Marx on Technological Unemployment in the Grundrisse

Marx’s Grundrisse der Kritik der Politischen Ökonomie (Outlines of the Critique of Political Economy) was a manuscript which he wrote from 1857–1858. These 800 manuscript pages by Marx on political economy were not even published until 1939 (Wheen 2001: 227), but they formed the basis of A Contribution to the Critique of Political Economy (1859) (Sperber 2014: 421).

Marx had an interesting passage in the Grundrisse where he discusses technological unemployment:

“Contradiction between the foundation of bourgeois production (value as measure) and its development. Machines etc.

The exchange of living labour for objectified labour – i.e. the positing of social labour in the form of the contradiction of capital and wage labour – is the ultimate development of the value-relation and of production resting on value. Its presupposition is – and remains – the mass of direct labour time, the quantity of labour employed, as the determinant factor in the production of wealth. But to the degree that large industry develops, the creation of real wealth comes to depend less on labour time and on the amount of labour employed than on the power of the agencies set in motion during labour time, whose ‘powerful effectiveness’ is itself in turn out of all proportion to the direct labour time spent on their production, but depends rather on the general state of science and on the progress of technology, or the application of this science to production. (The development of this science, especially natural science, and all others with the latter, is itself in turn related to the development of material production.) Agriculture, e.g., becomes merely the application of the science of material metabolism, its regulation for the greatest advantage of the entire body of society.

Real wealth manifests itself, rather – and large industry reveals this – in the monstrous disproportion between the labour time applied, and its product, as well as in the qualitative imbalance between labour, reduced to a pure abstraction, and the power of the production process it superintends. Labour no longer appears so much to be included within the production process; rather, the human being comes to relate more as watchman and regulator to the production process itself. (What holds for machinery holds likewise for the combination of human activities and the development of human intercourse.) No longer does the worker insert a modified natural thing [Naturgegenstand] as middle link between the object [Objekt] and himself; rather, he inserts the process of nature, transformed into an industrial process, as a means between himself and inorganic nature, mastering it. He steps to the side of the production process instead of being its chief actor. In this transformation, it is neither the direct human labour he himself performs, nor the time during which he works, but rather the appropriation of his own general productive power, his understanding of nature and his mastery over it by virtue of his presence as a social body – it is, in a word, the development of the social individual which appears as the great foundation-stone of production and of wealth.

The theft of alien labour time, on which the present wealth is based, appears a miserable foundation in face of this new one, created by large-scale industry itself. As soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure, and hence exchange value [must cease to be the measure] of use value. The surplus labour of the mass has ceased to be the condition for the development of general wealth, just as the non-labour of the few, for the development of the general powers of the human head. With that, production based on exchange value breaks down, and the direct, material production process is stripped of the form of penury and antithesis. The free development of individualities, and hence not the reduction of necessary labour time so as to posit surplus labour, but rather the general reduction of the necessary labour of society to a minimum, which then corresponds to the artistic, scientific etc. development of the individuals in the time set free, and with the means created, for all of them.

Capital itself is the moving contradiction, [in] that it presses to reduce labour time to a minimum, while it posits labour time, on the other side, as sole measure and source of wealth. Hence it diminishes labour time in the necessary form so as to increase it in the superfluous form; hence posits the superfluous in growing measure as a condition – question of life or death – for the necessary. On the one side, then, it calls to life all the powers of science and of nature, as of social combination and of social intercourse, in order to make the creation of wealth independent (relatively) of the labour time employed on it. On the other side, it wants to use labour time as the measuring rod for the giant social forces thereby created, and to confine them within the limits required to maintain the already created value as value. Forces of production and social relations – two different sides of the development of the social individual – appear to capital as mere means, and are merely means for it to produce on its limited foundation. In fact, however, they are the material conditions to blow this foundation sky-high. ‘Truly wealthy a nation, when the working day is 6 rather than 12 hours. Wealth is not command over surplus labour time’ (real wealth), ‘but rather, disposable time outside that needed in direct production, for every individual and the whole society.’ (The Source and Remedy etc. 1821, p. 6.)

Nature builds no machines, no locomotives, railways, electric telegraphs, self-acting mules etc. These are products of human industry; natural material transformed into organs of the human will over nature, or of human participation in nature. They are organs of the human brain, created by the human hand; the power of knowledge, objectified. The development of fixed capital indicates to what degree general social knowledge has become a direct force of production, and to what degree, hence, the conditions of the process of social life itself have come under the control of the general intellect and been transformed in accordance with it. To what degree the powers of social production have been produced, not only in the form of knowledge, but also as immediate organs of social practice, of the real life process.”
Karl Marx, Grundrisse. Foundations of the Critique of Political Economy (Rough Draft), Notebook VII – The Chapter on Capital
https://www.marxists.org/archive/marx/works/1857/grundrisse/ch14.htm

This is clearly one of those cases where a very interesting insight – indeed I would go so far as to say a brilliant one – is made by Marx but is then ruined and contaminated by his mystical labour theory of value nonsense.

Marx is wrong that capitalism seeks fundamentally to extract his mystical concept of surplus labour time from human beings.

On the contrary, it doesn’t matter to the capitalist who it is who performs the labour that produces the commodities he sells: it could be humans, animals, or machines. Capitalism isn’t about the search for surplus labour value: this is a ridiculous dogma of Marx’s theory.

This was seen by Piero Sraffa in an unpublished note of 1928, where Sraffa gave his damning verdict on the labour theory of value:

“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. Does the capitalist entrepreneur, who is the real ‘subject’ of valuation and exchange, make a great difference whether he employs men or animals? Does the slave-owner?” (Sraffa, unpublished note, D3/12/9: 89, quoted in Kurz and Salvadori 2010: 199).

Marx in the following passage in the Grundrisse also badly contradicts his later views in volume 1 of Capital:

“Labour no longer appears so much to be included within the production process; rather, the human being comes to relate more as watchman and regulator to the production process itself. … No longer does the worker insert a modified natural thing [Naturgegenstand] as middle link between the object [Objekt] and himself; rather, he inserts the process of nature, transformed into an industrial process, as a means between himself and inorganic nature, mastering it. He steps to the side of the production process instead of being its chief actor. In this transformation, it is neither the direct human labour he himself performs, nor the time during which he works, but rather the appropriation of his own general productive power, his understanding of nature and his mastery over it by virtue of his presence as a social body – it is, in a word, the development of the social individual which appears as the great foundation-stone of production and of wealth.”
Karl Marx, Grundrisse. Foundations of the Critique of Political Economy (Rough Draft), Notebook VII – The Chapter on Capital
https://www.marxists.org/archive/marx/works/1857/grundrisse/ch14.htm

It is clear here that Marx is thinking of machines reducing the arduous and lengthy labour time of human beings, as the human becomes a mere “watchman and regulator” of automated production. By implication, machines, in this view of Marx, must therefore lighten the work and painful toil of human beings and make production less difficult.

But in volume 1 of Capital – which was a cynical and polemical work of communist propaganda – Marx takes the opposite view: machines only increase the intensity and suffering of the workers by speeding up production and making it more intense and difficult.

Marx even starts Chapter 15 of volume 1 of Capital with an extraordinary endorsement of John Stuart Mill’s nonsensical idea that “It is questionable if all the mechanical inventions yet made have lightened the day’s toil of any human being” (Marx 1906: 405).

And finally we have a crucial passage:

“As soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure, and hence exchange value [must cease to be the measure] of use value. The surplus labour of the mass has ceased to be the condition for the development of general wealth, just as the non-labour of the few, for the development of the general powers of the human head. With that, production based on exchange value breaks down, and the direct, material production process is stripped of the form of penury and antithesis. The free development of individualities, and hence not the reduction of necessary labour time so as to posit surplus labour, but rather the general reduction of the necessary labour of society to a minimum, which then corresponds to the artistic, scientific etc. development of the individuals in the time set free, and with the means created, for all of them.”
Karl Marx, Grundrisse. Foundations of the Critique of Political Economy (Rough Draft), Notebook VII – The Chapter on Capital
https://www.marxists.org/archive/marx/works/1857/grundrisse/ch14.htm

Here Marx is foreseeing the day when human labour falls to a bare minimum or zero in the production process, and human beings have progressed to a post-scarcity world where our machines and automated artificial intelligences do most of our work.

In Marx’s theory here in the Grundrisse, commodities would cease to have an exchange value (and hence price) because they would cease to have any embodied labour value, and capitalism would break down.

But this doesn’t follow at all, because prices and exchange values were never based on the incoherent and empirically irrelevant concept of socially necessary labour time in the first place.

Actually, we can foresee a world where capitalism continues and where governments maintain aggregate demand by a minimum guaranteed income and employment programs, and where work in the natural sciences, medical and technological research and development, the social sciences, art and third world development would indeed be the kind of work that many people engage in.

A final point: some Marxists think this passage is a prediction of the Great Depression, and they therefore explain the Great Depression as a result of technological unemployment – a truly stupid and plainly false theory which would put such Marxists in the company of Schumpeter, whose business cycle theory was basically this too. Did human labour fall to a bare minimum or zero in the production process from 1929 to 1933? That is bizarrely and obviously untrue.

If it was really the case that millions of people from 1929 to 1933 lost their jobs because they were replaced by machines, then why did most of those people go back to the very same jobs in the recovery from 1933 onwards?

Now what happened during the depression is that capitalists mostly reduced their capacity utilisation and left some capital goods idle by firing workers en masse (of course many businesses were liquidated too). This happened because of huge failures of aggregate demand and shocked business expectations. Workers were not being replaced with machines en masse. That idea is absurd and manifestly untrue.

Nevertheless, there is a valuable insight in the passage above: the idea that one day science and technology may become so powerful that our machines will make very many human workers obsolete.

That day may well be approaching this century. But it does not follow at all that systems of production based on private property, private investment, and private money profits will cease to exist.

BIBLIOGRAPHY
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.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Sperber, Jonathan. 2014. Karl Marx: A Nineteenth-Century Life. Liveright Publishing Corporation, New York.

Wheen, Francis. 2000. Karl Marx. Fourth Estate, London.

Marx on Labour Value and Cost Price in the Grundrisse

Marx’s Grundrisse der Kritik der Politischen Ökonomie (Outlines of the Critique of Political Economy) is an 800 manuscript on political economy that Marx wrote between 1857–1858, but was not published until 1939 (Wheen 2001: 227). Therefore the Grundrisse represents Marx’s thinking on economics in the late 1850s and some 10 years before he published Capital.

In the Grundrisse, there is this very interesting description of the labour value:

“The value (the real exchange value) of all commodities (labour included) is determined by their cost of production, in other words by the labour time required to produce them. Their price is this exchange value of theirs, expressed in money. The replacement of metal money (and of paper or fiat money denominated in metal money) by labour money denominated in labour time would therefore equate the real value (exchange value) of commodities with their nominal value, price, money value. Equation of real value and nominal value, of value and price. But such is by no means the case. The value of commodities as determined by labour time is only their average value. This average appears as an external abstraction if it is calculated out as the average figure of an epoch, e.g. 1 lb. of coffee = 1s. if the average price of coffee is taken over 25 years; but it is very real if it is at the same time recognized as the driving force and the moving principle of the oscillations which commodity prices run through during a given epoch. This reality is not merely of theoretical importance: it forms the basis of mercantile speculation, whose calculus of probabilities depends both on the median price averages which figure as the centre of oscillation, and on the average peaks and average troughs of oscillation above or below this centre. The market value is always different, is always below or above this average value of a commodity. Market value equates itself with real value by means of its constant oscillations, never by means of an equation with real value as if the latter were a third party, but rather by means of constant non-equation of itself (as Hegel would say, not by way of abstract identity, but by constant negation of the negation, i.e. of itself as negation of real value). In my pamphlet against Proudhon I showed that real value itself -- independently of its rule over the oscillations of the market price (seen apart from its role as the law of these oscillations) -- in turn negates itself and constantly posits the real value of commodities in contradiction with its own character, that it constantly depreciates or appreciates the real value of already produced commodities; this is not the place to discuss it in greater detail. Price therefore is distinguished from value not only as the nominal from the real; not only by way of the denomination in gold and silver, but because the latter appears as the law of the motions which the former runs through. But the two are constantly different and never balance out, or balance only coincidentally and exceptionally. The price of a commodity constantly stands above or below the value of the commodity, and the value of the commodity itself exists only in this up-and-down movement of commodity prices. Supply and demand constantly determine the prices of commodities; never balance, or only coincidentally; but the cost of production, for its part, determines the oscillations of supply and demand. The gold or silver in which the price of a commodity, its market value, is expressed is itself a certain quantity of accumulated labour, a certain measure of materialized labour time. On the assumption that the production costs of a commodity and the production costs of gold and silver remain constant, the rise or fall of its market price means nothing more than that a commodity, = x labour time, constantly commands > or < x labour time on the market, that it stands above or beneath its average value as determined by labour time. The first basic illusion of the time-chitters consists in this, that by annulling the nominal difference between real value and market value, between exchange value and price -- that is, by expressing value in units of labour time itself instead of in a given objectification of labour time, say gold and silver -- that in so doing they also remove the real difference and contradiction between price and value. Given this illusory assumption it is self-evident that the mere introduction of the time-chit does away with all crises, all faults of bourgeois production. The money price of commodities = their real value; demand = supply; production = consumption; money is simultaneously abolished and preserved; the labour time of which the commodity is the product, which is materialized in the commodity, would need only to be measured in order to create a corresponding mirror-image in the form of a value-symbol, money, time-chits. In this way every commodity would be directly transformed into money; and gold and silver, for their part, would be demoted to the rank of all other commodities.”

Marx, The Grundrisse, October 1857, Chapter on Money
https://www.marxists.org/archive/marx/works/1857/grundrisse/ch02.htm#p136

Some important points:

(1) The initial sentence is crucial to understanding Marx’s thinking:

“The value (the real exchange value) of all commodities (labour included) is determined by their cost of production, in other words by the labour time required to produce them.”

A real “exchange value” or price equal to labour value (“labour time required to produce them”) is the cost of production. This is so obviously the same view that Marx held in his essay Wage-Labor and Capital published in the periodical the Neue Rheinische Zeitung in April 1849:

“The determination of price by cost of production is tantamount to the determination of price by the labortime requisite to the production of a commodity, for the cost of production consists, first, of raw materials and wear and tear of tools, etc., i. e., of industrial products whose production has cost a certain number of work-days, which therefore represent a certain amount of labor-time, and, secondly, of direct labor, which is also measured by its duration.” (Marx 1902: 34).

For more discussion of this point see this post.

(2) Marx thinks that

“The replacement of metal money (and of paper or fiat money denominated in metal money) by labour money denominated in labour time would therefore equate the real value (exchange value) of commodities with their nominal value, price, money value.”

Of course real world capitalist economies do not do this, and even if you introduced “labour money” denominated in labour time, then you would have to

(1) demonstrate how to reduce all heterogeneous human wage labour to a common, meaningful homogeneous unit so that, for example, 1 labour money unit equals one unit of homogeneous labour time, and

(2) ensure that in real world capitalism wage labourers are paid exactly in accordance with the socially necessary labour time appropriate for their labour, and

(3) price all non-labour factor inputs in terms of socially necessary labour time required to produce them.

Only this would allow one to say that a cost of production price would be equal to labour value.

Yet, once again, it is obvious that this is not how real-world capitalism works, and the fact that it does not work this way contradicts and negates Marx’s statement in (1) above (that is, “The determination of price by cost of production is tantamount to the determination of price by the labortime ... .”). Marx even recognizes this by saying: “But such is by no means the case.”

(3) After this Marx argues that the “value of commodities as determined by labour time is only their average value,” which appears to be what he would later call the “average price” that equals the cost of production price plus a uniform long-run rate of profit (though admittedly he does directly not refer to profit in the quotation above). We even get some Hegelian claptrap with which Marx dresses this up philosophically (“as Hegel would say, not by way of abstract identity, but by constant negation of the negation, i.e. of itself as negation of real value”).

But as always there is no rational reason to think that the labour theory of value is of any empirical value in the first place, when

(1) it ascribes to human wage labour a special significance that it does not have (that is, if work expended by labour creates a value in commodities, then slaves, animals or the power of nature should be able to create such a value too), and

(2) the problem of reducing (and aggregating) all heterogeneous human labour to a homogenous unit is a problem almost as severe as the idea of aggregating interpersonal subjective utilities, and I see no evidence that Marx or Marxists have ever shown how to do it.

Finally, neither real-world market wages or non-labour factor input prices are determined in the way required by Marx to make a cost of production price equal labour value, even if you could surmount the serious problems in (1) and (2) above.

In short, even here in the early version in Marx’s Grundrisse der Kritik der Politischen Ökonomie of 1857–1858 we have no reason to take the labour theory of value seriously.

BIBLIOGRAPHY
Marx, Karl. 1902. Wage-Labor and Capital. New York Labor News Company, New York.

Wheen, Francis. 2001. Karl Marx: A Life. W. W. Norton & Company, New York and London.