Here Marx gives his definition of a commodity:
“The commodity is first of all, an external object, a thing which through its qualities satisfies human needs of whatever kind. The nature of these needs, whether they arise, for example, from the stomach, or the imagination, makes no difference. Nor does it matter here how the thing satisfies man’s need, whether directly as a means of subsistence, i.e. an object of consumption, or indirectly as a means of production” (Marx 1982: 125).This is already somewhat problematic: does it include and encompass what neoclassicals call subjective value too? If so, Marx’s economics badly neglects the reality of subjective value, and how it is just as much a source of price determination as labour expended in the production of the good.
When Marx speaks of the “use value” of commodities, he seems to have in mind the physical usefulness of goods, and does not include subjective pleasure or, for example, delusional “use value” in his definition:
“The usefulness of a thing makes it a use-value. But this usefulness does not dangle in mid-air. It is conditioned by the physical properties of the commodity, and has no existence apart from the latter. It is therefore the physical body of the commodity itself, for instance iron, corn, a diamond, which is the use-value or useful thing. This property of a commodity is independent of the amount of labour required to appropriate its useful qualities. When examining use-values, we always assume we are dealing with definite quantities, such as dozens of watches, yards of linen, or tons of iron. The use-values of commodities provide the material for a special branch of knowledge, namely the commercial knowledge of commodities. Use-values are only realized [verwirklicht] in use or in consumption.” (Marx 1982: 126).But the usefulness of a commodity need not be limited to the “physical properties of the commodity.” People can buy things like magic charms or magic potions (and certainly people in the past did this in large numbers) or psychic readings. Some small numbers of people today probably think these things can give some kind of magic effect, but clearly there is no rational reason to think any such thing. The value or usefulness of such goods doesn’t lie in the “physical properties of the commodity.” People just mistakenly think the goods do certain things. But let us put all these points aside.
Marx further defines “exchange-value” as something that “appears first of all as the quantitative relation, the proportion, in which use-values of one kind exchange for use-values of another kind” (Marx 1982: 126). Marx admits readily that exchange values constantly change and are not fixed (Marx 1982: 126). But the exchange value is a “form of appearance” (Marx 1982: 127) concealing something deeper.
Marx sees exchange values in barter trades as being equivalent values (Marx 1982: 127). But this does not necessarily follow at all. In fact, when one person exchanges one good for another, it seems likely that in many cases he values the good he receives more highly than the good he gives up in the trade, and vice versa. Marx never considers this.
Marx assumes that, since goods must be equivalent in value during barter exchanges, therefore they must be reducible to some common value:
“… the exchange values of commodities must be reduced to a common element, of which they represent a greater or a lesser quantity.” (Marx 1982: 127).We can quote his argument at length:
“This common element cannot be a geometrical, physical, chemical or other natural property of commodities. Such properties come into consideration only to the extent that they make the commodities useful, i.e. turn them into use-values. But clearly, the exchange relation of commodities is characterized precisely by its abstraction from their use-values. Within the exchange relation one use-value is worth just as much as another, provided only that it is present in the appropriate quantity. Or, as old Barbon say: ‘One sort of wares are as good as another, if the value be equal. There is no difference or distinction in things of equal value … One hundred pounds worth of lead or iron, is of as great a value as one hundred pounds worth of silver and gold.’As a defence of the labour theory of value, this argument is a non sequitur. It simply does not necessarily follow. There is no necessary reason to think there must be an underlying universal, single objective value to all commodities. In fact, we need not even assume that in all trades the people value the goods exchanged equally at all, as we have seen.
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. But even the product of labour has already been transformed in our hands. If we make abstraction from its use-value, we abstract also from the material constituents and forms which make it a use-value. It is no longer a table, a house, a piece of yarn or any other useful thing. All its sensuous characteristics are extinguished. Nor is it any longer the product of the labour of the joiner, the mason or the spinner, or of any other particular kind of productive labour. With the disappearance of the useful character of the products of labour, the useful character of the kinds of labour embodied in them also disappears; this in turn entails the disappearance of the different concrete forms of labour. They can no longer be distinguished, but are all together reduced to the same kind of labour, human labour in the abstract.”
Let us now look at the residue of the products of labour. There is nothing left of them in each case but the same phantom-like objectivity; they are merely congealed quantities of homogeneous human labour, i.e. of human labour-power expended without regard to the form of its expenditure. All these things now tell us is that human labour-power has been expended to produce them, human labour is accumulated in them. As crystals of this social substance, which is common to them all, they are values – commodity values [Warenwerte].” (Marx 1982: 127–128).
Even worse, it is also very clear how Marx must ignore the reality of different types of labour, whether of different professions but more generally of differences in skilled, professional, or unskilled labour, even though Marx himself understands that there are “heterogeneous forms of useful labour, which differ in order; genus, species and variety” (Marx 1982: 132).
Nevertheless, Marx is forced to reduce all labour to a homogeneous abstract unit.
Marx is adamant that labour time is the quantitative measure of labour value:
“A use-value, or useful article, therefore, has value only because abstract human labour is objectified [vergegenständlicht] or materialized in it. How, then, is the magnitude of this value to be measured? By means of the quantity of the ‘value-forming substance’, the labour, contained in the article. This quantity is measured by its duration, and the labour-time is itself measured on the particular scale of hours, days etc.” (Marx 1982: 129).But immediately Marx hits up against the problem of why heterogeneous human labour can be meaningfully reduced to mere labour time as an objective measure of economic value. Why is this homogenous unit a truly accurate measure of labour value when everyone knows that workers work at different professions, speeds, levels of competence, and have different skills and expertise?
Quite frankly, Marx’s answer does not solve this devastating problem, but mostly just evades it:
“It might seem that if the value of a commodity is determined by the quantity of labour expended to produce it, it would be the more valuable the more unskilful and lazy the worker who produced it, because he would need more time to complete the article. However, the labour that forms the substance of value is equal human labour, the expenditure of identical human labour-power. The total labour power of society, which is manifested in the values of the world of commodities, counts here as one homogeneous mass of human labour-power, although composed of innumerable individual units of labour-power. Each of these units is the same as any other, to the extent that it has the character of a socially average unit of labour-power and acts as such; i.e. only needs, in order to produce a commodity, the labour time which is necessary on an average, or in other words is socially necessary. Socially necessary labour-time is the labour-time required to produce any use-value under the conditions of production normal for a given society and with the average degree of skill and intensity of labour prevalent in that society. ….Marx evades the severe problem of heterogeneous human labour by simply reducing all labour time to an abstract, homogenous unit: socially-necessary labour time. But this doesn’t solve the problem. It attempts to ignore the issue by means of wishful thinking.
What exclusively determines the magnitude of the value of any article is therefore the amount of labour socially necessary, or the labour-time socially necessary for its production. The individual commodity counts here only as an average sample of its kind. Commodities which contain equal quantities of labour, or which can be produced in the same time, have therefore the same value. The value of a commodity is related to the value of any other commodity as the labour-time necessary for the production of the one is related to the labour-time necessary for the production of the other. ‘As exchange-values, all commodities are merely definite quantities of congealed labour-time.’” (Marx 1982: 129–130).
Marx assumes that total labour power of a nation can be aggregated by reducing all labour to a “socially average unit of labour-power.” This won’t do. Labour is too heterogeneous and too radically different in terms of profession, skill, competence, experience, and skills to be aggregated in such a crude manner. Highly skilled labour (e.g., a professional surgeon) produces more subjective value and to most people more objective value than unskilled manual labour (e.g., a person who mops floors). That is why a surgeon is paid more than a janitor. What Marx calls “labour-power” can be very different in different cases, and Marx’s attempts to reduce labour to an abstract unit is as unconvincing as any neoclassical who reduces real capital to a homogeneous putty.
And matters are no better when Marx later argues that the value of a commodity made by “complicated labour” can be reduced to quantities of “simple labour,” which seems to be defined as “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). Here once again heterogeneous labour has to be reduced to a common measure, but what is it? It sounds rather like energy expended by human beings in their labour, but I see no reason why this should be an eternal source of economic value and the price determination of goods.
Neither the abstract “socially-necessary labour time” solution nor the “simple labour” unit reductionism can really solve the problem of heterogeneous human labour. On these grounds alone, the labour theory of value is unsound and unconvincing.
Finally, we have another utterly devastating problem with the labour theory of value:
“A thing can be a use-value without being a value. This is the case whenever its utility to man is not mediated through labour. Air, virgin soil, natural meadows, unplanted forests, etc. fall into this category. A thing can be useful, and a product of human labour, without being a commodity. He who satisfies his own need with the product of his own labour admittedly creates use value, but not commodities. In order to produce the latter, he must not only produce use-values, but use-values for others, social use-values. (And not merely for others. The medieval peasant produced a corn-rent for the feudal lord and a corn-tithe for the priest; but neither the corn-rent nor the corn-tithe became commodities simply by being produced for others. In order to become a commodity, the product must be transferred to the other person, for whom it serves as a use-value, through the medium of exchange.) Finally, nothing can be a value without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value.” (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 utility is also a necessary condition for economic value or exchange value, along with (1) labour time and (2) use value. And once we add subjective value into the mix, the Marxist labour theory of value becomes even more unsound. For now it is not even necessary for a commodity to have use value for it to command exchange value. Plenty of goods have no use value, e.g., pet rocks, but fetch an exchange value.
If Marxists want to argue that the Marx’s definition of “use value” includes “subjective value” as well, matters are no better. We are still left with the same devastating problem: labour time is not the only necessary condition for economic value or exchange value.
So Marx’s “labour theory of value” is obviously a blatantly one-sided and incomplete theory of both value and price.
And, finally, notice how all these issues are so devastating even before we get to yet another damning point, which I have made time and again, but which Marxists can never answer.
Most prices in modern economies are mark-up prices. It is not labour time per se but average unit cost of labour along with the average unit cost of all other non-labour factors at a given quantity of output that is used to calculate most prices. Given differing economies of scale, if you change the given quantity of output, then total average unit costs radically change, regardless of the total number of labour hours. After they calculate total average unit costs, businesses add a profit mark-up to this, nearly always. The profit mark-up can vary and is not related to labour.
Once again, on straightforward empirical grounds, we have no rational reason to accept the Marxist mystical dogma that “socially-necessary labour time” determines exchange value or prices in modern capitalism.
Further Reading
“Marx’s ‘Socially Necessary Labour Time’: A Quick Overview and Critique,” March 26, 2015.
“Progress in Marxism on the Labour Theory of Value?,” March 18, 2015.
“Mysticism and the Labour Theory of Value,” May 7, 2014.
“Lavoie on ‘Should Sraffian Economics be dropped out of the Post-Keynesian School?,’” June 19, 2014.
“Sraffians versus Kaleckians versus Fundamentalist Post Keynesians,” June 17, 2014.
“Did Kalecki Accept the Labour Theory of Value?,” April 18, 2014.
“Automation and Robots in the News,” February 23, 2015.
“Adam Smith on the Labour Theory of Value,” April 20, 2014.
BIBLIOGRAPHY
Marx, Karl. 1982. Capital. Volume One. A Critique of Political Economy (trans. Ben Fowkes). Penguin Books, Harmondsworth, England.
1/2:
ReplyDeleteThis is already somewhat problematic: does it include and encompass what neoclassicals call subjective value too?
Yes and no. To Marx, use-value is purely a qualitative condition, not quantitative. You'll notice he refers to it in a very particular way, even; he doesn't say things *have* a use-value, but that they *are* or *are not* a use-value. In other words, think of it as a binary status: 1 or 0.
He notes in the first few paragraphs that it's not why a thing is valued that matters for the sake of his analysis; only that it is valued and thus an object of the market.
People who already have spent enough time studying economics tend to acquire a default understanding of "value" that can make Marx very hard to parse. One thing I like to do, that often makes it easier for people versed in contemporary economics, is to just do away with the word "value" altogether until the basic concepts are cemented. Thus, when referring to subjective value, use "utility"; when referring to value in Marx's sense, use "SNLT." This really does wonders to help all parties avoid equivocation, which is extremely common when a word is being used at cross-purposes.
And as equivocation vanishes, this theory will start to look remarkably uncontroversial.
But the usefulness of a commodity need not be limited to the “physical properties of the commodity.”
He says *conditioned* by, not determined by. This is also hardly a controversial statement. Gold has particular physical properties that make it useful for some things (conductivity, ornamentation) and not useful for others (swim flippers). Chamomile can be great for tea, not so hot as building material. Uses are socially conditioned, too, varying by time and place and culture and custom. The point remains: Either something is useful or it isn't. That's all we need to know for the particular analysis at hand.
Marx sees exchange values in barter trades as being equivalent values (Marx 1982: 127). But this does not necessarily follow at all.
The "double inequality" is such a trivial point that it hardly even warrants mention. It's a truism that tells us nothing of worth — a logical necessity that is, for all intents and purposes, presupposed in the whole analysis he builds. Certainly, nothing he claims contradicts the notion.
There is no necessary reason to think there must be an underlying universal, single objective value to all commodities. In fact, we need not even assume that in all trades the people value the goods exchanged equally at all, as we have seen.
The very notion of a "market price" contradicts this, no? If I can buy a chair on the market for $5, and you sell me yours (same one!) for $10, I'll feel justifiably ripped off; you could have gotten two chairs at the store down the block from my house. And indeed, I now walk down there and do just that. So you just traded me, in effect, two of a type of chair for one of that type. This exchange isn't just unequal in terms of subjective utility; it's unequal in objective terms: 2 chairs != 1 chair.
If you're looking at it purely in terms of barter (generally a bad idea IMO), this might be disguised, but once we have money as a unit of account, this changes everything. Now it’s trivial to determine $5 = a chair = X oz. of coffee, etc. Equivalency is what makes arbitrage possible.
This notion has a pretty long pedigree. We can go at least as far back as Aristotle to find the argument that exchange implies equality and equality implies commensurability. And even subjectivists still refer to a common standard (utility), albeit one that is questionably measurable at best, and at worst outright non-enumerable.
Of course, I'm sure you'll agree that even then, subjective value doesn’t affect prices directly, but only indirectly -- through market demand.
(1) you haven't answered my question. Can commodities satisfy subjective utility?
Delete(2) once again the fundamental point is not answered. Does usefulness encompass subjective value or mistaken ideas about goods?
(3) inequality of value of goods in exchange (at least in some exchanges) most clearly is a problem for Marx.
(4) "The very notion of a "market price" contradicts this, no?"
Nope. I don't follow you argument at all.
1) It's not a question of "can"; they must be subjectively useful, or they're not commodities. I'm not sure what specific sort of answer beyond that you're looking for. If I still haven't answered it, could you elaborate?
Delete2) Are you asking if homeopathic remedies are commodities? They are, yes.
3) Not sure what you mean. Could you spell it out?
4) Basically it draw upon this: http://en.wikipedia.org/wiki/Law_of_one_price (which is not at all unique to Marxian econ)
The very fact that exchange coalesces around non-arbitrary "market prices" means you have a baseline from which differences are deviations in which one party benefits disproportionately from the exchange, seen most clearly when placed in the terms of the transaction (e.g., a spot transaction of 1 chair for the equivalent of 2 chairs is unequal because 1 != 2). Without this presupposition, we can't meaningfully talk about, say, "price gouging" or "monopoly rents." They both presuppose some threshold that the prices in question have risen above.
(3) without the assumption that all trades involve exchanges of goods of equal value, one of Marx's basic assumptions of the labour theory as presented in Chapter 1 of Capital is undermined.
Delete(4) I don't see what prices have to do with this point. In many transactions I make the trade because I value what I receive more highly than what I give up. This is a matter of utility, not price per se.
3) The restrictive assumptions in volume 1 are adopted for a very specific reason: to answer the question, "if all exchange is equal and everything exchanges at its value, how is profit possible?" This is the question that confounded Ricardo.
DeleteBy the time you get to Volume III, he's relaxed his assumptions and goes on to consider cases of price/value deviations, etc. -- the messy stuff that happens in the real economy.
4) Yes. Utility motivates the transaction. But would you say the notion that you were in no way ripped off itself contributes to the utility of the transaction? Because if I saw someone selling gasoline at four times the price of the other two stations at the same intersection, I think apart from simple accounting equivalence, I'd also find something of a shock to my utility at that location.
Nobody -- not Marx, not me, and not anyone I have ever met nor read -- disputes that one trades because one subjectively desires what one trades less than what one trades *for*. It's basically true by construction, and so general that one would be hard-pressed to find any economic doctrine that it contradicts. It certainly poses no trouble for this one.
It's really not that far removed from "humans act," when you get right down to it.
2/2:
ReplyDeleteMarx evades the severe problem of heterogeneous human labour by simply reducing all labour time to an abstract, homogenous unit: socially-necessary labour time. But this doesn’t solve the problem. It attempts to ignore the issue by means of wishful thinking.
No evasion. He spends pages and pages discussing the dual nature of labor -- it is both concrete (hence the heterogeneity) and abstract. It's the same sort of division he drew with the commodity, with use-value (concrete) distinguished from value (abstract), and the two kinds of labors map exactly; concrete labor produces a given kind of use-value, but these concrete labors are also abstract labor; there's no abstract labor "as such" any more than there can be a "dog" without some sort of designation of breed. But chows and pugs are all still dogs.
The thing one must remember is that this analysis is conducted from the perspective of capital. In other words, to a capitalist's accounts, it doesn't matter if his laborers are producing buoys or bricks; only that they're producing something salable for a certain wage for a certain span of time. The concrete side corresponds to an individual's reckoning, while the abstract side is the intrinsically societal aspect.
Highly skilled labour (e.g., a professional surgeon) produces more subjective value and to most people more objective value than unskilled manual labour (e.g., a person who mops floors). That is why a surgeon is paid more than a janitor.
Careful; you're playing right into right-wingers' hands by basically saying, for example, people barely scraping by on their low wages are nevertheless justified in the amount they receive. You're on much firmer footing with supply and demand (i.e., a glut of "unskilled" labor compared with those with the requisite training and licensure to be a surgeon) than you are with distinct quantities of subjective value as such; again, direct measurement is problematic. Arguing otherwise, to me, is what really rings of mysticism -- or at least naive idealism.
For labour is not even a sufficient condition for economic value or exchange value. Clearly utility is also a necessary condition for economic value or exchange value, along with (1) labour time and (2) use value. And once we add subjective value into the mix, the Marxist labour theory of value becomes even more unsound.
Labor is indeed not sufficient, but recall that (2) encompasses utility already. Value is already a synthesis of subjective and objective considerations. The difference is that subjective utility is fulfilling a qualitative role only, rather than *both* a qualitative and quantitative role.
If Marxists want to argue that the Marx’s definition of “use value” includes “subjective value” as well, matters are no better. We are still left with the same devastating problem: labour time is not the only necessary condition for economic value or exchange value.
...And? Certainly Marx never argued otherwise. The idea that you can have economic reproduction purely divorced from human needs and the satisfaction thereof is a ridiculous caricature of our views.
So, I'll gladly join you in beating the stuffing out of that straw man. The sooner we can dispense with these misgivings, the better.
Most prices in modern economies are mark-up prices…
...And? No argument here. Marxists don't dispute any of this. You may be interested to know, further, that the cost of non-labor inputs is considered a part of a commodity's value (in Marx's sense). This is something discussed at length by Marx, though the first link I provided the other day also explains it in much simpler and shorter language.
Suffice to reiterate: for a given commodity, price can differ from value, and profit can differ from surplus value, but in aggregate they must be equal, much in the same way that all rows and columns must net to 0 in double-entry bookkeeping.
(1) "Careful; you're playing right into right-wingers' hands by basically saying, for example, people barely scraping by on their low wages are nevertheless justified in the amount they receive"
DeleteI am doing no such thing. It is a fact that highly skilled labour gets greater wages then abundant unskilled manual labour. I am making no moral judgements about it.
Wages can be determined at least to some significant degree in some cases by scarcity and abundance and quality and skill of labour, regardless of labour time. This is a devastating problem for Marx.
(2) "If Marxists want to argue that the Marx’s definition of “use value” includes “subjective value” as well, matters are no better. We are still left with the same devastating problem: labour time is not the only necessary condition for economic value or exchange value.
...And?"
If you can't see the problem, you clearly can't think clearly.
If labour time is not the only necessary condition for economic value or exchange value, then why does Marx insist that economic value is only determined by labour?
Marx’s “labour theory of value” is misnamed. It should be Marx's "utility and labour theory of value".
Wages can be determined at least to some significant degree in some cases by scarcity and abundance and quality and skill of labour, regardless of labour time. This is a devastating problem for Marx.
DeleteIf it's a problem, you'll have to explain it to me. If you read him and Engels excoriating Lassalle's "Iron Law of Wages," you'll find the two of them stating in no uncertain terms the role of supply and demand in setting a wage. So, clearly they believed supply and demand as determinants of the wage were fully consistent with their system. Do you see a way it is not?
If labour time is not the only necessary condition for economic value or exchange value, then why does Marx insist that economic value is only determined by labour?
All value is labor, but not all labor is value. Unuseful labor, specifically, is the outer ring of the venn diagram, in this case.
Marx’s “labour theory of value” is misnamed. It should be Marx's "utility and labour theory of value".
This is correct! Marx himself never refers to this as the "labor theory of value," in fact; that was just a shorthand adopted by later theorists. Generally, Marx would refer instead to "the law of value." So, yes, the fact of it is much more general than the way it's often portrayed.
Some Marxists have suggested it might better be called a "value theory of labor," and others insist on only using "law of value." However, many also have simply shrugged and adopted the LTV moniker, just because it's easier to use the phrase people recognize.
"If labour time is not the only necessary condition for economic value or exchange value, then why does Marx insist that economic value is only determined by labour?
Delete>>All value is labor, but not all labor is value. etc
This is a comment that does not even answer my question.
"Marx’s “labour theory of value” is misnamed. It should be Marx's "utility and labour theory of value".
>>This is correct!
Um, then Marx was hopelessly confused -- and inconsistent.
Marx says:
“But the value of a commodity represents human labour pure and simple, the expenditure of human labour in general.
"Let us now look at the residue of the products of labour. There is nothing left of them in each case but the same phantom-like objectivity; they are merely congealed quantities of homogeneous human labour, i.e. of human labour-power expended without regard to the form of its expenditure."
"Human labour-power in its fluid state, or human labour, creates value, but is not itself value."
"We know that the value of each commodity is determined by the quantity of labour materialized in its use-value, by the labour-time socially necessary to produce it."
--------------
In none of these passages does Marx say: economic value is created by both labour and utility.
The way people interpret him is that only labour creates economic value. So basically virtually everyone has misunderstood Marx?
This is a comment that does not even answer my question.
DeleteWell, as I said already, if I am not catching the nuance of your questions, I'd greatly appreciate any elaboration you can provide.
In none of these passages does Marx say: economic value is created by both labour and utility.
Keep in mind when Marx was writing. There wasn't really a need to spar with subjectivist ideas just yet because they had not yet been well developed. The fact that the labor needs to be towards something useful would, at that point, have been a no-brainer on par with an Ikea instruction manual including bullet points like "remember to breathe and blink every so often."
In the above case, though, you've actually included the relevant passage. Note:
“But the value of a commodity represents human labour pure and simple, the expenditure of human labour in general."
The value of a commodity, as in, "we've already established it has a use-value." You can't have a commodity that is not a use-value.
But yes, when someone has written thousands and thousands of pages, it's possible to find some passages that are less good at conveying the ideas than others. The point remains that nothing I've said is inconsistent with any of the blurbs you're quoting, even if they don't fully restate the exact definition of "value" or "commodity" every time.
The way people interpret him is that only labour creates economic value.
Well, this is technically correct but the nuances are where people lose the thread. Strictly speaking, it's "socially necessary (abstract) labor time." And labor can hardly be considered necessary if it's not even *useful*, right?
So basically virtually everyone has misunderstood Marx?
Ugh. So, so many people have. As I said before, consider the case of Keynes. Same deal. And just as the last few decades have seen a real Renaissance of Post Keynesians trying to set the record straight, so too has Marxian econ put to rest many of its own bugaboos since the early 90's.
But yes, there remain many people who've carved out careers on the backs of shoddy interpretations, and if they've staked career and reputation on it, they're unlikely to come around to a new, better reading.
Basically, it gets kinda Kuhnian from there.
" You can't have a commodity that is not a use-value."
DeleteBut you can. Pet rocks. A used stamp that has mere antique value. The list can go on.
Maybe I have not done a good job explaining this point, but "mere antique value" and "novelty value" both describe possible qualities of a use-value. As I said, it's not important *why* people find utility in the good; only *that* they do.
Delete(1) So now "use value" includes any value whatsoever, including subjective utility?
Delete(2) anyway we have drifted from the point.
Marx says clearly:
"But the value of a commodity represents human labour pure and simple, the expenditure of human labour in general."
That excludes anything else causing economic value. But you say that Marx accepts that subjective utility is a necessary condition for economic value. In that case, Marx's theory is badly inconsistent.
I think I've figured out the problem. You see that a commodity must be a use-value (and thus an object of utility), and you see that the "value represents human labor," and take that to mean that value = [human labor] PLUS [utility]. But that's not the argument; if that were the case, we'd see shipments of vats (boxes?) of "utility" being shipped to factories every day.
DeleteThese are not, in fact, two separate things poured together to get a product, but rather a unity expressed in a *particular type of labor* -- namely, "useful labor."
"Human labor in general" does not mean "any kind of labor at all," but more specifically "abstract" (i.e., general is contrasted with specific or concrete) labor.
So, just as we'd say "I'm going to a car show," but then when we get there we see no cars, only Impalas and Mustangs and Model-T's. Similarly, Marx refers to "abstract labor" or "labor in general" as the source of value, even though you can't find that in the wild; though you will find the market allocates useful, concrete practices like carpentry, masonry, assembly, welding, etc.
I'm having as much difficulty as Hedlund understanding your critique.
ReplyDeleteMarx is examining production, not demand or distribution. In every economic theory I've studied, including Keynes, marginal cost of supply equals marginal demand, which includes subjective utility. (Note that, like Ricardo, Marx excludes from economic analysis objects we cannot produce more of.) Because the quantities are equal, we can substitute. If demand is high for something we can create, we will spend more time and resources producing it, which means we will spend less time and resources producing other goods. When we compare the exchange of two different commodities, the relative demand is already included in the cost of supply.
I don't understand why you're having trouble with the idea that if two people "freely" exchange some definite quantities of two different objects, there must be some equivalence between those two quantities. This is especially true when the exchange of commodities is socially ubiquitous. If people consistently pay the same price for two pairs of shoes as they do for one coat, there must be some way that two pairs of shoes are equivalent to one coat.
The whole reason that Marx separates out use-values from exchange value is that the use values are not only demonstrably not equivalent, they're incommensurable.
The alternative would seem to be that there is nothing at all equivalent in an exchange, and that people consistently exchange similar quantities of one commodity for similar quantities of another just by chance or some sort of social construct.
The main points of this post are easy to sum up:
Delete(1) does "use value" as defined by Marx include subjective utility or not?
(2) Marx thinks that all commodities can be quantitatively measured in terms of a meaningful homogeneous unit representing socially-necessary labour time, and, even more, that the exchange value of each commodity is determined by this socially-necessary labour time like a law of nature, even though prices are often drawn away from it by other factors.
But there is a horrible aggregation problem here in which heterogeneous labour is reduced to an abstract unit that is too abstract and too ill-defined to do justice to the very diverse nature of human labour power. I contend this undermines the very concept of a coherent, universal labour theory of value.
(3) next, labour time is not the only necessary condition for goods to have economic value or exchange value, and it is not even a sufficient condition either. Subjective utility is also a necessary condition. And so are natural resources. Ultimately, so is sunlight.
This blatantly contradicts the Marxist view that economic value is only determined by labour, and in fact Marx seems confused and inconsistent on this very point, and he says "nothing can be a value without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value.” (Marx 1982: 131).
(4) lastly, labour time is not used to determine prices in most businesses nor is there any underlying mysterious way that abstract SNLT does this.
The Marxists on this thread are actually saying that Marx never said that SNLT ever determines individual prices, which is a most bizarre contradiction of Marx plainly says.
1) for like the tenth time, yes, but it is evaluated as a boolean variable
Delete2) you're missing the concrete/abstract division again. what you're saying here, to draw on my previous example, is "how can you aggregate all these CARS, when I only see a Prius, a Miata, etc!" It can't be THAT hard, though, seeing as capitalists manage to distinguish the abstract from the concrete every day -- in their accounts.
3) You're conflating wealth with value. Value is a category (more specifically, a *social relation*) that applies only to commodities. Wealth can be created by other means than human labor -- notably, the bounty of nature. And I've explained the whole "useful/useless labor" distinction already.
4) Right. Because Price != Value. As I said, that's not a bug but a feature; the difference between price and value is an important factor in the dynamism of the system. E.g., if a good sells higher than its value, then it receives supernormal profits and that capital may expand as a result. If a good realizes a price below its value, then the firm in question is experiencing losses; this capital may shrink.
And I've already explained SNLT determines prices as a system. If you believe Marx said there's in fact a way to take a single commodity, removed from its systemwide context, and perform some operation on it to determine value from price and vice versa, then the onus is on you to show that operation. Let me save you a lot of time: You won't find any such thing.
(2) you are not understanding my point. I am not denying that you can count labour hours of workers as a homogeneous measure of total time of different types of labour -- if counting how many hours people work in total in any economy is the only point of this exercise.
DeleteThe point is that aggregation of diverse labour types is a serious problem for Marx's universal labour theory of value. His reduction of labour hours to socially-necessary labour time is too abstract and too artificial to support the idea that all value stems from some common homogeneous labour quantities. Also, Marx doesn't even seem to be able to explain how to define his quantities of “simple labour” either.
(3) I am not "conflating wealth with value" at all. Your charge is untrue.
2) You're right, I don't understand. How can you go from "you can count hours of labor" to "this is a serious problem" just by adding the word "universal"? (Btw, the theory is not universal at all; it applies specifically and solely to the capitalist mode of production. A theory that explains everything more often than not explains nothing, and so it's important to specify your domain and its boundaries.)
Delete3) Wealth is the whole field of use-values available to us, in the various forms they take -- whether made by humans or nature. Value is a property of the *subset* of the world's wealth that exists as commodities -- man-made goods created to be exchanged for something else. Sunlight belongs to the former category. Yes, it contributes to "economic value" (here I believe you mean subjective, yes?) but not value in Marx's sense, which is, again, a historically particular social relation.
(2) by universal I mean that Marx thinks labour is the only cause of economic value.
Delete(3) you're just wondering from the main point:
Now Marx defines economic value as SNLT, but that is hardly anything but a tautologous analytic definition. The point is: is it a useful, sound and empirical testable concept? No, we can see that labour time is NOT the only necessary condition for goods to have economic value (however we define this) or exchange value, and it is not even a sufficient condition either. Subjective utility is also a necessary condition.
This blatantly contradicts the Marxist view that economic value is only determined by labour, and in fact Marx seems confused and inconsistent on this very point, and he says "nothing can be a value without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value.” (Marx 1982: 131).
2) It's not just "the cause of" -- as you state below, "value = SNLT" is actually a definition.
Delete3) I'm not wandering; your main point included a conflation, that's all. And now I'm not sure how your points are meant to follow one another. For instance: What is a "testable" definition, exactly? Are you asking me if it's testable that, for example, total value equals total price? In principle yes but you wouldn't even need to, any more than you need to rigorously prove double-entry bookkeeping is sound every time you want to use it. This is because it's not production that generates the equality, but exchange, and it's always possible to "scope out" market exchange far enough that it forms a closed system. In other words, you're arguing against *accounting principles* right now.
Yes, subjective utility is a necessary but not a sufficient condition of value. Yes, labor qua labor is a necessary but not sufficient condition for value. You can see them both in isolation from one another: in the bounty of nature in the former case, and in useless things nobody wants ("mudpies") in the latter. The combination of the two, if produced for sale, is a commodity. You definitely grasp all this, no problem.
What boggles my mind is why you can't see that this therefore entails "useful labor" being performed -- that is, labor that produces a use-value as its output. What other option do you think there is?
I just don't see how pointing out "a commodity must be a use-value" is a critique. You're just restating part of the definition of a commodity.
"What boggles my mind is why you can't see that this therefore entails "useful labor" being performed -- that is, labor that produces a use-value as its output. "
DeleteJust because labour is required in our world to produce commodities with uses, it does not follow the LTV is correct.
The LTV requires that all commodities can be quantitatively measured in terms of a meaningful homogeneous unit representing abstract socially-necessary labour time, and also that the exchange value of each commodity is determined by this socially-necessary labour time like a law of nature, even though prices are often drawn away from it by other factors.
Again and again, we have seen the severe problems with this view. Every time either you bizarrely say that what Marx requires for a valid LTV doesn't actually need to happen (destroying the very theory in the way Marx presents it), or that it is "a theorem that holds at a fairly high level of abstraction/idealization" (= a grossly unrealistic and irrelevant concept like the natural rate of interest).
I've also challenged you to tell me:
(1) what would it take to prove to you that the labour theory of value (LTV) is false?
(2) What conditions would falsify the LTV?
But you can't answer and just shift the issue to Marxism as a complete theory.
Just because labour is required in our world to produce commodities with uses, it does not follow the LTV is correct.
DeleteI agree. All I'm maintaining is that it's not logically inconsistent. Whether it's *correct* is an empirical issue. But we haven't been able to get that far in the discussion yet.
The LTV requires that all commodities can be quantitatively measured in terms of a meaningful homogeneous unit representing abstract socially-necessary labour time
Right. The units are, generally speaking, either a monetary unit or a temporal unit -- e.g., $ or hours. The homogeneous unit is just an average. In the case of complex labor being reduced to simple, you're just taking into account training costs and the like. As I've said before, think of this from the perspective of a business owner evaluating and minimizing costs, performing cost/benefit analyses. This is basically the tack Marx took.
Every time either you bizarrely say that what Marx requires for a valid LTV doesn't actually need to happen (destroying the very theory in the way Marx presents it)
No I didn't. You're just skeptical that price is not the same thing as value in this system. But as someone who has studied it extensively, both the foundational documents and years and years of subsequent scholarship and even debate within the subfield, I am telling you that price and value figure into things very differently. They are related, but not the same.
or that it is "a theorem that holds at a fairly high level of abstraction/idealization" (= a grossly unrealistic and irrelevant concept like the natural rate of interest).
I never said this. I've been quite clear that the aggregate equalities are accounting identities. They hold under all circumstances, so long as you take note, as an accountant must in order to close they system, of things like saving, leakages -- basically, one must take note of flows *and* stocks, something no Post Keynesian would dispute.
I've already explained to you in very clear terms that each and every one of the issues I raised apply specifically to the LTV, and I even offered to walk you through how one or more of them relate to the things we've been discussing. In response you have refused to acknowledge that I said so, and persist in what is looking more and more like a bad-faith argument.
Like, I actually don't even know what you mean when you say "shift the issue to Marxism as a complete theory." Can you explain that turn of phrase? What characterizes "Marxism" as an economic research program distinct from the value theory (which forms its centerpiece and the subject of his most important work), and how have the things I mentioned fit more into the former than the latter?
(1) does "use value" as defined by Marx include subjective utility or not?
DeleteYes, I think so, but I'm not sure why this point is important. Marx is looking at the supply side, and if demand is high, that just means that we will put more resources into production at the margin. Like Ricardo, Marx is, I think, looking only at things we can create more of if we want them more.
(2) . . . socially-necessary labor time . . . is reduced to an abstract unit that is too abstract and too ill-defined to do justice to the very diverse nature of human labour power.
That's a matter of opinion, I suppose. Abstract labor time is mostly just the very concrete labor time. And Marx also notes the tendency of capitalism to reduce heterogeneous labor to an unskilled common denominator.
The "abstract" in abstract labor time just means that when people exchange things, they don't care about (and usually don't know) the specific process used to create them. If two firms create a particular commodity in two completely different ways, but the total labor time is the same, then Marx argues that the exchange value will be the same. This argument seems like simple common sense.
Finally, all models are wrong, but some models are useful. Using the "wrongness" of a model as an argument against it is an argument against all models, and AFAIK, all economic theories use models. Personally, I think money is pretty abstract and ill-defined. What's the intrinsic value of a dollar? But it's useful in models.
(3) . . . labour time is not the only necessary condition for goods to have economic value or exchange value, and it is not even a sufficient condition either. Subjective utility is also a necessary condition. And so are natural resources. Ultimately, so is sunlight.
First, Marx does not claim that labor time is a sufficient condition, nor does he claim that labor time is the only necessary condition. In fact, you quote him as saying the opposite.
What Marx says is that if two objects have sufficient use-value to be worth exchanging, and they both embody abstract labor time, then their exchange value will be proportionate to the (socially necessary) abstract labor time. I cannot see any contradiction here.
There is no contradiction to say that X having some value is conditional on Y and Z, but that given Z, X = Y. If you are in my house and eating my food, then the nutritional value you obtain is exactly determined by the food (and not by the fact that you are in my house); however, if you are not in my house, the food has no nutritional value to you, because you cannot eat it.
(4) labour time is not used to determine prices in most businesses nor is there any underlying mysterious way that abstract SNLT does this.
Marx argues at length that SNLT is a hidden law, so we would not expect businesses to explicitly use SNLT to determine prices. Marx argues that competition is what "forces" prices to correspond to SNLT: "Free competition brings out the inherent laws of capitalist production, in the shape of external coercive laws having power over every individual capitalist" (p. 178 in my copy).
Hedlund:
Delete(4) Because Price != Value. Uh... I think this is not the best way to argue the point. Marx argues that Price = Value; or, more precisely, day-to-day prices are strongly attracted to exchange-value. At equilibrium, Marx argues that prices will exactly equal value. Out of equilibrium, the disequilibrium will bring prices (eventually) to their value. Which is what you argue, but not, I think, as clearly as possible.
LK
DeleteThe LTV requires that all commodities can be quantitatively measured in terms of a meaningful homogeneous unit representing abstract socially-necessary labour time, and also that the exchange value of each commodity is determined by this socially-necessary labour time like a law of nature, even though prices are often drawn away from it by other factors.
Yes. Exactly.
Again and again, we have seen the severe problems with this view.
What you mean "we", white man? I haven't seen any severe problems. Abstract labor time is difficult to measure precisely, but we can estimate it just using raw time.
What conditions would falsify the LTV?
Well, the LTV is a model, and all models are wrong. It would be less useful as model if produced and exchanged under perfect competition we (a) found two commodities about the same amount of measurable time involved and widely divergent prices or (b) two commodities with divergent measurable time and relatively equal prices.
Remember, the LTV applies only to perfect competition. If I own all the water in the village, I might be able to exchange a gallon of water for much more labor time than I used to extract it. However, my customers/neighbors will probably get pissed off, and I will have to use additional labor to protect my ownership. The labor necessary to guard a monopoly is a cost of production.
"If two firms create a particular commodity in two completely different ways, but the total labor time is the same, then Marx argues that the exchange value will be the same. This argument seems like simple common sense."
DeleteBut it is not simple common sense. You need to understand how mark-up prices are set:
http://socialdemocracy21stcentury.blogspot.com/p/there-is-mountain-of-empirical-evidence.html
It is not labour time, but total average unit costs at a given level of output and given productivity level that determines unit costs on top of which is added a profit-up. Two firms might have the same labour time but different given levels of output and given productivity levels and different prices.
What Marx describes is not how firms set prices. In fact, you've already said above that the manner in which SNLT determines exchange value is a "a hidden law, so we would not expect businesses to explicitly use SNLT to determine prices"!!
Can't you see the severe contradiction here?
Larry, The Barefoot Bum,
Delete"Abstract labor time is mostly just the very concrete labor time."
But it is not. In fact SNLT is a highly abstract and artificial invented measure of labour, as Marx says:
“The total labour-power of society, which is manifested in the values of the world of commodities, counts here as one homogeneous mass of human labour-power, although composed of innumerable individual units of labour-power. Each of these units is the same as any other, to the extent that it has the character of a socially average unit of labour-power and acts as such; i.e. only needs, in order to produce a commodity, the labour time which is necessary on an average, or in other words is socially necessary. Socially necessary labour-time is the labour-time required to produce any use-value under the conditions of production normal for a given society and with the average degree of skill and intensity of labour prevalent in that society.” (Marx 1982: 129).
So SNLT is a highly abstract “average unit” of “average degree of skill and intensity of labour”. There are severe problems with this. How do you take an average of a heterogeneous factor like labour, with so much difference in profession, skill, competence, experience, and skills to be aggregated in such a crude manner.. What do you average?
"Well, the LTV is a model, and all models are wrong.
DeleteI strongly disagree. I have a model of how prices are set in capitalist economies. It is complex model and accurately describes how reality is. The model is right, not wrong.
Please. Does your model correctly predict all prices all the time with only random errors? No? Then it's wrong. In fact if it did come even close to accurately predicting prices, you wouldn't be writing this blog' you'd be out making Soros-level money.
DeleteI'm not saying your model is bad; I don't even know what it is. I'm just saying that all our theories of the world are (a) incomplete and (b) inaccurate. We can never hope to get a model to be completely comprehensive and absolutely accurate (less random errors).
Similarly, just because it's incomplete and not always accurate is not by itself a defense of the LTV. I'm just saying that pointing out that the model is limited, and ignores some price-setting features of reality, is not by itself a valid criticism.
It's completely fine if you want to model additional price-setting features of reality that are not included in the LTV. Your model will probably be more accurate, in just the same sense that a model of gravity + aerodynamics will more accurately model how an airplane flies than gravity alone.
I doubt you would say that bog standard labor time (BSLT; "count the total number of hours that people work, including capital formation, skill training, and externalities") has nothing whatsoever to do with prices. I doubt you would say that BSLT is not even strongly empirically correlated with prices, with variation in BSLT explaining at least 50% of variation in prices.
The LTV makes a specific prediction: to the extent that prices do not match BSLT, then something independently determinable has happened: (1) there's been some sort of temporary shock, and prices have not yet adjusted; (2) we are not looking at production prices at the margin (SNLT should look not at average cost (Marx was no statistician) but at the marginal cost; many producers will be more efficient; none should be less efficient); (3) you are ignoring some externalized BSLT; (4) there is some sort of impediment to perfect competition; (6) there is some other independently determinable factor at work.
If we see BSLT deviate from prices and not find an independently determinable reason for that deviation, then the LTV would become useless, or at least a lot less useful. AFAIK, the only live challenge to the LTV (that is not a challenge to models in general) is the transformation problem, variation in prices due only to variation in the organic composition of capital.
"Please. Does your model correctly predict all prices all the time with only random errors? No? "
DeleteIt doesn't need to do any such thing to be a valid and true general qualitative descriptive model. Your demand for what a model must do is unreasonably high. So is the equally unreasonable demand that all models must be complete.
(2) "I doubt you would say that bog standard labor time (BSLT; "count the total number of hours that people work, including capital formation, skill training, and externalities") has nothing whatsoever to do with prices. I doubt you would say that BSLT is not even strongly empirically correlated with prices, with variation in BSLT explaining at least 50% of variation in prices."
There would be a correlation only because wage costs are a high component of total average unit costs. This doesn't necessarily indicate the LTV is true at all. You should know well that correlation is not necessarily proof of causation.
(3) You also haven't explained at all why marginal costs should be the relevant indicator of SNLT. In fact you seem almost totally unaware that marginal cost is mostly irrelevant for most businesses.
Even worse, many of them couldn't even calculate marginal cost even if they tried.
This is confirmed time and again in empirical work: in France, it is found that it is difficult to question firms about their marginal costs (since the concept is hard to explain to business people!) and marginal cost is itself difficult to calculate (Loupias and Ricart 2004: 11). In a survey of Swedish firms, it is found that marginal cost is difficult for many businesses to even calculate and firms face serious “difficulty estimating the marginal cost for all but the simplest techniques” (Apel et al. 2005: 330, n. 20).
And it gets even worse: “marginal cost” is a concept some business people have difficulty even understanding (Blinder et al. 1998: 216–218, 102: “marginal cost” is “not a natural mental construct for most executives”; Fabiani et al. 2006: 16).
BIBLIOGRAPHY
Apel, Mikael, Friberg, Richard and Kerstin Hallsten. 2005. “Microfoundations of Macroeconomic Price Adjustment: Survey Evidence from Swedish Firms,” Journal of Money, Credit and Banking 37.2: 313–338.
Blinder, A. S. et al. (eds.). 1998. Asking about Prices: A New Approach to Understanding Price Stickiness. Russell Sage Foundation, New York.
Fabiani, S., M. Druant, I. Hernando, C. Kwapil, B. Landau, C. Loupias, F. Martins, T. Mathä, R. Sabbatini, H. Stahl and A. Stokman. 2006. “What Firms’ Surveys tell us about Price-Setting Behavior in the Euro Area,” International Journal of Central Banking 2.3: 3–47.
Loupias, Claire and Roland Ricart. 2004. “Price Setting in France: New evidence from Survey Data,” ECB Working Paper Series No. 423
http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp423.pdf
I also notice you do not address the most serious charges I make against the LTV:
Delete(1) If someone creates something without subjective utility to anyone when this is a necessary condition for it to have value in any sense, no amount of labour confers value on it.
Hence a devastating problem for the LTV: labour is not even a sufficient condition for economic value (in any sense) or exchange value at all. There are other necessary conditions. That badly undermines the whole theory.
(2) SNLT is a highly abstract “average unit” of the “average degree of skill and intensity of labour”. But there are severe problems with this. How do you take an average of a heterogeneous factor like labour, when there is so much difference in profession, skill, competence, experience, and skills to be “averaged”?
(3) Finally, (a) it is unclear how to properly define SNLT anyway and (b) even when they do give some definition no Marxist has ever been able to explain coherently how a SNLT maps onto a market price.
Larry:
DeleteUh... I think this is not the best way to argue the point. Marx argues that Price = Value; or, more precisely, day-to-day prices are strongly attracted to exchange-value. At equilibrium, Marx argues that prices will exactly equal value. Out of equilibrium, the disequilibrium will bring prices (eventually) to their value. Which is what you argue, but not, I think, as clearly as possible.
My preferred reading differs a bit from yours, inasmuch as applying equilibrium reasoning to almost any part of Marx winds up leading to very different conclusions than the ones he was indicating. Equilibrium prices are not necessarily equal to value; prices equal to value would need to be on goods realizing the general rate of profit at the average organic composition.
Also, I think you mean to say that prices are strongly attracted to "value," rather than exchange value; price IS exchange value, expressed in terms of money, instead of in terms of a ratio against jackets or chairs or whatever. However, I also reject the position that value acts as a price attractor. Freeman wrote a paper that I hold as a good introduction to the non-equilibrium approach, in which he walks through some basic formalizations that might go into a non-eq Marxist model.
LK:
(1) If someone creates something without subjective utility to anyone when this is a necessary condition for it to have value in any sense, no amount of labour confers value on it.
This is not a criticism of Marx's value theory, but rather a premise of it. I don't get why this is such a stumbling block for you. If it's because of "LTV," then please stop using that name; as you (correctly) pointed out earlier, it's not even particularly accurate.
(2) SNLT is a highly abstract “average unit” of the “average degree of skill and intensity of labour”. But there are severe problems with this. How do you take an average of a heterogeneous factor like labour, when there is so much difference in profession, skill, competence, experience, and skills to be “averaged”?
That's the whole point of an average: to find a point of harmony between the most and least competent, experienced, skilled, etc. laborers that represents productivity in a given span. Again, not seeing the problem. As for the more general heterogeneity (i.e., comparing welders v. basket-weavers), remember that we're addressing ourselves to the abstract category of labor, which is the part that makes its way into, e.g., a business's payroll data. To a capitalist, the welder and the weaver both look the same in the books: X labor input requiring Y material inputs to produce Z output. We're still looking at dollars and hours, either way.
(3) Finally, (a) it is unclear how to properly define SNLT anyway and (b) even when they do give some definition no Marxist has ever been able to explain coherently how a SNLT maps onto a market price.
a) No it's not. Socially (that is, a social average) necessary (useful and non-wasted) labor time.
b) I've explained it already, quite coherently. I'm not going to do it again here. Your problem seems to be that the thing you want the theory to do (to be able to look at any price in isolation and determine the underlying value) is nothing the theory ever purported to do.
It's a bit like critiquing a Godley stock-flow consistent macro model for failing to predict the weather.
I'm beginning my own exposition of the LTV: Marx's project: Introduction and commodities. You are, of course, invited to comment, as critically as you please.
ReplyDeleteIf someone creates something without subjective utility to anyone when this is a necessary condition for it to have value in any sense, no amount of labour confers value on it.
ReplyDeleteHence a devastating problem for the LTV: labour is not even a sufficient condition for economic value (in any sense) or exchange value at all. There are other necessary conditions. That badly undermines the whole theory.
I will address this charge one last time. Marx does not claim that labor time is a sufficient condition for an object to have exchange value. It is not a part of the theory. Embodying labor time is one of many necessary conditions. If all the necessary conditions are met (including the assumption of perfect competition), the theory states that the quantity of exchange value equals the total quantity of embodied labor value. Since the theory explicitly claims that labor time is not a sufficient condition, it is entirely unclear why showing that labor time is not a sufficient condition undermines the theory. We would need an explicit argument that labor time should be a sufficient condition.
"Since the theory explicitly claims that labor time is not a sufficient condition, it is entirely unclear why showing that labor time is not a sufficient condition undermines the theory."
DeleteIt is perfectly clear: Marx says time and again that labour is the only thing that creates value:
“A use-value, or useful article, therefore, has value only because abstract human labour is objectified [vergegenständlicht] or materialized in it.” (Marx 1982: 129).
"“But the value of a commodity represents human labour pure and simple, the expenditure of human labour in general." (Marx 1982: 135).
"“Human labour-power in its fluid state, or human labour, creates value, but is not itself value.” (Marx 1982: 142).
------------------
Marx's theory is plainly incoherent and inconsistent. Either labour is the ONLY thing to create value, or it is only one thing amongst many that can create economic value (in any sense) and exchange value (the latter view is the correct one).
But you already admit there can be no labour value at all (even as defined by Marx) without real use value in a commodity or at least subjective utility.
(1/2) I'll try something else, perhaps you'll find it useful. Marx thinks that in any society, the total labor which the society has at its disposal has to be apportioned to the production of various useful goods and services that satisfy the needs of society's members. There is a given range of needs and there are some capacities available. The individual labors of individual laborers have to be apportioned to the production of various things that people need. Taken all together, these labors constitute the total social labor of that society and their product constitutes the total product or the total wealth (a part of this wealth is consumed, while another part is left aside for future production). Historically, the organization of this allocation of social labor has taken many forms. There could be an authoritarian ruler who decides up front what will be produced, say, in a given year, and then the ruler's army forces everybody to do their job according to the plan. Or it can be decided some other way. But in any society, there is total social labor that is organized to produce things deemed necessary for the reproduction of that society. Put simply, we can view a society as a single person who has to apportion the time she has at her disposal to the production of various useful things. This is something Marx takes for granted.
DeleteCapitalism has a special mechanism for apportioning social labor: the market, or as Marx says, the circulation of commodities. The individual producers (firms) are private and independent. They themselves decide what they will produce. Of course these decisions will be affected by many outside factors, but (as long as we take the "pure capitalism" Marx is talking about) there is no ruler deciding up front what will be produced. But somehow the goods have to be distributed to those who need them, and decisions also have to be made on what really is useful and what is not. So the individual products are brought to the market, where individual consumers (be they firms or households) decide what is useful for them, how much they're willing to pay etc.
When, for whatever reason, a commodity of kind X is not sold and rots in a warehouse somewhere, it does not become a part of the social product. It is just as if it hadn't been produced at all. The labor expended to produce it was expended in vain. The producer of that commodity will probably incur losses and may want to reconsider whether he will continue to produce Xs. There can be various reasons for a commodity not being sold – perhaps it's not seen as useful by the consumers, perhaps the producer asks too high a price, or perhaps the market is more than saturated with Xs.
On the other hand, when a commodity is sold, it becomes a part of the social product, and the labor which produced it becomes part of the total social labor. The market, by giving feedback to producers in this way, apportions total social labor in a sort of "indirect way" (indirect as opposed to the "direct" way in the case of the autocratic ruler).
J.
(2/2)
Delete"Value" is simply the amount of social labor represented by a commodity. Value says, "how much of total social labor, under the prevailing conditions of production, at the current level of productivity etc., is used to produce a commodity of this kind". This is a matter of definition for Marx.
As the example of Xs shows, it is only decided in exchange whether a commodity will enter into the total social product and whether that labor will become part of total social labor. So if a commodity is not recognized as useful on the market, it does not have value. To have value, being a product of some (individual) labor is not enough; the commodity has to be validated in exchange, where it is compared to all other commodities of the same kind, as well as to commodities of other kinds. This is perfectly consistent with Marx's insistence on value being produced by labor – it is not labor of any kind, but social labor. And in capitalism, social labor is only allocated through market.
In this allocation, the decision whether a commodity is useful or not is only one of the decisions to be made; another decision is the proportion in which it will be exchanged. And Marx says that this proportion is also regulated, although in an indirect way, by value.
So the statement that "value is a quantitiy of (social) labor" is not really a discovery; it's a matter of definition. What constitutes a discovery is the fact that the exchange proportions are regulated (indirectly) by value. To sum up, Marx thinks that all societies apportion social labor. Capitalism does this by putting price tags on products of labor and letting them exchange on the market. The quantities on these price tags are regulated by the amount of social labor spent "on average" (although it's not an arithmetic mean) in producing the commodities. However, as has been pointed out previously, it's not that the price of a commodity corresponds 1:1 to its value.
There is nothing metaphysical and nothing in comon with Rothbard here.
J.
""Value" is simply the amount of social labor represented by a commodity .... There is nothing metaphysical and nothing in comon with Rothbard here.. "
DeleteBut you have evidence right in front of your eyes that Marx thinks more than this.
He says:
“A use-value, or useful article, therefore, has value only because abstract human labour is objectified [vergegenständlicht] or materialized in it.” (Marx 1982: 129).
What you quoted is neither inconsistent with what I wrote, nor is it necessarily metaphysical, depending on interpretation. I'm sorry, but to arrive to a reasonable interpretation, you'll have to read the whole thing. That's just the way it's written. In fact, that's the way most scientific works are written. So by all means do try to get an actual grasp of the theory and then criticize it. The theory certainly isn't unproblematic, but the way you portray it is distorted beyond recognition. There's plenty of literature to help you along the way. It would at least make your attempts at criticizing Marx more honest. Arguing like you do now is like criticizing Newton's physics by pointing to some uncommon terms in the first few definitions in the Principia.
DeleteJ.
BTW, you might want to check out Michael Heinrich's "An Introduction to the Three Volumes of Karl Marx's Capital" for an accessible overview of the theory which avoids some of the common misinterpretations and clearly explains the differences between Marx and classical political economy (with which he is often confused, starting with the idea that he subscribed to a "labor embodied" approach). You can get a PDF of the full book online (it's one of the first results in Google). Chapter 3 explains the basics.
ReplyDeleteJ.
And right on p. 43 of the book you refer to, Heinrich speaks of commodities as an "objectification of equal human labour".
DeleteInterestingly, it seems J. and I happen to occupy two different camps within the Marxist spectrum. So if you happen to detect any difference in our respective exposition, chalk it up to that.
Delete(Sort of like Kaleckians v. Sraffians v. etc.)
Yet again, you concentrate on the metaphors instead of focusing on the actual content of the theory... Sorry, but that's just bad scholarship. If you had read and understood the theory, you would see that there is nothing metaphysical about this "objectification" (certainly no more than saying "This is a product of social labor", "Social labor had been expended on this product").
DeleteYour approach reminds me of the fellow who, upon finding out there's a "theory of relativity", proceeded to criticize its "relativism" as philosophically unacceptable.
J.
J,
DeleteYou have not provided any evidence that Marx was speaking in metaphors.
(1) tell me where and on what page in Heinrich's An Introduction to the Three Volumes of Karl Marx’s Capital he says Marx was just speaking in metaphors when he says that useful articles have " value only because abstract human labour is objectified [vergegenständlicht] or materialized in it.”
Also, if you going to comment on a particular post, tell have the courtesy to post on that post and not on another.
Sorry for the issues with replying, I'm new to Blogspot discussions. It certainly wasn't a matter of courtesy.
DeleteThe fact that it's a figure of speech will become clearer as you read on. Well, maybe calling it a metaphor or a figure of speech is not that precise. It's a technical term with a specific meaning. Anyway, without having an analysis of Marx's use of the terms "objectified" and "materialized", you can't really say it's "metaphysical". That would be just your projection of some pre-existing meanings onto the text (one can do that with "relativity", "uncertainty" and "force" just as well; you could, for example, accuse Newton of subscribing to Jedi metaphysics). The fact that the term "energy" is sometimes used with metaphysical connotations (as in, "I love the energy of this place") does not mean that all occurrences of this term in scientific discourse are sign of metaphysics. The pseudo-scientific and the scientific concepts of energy are different, although they are expressed by the same term.
The thing is you can't have a proper analysis of what "materialization" and "objectification" means without reading the text.
J.
J,
DeleteI asked you to tell me:
Where and on what page in Heinrich's An Introduction to the Three Volumes of Karl Marx’s Capital he says Marx was just speaking in metaphors when he says that useful articles have "value only because abstract human labour is objectified [vergegenständlicht] or materialized in it”?
You can't appear to answer. Yet you told me that in Michael Heinrich's "An Introduction to the Three Volumes of Karl Marx's Capital" Heinrich proves that Marx does not subscribe to a "labor embodied" approach.
Oh, OK. Read the entire third chapter of Heinrich's book to see why Marx's theory is not a labour embodied theory.
DeleteJ.
More specifically, see Heinrich's critique of the "naturalistic" interpretation on pp. 48 – 52. I'm afraid there's not much else I can do here, apart from repeating what's been said. So good luck with your further endeavors.
DeleteJ.