Wednesday, April 8, 2015

David Harvey on Reading Marx’s Capital Volume 1, Class 01

David Harvey is a Professor of Anthropology and Geography at the Graduate Center of the City University of New York.

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.

(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.’

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).
Harvey fails to notice the awful non sequitur here.

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).

“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).
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:
“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?
All in all, this is a poor start to Harvey’s videos. I am not impressed.

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.


  1. "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."

    Indeed not. Increasing automation implies an increasing cost of capital. The machines have to be bought, and those who provide the necessary funds will require a return on their investment.

    "the damaging admission by Marx that labour creates no value if there is no demanded use value"

    Marx really admitted that? If so, he was one step away realising that the use value of a commodity is not a constant but can vary according to the subjective preferences of consumers. This leads to a different theory of value to the one he proposed!

  2. [Marxists] … admit that the LTV doesn’t explain individual price determination. So what explanatory power does it even have?

    Do you really think the domain of economic science is exhausted by the transient determination a price? It's a surface-level phenomenon. By not stopping there, we reach an immanent crisis theory, a theory of unequal exchange, etc. Plus, it’s compatible with your favorite theory of individual price. So what's the problem?

    I blame the marginalist revolution; it turned economics into a science of distribution and exchange ("the study of the allocation of scarce resources among unlimited wants," etc) instead of a more complete, production-oriented field ("study of the origin of wealth and the reproduction of society through time"). You reject neoclassicism, yet you still let them set the terms of the discussion.


    (1) To be fair I think "deconstruct" colloquially denotes "breaking down." Doesn’t mention Postmodernism. If he DID mean that then yes, I agree it wouldn't make sense, especially considering Marxists hate pomos (see critiques by, e.g., Fredric Jameson or Terry Eagleton).

    Even then, being wrong is not charlatanry; the latter needs a degree of willful dishonesty, such as this or this.

    (4) The method is indeed "careful" and "causal." It's just different. If the point is how the pieces fit together, then you can't explain this or that piece in a vacuum; if they all reference one another, and you logically have to start *somewhere*, it follows that some terms will have act as sort of semiotic placeholders until they can come into full view.

    (5) No hole; subjective value is implied in use-value and demand exerts an effect on price. Yours is the first straw man addressed in Section 3 of this, which Steve linked recently and which isn't even Marxist (more classical anarchism).

    (6) a) A general equivalent is exactly what money is. b) What part of "equality implies commensurability" is a non sequitur? c) You want proof of what, that capital value is not created in exchange? That's just bookkeeping, homes; deal with it. d) Volume 3 doesn't repudiate anything in 1; just sheds a simplifying assumption. If fluctuations cancel, then it's totally sensible to abstract them away, full stop.

    (7) No aggregation problem. "Hours" are discrete units, moreso than "utils." As Mr. Vienneau told you, aggregation already happens in the market. Either you can investigate the whys and hows, or you can continue to complain about how reality is theoretically impossible.

    You're prioritizing theory over reality, putting the cart before the horse. Hell, not even theory but your own subjective satisfaction with theory (even though said satisfaction is tempered by ideology).

    (8) Possible. If value falls while price rises, that means the firm is leeching a flow of value from elsewhere. It's up to market conditions to determine whether that is sustainable.

    (9) It's a good thing you still don’t get that "useful" is implicit in "necessary," because I never get sick of explaining it.

    (10) Are you a bot? How on earth could you not understand this yet?

    If you cannot even convince me of the LTV

    You ask the impossible; literally no one can convince you of something if you're determined not to be convinced of it. All I can do is demolish your facile arguments again and again, in some cases retreading ground you already conceded.

    You're essentially Lucy holding the football right now, hollering at us to kick a field goal.

    1. "Plus, it’s compatible with your favorite theory of individual price. So what's the problem?"

      If you don't know what my problem is with the LTV by this stage, we've talking in vain.

      (4) hmmmm.. despite even Harvey saying it is *not* a straightforward causal explanation? I suppose we'll soon hear that Harvey doesn't understand Marx properly...

      (5) Tell me where Marx shows an understanding of subjective value. Chapter and verse, please. Not vague references.

      (6) "Volume 3 doesn't repudiate anything in 1; just sheds a simplifying assumption.

      You should read carefully your last sentence. It concedes my point.

    2. If you don't know what my problem is with the LTV by this stage, we've talking in vain.

      No, I definitely know; you've been very blatant.

      (4) Did I say "straightforward"? I don't think I did.

      (5) Wait, you're serious? You want me to prove Marx understood the most basic, immediately apparent detail about the effect of demand on price? I thought you were just playing around, but okay I guess

      (6) If your point is you spontaneously forgot you already conceded that it was an explicitly stated assumption held against the explicitly stated fact that price and value differ, then I will concede that you do appear to have done so.

      Volume 3 hardly makes a splash by saying price and value differ, because Volume 1 does, too, remember? Please, you've got to try to remember. I know you can do it.

    3. On (5) I am asking you to explain where Marx shows understanding of **subjective value/utility**, not demand.

      The concept of "demand" existed long before the marginal revolution, and merely citing Marx talking about demand and supply determining market prices does NOT prove Marx understood subjective value.

      So on (5) you fail miserably.

      On (6) if all of Marx's talk about equal SNLT determining real individual exchange values in vol. 1 of Capital has to be thrown aside, this is effectively a massive contradiction between vol. 1 and vol. 3.

    4. (5) Yes, the concept of demand predates Marx. However, demand implicitly contains a concept of subjective utility. If you're looking specifically for the word "utility," then no, you won't find it. "Did not use a specific term" is of course quite a less damning claim than "did not understand subjective value." Subjective value is innate. If you have preferences, you understand subjective value. Your argument appears to be that Marx was a vegetable.

      Or, I suppose, that he did not attempt to quantify subjective value, which is a stupid thing to treat as anything more than an unrealistic stylization in the first place.

      In short, your critique of "Marx was not a neoclassical" is both uninteresting and uncompelling.

      (6) So you REALLY don't remember where you admitted that he says price and value diverge in volume 1? Were you hit on the head recently? It was like less than a week ago. There is no "contradiction" between volume 3 and volume 1 because by this clueless standard volume 1 contradicts volume 1.

      By said same standard, Kalecki contradicts himself when he assumes workers don't save while himself having a savings account. Also, Keynes, from chapter 3 of the GT: "In this summary we shall assume that the money-wage and other factor costs are constant per unit of labour employed. But this simplification, with which we shall dispense later, is introduced solely to facilitate the exposition." CONTRADICTION, you may think. But hang on a moment: an assumption, being a device to elucidate a theory, does not make it a part of that theory. So hold off on attacking Keynes; he's theoretically consistent. As is Marx.

      Also, not to put too fine a point on it, maybe you should examine how your claim of contradiction in Marx itself contradicts(!) your previous admission.

      Give it up. You're obviously just throwing around red herrings to waste my time. And if it's not just a cynical ploy, then, well... frankly, I don't know which would reflect worse on you, at this point.

    5. (5) Marx did not properly understand nor treat the fundamental concept of subjective utility. Without this, his price theory is badly flawed. You clearly cannot dispute this.

      (6) and we have seen time and again that this passage in vol. 1 in the footnote doesn't do what you want it too.

    6. (5) I'll take it to the next post.

      (6) False. Sorry. It doesn't do what you want it to do, and of the two of us, you are also the one who has demonstrated a willingness to play fast and loose with the facts to score a point, so forgive me for not finding much worth in your dismissal based on nothing.

  3. I have no doubt that Hedlund actually believes the gobbledegook he's written is true. Maybe it describes some imaginary world in his head. I don't think you'll get anywhere with him until he attempts the following task:

    (1) Choose a specific commodity being produced in the real world. Motor cars, wine, computers, condoms - take your pick.

    (2) Show how the labour theory of value would be used to explain something about that commodity.

    1. It sure is great to see that paying great care to considerations of theory specification and philosophy of science now qualify as gobbledygook. You're definitely a voice people should be trusting in this discussion, Unlabeled Anon.

      You don't need to "get anywhere" with me, because I'm right here, explaining this all in the simplest terms I can to people who are more interested in shouting down a theory than understanding it.

      Individual commodities can be analyzed about as well as they can in any economic theory. Like, I'm not sure what answer you're even looking for (especially since this is plainly attempting to be some half-baked Gotcha). We can examine price movements, relative demand, costs of production, the objective conditions of production, you name it. However, only with reference to macroeconomic data (average OCC, general rate of profit, etc) can we determine the relation of s to p and so on. ("Numeric variables? What science has those?! Pure gibberish!")

    2. "We can examine price movements, relative demand, costs of production, the objective conditions of production, you name it. However, only with reference to macroeconomic data (average OCC, general rate of profit, etc) can we determine the relation of s to p and so on. ("Numeric variables? What science has those?! Pure gibberish!")"

      Who is "we", my friend? YOU have never analysed the price of the single commodity. YOU have never referred to a single datum of any kind. Science involves the application of theory to The Real World. You have certainly not done that in these blog comments and I seriously doubt you have ever done it. Your words are merely religion posing as philosophy. I challenged you to apply the labor theory of value to one real commodity produced in the real world. You failed, as you will always

    3. You don't know me or my work and I frankly couldn't care less about your doubts. And if you're going to make demands on my time, try being less rude, and have the decency to give yourself a consistent handle, fake or otherwise.

      Because I aim to be generous, I will clue you in: "Apply the labor theory of value to one real commodity" is a meaningless phrase. Consider a symmetrical case: "Apply marginalism to one real commodity."

      So, if this is going to continue, I'm going to need you to be more a) polite, b) specific, and c) differentiated. Otherwise, you can just continue to fling garbage from somewhere beneath the peanut gallery.

      <3 Big H <3