In what follows, much of Marxist economic theory will be debunked by means of Post Keynesian economics, though I often have my own original criticisms too.
It is important to remember that Post Keynesian economics – although it has severe criticisms of laissez faire capitalism and neoclassical or Austrian economics – is still strongly distinct from Marxist economics. Post Keynesian economics is not Marxism, and leading Post Keynesians and economists whose work has been foundational for Post Keynesian economics have rejected the labour theory of value, the basis of Marxist economics.
John Maynard Keynes, for example, said that Marx’s theories were founded “on a silly mistake of old Mr Ricardo’s” (Skidelsky 1992: 517) – namely, the labour theory of value. For Michał Kalecki and Joan Robinson the labour theory of value was “metaphysical” (Brus 1977: 59; Robinson 1964: 39), and for Piero Sraffa it was “a purely mystical conception” (Kurz and Salvadori 2010: 199). If the labour theory of value is unsound, then the whole Marxist edifice constructed on it cannot but fall and collapse.
Moreover, the classical Marxist idea of historical determinism is also incompatible with the Post Keynesian idea of the fundamental uncertainty of the future.
The posts are divided into the following groups:
(I) Karl Marx’s Life 1818–1883The posts are as follows:
(II) Documentaries about and discussions of Karl Marx and Marxism.
(III) Against the labour theory of value.
(IV) On the alleged tendency of the rate of profit to fall.
(V) On Marx’s “Critique of the Gotha Program.”
(VI) Discussions of David Harvey’s lectures on Reading Marx’s Capital Volume 1.
(VII) Steve Keen on Marxism.
(VIII) On Marx’s views on Marx’s phrenology and race.
(IX) On Marx’s views on slavery.
(X) Marxism and authoritarianism.
(XI) Against Marx’s Communist Manifesto.
(XII) Against Sraffian and Marxist long-run equilibrium.
Debunking Marxism 101
(I) Karl Marx’s Life 1818–1883:
(1) “Karl Marx’s Life 1818–1841,” April 20, 2015.(II) Documentaries about and discussions of Karl Marx and Marxism:
(2) “Karl Marx’s Life 1842–1844,” April 21, 2015.
(3) “Karl Marx’s Life 1845–1849,” April 24, 2015.
(4) “Karl Marx’s Life 1850–1860,” April 25, 2015.
(5) “Karl Marx’s Life 1861–1870,” April 28, 2015.
(6) “Karl Marx’s Life 1871–1883,” May 1, 2015.
(1) “A BBC Discussion of Karl Marx,” April 4, 2015.(III) Against the labour theory of value
(2) “Karl Marx in London,” April 26, 2015.
(3) “BBC Radio 4 Discussion on the 1848 Revolutions,” April 22, 2015.
(4) “Jonathan Sperber on Karl Marx,” April 23, 2015.
(5) “Bryan Magee interviews Peter Singer on Hegel and Marx,” April 8, 2015.
(1) “Mysticism and the Labour Theory of Value,” May 7, 2014.(IV) On the alleged tendency of the rate of profit to fall:
(2) “Did Kalecki Accept the Labour Theory of Value?,” April 18, 2014.
(3) “Adam Smith on the Labour Theory of Value,” April 20, 2014.
(4) “Progress in Marxism on the Labour Theory of Value?,” March 18, 2015.
(5) “Marx’s ‘Socially Necessary Labour Time’: A Quick Overview and Critique,” March 26, 2015.
(6) “Marx on the Labour Theory of Value in Volume 1 of Capital,” March 27, 2015.
(7) “Marx’s Labour Theory of Value and Rothbard’s Homesteading Property-Rights Theory: Peas in a Pod,” March 28, 2015.
(8) “The Foundation of Marx’s Labour Theory of Value in Ricardo,” March 29, 2015.
(9) “More Mystical Labour Theory of Value Nonsense,” March 29, 2015.
(10) “The Two Epistemological Ways to Interpret the Labour Theory of Value,” March 30, 2015.
(11) “Piero Sraffa’s Damning Verdict on the Labour Theory of Value,” March 30, 2015.
(12) “Kliman’s Explanation of Marx’s Labour Theory of Value,” March 31, 2015.
(13) “Philip Pilkington on the Labour Theory of Value,” April 1, 2015.
(14) “The Labour Theory of Value and Animal Labour,” April 1, 2015.
(15) “Achille Loria and Alexander Gray on Marx’s Labour Theory of Value,” April 2, 2015.
(16) “Matias Vernengo on Marx’s Labour Theory of Value,” April 3, 2015.
(17) “My ‘Sun Theory of Value’: Why it’s better than the Marxist Labour Theory of Value,” April 5, 2015.
(18) “Achille Loria on the Contradiction in Marx’s Labour Theory of Value,” April 7, 2015.
(19) “Marx’s Wage-Labour and Capital,” April 9, 2015.
(1) “Michael Heinrich on the Tendency of the Profit Rate to Fall and Engels’ Dubious Editing of Marx,” April 4, 2015.(V) On Marx’s “Critique of the Gotha Program”:
(1) “Marx’s ‘Critique of the Gotha Program’: Four Points,” April 29, 2015(VI) Discussions of David Harvey’s lectures on Reading Marx’s Capital Volume 1:
(1) “David Harvey on Reading Marx’s Capital Volume 1, Class 01,” April 8, 2015.(VII) Steve Keen on Marxism:
(1) “Steve Keen’s ‘A Marx for Post Keynesians,’” April 6, 2015.(VIII) On Marx’s views on Marx’s phrenology and race:
(1) “Marx’s Phrenology and Racial Views,” April 26, 2015.(IX) On Marx’s views on slavery:
(1) “Marx on Slavery in his 1846 Letter to Annenkov,” April 27, 2015.(X) Marxism and authoritarianism:
(1) “Engels on Authoritarianism and Revolution,” April 30, 2015.(XI) Against Marx’s Communist Manifesto:
(1) “What Economic System did Marx and Engels Advocate?,” July 24, 2012.(XII) Against Sraffian and Marxist long-run equilibrium:
(1) “Sraffians versus Kaleckians versus Fundamentalist Post Keynesians,” June 17, 2014.BIBLIOGRAPHY
(2) “Matias Vernengo on Marx’s Labour Theory of Value,” April 3, 2015.
(3) “Sraffian Long-Run Equilibrium Prices of Production and Post Keynesianism,” April 11, 2015.
Brus, Włodzimierz. 1977. “Kalecki’s Economics of Socialism,” Oxford Bulletin of Economics and Statistics 39.1 (February): 57–67.
Kurz, Heinz D. and Neri Salvadori. 2010. “Sraffa and the Labour Theory of Value: A Few Observations,” in John Vint et al. (eds.), Economic Theory and Economic Thought: Essays in Honour of Ian Steedman. Routledge, London and New York. 189–215.
Robinson, Joan. 1964. Economic Philosophy. Penguin, Harmondsworth.
Skidelsky, R. J. A. 1992. John Maynard Keynes: The Economist as Saviour, 1920–1937 (vol. 2), Macmillan, London.
In what follows, much of Marxist economic theory will be debunked by means of Post Keynesian economics, though I often have my own original criticisms too.
ReplyDeleteBest of luck to you! If you can avoid the pitfalls that have been pointed out to you in your previous attempts, perhaps you'll generate some interesting discussion.
Moreover, the classical Marxist idea of historical determinism is also incompatible with the Post Keynesian idea of the fundamental uncertainty of the future.
Not really; critics vastly overstate the nature of the determination. It's nothing more than the statement that material conditions determine social existence in the last analysis. The way humans relate to one another when the highest technology is clay tablets is quite a bit different than when we've got an internet. It's the same reason the parka has its cultural roots in northern climes and not Ecuador.
Think of it in terms of how stratification and emergence play out elsewhere. For instance, biological laws are said to emerge from the laws we study in chemistry. The former are not reducible purely to the latter, but nor can the former violate the latter. Similarly, superstructural elements (politics, law, ideology, etc) are basically autonomous, but they also are constrained by the economic realities underlying them.
Frankly, you haven't even adequately defended the LTV as an empirical concept yet (e.g., why aren't slaves, animals or the power of nature capable of creating surplus value).
DeleteI have indeed defended it. What seems to rather be the case is that I have not done so in a way that you find readily comprehensible. So, how about this: I'll give my answer again, and then maybe we can pick it apart and see what part of it you were getting stuck on.
DeleteSlaves/animals/nature don't create surplus value because they don't create "value," a placeholder term that stands in for a particular portion of the total social labor employed in capitalist production. As such, value is a social construct, dependent upon participation in the production process as labor qua wage-labor.
Animals, slaves, and nature all produce output and therefore all produce use-values, but none of them sell their power to create output for a wage that they are then free to spend on the market as they will. Therefore when a slave or an animal is utilized in a capitalist firm, they are accounted for as a kind of fixed capital.
Then, when the output is sold, it is ultimately sold to those who have money to buy it -- people who have received a form of income such as profit (/interest/dividends/etc) or wages (/salaries/commissions). We don't sell hay directly to horses, but rather its purchase is a form of maintenance on a capital good. Accordingly, the contribution of the horse to a good's value is nothing more than the costs needed to maintain the horse, plus the cost of obtaining it depreciated over its lifetime using standard accounting methods.
If an animal (or AI) were sufficiently complex that it could live among humans, agree to work for a wage (instead of merely being owned by the firm), do so, then spend that wage on the market, then its labor would be productive of value in Capital's sense, since, as I said, it's based on social relations rather than biological essentialism or the like.
I'll pause here and let you jump in with any questions or problems.
(Incidentally, you may also find Krul's "Why a Theory of Value?" useful.)
Do you mean that a thieving slave can add value?
Delete(Disclaimer. I use thieving descriptively; morally I think slaves are right to take that which the law denies them.)
Your talk about placeholder terms gives the game wawy I think. You define a function m defined on the positive numbers where m(x) < x. But then later it turns out that it is x which matters. You just label x as having two parts, m and "surplus m", ie x-m.
DeleteConsider this case. I own LK and use his labor as capital. His wages accrue to me (Fun.) And at the same time I belong to LK; my wages accrue to him (Sigh.) We make the same wages. LTV says what exactly?
Slaves produce surplus value. Marx wrote it explicitly - "The price paid for a slave is nothing but the anticipated and capitalised surplus-value or profit to be wrung out of the slave.". Animals are treated as fixed capital. Even in contemporary civil law animals are seen as things. You need human labor to change the nature.
DeleteAnimals may be treated as fixed capital, but there is no rational reason why animals cannot create a surplus value just as human beings can under Marx's LTV - unless you want to admit the LTV is just an analytic concept true only by definition and not empirically sound.
DeleteAs Sraffa said, "There appears to be no objective difference between the labour of a wage earner and that of a slave; of a slave and of a horse; of a horse and of a machine, of a machine and of an element of nature (?this does not eat). It is a purely mystical conception that attributes to human labour a special gift of determining value."
Do you mean that a thieving slave can add value?
DeleteNo. No value is created through transfers; only production.
Your talk about placeholder terms gives the game wawy I think. You define a function m defined on the positive numbers where m(x) < x. But then later it turns out that it is x which matters. You just label x as having two parts, m and "surplus m", ie x-m.
Wait, is m an integer or a function? I'm not even sure what you're saying, here. Could you rephrase?
Consider this case. I own LK and use his labor as capital. His wages accrue to me (Fun.) And at the same time I belong to LK; my wages accrue to him (Sigh.) We make the same wages. LTV says what exactly?
So you own one another's labor, and you use it as private property by... renting it to other people? Or by applying it directly to inputs? Or what? If you own someone else outright such that you can treat them as capital, then there are no "wages" of which to speak in the first place; that would be category error. And mutual ownership suggests a cooperative, but you've excluded your own stake in it except insofar as remunerating the other is concerned? I'd like to help, but near as I can tell Marx's value theory would have little to say about it because it is meant to explain capitalist production specifically; what you have described sounds more like some sort of bizarrely authoritarian gift economy.
Slaves produce surplus value. Marx wrote it explicitly - "The price paid for a slave is nothing but the anticipated and capitalised surplus-value or profit to be wrung out of the slave."
The key there is "wrung out." They're not wringing themselves out. The rest of the paragraph you quote specifies that further expenditures of capital are still necessary for exploitation in the specific descriptive sense examined in Capital. It compares the purchase of a slave to the purchase of land.
Animals may be treated as fixed capital, but there is no rational reason why animals cannot create a surplus value just as human beings can under Marx's LTV - unless you want to admit the LTV is just an analytic concept true only by definition and not empirically sound.
I've already explained why animals are not considered, in this theory, to create value. You have not responded to my substantive remarks; instead, you merely dig your heels in and go "nuh UH!" Appealing to the authority of Sraffa is no help if he was also wrong.
Perhaps the problem is that you're conflating value with product? It would be correct to suppose that there's no rational reason why animals cannot create surplus PRODUCT, but value is quite another matter.
As for the rest: Can you clarify what you mean by "LTV is just an analytic concept true only by definition"? How can an entire theory be "an analytic concept"? Would that not be a definition and not a theory? I have already told you to treat SNLT = value as a definition, but that is not the theory; just a definition within it. (I should reiterate: When Kliman said it could be regarded as an empirical claim, he was actually introducing another proposition about the behavior of "value" -- which, IMO, was not very clearly stated, so let's just leave that out for now.)
(1) " If you own someone else outright such that you can treat them as capital, then there are no "wages" of which to speak in the first place; that would be category error."
DeleteRubbish. It is possible for a slave also to rent his wage labour. We have real examples from history, e.g.:
(1) In ancient Rome, for example, there was the practice called the peculium in which a slave master could sometimes allow his slave to run a business on the side and keep the profits and later even buy his freedom.
(2) In America, slaves could sometimes work for wages: e.g., a New Orleans merchant John McDonogh gave permission for his "slaves to work for wages at night and on Sundays. In
1842, he allowed eighty-four of his slaves to purchase their freedom"
"Roman Roots of the Louisiana Law of Slavery:
Emancipation in American Louisiana, 1803-1857," p. 417
http://digitalcommons.law.lsu.edu/cgi/viewcontent.cgi?article=5618&context=lalrev
So did these slaves create a labour value in the commodities they created? If so, then you cannot deny that slaves can create labour value.
(2) It is clear that animals, humans or even the power of nature (e.g, wind power driving a mill) can transform factor inputs into a final output commodity with a monetary value exceeding that of its factor inputs. If there was some way to reduce all work expended in labour to a common unit of measurement, then I see no empirical reason why animals could not create a labour value in commodities.
Also, I can add: if monetary profit is supposed to be explained by surplus labour value, then why do goods produced by slaves or animals fetch a profit, if there is -- according to you -- no labour value or surplus labour value in these commodities?
DeleteThere is something special in human labor. It allows us to transform, change nature in a purposeful, intentional way. There is a difference between us and horses in that. I don't think it is mystical.
DeleteBut you can use animals' labour to "to transform, change nature in a purposeful, intentional way." You can use it to create commodities with a monetary profit as well. What you say doesn't refute my argument.
DeleteEach of your examples are missing the point, in different ways. First of all, (1) is describing independent craft labor or perhaps a small business proprietorship (not wage labor), but even if the worker went out and worked for a wage as in (2), that work remains distinct and separate from their slavery. The simple fact of being a slave does not mean you are barred from producing value for capital; merely that your work in your capacity as a slave does not; in that sense, you're basically a machine. When you work nights in a different social relation, then that's altogether separate.
DeleteIt's like if I run a law practice by day and moonlight as a rodeo clown. I'm not JUST a lawyer or a clown, but I'm each at a particular time.
As for your second (2), the reason technology is so profitable owes to the fact that its adoption is not universal. Some people still do task X by hand, but others have a machine that does X with a fraction of the labor. But whereas the market is still conditioned by output from both processes, the market price will fall somewhere in between, and the machine-user obtains superprofits, essentially flows of labor value from the less-developed producers. This is a far sight from the case where the technology were universal, and in all cases this still calls for human labor input.
Now, if we assume for a moment that a windmill produces output from an input with NO human labor (not even collection or packaging, let's say), then all we've established is that the value of the output is equal to the value of the mill plus the inputs. If it commands a price above that value, there are systemic consequences.
I'm curious, LK, why is attacking Marx's theory more important to you than understanding it? Did he spit in your great grandfather's eye or something? You just seem really driven.
Also, I can add: if monetary profit is supposed to be explained by surplus labour value, then why do goods produced by slaves or animals fetch a profit, if there is -- according to you -- no labour value or surplus labour value in these commodities?
DeleteThe answer is systemic; for instance, in the American South, people were still producing cotton by wage labor elsewhere in the world, and therefore slave plantation owners would be effectively in possession of the equivalent of a massive technological advantage. So, the production method [labor:hand-picking] was suddenly far less efficient than [labor:whipping]+[machine:slave]. Thus, plantation owners reaped superprofits of the sort I mentioned in my last comment.
(1) "The simple fact of being a slave does not mean you are barred from producing value for capital; merely that your work in your capacity as a slave does not;"
DeleteSo now you have admitted that the fact that a person is a slave does not necessarily preclude them from creating labour value. This is a significant admission.
You are now forced to argue that anyone who does labour for a wage can create a labour value, even a slave. Therefore the actual free status of a worker is not a crucial distinction.
(2) on animals, here all you seem to be saying is that because wage labour elsewhere allegedly produces a labour value and surplus value, this mysteriously gives the same goods when produced by animals and slaves a labour value and surplus value too that allows monetary profit. It is an absurd and empirically untrue view.
The truth is that the LTV in any form is unsupported by the empirical evidence and doesn't explain price formation. Goods produced by slaves or animals can fetch a profit because prices aren't explained by any mythical LTV. Any work -- whether of free workers, slaves, animals or natural power -- could transform factor inputs into a commodity sold for profit when demand exists for it. You impute to human wage labour a false power that it does not have.
You are now forced to argue that anyone who does labour for a wage can create a labour value, even a slave. Therefore the actual free status of a worker is not a crucial distinction.
DeleteThere is not some sort of magic "not a slave" card we each carry that enables us to produce value for capital. We relate to one another in countless ways (E.g., a son, a husband, an employee, a teacher, a friend, etc.). In some cases, a person relates to another person as a slave, but as you've pointed out that does not preclude them being permitted to relate to someone else as a wage-laborer. The latter relationship is what reproduces capitalism, enables capitalist accumulation, etc.
(2) on animals, here all you seem to be saying is that because wage labour elsewhere allegedly produces a labour value and surplus value, this mysteriously gives the same goods when produced by animals and slaves a labour value and surplus value too that allows monetary profit. It is an absurd and empirically untrue view.
I've never claimed anything to be "mysterious." Those mysteries are all in your head. It's actually very straightforward: Capitalism works a particular way, involving a wage relation. If you remove the wage relation, it's no longer capitalism. Full stop.
What is this "LTV," anyway? I am careful never to use the phrase, and you yourself have pointed out that it's a poor name. So let's ditch it please? Thanks.
[Marx's value theory] in any form is unsupported by the empirical evidence
Another flat-out lie, cool, you'd been needing another one of those. Just because you don't read the literature I share with you (some of which has been explicitly empirical!) doesn't mean it doesn't exist, Lord Ostrich.
Why do I even bother? I can deal with smugness, and I can deal with ideologues, but a smug dogmatic liar is really taxing.
Any work -- whether of free workers, slaves, animals or natural power -- could transform factor inputs into a commodity sold for profit when demand exists for it.
If you had taken the time to understand before you criticize (after more than a month, I am beginning to suspect you to be constitutionally incapable of it), you would recognize that this is not even a criticism! Commodity production predates capitalism, and not all commodity production is even capitalist production, whereas this theory is particular to the latter. It's literally the first entry in this, which I've recommended to you and several other people now.
Please read this, and try to internalize it.
I missed your comment above:
Delete" I have already told you to treat SNLT = value as a definition, but that is not the theory; just a definition within it. (I should reiterate: When Kliman said it could be regarded as an empirical claim, he was actually introducing another proposition about the behavior of "value" -- which, IMO, was not very clearly stated, so let's just leave that out for now.)"
You're basically admitting to me here that the LTV -- for you -- is just an analytic definition. In that case, you're back to square 1:
http://socialdemocracy21stcentury.blogspot.com/2015/03/the-two-epistemological-ways-to.html
You apparently also missed the part in there where I say "that is not the theory; just a definition within it." All theories must define their terms. That doesn't make the whole theory tautological, any more than defining "force" as "an interaction that tends to change the motion of an object" makes physics purely analytical. You ought to know this.
Delete"But you can use animals' labour to "to transform, change nature in a purposeful, intentional way." You can use it to create commodities with a monetary profit as well. What you say doesn't refute my argument."
DeleteYes you can, just as you can use machines, but it doesn't change the fact that to do this you also need social, live human labor, at lease to some extent. Have you read Marx at all? There is a book you might find interesting - Nicholas Howard "Marx's theory of money", there is an interesting chapter on post keynesians.
Hedlund
DeleteIn the first m is a funcyion. I did say so. I conclude you lack the mathematical chops to discuss issues in those terms, so let it pass.
My example with LK is a simple reductio of your position. If you SAY he and I rent our labor then you recognize surplus value. So I changed the WORDS but not the results. And yet suddenly you cannot handle it. Likewise if LK agrees to SAY he is my slave and I agree to transfer to him later an amount identical to his wage you say no value created! Youjust denied transfers or slaves can produce value. But the end result is unchanged. You are left with, as LK notes, just definitions not claims with empirical content.
In the first m is a funcyion. I did say so. I conclude you lack the mathematical chops to discuss issues in those terms, so let it pass.
DeleteAggressive much?
You wrote an unclear post where you appeared to be subtracting a function sans argument from an integer. The thing to do, when someone asks you to clarify, is to answer with grace and humility; we're all supposed to be working in the service of truth, not ideology, and all parties should welcome the chance to be understood, no? Instead, you've tipped your hand and revealed that you're coming into this hostile and swinging. Why on earth would I bother talking to you, now?
I think maybe an apology is in order.
"If an animal (or AI) were sufficiently complex that it could live among humans, agree to work for a wage (instead of merely being owned by the firm), do so, then spend that wage on the market, then its labor would be productive of value in Capital's sense, since, as I said, it's based on social relations rather than biological essentialism or the like."
ReplyDeleteAny economic theory in which only wage-remunerated labor creates value is empirically worthless. It does not reflect the reality of a world in which humans are constantly creating valuable commodities without being remunerated. My daughter baked some cookies yesterday and gave me one to eat. Yum, yum!
Oh good, another tyro wants to weigh in without understanding any aspect of the material. Yawn.
DeleteYour daughter's cookie was not a commodity. Please take a moment to familiarize yourself with the vocabulary before you shove your foot in your mouth. You might choke on cookie.
Also, I don't know how much you know about science, but domain specificity is actually really important; a theory that explains everything explains nothing.
Have a good day!
Wait, wait. LK accuses you of just making definitions and dealing only in analytical statements based on them, not on statements with empirical content, or that tie to the real world. And you respond to a simple example of about cookies by citing a 40 page vocabulary, and denying cookies are a commodity with value!
DeleteYes, words have particular meanings in particular fields. If you had looked no further than item "1." in the document I linked, you'd have gotten my point: Some people use "commodity" to mean "a good"; however, in Marx (and classical political economy generally), a commodity is something that a) satisfies a need and b) is produced specifically to be sold. And since the value relation in Marx is specific to the commodity form (remember, his analysis is from the perspective of capital), a non-commodity cannot have value in this sense.
DeleteIf you produce a use-value to satisfy a need of yourself or a family member or the like, then it doesn't matter how much labor went into it; it's not a commodity and therefore it does not have value.
This is all definitional, yes. It's how these categories interact and what they ultimately yield that is of empirical interest. If I had my druthers we'd have moved past all this tedious clarifying by now and on to the actual processes and relations, but some people simply refuse to grasp even the most basic aspects of the analysis.
What is "labor"? The dictionary definition of this commonplace word would encompass any activity in which a living organism expends energy to achieve a particular aim. Hence ants labor, bees labor, slaves labor, people decorating their own homes labor. But in the Marxist fairyland, "labor" is bizarrely redefined to exclude these activities. Why? To make a bogus theory less implausible! If the facts don't fit the theory, change the facts - we should call this Marx's first law!
ReplyDeleteYou wouldn't know if the facts fit the theory, because you don't know the theory — nor, I suspect, the facts.
DeleteDid Robinson Crusoe on his island perform any labor?
ReplyDeleteHave not studied Marx enough to say anything worth reading. But I have read a little of the mighty thinker of whom he was a pupil. Here is a little known quote from him - or advice from Polonius? - that some here might like - or not.
ReplyDelete"Once a man has reached the point where he no longer knows things better than others - that is, when it is a matter of total indifference to him that others have done things badly and he is only interested in what they have done right - then peace and affirmation have entered his mind."