Tuesday, March 31, 2015

Kliman’s Explanation of Marx’s Labour Theory of Value

Chapter 2 of Andrew Kliman’s Reclaiming Marx’s ‘Capital’: A Refutation of the Myth of Inconsistency (2006) is a summary of Marx’s labour theory of value (LTV). Kliman is an advocate of the Temporal Single System Interpretation (TSSI) of Marxist theory.

Kliman (2006: 19) states that “Marx’s value theory is not a general explanation of why goods and services have prices, nor of why they have one price rather than another.” This seems like an odd statement, but Kliman apparently means that the labour theory is strictly limited to certain goods only: that is, Marx’s value theory applies only to commodities, which are goods or services intended for market exchange (Kliman 2006: 19–20). Therefore when we find things produced but not for market exchange, Marx’s theory doesn’t explain these, is inapplicable to them, and doesn’t explain how their prices are determined (Kliman 2006: 20).

When production produces commodities for the purpose of exchange, then
“… workers’ labor acquires the same dual character. As an activity that produces a specific useful good or service, it is what Marx calls concrete labor. As an activity that produces value—abstract wealth, wealth as such, considered without regard to its specific physical form—it is what he calls abstract labor.” (Kliman 2006: 20–21).
The value of a commodity is “determined by the average amount of labor currently needed to produce it” (Kliman 2006: 21).

In Marx, this is called abstract socially necessary labour time (SNLT), and Kliman explains this as follows:
“The phrase ‘average amount of labor’ is also significant. Marx (1990a: 129) holds that labor creates value only to the extent that it ‘is necessary on an average, or in other words is socially necessary’; any labor spent on the production of a commodity in excess of what he calls the socially necessary labor-time does not count as value-creating labor. This is his way of expressing the idea that less efficient producers cannot get higher prices for their products simply because their costs of production are above average, nor must more efficient producers charge less than others simply because their costs of production are below average.” (Kliman 2006: 21).
The total SNLT is a sum of two components, as follows:
(1) the value transferred from the SNLT embodied in non-labour factors both used up in production and the durable capital goods used in production (whose value is transferred as the capital goods depreciate in value, though how you properly calculate this is left unexplained), and

(2) the SNLT added by living labour, or the human beings labouring in production (Kliman 2006: 22).
Even more than this, the value of the most recently newly-produced commodities of a particular type will determine the value of ones that already exist (Kliman 2006: 21). But already we have a problem in Kliman’s analysis. He speaks of abstract labour value, but then talks of money prices on this point:
“If wheat harvested last year had a value of $4/bushel, while wheat harvested today has a value of $3/bushel, then any wheat that remains from last year likewise has a value of $3/bushel today.” (Kliman 2006: 21).
Kliman has switched to talking of money values. He hasn’t explained at all how abstract SNLT determines such prices. The idea here, which I examined in this post, doesn’t make any sense. Agricultural good prices, both old and newly-produced goods as sold in flexprice markets, are plainly determined by supply and demand, not some nebulous SNLT. The Marxists haven’t explained how the SNLT determines the price.

Matters are no better when we get a truly confused passage attempting to explain the difference between value and price:
“Marx (1990a: 188) holds that value has two measures, money and labor-time. He generally measures commodities’ values in terms of money, but he sometimes measures them in terms of labor-time, and occasionally he compares the two (see, e.g., Marx 1991a: 266). When measuring a commodity’s value in money terms, he often calls it simply the ‘value,’ while at other times he calls it the ‘monetary expression of value’ or, equivalently, the price. ‘Price, taken by itself, is only the monetary expression of value’ (Marx 1971: 35, emphasis omitted; cf. Marx 1990b: 1068). In this sense, then, “price” refers to value measured in terms of money rather than in terms of labor-time.

The other distinction between ‘value’ and ‘price’ is quantitative. In this context, if we are speaking of a firm’s or industry’s output, ‘value’ refers to the sum of value produced within a firm or industry—the value transferred plus the new value added—while ‘price’ refers to the sum of value received by the firm or industry. Similarly, if we are speaking of a single commodity, ‘value’ refers to the commodity’s actual value, determined by the labor-time needed to produce it, while ‘price’ refers to the sum of money that the commodity’s owner can receive in exchange for it.

Note that we can meaningfully discuss these quantitative differences only if we are measuring price and value in the same units. It makes no sense, for example, to say that the $5400 a firm receives for its output is greater or less than the 100 hours of labor needed to produce that output. This shows that the two value-price distinctions are indeed wholly independent of one another.” (Kliman 2006: 24–25).
So does SNLT determine individual “natural prices” or not?

At one point, Kliman (2006: 32–33) discusses the so-called “dual-system interpretations” of Marx in which labour values and prices are actually “determined independently of one another” (Kliman 2006: 32). But he does not seem to support this, but the simultaneous single-system interpretation (SSSI).

But then Kliman states that there is a “conversion factor” between labour time and price called the “monetary expression of labor-time” (MELT), which can translate one hour of socially necessary labor time directly into a monetary value (Kliman 2006: 25). How we calculate this MELT is left unexplained.

Kliman (2006: 23) notes how in the production process capitalists advance “sums of value” to buy non-labour factor inputs (or “constant capital”) and “sums of value” to buy labour (or “variable capital”). The value in the final produced commodity above the total original value is “surplus value” (Kliman 2006: 23). Because workers are the only source of this “surplus value” it follows, according to Marx, that workers are robbed of this surplus value by capitalists. The “rate of surplus-value or rate of exploitation” is simply the ratio of the surplus-value to variable capital (Kliman 2006: 24).

There is also a difference between (1) “value rate of profit” (total surplus value produced in a year as a measure of SNLT) and (2) the “price rate of profit” (the mere total monetary price of profits) (Kliman 2006: 26). The rates of profit tend to equalise throughout an economy (Kliman 2006: 27), because of free competition.

The value total in an industry consists of cost price (or sum of labour value from constant capital and variable capital) and surplus-value, and the “price of production” is equal to cost price plus average profit (Kliman 2006: 27).

Here we see how the Marxist theory of prices and profits is really just another species of the false Classical and neoclassical view:
“In the hypothetical case in which rates of profit were exactly equal—that is, in which all industries realized the general rate of profit—they would each receive what Marx calls average profit and each industry’s output would sell for what he calls its price of production (Marx 1991a, chap. 9). He stressed that this situation never occurs in reality. Instead, he argued, actual market prices fluctuate around prices of production, and thus actual profits fluctuate around average profit, given a sufficiently competitive (non-monopolistic) environment.” (Kliman 2006: 27).
In fact, most prices do not fluctuate around prices of production, and the reason for this is not monopoly, but the fact that the real world contains widespread use of mark-up pricing and strong barriers to entry through capacity utilisation and other factors.

However, Kliman holds that Marx’s theory does not imply that “the rate of profit will actually display a falling trend in the long run” (Kliman 2006: 30).

It is only in the aggregate in a situation in which the rate of profit has equalised throughout the economy that (1) price and value rates of profit are equal, (2) total profit and total surplus-value are equal, and (3) total price of production and total value are equal (Kliman 2006: 28). But profit rates do not equalise in real world capitalism and if Marxists cannot even justify the LTV in the first place there is no reason to believe any of the subsequent propositions of Marxist value theory.

Kliman makes a crucial epistemological point about how to understand the LTV:
“Marx’s theory that a commodity’s value is determined by the amount of labor needed to produce it has often been construed as a definition of the commodity’s value (see, e.g., Mongiovi 2002: 397–98), but this is incorrect for two reasons. First, Marx usually expressed commodities’ values in monetary terms, which would not be possible if values were defined as amounts of labor. Values in that case would have to be expressed exclusively in terms of labortime. Second, the theory can in principle be falsified, while definitions cannot.” (Kliman 2006: 21).
It would appear that Kliman is saying that Marx’s LTV is an empirical proposition. If this is so, then there are a number of empirical tests that the LTV must pass to be taken seriously. On this interpretation, Marxists cannot retreat into a defence of the LTV as mere analytic definition to defend it. They must face the hard test of empirical reality.

Quite simply, as an empirical proposition, there is no convincing reasons why I should believe that LTV, for the following reasons:
(1) the LTV is concerned with establishing the labour value of commodities expressed in SNLT. But why is human labour special, as Sraffa noted? Animal labour is still important in many countries even to this day. It should be possible to measure animal labour in terms of SLNT, since in many cases human labour could even be substituted for animal labour. It is no good for Marxists to fall back on an analytic definition of the LTV, where it is just true by definition. I have no reason to accept an analytic definition I think is incoherent and not empirically relevant.

(2) Marx already admits that “nothing can be a value without being an object of utility” (Marx 1982: 131). If labour value is totally worthless and cannot confer exchange value when the object has no utility (“use value”), then the whole labour theory of value is undermined. For labour is not even a sufficient condition for economic value or exchange value. Clearly use value is also a necessary condition for economic value or exchange value.

(3) it is still never explained how to define and calculate SNLT. How is heterogeneous labour reduced to a common measure?
How to define “simple labour-power, i.e. of the labour-power possessed in … [sc. the] bodily organism by every ordinary man, on the average, without being developed in any special way” (Marx 1982: 135).

(4) it is still unexplained how the SNLT determines individual natural prices. How, for example, do equal labour quantities determine equal natural prices when there are, and have always been, such radical differences in wage rates by sector, profession, skill, experience, privilege or competence? For if, at the natural price, equal labour quantities do not cause equal prices, how can anyone take the labour theory seriously? And worse than this, we need extensive empirical evidence of real world prices where SNLT has been independently defined and found to be equivalent and the prices are the same.

(5) finally, we have the overwhelming empirical truth that prices are not determined by abstract SNLT. Businesses do not price products in terms of SNLT. Businesses do not even calculate it. Instead, we know the nature of price determination. In any given capitalist economy, commodity markets (defined as those for newly-produced goods and services) are divided into (1) flexprice and (2) fixprice markets. Flexprice markets are prevalent in primary commodities and asset markets, while newly produced goods and services tend to be fixprices. A “flexprice” market – as the name suggests – indicates that prices are generally flexible and are determined by the dynamics of supply and demand, either in (1) competitive auction-like markets or (2) markets where a buyer and seller haggle and negotiate an individual price for an individual exchange (as in the oriental bazaar). The labour hours are not relevant for price determination here, nor necessarily are wages. In fixprice markets, mark-up prices are the major form of prices. And here SNLT just isn’t what determines prices.
I have no reason to accept anything deduced or developed from an assumption of the LTV in Marxism if you cannot convince me that it is a real phenomenon with causal power observable in a capitalist economy.

The utter failure of the Marxist program can be seen in the fundamentally incompatible and endless schools and heresies: dual-system interpretations, simultaneous single-system interpretation (SSSI), physicalist interpretations, or social paradigm/abstract labor approaches.

Finally, if Marxists want to defend value in some labour–defined form, then the “physicalist” interpretation is about the only sensible view: this holds that the physical factors of technology and real wages determine concepts like “value, surplus-value, prices of production, average profit, and rates of profit” (Kliman 2006: 35). But this is just a type of Sraffianism, and there are serious problems with Sraffianism as described here and here.

BIBLIOGRAPHY
Kliman, Andrew. 2006. Reclaiming Marx’s ‘Capital’: A Refutation of the Myth of Inconsistency. Lexington Books, Lanham.

Freeman, Alan. “Price, Value and Profit – A Continuous, General, Treatment,” MPRA Paper No. 1290, April 1996
http://mpra.ub.uni-muenchen.de/1290/1/MPRA_paper_1290.pdf

Kliman, Andrew. 2012. Failure of Capitalist Production: Underlying Causes of the Great Recession. Pluto Press, London.

41 comments:

  1. LK:

    First of all, let me just say that I appreciate your attention to this matter.

    This seems like an odd statement, but Kliman apparently means that the labour theory is strictly limited to certain goods only: that is, Marx’s value theory applies only to commodities


    Correct, though it also bears mention that the divergence of price from value that I'd previously mentioned still holds even in the case of commodities. The point is not to predict this or that price (though it provides tools to explain them), but rather to identify the conditions that underlie prices, and make broader statements about the system (such as its inherent instability and tendency towards crisis on the basis of capital accumulation alone, through a falling rate of profit, et al).

    The emphasis on explanation as the goal, rather than prediction, distinguishes this as a realist theory -- as contrasted with, say, Friedman's famous exposition of positivist methodology. (This is not, though, to say that no predictions spring from it.)

    the value transferred from the SNLT embodied in non-labour factors both used up in production and the durable capital goods used in production (whose value is transferred as the capital goods depreciate in value, though how you properly calculate this is left unexplained)

    The depreciation, or the transfer? If the former, standard accounting methods are applicable. If the latter, it's pretty simple in the TSSI: the value contributed by the input is the value required to obtain that input -- in other words, the input's market price. This is what I meant when I said, some time ago, that "prices and values form a continuum." Prices of intermediary goods reappear in the value of output, from which the output's price may again diverge.

    But already we have a problem in Kliman’s analysis. He speaks of abstract labour value, but then talks of money prices on this point:

    Not exactly. As I've stated, both prices and values are reckoned in money terms, seeing as money is the "form of value." This is what makes all the charges of "mysticism" so frustrating; in fact, value can be precisely measured using only money figures or ratios thereof -- price, organic composition of capital, rate of profit, rate of surplus value, and so on. They just require reference to the macroeconomic data, to determine the general rate of profit, etc.

    The Marxists haven’t explained how the SNLT determines the price.

    We have, though: "In aggregate." For a given output price, prices and values determine one another, as I indicated above, but in the last analysis the total system of prices is constrained by the total value. You may not like this answer for whatever reason, but that doesn't mean we haven't answered.

    So does SNLT determine individual “natural prices” or not?

    "Natural price" is not a term in this system, so you'd need to clarify whether you mean the market price, or the price of production, or what.

    How we calculate this MELT is left unexplained.

    There are a few ways to derive it. For instance, see Alejandro Ramos Martinez's explanation in Chapter 5 of this book, or Fred Moseley's in this essay, or even Kliman's summary in this blog comment, which is the shortest of the three.

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    1. (1) "The Marxists haven’t explained how the SNLT determines the price.

      We have, though: "In aggregate.""


      I've already dealt with that: there is no reason why any of your opponents should take seriously the claims that in the aggregate in a situation **in which the rate of profit has equalised throughout the economy** that (1) price and value rates of profit are equal, (2) total profit and total surplus-value are equal, and (3) total price of production and total value are equal (Kliman 2006: 28).

      First, you can't demonstrate to me the LTV is even empirically grounded and has any causal power in a real economy and (2) even if you could an equalised profit rate equilibrium NEVER occurs in any real world capitalist economy anyway (and there no reason to think there is any tendency towards it), so any claim that price = labour value in the aggregate is just like a claim about the natural rate of interest.

      (2) Do all individual prices in the aggregate situation you imagine = labour value? When the system is out of this type of profit equilibrium, do any individual prices EVER = labour value?

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    2. What? This response makes no sense.

      1) The theory in no way depends on the rate of profit being equal through the economy. In no way. It merely states that if such WERE the case, all market prices would equal prices of production. Which means most of the time, they don't. As the theory holds.

      2) It can be demonstrated that it is empirically grounded, by the simple fact that it is testable (and it tests very well, if properly specified).

      3) The price = value aggregate equality is enforced by exchange, not production. It's double-entry bookkeeping. Freeman explains this clearly in the paper I linked.

      4) There is no necessary reason to expect individual prices ever equal value exactly. In aggregate, the SUM of value equals the SUM of price. Individual variance does not go away. Even if all profit rates were exactly equal, individual prices (prices of production, in this case) would not necessarily equal individual values, since the organic composition of capital could vary between industries, sectors, firms, etc. Both of those conditions must be equalized for individual prices and values to be the same across the board, which is flatly impossible; it's only used as a simplifying assumption to clarify the basics concepts in Capital vol. 1, and is discarded later into the work.

      So, the answer to your final question is "yes, outside when profit rates are not equal (i.e., in the real world), an individual price CAN equal labor value, but only as a mere coincidence or accident with an extremely low probability, and the far, far, FAR safer assumption is that it diverges."

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    3. "2) It can be demonstrated that it is empirically grounded, by the simple fact that it is testable "

      Testable in what way? Can you give me any examples of prices today that equal their labour value?

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    4. Why would finding one price out of billions that accidentally equals its value to the penny prove anything? In principle, if you had access to enough data, you could search for one, but that's hardly the point of the theory, or my defense of it.

      I already told you, if you'd prefer to just assume all prices don't equal values, this is safe. Strictly speaking, it'd be an "unrealistic" assumption, since you would be consciously omitting something that is not strictly speaking impossible, but it's of negligible impact to the system, sort of like omitting wind resistance when calculating the toss of a lead orb across a still room.

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    5. "How we calculate this MELT is left unexplained." This is another instance of uncharitable reading and impatience. This last bit is really uncharitable. Because the calculation isn't explained *there and then*, in a brief intro for tyros, it is supposedly "left unexplained."

      In addition to the sources that Hedlund mentioned, the calculation is explained in detail and exemplified in the very book that our Lord is reading, on pp. 185-189.

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  2. In fact, most prices do not fluctuate around prices of production, and the reason for this is not monopoly, but the fact that the real world contains widespread use of mark-up pricing and strong barriers to entry through capacity utilisation and other factors.

    Mark-up prices do not contradict the above, though? Consider that different firms can and often do have different cost structures. (Not to mention, prices of production are not independent variables, but mere derived averages.)

    However, Kliman holds that Marx’s theory does not imply that “the rate of profit will actually display a falling trend in the long run” (Kliman 2006: 30).

    In the sense that it's "overcome by way of crises," yes. However, as you can see from The Failure of Capitalist Production, it actually has trended downward from the Great Depression to the present, and would need something else on the scope of said depression to be restored. The Great Recession did not "bottom out" sufficiently to achieve this. Of course, this is not a bad thing, as the human immiseration required for such an outcome is unconscionable.

    But profit rates do not equalise in real world capitalism

    Again, it's another inherent tendency, overcome by countertendencies such as the drive to revolutionize technology.

    if Marxists cannot even justify the LTV in the first place there is no reason to believe any of the subsequent propositions of Marxist value theory.

    I cheerfully second this motion.

    It should be possible to measure animal labour in terms of SLNT, since in many cases human labour could even be substituted for animal labour.

    It can be, though, quite easily, the same way as any machine used over multiple production cycles. That is, over a machine's life it transfers its full value, depreciated over time, plus the value of upkeep. And the value of an input, as I noted earlier, is its price at the time of acquisition, adjusted for inflation if depreciated over a long period.

    So, an ox pulling a plow would be evaluated on a business's books in the same as a tractor, with food and vet bills instead of gas and mechanic bills.

    In other words, animal labor is already evaluated in terms of human labor.

    If labour value is totally worthless and cannot confer exchange value when the object has no utility (“use value”), then the whole labour theory of value is undermined.

    I've already explained to you that SNLT excludes unuseful labor, which violates the "necessary" component. You can't use this objection anymore; it's been answered.

    it is still never explained how to define and calculate SNLT. How is heterogeneous labour reduced to a common measure?

    You don't "reduce" heterogeneous labor, because it cannot be reduced any more than a Taurus and a Pinto can be reduced to Miatas, though they can all be considered in the abstract as cars qua cars. Similarly, labor is viewed as labor qua labor in the books of the people who hire labor. That is where Marx is looking.

    As I've said a few times, this whole analysis is conducted from the vantage point of capital, and Marx developed it in reference to actual capitalist accounts provided to him by Engels.

    Reducing complex labor to simple labor involves determining the value of the necessary training to transform the latter into the former.

    it is still unexplained how the SNLT determines individual natural prices.

    *facepalm*

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    1. So basically you think NO individual real world prices out of an imaginary aggregate uniform profit rate equilibrium situation ever directly correspond to labour values?

      So we have no empirical evidence any actual observable individual real world price ever is determined by a SNLT value?

      And you wonder why your opponents complain that your LTV is metaphysical, unprovable, unnecessary and that it adds nothing to economic science.

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    2. So basically you think NO individual real world prices out of an imaginary aggregate uniform profit rate equilibrium situation ever directly correspond to labour values?

      It's not impossible that an individual price can equal an individual value, it's just vanishingly rare. If you want to ASSUME that no individual prices equal values, then that is what Uskali Maki would call a "weak" or "negligibility" assumption, and it wouldn't be epistemologically unfounded entirely. But it'd be safer to just leave the question open.

      So we have no empirical evidence any actual observable individual real world price ever is determined by a SNLT value?

      Right. Nor do we have any theoretical reason to believe it, because no individual price is determined by SNLT, save when they hit the system-wide constraint value imposes -- namely, that if something sells high above its value, other things must sell below theirs. If there are 100 hours of labor in an economy in a given period, and five capitals each produce 20 hours' output, and one capitals' output then sells for the equivalent of 30 hours, then in the next period one of the capitals has grown and another (or some combination of the other four) shrank. The price system can render this in a multitude of ways, but the fact of the matter is everything produced represents a fraction of the total productive capacity of society, and the value system is what represents this.

      It doesn't matter that SNLT doesn't mechanically determine this or that individual price. That was never the point. You can't critique a theory for not illustrating something it never claims to illustrate.

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    3. " If there are 100 hours of labor in an economy in a given period, and five capitals each produce 20 hours' output, and one capitals' output then sells for the equivalent of 30 hours, then in the next period one of the capitals has grown and another (or some combination of the other four) shrank."

      How on earth do figure that? Have you never heard of endogenous expansion of the money supply?

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    4. "It's not impossible that an individual price can equal an individual value, it's just vanishingly rare."

      Do you have an example of 1 price in any time in human history that equaled its SNLT?

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    5. How on earth do figure that? Have you never heard of endogenous expansion of the money supply?

      Doesn't matter here if the money supply expands endogenously, because I'm abstracting from it to point to the real relations underlying it. In the first period, all five capitals were equal. In the following period, more social labor is under the command of Capital 1 than Capitals 2-5, irrespective of what happens at banks.

      (This is not to say that what banks do isn't important -- quite the contrary, Marx was one of the first important endogenous money theorists.)

      Do you have an example of 1 price in any time in human history that equaled its SNLT?

      No, because it wouldn't prove anything. Marxists wouldn't put it up on some banner and shout "look everybody! A value equal to its market price!" because it wouldn't matter. Imagine I am a physicist trying to describe a pendulum's motion. Right now, you'd be demanding I illustrate that a given electron within said pendulum happened to be moving in the exact same direction as the pendulum taken as a whole. It's not in principle impossible, but it's a pointless exercise.

      That said, if you really wanted to look it up for whatever reason, you absolutely could waste your time doing so, if you have access to enough national accounts and individual business account data.

      You should feel free to go track one down, if it interests you this much.

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    6. "You should feel free to go track one down, if it interests you this much."

      lol... I won't waste my time, because on empirical grounds it is quite clear to me that LTV is wrong. The burden of proof is on you as a Marxist to prove your theory.

      "Do you have an example of 1 price in any time in human history that equaled its SNLT?

      >>>No, because it wouldn't prove anything. Marxists wouldn't put it up on some banner and shout "look everybody! A value equal to its market price!" "


      That truly speaks volumes. Empirical evidence?! who needs that!

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    7. lol... I won't waste my time, because on empirical grounds it is quite clear to me that LTV is wrong. The burden of proof is on you as a Marxist to prove your theory.

      No, you haven't even gotten to the empirical grounds yet. You're unconvinced on theoretical grounds, which in this case rests on an appeal to personal incredulity. I've suggested some empirical work for you to peruse, though I doubt you have.

      That truly speaks volumes. Empirical evidence?! who needs that!

      Don't stop now; keep going. What would it be evidence of?

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  3. 3/3 (sorry, forgot to number the above two as 1, 2)

    (Special request: Could you answer all three posts under this one alone, so the conversation isn't spread out all over the place? Thanks in advance!)

    finally, we have the overwhelming empirical truth that prices are not determined by abstract SNLT. … Businesses do not even calculate it.

    That a tree doesn’t see the forest doesn't invalidate the theory. Similarly, businesses pursue higher rates of profit rather than higher rates of surplus value, which they don't even consider. This doesn't invalidate the theory, either, since the whole point is that the emergent effect of system-wide maximization of profits is the maximization of surplus value.

    Instead, we know the nature of price determination.

    Reminder: the PK price theory you describe is 100% compatible with Marx's value theory. In fact, it's basically already a part of it, since "how businesses act" was Marx's starting point for deducing all the value stuff.

    The utter failure of the Marxist program can be seen in the fundamentally incompatible and endless schools and heresies

    Please stop using this "heresy" rhetoric, it is disrespectful in the extreme. There are different approaches and different hypotheses pertaining to the same subject matter in literally every science. Even math. Seriously, go read about the debates on formalism during the 19th and 20th centuries. Go read about the numerous attempts to rigorously found calculus. Some of those squabbles got downright nasty. I highly recommend, for instance, Morris Kline's Mathematics: The Loss of Certainty.

    Finally, if Marxists want to defend value in some labour–defined form, then the “physicalist” interpretation is about the only sensible view

    All forms of Marxism hold that the material factors are determinant. The difference is whether you view "value" as a physical quantity or a social relation. The physicalist approach, as the book illustrates, is riddled with contradictions, and cannot replicate the results Marx generates. That critique is contained in a later chapter, though.

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    1. "That a tree doesn’t see the forest doesn't invalidate the theory. Similarly, businesses pursue higher rates of profit rather than higher rates of surplus value, which they don't even consider."

      They don't consider "surplus value" as defined by Marx as surplus labour value, because that concept is as irrelevant to the real world as the natural rate of interest concept.

      "Reminder: the PK price theory you describe is 100% compatible with Marx's value theory."

      Actually, PK price theory is totally capable of describing real prices on its own.

      It requires no unnecessarily unprovable LTV, which adds nothing to economic science, and has no explanatory power.

      Anything observable in capitalism that is allegedly deducible from the LTV is explainable by other theories. LTV is just like the concept of god in classical theism. Unfalsifiable, unnecessary, redundant.

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    2. They don't consider "surplus value" as defined by Marx as surplus labour value, because that concept is as irrelevant to the real world as the natural rate of interest concept.

      I don't know if the word "emergent" means anything to you, but as a post keynesian, it should, since it's the reason why methodological individualism fails. Systems of things often have properties irreducible to the laws that govern the things themselves. Just because an individual actor or business doesn't consider it doesn't mean it doesn't become important in aggregate.

      Seriously, this is important for your favored theory, too.

      Actually, PK price theory is totally capable of describing real prices on its own.

      Agreed. Just not value. And I agree that you shouldn't run with an interpretation of value theory that adds nothing to economic science and has no explanatory power. But that doesn't describe the one I'm explaining to you.

      You're so damn haughty, sometimes.

      Anything observable in capitalism that is allegedly deducible from the LTV is explainable by other theories.

      Again, this is true of all science.

      LTV is just like the concept of god in classical theism. Unfalsifiable, unnecessary, redundant.

      The best part is when you act really proud of your ignorance, making grand, sweeping claims with booming authority about something you haven't even demonstrated you understand.

      For all your allusions to theism, you might as well be an early 20th-century Evangelical preacher. "Well, I can't understand Darwin's gobbledygook, but lemme tell you something about that Darwin..."

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    3. "Agreed. Just not value."

      Of course it has a theory of value. It understands the very important role of subjective and intersubjective value in determining prices without making the errors of marginal utility theory.

      Anyone can see from personal introspection that they have feelings of satisfaction, happiness or pleasure (subjective utility) that influence their willingness to pay prices for goods. Go to any auction and see how prices are formed as people demand goods from their personal subjective feelings and bid for them. We can also study extrinsic value and intrinsic value. We don't need the LTV. It is empirically irrelevant.

      We can see this in how you can't even name one price determined directly by the SNLT.

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    4. We can see this in how you can't even name one price determined directly by the SNLT.

      You appear to have missed the extremely important point that finding a price that is exactly equal to value does not mean that said price was exactly determined by value. I've been very clear that it only becomes equivalent "by accident."

      If I place 100 feathers on a table, and then the wind blows them all around like crazy, and ONE of them by pure chance manages to land exactly as it had been before, you wouldn't claim that it's there because I determined it. Similarly, you could make the assumption that no feather will EVER land exactly where it was. This assumption is strictly unrealistic, since it's not IMPOSSIBLE that one could, but it's so unlikely that you won't do any damage to your subsequent calculations.

      Do you understand how silly it is now to insist I find you a price equal to value? It won't be equal due to any sort of direct and exclusive causality. It's like finding, as I said, a particle with direction and spin equal to the pendulum of which it is a part.

      Anyone can see from personal introspection that they have feelings of satisfaction, happiness or pleasure (subjective utility)

      Markup prices don't depend on a subjectivist value theory, though. They are applicable to either.

      Anyway, what is the subjective utility of a markup of, say, 5%? Round to the nearest whole util. Wait, you can't tell me? RANK MYSTICISM. Next you'll tell me that I'm only arguing this because I gain utility from doing so, like the Austrians' defense of their Action Axiom. "You can't refute it, because that means you acted!"

      (This is literally how you're acting right now. Yes, it's actually that off-putting.)

      I've already explained that the subjective utility of exchange is a presupposition of this theory, so maybe you should spend more time comprehending and less time running off your mouth.

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    5. " It's like finding, as I said, a particle with direction and spin equal to the pendulum of which it is a part."

      It's nothing of the sort. We are not dealing with microscopic entities, or dark matter or electron spin here.

      We are dealing with real observable human behaviour that has been studied time and again and in the ways that do show us how prices are determined. Yet the LTV is utterly absent in empirical study of, and findings on, how prices are determined.

      "Markup prices don't depend on a subjectivist value theory, though. "

      I didn't say they are. A poor straw man, Hedlund.

      In fact, however, subjective utility via demand is not absent even here: advertising can strongly influence people' demand and hence their willingness to pay certain mark-up prices, as Philip Pilkington points out:

      " I recall pointing to advertising a number of times and saying that this added value to commodities without any additional human labour.

      I had a long argument with two Marxist economists about this and came up with a great example:

      Two pairs of runners are made in the same Chinese factory. The inputs are identical -- including labour time. However, one pair gets a little tick stitched onto it and are seen in magazines being worn by Michael Jordan. The other have a little star stitched onto them and are sold in WalMart.

      The pair with the tick are sold for four times as much as the pair with the star.

      The Marxist economists couldn't really fault my logic. Without recourse to the idea of false consciousness, or some other moral/metaphysical concept, the labour theory of value can say nothing about any of this."

      http://robertvienneau.blogspot.com/2012/07/vocabulary-for-marxism.html?showComment=1341935604166#c1327734235898167917

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    6. It's nothing of the sort. We are not dealing with microscopic entities, or dark matter or electron spin here.

      Ah, yes. My apologies, I was using an esoteric Marxist tool: http://en.wikipedia.org/wiki/Analogy

      Of course, the fact that the economic half of the analogy actually would be *easier* to measure certainly doesn't hurt my case. :)

      Yet the LTV is utterly absent in empirical study of, and findings on, how prices are determined.

      You have not absorbed even the most basic aspect of the theory I've shared with you. I believe this is because you simply don't want it to be a good theory, and you know it can't be good if it's not coherent, and therefore you will do the simplest thing in your power to render it incoherent: misapprehend it.

      Nothing strengthens a critique like invincible ignorance. Carry on, O indolent paladin.

      I didn't say they are. A poor straw man, Hedlund.

      Except that I wasn't claiming you said otherwise, though, nor did I attribute the belief to you. I was only reaffirming that much of PK theory is compatible. Please read more carefully.

      *cites Pilkington*

      Oof. The blind leading the blind.

      I answered his question back then -- a point he carefully omitted -- as I shall now do for you.

      If two shoes are identical in all manner except one has a Swoosh and the other does not, then they have the same value (assuming the Swoosh shoe doesn't require more time or money to make), though they command two different prices and are, in fact, two distinct use-values. The Swooshless shoe acts as a shoe and a shoe alone, while the Swooshed one acts as a shoe AND something more: a status symbol, something one associates with a person one wishes to emulate, etc. Further, intellectual property law gives Nike a monopoly on the production of the latter use-value, better enabling it to hold the price above value, in line with the demand. If any producer could make the Swoosh shoes, this would reduce the disparity. It would also dilute the social cachet such that it might no longer be a status symbol, etc.

      Note how I don't reference either false consciousness nor "some other moral/metaphysical concept" beyond his own. Of course, Mr. Pilkington is a steadfast idealist, so perhaps the version of me in his mind phrased it differently. (Yes, I know, it's a cheap shot as he is a Berkeleian and rejects solipsism, blah blah blah.)

      Anyway, the only people who think Marx paid no attention to factors like supply and demand (the latter of which *presupposes* a concept of subjective utility) are people who haven't bothered to read him (or who stopped after five or ten pages).

      Funny thing, though: Notice that a defense of subjective utility as a coherent value theory nevertheless clearly always mediates it through demand? It's almost like subjective utility becomes a superfluous concept if you already have a concept of demand. Sellers don't read the mind of some collective zeitgeist entity, they respond to concrete quantity signals in the form of effective demand, as Kaldor pointed out so eloquently. So why bother saying "it's because they wanted the good more than their money," a phrase true by construction? Why not go the extra yard and add, "also they did it because they act."

      So, then: What makes "demand affects price" different coming from your mouth than Marx's?

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    7. "If two shoes are identical in all manner except one has a Swoosh and the other does not, then they have the same value (assuming the Swoosh shoe doesn't require more time or money to make), though they command two different prices and are, in fact, two distinct use-values."

      Marx already says that exchange value cannot be explained by use value, but is ultimately determined by SNLT:

      "As use-values, commodities differ above all in quality, while as exchange-values they can only differ in quantity, and therefore do not contain an-atom of use-value.

      If then we disregard the use-value of commodities, only one property remains, that of being products of labour."


      So for Marx exchange value is not determined by use-value, only by abstract labor units.

      So your explanation is contradicted by Marx. According to him, since the two shoes have the SAME SNLT (which you admit), they ought to command the same natural price!

      Good lord, you just failed Marxism 101, Hedlund.

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    8. Nope: Once again, you have not earned your condescension with comprehension. If you're going to do this "hit piece" selective-quoting nonsense, at least make sure the quotes say what you want them to.

      It's clear you need a primer on the terms you're using:

      "Value" is the socially necessary labor time needed to produce a good.

      "Exchange value" is the form of appearance of value. As in, it is an indirect expression of value that, at the surface level, we might mistake for value. It is a ratio at which the good trades for other goods; and placed in terms of money is called "price." It is the purely quantitative aspect of a commodity, as well as its abstract expression.

      A "use-value" is a good that satisfies some human desire or need. It is the purely qualitative aspect of the commodity, as well as its concrete expression.

      The passage you quote merely reaffirms the qualitative/quantitative division I expressed, and then indicates the quality (products of labor) that make commodities mutually commensurable.

      Exchange value is only determined purely by labor content as a system (remember, "total price = total value"?) while an individual commodity's exchange value is affected by a variety of factors — social arrangements such as price regulation, supply and demand, etc. Any time you think "exchange value," instead substitute "price." Though the latter is only one of a variety of expressions of the former, at least it puts you back into familiar territory and out of this fancy new vocabulary you haven't yet mastered. It'd prevent you from panicking and saying silly things like "you just failed Marxism 101" as you hideously butcher it.

      Now: In your own words, please tell me what you think I argued, such that "use-value is qualitative, exchange value is quantitative" is in any way a rebuttal. I'm extremely curious.

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    9. "Exchange value is only determined purely by labor content as a system "

      That is not Marx. He never says labour value = price only in some aggregate state.

      He clearly gives examples of INDIVIDUAL commodities in vol. 1 of Capital where labour value is supposed to equal price, e.g., in the case of reduced cotton crop that spoils.

      You claim:
      (1) "two shoes are identical in all manner except one has a Swoosh" might the same labour value, which implies they should have the same natural price.

      (2) you then say they are different use values (which is highly questionable), but that is irrelevant here.

      (3) you the say they have different prices, which is an admission that have different exchange values.
      ---------------
      So clearly the difference in price has been caused by a factor other than (1).

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    10. Volume 1 is not a good pick for the point you're trying to make. As I have stated many times, and as is basic knowledge of Capital, volume 1 explicitly holds to the unrealistic assumption that price and value are equal, for the sake of illustrating particular characteristics of the system. So of course the cotton in volume 1 had value equal to price; it was assumed to be such.

      Regarding your list:

      1) I've asked once before: Can you define "natural prices" for the sake of this discussion so I can make sure my responses are actually addressing the thing you say? Thanks in advance.

      2) Not irrelevant at all, since it's an important part of why the two prices are not subject to arbitrage. One distinguishes itself, even if only socially, as a superior good. People who can afford it will not accept the cheaper shoe as a substitute, etc. Essentially, there are two different levels of demand in consideration, one for each product, which in and of itself renders the notion that they're identical use-values problematic. There IS some qualitative difference, whether generated by marketing or by conspicuous consumption or whatever.

      3) Correct, different prices imply different exchange values, since price is shoe.exchange_value(money) as distinguished from shoe.exchange_value(mcribs) or (pokemon_trading_cards) or whatever.

      And yes, the price difference in 3 owes to a factor other than 1. As it happens, I have provided an example of just such a factor, as have you and Mr. Pilkington: greater demand. Nike, accordingly, nets supernormal profits by selling high above value, etc.

      That's the importance of the price/value distinction. It's the essence of the theory: value and price are two different moments in a process.

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    11. The key element is subjective value, not use value. Even when you claim the shoes are a status symbol, it is subjective and intersubjective value that lies behind this.

      So despite saying that you refuted Philip in fact you can't refute him.

      Also, you're starting to sound like a dual-system interpretation Marxist.

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    12. The key element is subjective value, not use value. Even when you claim the shoes are a status symbol, it is subjective and intersubjective value that lies behind this.

      When you say "use-value" is not "the key element" you betray a faulty grasp of the terms. Use-value is not a property of an object, as utility is ("that thing HAS utility"). Rather, it is a category of object ("that thing IS/ISN'T a use-value"). One wouldn't speak of use-value as more important or less important to a commodity's price because it is fully qualitative and therefore not numerically expressible (save in boolean terms). An object that is not a use-value has no realizable price on the open market. An object that is a use-value *can* have a price, but this in no way specifies *what* price.

      To that end, yes, subjective value acts as the determinant of demand, and demand affects price. As I've already said.

      My more controversial contention is that the notion of subjective utility adds virtually nothing to the concept of demand that is not already presupposed by it (e.g., if people demand something, they must want it more than the money it costs; if not, then they must not), and therefore is superfluous. Attempts to formalize it generally demand properties like transitivity, completeness, etc., which are not properties I can relate to in my own preferences (e.g., I prefer apples to oranges, oranges to grapes, and grapes to apples).

      With all that said, I am not married to the idea that subjective utility is useless, and am open to being shown some novelty it introduces that I've missed. As I said, I recognize it’s a controversial position. I just find it discouragingly easy to spot tautologies and similar problems in utility claims, and demand already seems to do all the heavy lifting by itself.

      So despite saying that you refuted Philip in fact you can't refute him.

      ...interesting. So, he can't be refuted? Has Philip obtained apodictic certainty of market phenomena?

      Reread his claim; he argued that the swoosh added value, which in his mind contradicts Marx's value theory. However, Phil was introducing a completely separate value theory. The existence of one theory does not and cannot suffice to refute another; a refuting critique must point to an immanent shortcoming or contradiction.

      Phil claimed that Marx's theory cannot account for the described phenomenon. I illustrated quite clearly that it can. Therefore, I refuted his claim.

      Also, you're starting to sound like a dual-system interpretation Marxist.

      Yet again, your misuse of terms belies the authoritative tone of your denunciations. I've seen you display epistemic modesty before, and urge you to practice it again, because you're at risk of morphing into a caricature of yourself. Or perhaps an unsympathetic Mel Brooks character.

      Recognizing demand affects price is not "dual-system." To be absolutely clear: EVERY Marxist scholar I’ve read, regardless of which camp they fall into on contentious interpretive issues, agrees that value and price can and generally do vary in individual commodities. Dualists, simultaneists, News, temporalists, Sraffians -- they all understand this very basic, explicit point.

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  4. I'll try to respond to this post in the spirit in which it was written. That is, I'll nitpick and try to find errors and inconsistencies.

    "Chapter 2 ... summary of Marx’s labour theory of value ...." I don't characterize the theory that way. Neither did he. This characterization is somewhat tendentious; it presupposes that there is more than one theory of value. He didn't think there had been: "the concept of the value relation has *always been the same* — more or less clear, hedged more or less with illusions or scientifically more or less definite." I think supposedly alternative theories change the subject to varying degrees. Keep this in mind when Marx doesn't address or gives a wrong answer to "the" question. Also, "labor theory of value" induces false preconceptions about the role of labor in the theory (see, e.g., last para. of the post).

    "The value of a commodity is 'determined by the average amount of labor currently needed to produce it' (Kliman 2006: 21).

    "In Marx, this is called abstract socially necessary labour time (SNLT), ..."

    No, just socially-necessary labor.

    "The total SNLT is a sum of two components, as follows:

    “(1) the value transferred from the SNLT embodied in non-labour factors both used up in production and the durable capital goods used in production (whose value is transferred as the capital goods depreciate in value, though how you properly calculate this is left unexplained),"

    This last bit is really uncharitable. Because the calculation isn't explained *there and then*, in a brief intro for tyros, it is supposedly "left unexplained."

    "the value transferred from the SNLT embodied in non-labour factors"--wrong, and not what I wrote, and not compatible with the single-system aspect of the TSSI. I doubt that the idea of value being transferred from SNLT even makes sense. In Marx's theory, value is transferred from used-up means of production.

    I wrote, "In this theory, a commodity’s value is the sum of two components," not "The total SNLT is a sum of two components." The latter confuses socially-necessary labor and value.

    "The total SNLT is a sum of two components, as follows: ... (2) the SNLT added by living labour, or the human beings labouring in production (Kliman 2006: 22)." This reflects the same confusion. I wrote, "The other component of a commodity’s value is the *new value* added by what Marx calls living labor."

    "But already we have a problem in Kliman’s analysis. He speaks of abstract labour value, but then talks of money prices on this point ... Kliman has switched to talking of *money values*."

    Analysis? It’s a brief introduction for tyros. And I don't speak of "abstract labour value" or “labor value,” anywhere.

    But let's get to the alleged "problem." I wrote, "Marx holds that a commodity’s value is determined by the average amount of labor currently needed to produce it." Then I "switch[ ] to talking of *money values*."

    Just what is the problem? Where is the switch? If I say that your weekly wage is determined (in part) by how many hours you work, and then express your weekly wage in money terms, have I "switched to talking of *money wages*"? No. Is there a problem? No.

    To be continued (maybe).

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    1. (1) Thank you. I am willing to learn from corrections or misunderstandings.

      (2) Now just tell me this: can you point to any real world prices today -- that is, out of the wholly imaginary aggregate equalised profit rate situation as unrealistic as any neoclassical general equilibrium state --where money price directly corresponds to SNLT?

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    2. "This reflects the same confusion. I wrote, "The other component of a commodity’s value is the *new value* added by what Marx calls living labor."

      So "new value" isn't quantifiable in SNLT?

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    3. No, my point is that you confuse value and one of its measures (labor). ""The other component of a commodity’s value is the *new value* added by what Marx calls living labor" is not the same thing as "[The other component is] the SNLT added by living labour."

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  5. Former Neo LiberalMarch 31, 2015 at 1:15 PM

    It is by looking at animals and slaves etc that we see why Marx’s theory of value is worth considering. If the animal or slave produced surplus value in the same way that wage workers do then we could have avoided 300 years of bloody history! It goes without saying that a society where animal labour is prevalent will look very different to one where wage labour is prevalent.

    Animals do produce value of course in a multitude of ways, from primitive to advanced societies, but they are use values for their owners and not exchange values. A horse does not go on strike when they are not fed enough hay for example. The necessary labour for an animal doesn't really change over time and place; the animal is not seen with a mobile phone to its ear. The animal does not come to market to take part in exchange, and moreover the wage worker that does come to market cannot mark up his own price when doing so, unlike the capitalist! Marx made the point that marking up prices wasn't much different to his theory in the final analysis, as long as it is admitted that while capitalists can mark up, workers cannot!

    But you really have to grapple with the totality of Marx’s argument here, rather than indulge in superficial and petty gripes (which are all forced into). I would recommend this early work:

    https://www.marxists.org/archive/marx/works/1844/james-mill/index.htm

    And for a more general introduction to Marx’s analysis I would read this:

    https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/index.htm

    Then move onto the complicated stuff!

    On price equating to value (I wonder why this is such a philosophers stone for progressive post Keynesians?!) Farjoun and Machover have demonstrated that *over time* prices equate to labour values more closely than can be measured by any other value theory. So the fact is that LK cannot go into sports direct tomorrow, look at a pair of trainers and say this proves his theory correct, as if that could ever be the case! If your obsession was to explain prices on a given day (why any progressive would ever be obsessed by this is a mystery wrapped in an enigma) you wouldn't see the wood for the trees. Imagine that you just looked at changes day by day, you would think nothing much had changed, one day very much like the day before, until you stood back and looked at the bigger picture you would suddenly realise things had changed very much!

    Also capitalists don’t approach pricing quite in the way the post Keynesians imagine. For capitalists equating cost with the widgets produced can be a fundamental concern. So the return on number of widgets produced is crucial and if the desired price cannot be found the capitalist will look to ways of changing the production process, for example by intensifying labour.

    Incidentally, I think Sraffa (and call me a Sraffian incidentally) was more enamoured and influenced by Marx than you imagine. He would certainly want to distance himself from the new post Keynesians judging by the articles on this site, which look suspiciously like the reactionary concerns of neo classical economists to me.

    What is progressive in your ideas?

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    1. You simply do not explain why animals should not be included in any coherent theory of labour value.

      Suppose we had some labouring people who did not go on strike, did not have mobile phones, did not go to market to take part in exchange and worked for free in a factory (they grow their own food and no need fo exchange). Would they then produce no labour value?

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    2. Former neoliberal, good theories are neither "progressive" nor "reactionary". They just hopefully tell the voters the consequences of policies that can be implemented. It's then up to voters to decide for an "humane" course of events.

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  6. Former Neo LiberalApril 1, 2015 at 9:31 AM

    "Suppose we had some labouring people who did not go on strike, did not have mobile phones, did not go to market to take part in exchange and worked for free in a factory (they grow their own food and no need fo exchange). Would they then produce no labour value?"

    Good question, though if they didn't go to market they wouldn't be wage workers because their labour is bought and sold on the market and workers have to buy stuff in shops. So I would suspect that labouring people who didn't exchange on the market would have to be slaves and I already dealt with those in the previous comment.
    These debates go back to Ricardo and Adam Smith who when polemicising about productive and unproductive labour in order to show that the aristocracy and their hangers on were unproductive, Ricardo wanted to highlight why not only agricultural workers were productive etc. The arguments are quite technical so I would read the links I provided in my previous comment, as they explain the context far better than I could in a comments box.

    On progressive and reactionary, for conservatives I think theories are neither progressive nor reactionary but for post Keynesians I think they are very much usually aware of what is progressive and what isn't or minded of it. I can't see the progressive nature of Lords arguments or obsessions, but I can see the progressive ideas in what Sraffa said and what other Post Keynesians say.

    I still can’t get beyond the idea that LK is more of a neo classicalist than a post Keynesian.

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    1. You haven't explained if slaves would provide SNLT. You haven't explained why animals cannot produce labour.

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  7. Former Neo LiberalApril 1, 2015 at 10:06 AM

    Slaves would not produce SNLT as they are in direct exchange with their master, their labour or products of their labour are not exchanged on the market with money as the universal equivalent, generally speaking.

    The thing is that this argument can only be made by explaining the historical process and setting up the conditions that underpin capitalism, private property, generalised exchange, division of labour, money in its most mature form etc etc. Also by looking at the history of the expansion of capitalism and the affect on slavery we can see the differences. This is no modest task but one that would pay off for you I think. I would advise you to ditch economics and start looking at history.

    But if you are correct and slaves are effectively no different to wage workers then it makes you wonder what the US civil war was all about?

    And animals do produce labour and do produce value.

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    1. "Slaves would not produce SNLT as they are in direct exchange with their master, their labour or products of their labour are not exchanged on the market with money as the universal equivalent, generally speaking."

      That is nonsense. Slaves in the US before 1861 and in Haiti and in many examples through history were producing commodities sold on world markets.

      "But if you are correct and slaves are effectively no different to wage workers"

      Nice straw man. I never said they were "no different to wage workers". I only asked you if they produce SNLT.

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  8. Former Neo LiberalApril 1, 2015 at 11:34 AM

    This reply is such a poverty of the imagination. Seriously, these questions are so dumb and so lacking in thinking things through fully, you just leap on what you imagine is something that proves your point, without bothering to really think deeply about it. This is your general and fundamental problem.

    I am aware that slave labour often enters the sphere of capitalist markets but we have to think historically and logically here to understand the truth of the matter. We need to ask the question, could a predominantly slave economy produce surplus value? That is surplus value, not, I repeat, not surplus use value. Think of a society of predominantly slaves and one of wage workers and imagine the differences between them.

    Of course there are technical arguments behind your question; the slave worker does not come to the market as a participant but as a commodity. What the worker brings to market is the product of his labour, and exchanges this on equal terms with other commodities brought there by the capitalists. They can evaluate a certain commodity they wish to buy in terms of the labour-time required for its production, and exchange it for some commodity they have produced which requires the same amount of labour-time. Say a worker produces by such means some commodity that requires 10 hours work. The capitalist might acquire this product for say 5 hours work, because they are able to buy the labour-power of a worker for this amount, and then obtain 10 hours work from the worker – 5 hours replace the cost of his wages, and 5 create a surplus value for the capitalist. If all labour is slave labour there can be no Surplus Value because the exchange Value of all output is equal to the value of the inputs.

    You really need to study history and then think carefully about the differences between a slave economy and a capitalist economy. In a slave economy there is no generalised commodity exchange.

    So slaves do not produce surplus value and SNLT does not appear as a concept in slave economies, it can only manifest itself in a capitalist economy. I will let you discover why this is yourself.

    Enjoy your journey out of stupefying ignorance.

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    1. So we finally get the answer: "slaves do not produce surplus value and SNLT does not appear as a concept in slave economies".

      But in this case LTV is still incoherent: I see no reason why this should make a different to SNLT. There is no reason why capitalists can't extract profits from slave production.

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    2. Slaves are a commodity, they would function the same as a machine in this case. You have to pay for the full upkeep cost of the slave(or it'll die - just like if you don't take care of a machine). If you don't understand you need to re-read everything.

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