Here is the data: Production Paper Press Working Days Wage Bill Surplus Output* Rate SV Profit Capital 1 30 30 4 40 10 30 25.0% 10.0% Capital 2 100 60 4 40 13.33 100 33.3% 6.7% Note that the value produced by Capital 2 is 53.33 thalers, while the output produced by Capital 1 is 50 thalers. Both capitals have identical production times. Thus, Keen can put his QED on the notion that constant capital goods can produce value, too. But not so fast. While my critique against Keen is still very incomplete, I have taken a serious look at the relevant passage in the Grundrisse. Things are not what they seem. Keen made an exegetical error so clumsy, it's laughable. As far as I know, nobody has made the following argument before, so I take credit for it.Now, I did read the passage in question, and what's curious is that Marx seems totally unware that he's debunked his own theory: Karl Marx The consumption, in the production process, of the element of value consisting of the instrument cannot in the least [serve to] distinguish the instrument of labour from the material—here, where all that is to be explained is the creation of surplus value, self realization. This is because this consumption is part of the simple production process itself, hence the value of the consumed instrument (whether it be the simple use value of the instrument itself or the exchange value, if production has already progressed to where there is a division of labour and where at least the surplus is exchanged) has to be recovered again in the value (exchange value) or the use value of the product—so that the process can begin anew. The instrument loses its use value in the same proportion as it helps to raise the exchange value of the raw material and serves as a means of labour. This point must, indeed, be examined, because the distinction between the invariable value, the part of capital which is preserved; that which is reproduced (reproduced for capital; from the standpoint of the real production of labour-produced); and that which is newly produced, is of essential importance. Reading the paragraphs leading onto Keen's money quote reveals some astonishing facts. Most noticeably, it appears in a part of the Grundrisse where Marx makes more than a few errors in arithmetic ("The devil take this wrong arithmetic. But never mind. Commençons de nouveau."). What is really interesting, and demolishes Keen's interpretation of the passage, is that beginning at least on page 378 (of the Penguin Classics edition), all of Marx's examples show a disparity in the value production of the two capitals compared in each successive example he produces. To be more succinct, Marx makes the mistake of giving the two capitals under comparison different MELTs (Monetary Equivalents of Labour Time). Here's the first example: Quote: Value reproduced for wages: 40 Surplus value from production: 10 Value reproduced for wages: 20 Surplus value from production: 10 The surplus value in the second capital should be 30, since both capitals should add up to 50 thalers, given that they are both set in motion for the same amount of time. Marx himself senses something very peculiar is going on: Karl Marx The conditions presupposed in No. II are in themselves as possible as those in No. I. But brought into connection with one another, those of No. II are absurd....In the first case the invariable value is smaller than in the second case, but the total product of labour is larger; since, if one part of 100 is smaller, the other has to be larger; and, since absolute labour time is fixed at the identical amount, and since further the total product of labour becomes smaller, in proportion as 'invariable value' becomes larger, and larger as the latter becomes smaller, we therefore obtain less product (absolutely) from the same labour time in proportion as more capital is employed. Now, this would be quite correct, since, if out of a given sum such as 100 more is spent as 'invariable value', less can be spent for labour time, and thus, relative to total capital, less new overall value can be created; but then, if capital is to make a profit, one cannot hold labour time constant, as is done here, or, if one holds it constant, the value of the working hour cannot become smaller, as it does here; which is impossible if 'invariable value' becomes larger and surplus value becomes larger; the number of working hours would have to become smaller. But that is what we have assumed in the example. We assume in the first case that 50 thalers are produced in 12 hours of labour; in the second case, only 30 thalers. In the first, we make the worker work 9 3/5 hours; in the second only 6, although he produces less per hour. It's absurd.Emphasis added. But Marx then immediately says, "But, understood differently, is there not after all something correct in these figures? Does not absolute new value decrease despite an increase in the relative, as soon as relatively more material and instrument than labour is introduced into the component parts of capital?" And so does not realise his error. He already settles on a surplus value rate of 33.3% for the second capital. What is new in the example Keen quotes is that Marx gets specific about amounts of depreciation. Both machines have the same depreciation rate: 1/10 of the value of the machine per annum. Machine Two therefore depreciates twice as much in a year than Machine One: 6 thalers as against 3 thalers. However, Machine Two increases the productivity of labour by 3 1/3 times that of Machine One. So, Marx means what he says when he writes, "the use value of the machine significantly greater than its value...its devaluation in the service of production is not proportional to its increasing effect on production." He just does not mean what Keen thinks he means, which explains why Marx can say a few paras later, "The instrument loses its use value in the same proportion as it helps to raise the exchange value of the raw material and serves as a means of labour." That, in his numerical example, Marx attributes greater surplus value production to the machine is an artefact of an error made by Marx several examples back and not corrected in this one. In other words, what we have here is a sheer coincidence combined with Keen's confirmation bias.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Posted: Fri Feb 04, 2011 7:16 am
First off, I applaud what you have written here. As someone who also likes to make long technical posts I think it's good that others step up and likewise participate in such writing and dialogue.
However I am going to come back later with something more substantial to say either in agreement/disagreement, I have a lot of research to do in order to properly phrase a lot of what I want to say.
So for now this is just a placeholder comment. If I haven't responded in the next 36 hours, please quote me so that I get sent an email notification. Articulate OPs deserve articulate responses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Posted: Fri Feb 04, 2011 9:42 am
Still working on perusing through your writing. Few questions from part 1 for clarification while I work out some of the things.
1. What is Bohm-Bawerk's now discredited argument? Both, what is the argument, and how has it been discredited? The section is not sourced with either what it is, or who thoroughly debunked it.
2. Can you fully define all the variables in Kliman's section?
c, v, s, w, pi, p, s/(c+v), pi/(c+v)
Your write up only includes pi as the price of production markup, p as the price of production. From what I can guess, C = constant capital, V = variable capital, S = surplus value, w = wage?
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Posted: Fri Feb 04, 2011 3:42 pm
Quote: As a result, strange things happen when simultaneist assumptions are made in ostensibly LTV models. You can have total profit negative even when surplus labour has been extracted. Conversely, you can also have total profit positive even when no surplus labour has been extracted at all. Surplus labour extracted can even be greater than the total labour performed. Value can both disappear and appear from nowhere. Would you be able to give more examples of this? I've not dealt with Marxist economics in almost 5 years, so my understanding has atrophied quite a bit. Moreover I was never into any of the academic disputes by Marxian scholars who can wage veritable wars upon each other about what Marx said and wrote, but don't seek to actually do anything with it, so I'm familiar with neither of these straw men and the lulz that can be created from their nonsense. Also, throughout you seem to be trying to debunk the notion that labour is not the only source of value. However, Marx argues against this view in the openning paragraph of the Gritique of the Gotha Programme: Marx Labor is not the source of all wealth. Nature is just as much the source of use values (and it is surely of such that material wealth consists!) as labor, which itself is only the manifestation of a force of nature, human labor power. the above phrase is to be found in all children's primers and is correct insofar as it is implied that labor is performed with the appurtenant subjects and instruments. But a socialist program cannot allow such bourgeois phrases to pass over in silence the conditions that lone give them meaning. And insofar as man from the beginning behaves toward nature, the primary source of all instruments and subjects of labor, as an owner, treats her as belonging to him, his labor becomes the source of use values, therefore also of wealth. The bourgeois have very good grounds for falsely ascribing supernatural creative power to labor; since precisely from the fact that labor depends on nature it follows that the man who possesses no other property than his labor power must, in all conditions of society and culture, be the slave of other men who have made themselves the owners of the material conditions of labor. He can only work with their permission, hence live only with their permission. Of course one could divorce wealth from value, but wealth is merely the posession of exchange value. You imply the correct understanding when you say Quote: Now, I must add that Keen in fact positively commits himself to the belief that raw materials and the means of production can create new value - which seems to me the same as "believing in magic". with the implication being that they contain value, but on their own it is inert and does not create anything more. This much is true.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Posted: Fri Feb 04, 2011 11:37 pm
Comrade D Still working on perusing through your writing. Few questions from part 1 for clarification while I work out some of the things. 1. What is Bohm-Bawerk's now discredited argument? Both, what is the argument, and how has it been discredited? The section is not sourced with either what it is, or who thoroughly debunked it. Bohm-Bawerk believed that Volume 1 of Capital stood in contradiction to Volume 3, because the one said that commodities sell at their values, and and the other said that they don't. Hilferding did the best known anti-Bohm-Bawerk critique. It's bollocks because Bohm-Bawerk clearly doesn't understand what Marx is talking about and resorts to cherry-picking and half-quotes. Quote: 2. Can you fully define all the variables in Kliman's section? c, v, s, w, pi, p, s/(c+v), pi/(c+v) Your write up only includes pi as the price of production markup, p as the price of production. From what I can guess, C = constant capital, V = variable capital, S = surplus value, w = wage? Correct, except w is "value" (Wert). s/(c+v) is the profit rate, pi/(c+v) is average profit rate that results from the transformation. Gracchia Blanqui Quote: As a result, strange things happen when simultaneist assumptions are made in ostensibly LTV models. You can have total profit negative even when surplus labour has been extracted. Conversely, you can also have total profit positive even when no surplus labour has been extracted at all. Surplus labour extracted can even be greater than the total labour performed. Value can both disappear and appear from nowhere. Would you be able to give more examples of this? I've not dealt with Marxist economics in almost 5 years, so my understanding has atrophied quite a bit. Moreover I was never into any of the academic disputes by Marxian scholars who can wage veritable wars upon each other about what Marx said and wrote, but don't seek to actually do anything with it, so I'm familiar with neither of these straw men and the lulz that can be created from their nonsense. Here's one example that isn't math heavy. The physical net product is equal to total product minus used-up input. Now, it's possible that the physical net product can be negative (i.e. more stuff gets consumed than is produced, such as a famine etc.) The simultaneist MELT (Monetary Expression of Labour Time) is equal to the price of the net product (PNP} divided by total labour performed. This MELT will be negative whenever the PNP is negative. And so will total profit - which implies that something other than labour is the source of value. Kliman, after explaining that, gives a numerical example where 5 hours of labour and a PNP of -$10 produces a MELT equivalent to -$2/hour. Wages are $60, which is the equivalent of -30 hours. Profit is PNP minus wages, which is -$70, the equivalent being 35 hours. So with a simultaneist MELT, it's possible, with the right data, for the surplus labour to be greater than all the labour performed. Which is self-evidentally absurd. Quote: Also, throughout you seem to be trying to debunk the notion that labour is not the only source of value. However, Marx argues against this view in the openning paragraph of the Gritique of the Gotha Programme: Marx Labor is not the source of all wealth. Nature is just as much the source of use values (and it is surely of such that material wealth consists!) as labor, which itself is only the manifestation of a force of nature, human labor power. the above phrase is to be found in all children's primers and is correct insofar as it is implied that labor is performed with the appurtenant subjects and instruments. But a socialist program cannot allow such bourgeois phrases to pass over in silence the conditions that lone give them meaning. And insofar as man from the beginning behaves toward nature, the primary source of all instruments and subjects of labor, as an owner, treats her as belonging to him, his labor becomes the source of use values, therefore also of wealth. The bourgeois have very good grounds for falsely ascribing supernatural creative power to labor; since precisely from the fact that labor depends on nature it follows that the man who possesses no other property than his labor power must, in all conditions of society and culture, be the slave of other men who have made themselves the owners of the material conditions of labor. He can only work with their permission, hence live only with their permission. Of course one could divorce wealth from value, but wealth is merely the posession of exchange value. You imply the correct understanding when you say Quote: Now, I must add that Keen in fact positively commits himself to the belief that raw materials and the means of production can create new value - which seems to me the same as "believing in magic". with the implication being that they contain value, but on their own it is inert and does not create anything more. This much is true. Well I'm glad that my phraseology was not altogether clumsy. I put this stuff together in a hurry. Oh and thanks for coding that data. Keen's position is ridiculous - when you know why labour has to take the form of value under conditions of a continuum of atomistic private producers, saying inanimate objects can produce new value isn't saying something wrong so much as it's saying something that's prima facie incoherent - regardless of how subtle Keen's logic is. The point is to come up with rebuttals that don't sound like preaching to the choir. That said, Keen digs up all the old chestnuts, including the old saw that Marx didn't explain why capitalists should operate as if it were a joint operation. Forewarned is forearmed, so I thought it was necessary to spread the word that his drafting Marx to be on his side is slipshod quote mining (plus a semblance of serendipity), so nobody should be psyched out by it. Oh and BTW. Look at the so-called "Commodity Axioms." Note that by excommunicating the "Labour Axioms," Keen ditches the existing explanation of what makes commodities commensurable. He's so hot to discredit Marx that he forgets to think up a replacement rationale. So even if constant capital could produce new value, it's not clear why Keen thinks the process of exchange (and hence their acquisition) can go foreward at all. In effect, he relapses back to Aristotle.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Posted: Fri Feb 04, 2011 11:46 pm
This is an excellent piece. I would very much like to put this in the exceptional posts thread
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Posted: Sat Feb 05, 2011 10:35 am
Okay, so I'm still sitting around writing up a more formal response, but Kliman's model had me for a bit. Both because I had to work through it several times to get what was going on, and I'm still a bit confused with why certain things worked out the way they do. So, just to clarify for myself, and others who don't feel like scrolling back up. C is constant capital, V is variable capital, S is surplus value, W is value, π is price of production markup, and P is price of production. Furthermore, W = (C + V + S), and P = (cost price + average profit of capital invested in production), however I don't know how to replicate the numbers that appeared, clarification would be helpful.After some tomfoolery, P is equal to (C+V+π), with π being most likely backwards induced from the formula .25 = π/(c+v) given "Ricardo on the other hand came to grief when he tried to reconcile labour values with the observed fact that profit rates tend to average out across industries - and hence that the profits capitalists receive have no prima facie relation to the amounts of living labour employed in the production of commodities." Since I see no forward way to induce π. Also, Azulmanga, before I jump the gun, why are you able to reprice constant capital? It's constant capital, it should be constant. Edit: turns out Marx's definition of constant includes a lot of products that are in fact variable. In "bourgeois economics" things that are fixed or constant capital cannot be changed in short run time analysis, to Marx though, "Constant capital includes the outlay of money on (1) fixed assets, i.e. plant, machinery, land and buildings, (2) raw materials and ancillary operating expenses (including external services purchased), and (3) certain faux frais of production (incidental expenses). Variable capital by contrast refers to the capital outlay on labour costs insofar as they represent workers' earnings." pulled from the wiki article. This is rather bad analysis then. In the term "constant" there are things that in fact change, ie: are variable expenses. Variable on the other hand relates to purely labor expenses, it seems. This is just really messed up terminology. It's apparently defended because, "Marx calls the constant part of the capital outlay "constant" because according to his labour theory of value, constant capital inputs - once produced, purchased, withdrawn from the market and used to create new products - do not by themselves add new value to output, or increase in value in the production process. Instead, the value of equipment and materials being used in production is conserved and transferred to the new product by living labor" [still from wiki article].
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Posted: Sat Feb 05, 2011 10:48 pm
Comrade D Okay, so I'm still sitting around writing up a more formal response, but Kliman's model had me for a bit. Both because I had to work through it several times to get what was going on, and I'm still a bit confused with why certain things worked out the way they do. You think that's confusing, the example on the Kapitalism 101 page REALLY had me scratching my head. Because the rate of exploitation had apparently changed. It was not until I read Kliman's book until I figured what was going on. In the meantime I was working on my own solution (VERY unfinished) to be problem, I will not give too many details because if there is no problem, my solution is not needed. Basically it involved prices that were not full c+v+s prices nor prices of production, and were formed by moving capital between departments - instead of ordaining average profit rates by the fiat of the modeller. Quote: After some tomfoolery, P is equal to (C+V+π), with π being most likely backwards induced from the formula .25 = π/(c+v) given "Ricardo on the other hand came to grief when he tried to reconcile labour values with the observed fact that profit rates tend to average out across industries - and hence that the profits capitalists receive have no prima facie relation to the amounts of living labour employed in the production of commodities." Since I see no forward way to induce π. Yeah, that's right. Quote: Also, Azulmanga, before I jump the gun, why are you able to reprice constant capital? It's constant capital, it should be constant. Edit: turns out Marx's definition of constant includes a lot of products that are in fact variable. In "bourgeois economics" things that are fixed or constant capital cannot be changed in short run time analysis, to Marx though, "Constant capital includes the outlay of money on (1) fixed assets, i.e. plant, machinery, land and buildings, (2) raw materials and ancillary operating expenses (including external services purchased), and (3) certain faux frais of production (incidental expenses). Variable capital by contrast refers to the capital outlay on labour costs insofar as they represent workers' earnings." pulled from the wiki article. This is rather bad analysis then. In the term "constant" there are things that in fact change, ie: are variable expenses. Variable on the other hand relates to purely labor expenses, it seems. This is just really messed up terminology. It's apparently defended because, "Marx calls the constant part of the capital outlay "constant" because according to his labour theory of value, constant capital inputs - once produced, purchased, withdrawn from the market and used to create new products - do not by themselves add new value to output, or increase in value in the production process. Instead, the value of equipment and materials being used in production is conserved and transferred to the new product by living labor" [still from wiki article]. That's also right. The constant capital tranfers its value in proportion to how much the machine wears down in the course of the production process and is not "constant" in sense other than that. Of course this depends on accepting the Law of Value as a premise anyway. Keen ditches it - on mistaken grounds, as I hoped I've succeeded in pointing out - and then goes on to argue that just as the capitalist searches on the market for a commodity with the use-value of being a source of value, and finds it in labour-power, the capitalist also buys constant capital goods for the same reason. It all comes down to the use-value(s) of the constant capital goods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Posted: Sun Feb 06, 2011 8:38 am
azulmagia Comrade D Okay, so I'm still sitting around writing up a more formal response, but Kliman's model had me for a bit. Both because I had to work through it several times to get what was going on, and I'm still a bit confused with why certain things worked out the way they do. You think that's confusing, the example on the Kapitalism 101 page REALLY had me scratching my head. Because the rate of exploitation had apparently changed. It was not until I read Kliman's book until I figured what was going on. In the meantime I was working on my own solution (VERY unfinished) to be problem, I will not give too many details because if there is no problem, my solution is not needed. Basically it involved prices that were not full c+v+s prices nor prices of production, and were formed by moving capital between departments - instead of ordaining average profit rates by the fiat of the modeller. Quote: After some tomfoolery, P is equal to (C+V+π), with π being most likely backwards induced from the formula .25 = π/(c+v) given "Ricardo on the other hand came to grief when he tried to reconcile labour values with the observed fact that profit rates tend to average out across industries - and hence that the profits capitalists receive have no prima facie relation to the amounts of living labour employed in the production of commodities." Since I see no forward way to induce π. Yeah, that's right. Quote: Also, Azulmanga, before I jump the gun, why are you able to reprice constant capital? It's constant capital, it should be constant. Edit: turns out Marx's definition of constant includes a lot of products that are in fact variable. In "bourgeois economics" things that are fixed or constant capital cannot be changed in short run time analysis, to Marx though, "Constant capital includes the outlay of money on (1) fixed assets, i.e. plant, machinery, land and buildings, (2) raw materials and ancillary operating expenses (including external services purchased), and (3) certain faux frais of production (incidental expenses). Variable capital by contrast refers to the capital outlay on labour costs insofar as they represent workers' earnings." pulled from the wiki article. This is rather bad analysis then. In the term "constant" there are things that in fact change, ie: are variable expenses. Variable on the other hand relates to purely labor expenses, it seems. This is just really messed up terminology. It's apparently defended because, "Marx calls the constant part of the capital outlay "constant" because according to his labour theory of value, constant capital inputs - once produced, purchased, withdrawn from the market and used to create new products - do not by themselves add new value to output, or increase in value in the production process. Instead, the value of equipment and materials being used in production is conserved and transferred to the new product by living labor" [still from wiki article]. That's also right. The constant capital tranfers its value in proportion to how much the machine wears down in the course of the production process and is not "constant" in sense other than that. Of course this depends on accepting the Law of Value as a premise anyway. Keen ditches it - on mistaken grounds, as I hoped I've succeeded in pointing out - and then goes on to argue that just as the capitalist searches on the market for a commodity with the use-value of being a source of value, and finds it in labour-power, the capitalist also buys constant capital goods for the same reason. It all comes down to the use-value(s) of the constant capital goods. Honestly Azul, as far as I'm concerned Part 2 of your writing is a giant strawman. My entire response is going to be in response to part 1. I have not read Keen or Kliman, and so to speak on their ideas would be faulty of me. However, I can respond to some of the models, assumptions, and propositions made in part 1. I'm probably going to argue from a far more axiomatic position while the LTV and Kliman's model aren't necessarily true representations. However, thanks for the clarifications.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Posted: Sun Feb 06, 2011 9:23 pm
Comrade D Honestly Azul, as far as I'm concerned Part 2 of your writing is a giant strawman. How so? Keen indeed states explicitly that machines can add new value, hence are productive of surplus value. I'm not misrepresenting his position at all. Maybe nuances were lost due to my compression of it, but that's not the same as a strawman. And note that I didn't try to debunk his argument (a work in progress), so I don't see how I could have strawmanned him in the first place. I only pointed out that his recruitment of Marx is based on an amphiboly and a lucky coincidence, and hence fails. When you read his treatment of Marx in his book, there's a lot to desired, incidentally. He states that in Marx, the inputs required to produce surplus value are means of production and necessary labour, and then he equates variable capital as necessary labour. This is wrong. The inputs are means of production and living labour. The cost of reproducing the capacity to do that living labour is what shows up as variable capital on the balance sheet. Another whopper is that he says Marx assumed that the rate of surplus was constant, both across industries and across time (Keen's exact wording). I can't imagine why Keen would think that, when Marx explains that the capitalist uses every trick in the book - lengthening the working day, speed-ups, raising labour productivity - to change that rate in his favour. That's like half of volume 1 right there. Keen's charges against Marx are three (in case I didn't make it clear in post 2): (a) With respect to means of production, purchasers make use of their exchange value but not their use value; (b) that their use-values cannot exceed their exchange values; and (c) that the use-values of constant capital are transferred to the use-values of the commodities they create as long as they lose their exchange value ...And Keen claims that these premises violates Marx's own approach to the dialectic of the commodity. Quote: My entire response is going to be in response to part 1. In other words, the less interesting part. Quote: I have not read Keen or Kliman, and so to speak on their ideas would be faulty of me. However, I can respond to some of the models, assumptions, and propositions made in part 1. Well, you can read Keen's thesis on Marx. Here's the link to the .pdf: Keen's thesis on Marx (pdf)And since you want to deal with part one, here are Ormazabal's articles as well: The Transformation of Value into Competitive Price: Rescuing Marx' Value Theory from Historical Misinterpretation (pdf)Adam Smith on labor and Value: Challenging the Standard Interpretration (pdf)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Posted: Sun Aug 26, 2012 5:58 pm
Update.Like - I hope! - the rest of y'all, I pay attention to Brendan Cooney and his Kapitalism 101 youtube videos and blog. In a recent post, Cooney addressed Keen's critique: Quote: Just because Marx’s value theory is consistent, rigorous, and holds up to the basic requirements of logic doesn’t mean that it is correct. There is still an argument to be had over whether his theory actually explains the way the world actually works. Sometimes people confuse the two issues. Steven Keen, for instance, argues that Marx is wrong to say that only labor can produce value. He does this by pointing to a supposed logical mistake in Marx’s description of exploitation. Marx says that the use value of labor-power is that it can produce value. Workers produce more value than they cost. But Machines can do the same thing, Keen argues. Marx ignored that machines can produce more value than they create. If Keen wants to argue for a theory of machines creating value that’s fine, but he shouldn’t do so by acting like he’s found some brilliant little hole in Marx’s logical argument. Keen acts as if he wants Marx, in the discussion of exploitation, to furnish some knock-down proof that machines can’t create value. But by this point in the argument Marx has already established that only labor can crate value. He is merely explaining the logical implications of such a theory. Elaborating on implications of a premise need not prove the premise. I’d almost be willing to say that they can’t prove the premise because you have to assume a premise to elaborate on its implications. I feel like Keen’s argument is an obnoxious attempt to imitate what seems to be a trend: one makes up nonexistent problems regarding the logical structure of Marx’s argument and then uses these “discoveries” as material for riffing on one’s own theory of capitalism which has no relation to Marx at all. Keen would be better off just debating premises, and the basic questions of what a value theory is and what it means to express social productive relations through commodity exchange rather than to go on a fools errand to find some flaw in Marx’s own structure of argument. I also want to stress that absolutely none of the qualitative aspects of value theory are effected negatively by the deviation of value from profit. I also do not believe that Marx’s method of deriving labor as the content of value is effected at all by the derivation of value from profit. In many ways, these qualitative and methodological questions are the important ones to have. (link)This is not as full a refutation as I'd like, but it's good enough for the time being. The important thing in a full argument is to tackle the line Keen takes on the dialectic of the commodity. Commodity axiom 5 ("The exchange-value of a commodity is the exchange-value of the commodities used up in its production") is problematic because the using up of labour-power is, well, living labour. So are we to take commodity axiom 5 as saying that, in addition to the used up machinery and raw materials, the exchange-value of a commodity also consists of the price of the labour-power - that is of the wages? That sounds suspiciously like Adam Smith's debunked "adding up" thesis. If you take axiom 5 all by itself, it would seem not to be able to explain the creation of new value. In any event, Keen doesn't seem to be giving us an alternate theory of value at all, in the sense of a theory that explains what the essence of value is. That means Keen is basically cutting a hole in Marx's Capital without anything to fill the void thus created. Which in itself is nothing new, either.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
