I’m told his lectures on Marx’s Capital are a “good overview,” and so the first part is below. My comments are under the video.
First, some general comments. David Harvey is deeply mistaken that Marx’s Capital gives us the best or profound insight into modern capitalism and its characteristics, such as, for example, business cycles or price determination. In fact, in my disputes with Marxists it quickly emerges that, despite the labour theory of value (LTV), they are forced to admit that the LTV doesn’t explain individual price determination. So what explanatory power does it even have? Clearly, near zero if we want to explain how prices are determined. When pressed for an explanation of how prices are created in modern capitalism, Marxists – when they do not just recycle neoclassical price theory – are just parasites on Post Keynesian price theory.
In my view, the best and most insightful introduction to modern, real world capitalism is Marc Lavoie’s Post-Keynesian Economics: New Foundations (Cheltenham, 2014), not the incoherent, obsolete ramblings of Marx’s Capital, which should be read largely for historical interest.
Now my specific comments:
(1) I am astonished that Harvey thinks (at the 18.00–18.11 mark) that Marx was engaged in Postmodernist “deconstruction” – for this is surely one of the most outrageous pieces of intellectual charlatanry you’ll find anywhere in the academy.All in all, this is a poor start to Harvey’s videos. I am not impressed.
(2) the first part is mainly a background of Marx’s intellectual ideas in Hegel, French utopian socialism and political economy. I don’t have any real problems with the analysis.
(3) at about 32.00 we get a frank admission that many of Marx’s concepts and analysis make no sense, and you have to read to the end of the book to (supposedly) understand them. Marx’s exposition in Chapter 1, says Harvey, is “cryptic.” So, basically, that sounds to me like Marx is pretty incompetent at explaining his ideas and theories.
(4) Harvey seems to admit (41.00 onwards) that Marx’s “dialectical” method is not the careful causal explanation we’d expect in good modern economic science. This is not doing Marx any favours.
(5) in Harvey’s discussion of the commodity as understood by Marx, there is a massive hole: subjective value. No proper theory of the commodity will ever be coherent and well developed until subjective value is brought into the discussion.
(6) Harvey repeats Marx’s argument that in a barter trade there is an equality which reduces to equally socially necessary labour time:“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.’Harvey fails to notice the awful non sequitur here.
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.” (Marx 1982: 127–128).
Even Marx admits that the fluctuating exchange values of capitalism seem to have no universal, common element. In a barter exchange, there is an equality in the sense in which, say, 2 sheep might exchange for 1 cow, and only two sheep and nothing more are exchanged, and vice versa. But this is trivial sense of equality. There is no further and obvious logical or empirical sense that the exchange is an equality.
Marx’s leap to the conclusion that there must be an additional, fundamental unit in which both commodities can be measured and by which they can both be shown to be equivalent simply does not follow. It is a non sequitur. This is how shoddy Marx’s argument was.
Can Marx prove it empirically? He doesn’t even attempt to, and when we empirically investigate the exchange values/prices of goods, we find it is nonsense that individual exchange values/prices are determined by socially necessary labour time.
When Marxists are pressed on this issue, as we noted above, they retreat into the most embarrassing admission: the LTV doesn’t even provide an explanation of individual exchange values or prices. It only holds on an empirically-empty, tautological aggregate level. In which case, why does Marx insist that exchange values are explained by equally socially necessary labour time in Chapter 1 of Capital and elsewhere in the book?
Why do we get these dogmatic statements in volume 1 of Capital?:“Price is the money-name of the labour objectified in a commodity. Hence the expression of the equivalence of a commodity with the quantity of money whose name is that commodity’s price is a tautology, just as the expression of the relative value of a commodity is an expression of the equivalence of two commodities.” (Marx 1982: 195–196).So we are told that price is the “money-name of the labour objectified in a commodity” and when prices diverge from labour values they are driven back towards the “pure form” value of labour time. This is how we should interpret this passage in Marx:
“It is true that commodities may be sold at prices which diverge from their values, but this divergence appears as an infringement of the laws governing the exchange of commodities. In its pure form, the exchange of commodities is an exchange of equivalents, and thus it is not a method of increasing value.” (Marx 1982: 261).“The production of commodities must be fully developed before the scientific conviction emerges, from experience itself, that all the different kinds of private labour (which are carried on independently of each other; and yet, as spontaneously developed branches of the social division of labour, are in a situation of all-round dependence on each other) are continually being reduced to the quantitative proportions in which society requires them. The reason for this reduction is that in the midst of the accidental and ever-fluctuating exchange relations between the products, the labour-time socially necessary to produce them asserts itself as a regulative law of nature. In the same way, the law of gravity asserts itself when a person’s house collapses on top of him. The determination of the magnitude of value by labour-time is therefore a secret hidden under the apparent movements in the relative values of commodities.” (Marx 1982: 168).Yet by volume 3 of Capital none of this can be true. By volume 3, individual market prices are not determined by socially necessary labour time. This is a severe, devastating contradiction in Marx’s Capital.
(7) Harvey seems blissfully unaware of the aggregation problem involved in reducing all heterogeneous labour to homogeneous socially necessarily labour time units. For Marx, all labour needs to be reduced to meaningful homogeneous, discrete units, but he never adequately explains how. All we get is hand-waving from modern Marxists when they are asked this question.
(8) the point that labour value (as defined by Marx) declines with increasing productivity and automation does not necessarily mean that price of goods will fall. The realities of mark-up pricing mean that some firms will pick a price and maintain that price even as total average unit costs fall, so that they can enjoy an increasing profit rate as unit cost falls and the quantity sold rises. Here profits rise as unit labour time falls.
(9) the damaging admission by Marx that labour creates no value if there is no demanded use value in commodities means labour cannot even be a sufficient condition for labour value. The coherency and conceptual problems of the LTV here are glossed over by Harvey. We get some waffle about Marx’s “dialectics.”
(10) Harvey also seems oblivious to other objections to the LTV: why aren’t animals or slaves capable of producing labour value?
If you cannot even convince me of the LTV, then you will never convince me of any doctrines deduced, or derived, from it, because they will be as worthless as the LTV if the LTV is worthless.
Marx, Karl. 1982. Capital. Volume One. A Critique of Political Economy (trans. Ben Fowkes). Penguin Books, Harmondsworth, England.