“In the same way the exchange values of commodities must be capable of being expressed in terms of something common to them all, of which thing they represent a greater or less quantity.According to Marx’s argument, we must totally abstract from a commodity’s “use value” to determine the ultimate thing that underlies the equality of exchange and what ultimately determines exchange value.
This common ‘something’ cannot be either a geometrical, a chemical, or any other natural property of commodities. Such properties claim our attention only in so far as they affect the utility of those commodities, make them use-values. But the exchange of commodities is evidently an act characterised by a total abstraction from use-value.” ….
If then we leave out of consideration the use-value of commodities, they have only one common property left, that of being products of labour. But even the product of labour itself has undergone a change in our hands. If we make abstraction from its use-value, we make abstraction at the same time from the material elements and shapes that make the product a use-value; we see in it no longer a table, a house, yarn, or any other useful thing. Its existence as a material, thing is put out of sight. Neither can it any longer be regarded as the product of the labour of the joiner, the mason, the spinner, or of any other definite kind of productive labour. Along with the useful qualities of the products themselves, we put out of sight both the useful character of the various kinds of labour embodied in them, and the concrete forms of that labour; there is nothing left but what is common to them all; all are reduced to one and the same sort of labour, human labour in the abstract.” (Marx 1906: 44–45).
However, that is blatantly and disastrously contradicted later in the same Chapter when Marx makes this admission:
“Lastly, nothing can have 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 1906: 48).This is exactly like having your cake and eating it too.
On the one hand, we can totally ignore use value in ultimately explaining exchange values, but on the other hand – only a few pages later – nothing without utility (by which Marx no doubt means “use value”) can create value and by implication price. This is a bad contradiction, and requires that being an object of utility is a necessary condition not only for having labour value but also an exchange value.
Marx cannot be correct in saying that “the exchange of commodities is evidently an act characterised by a total abstraction from use-value” (my emphasis), if “nothing can have value, without being an object of utility” (Percival 2012: 253).
But it is worse than this. Later we read the following:
“The social division of labour causes his labour to be as one-sided as his wants are many-sided. This is precisely the reason why the product of his labour serves him solely as exchange value. But it cannot acquire the properties of a socially recognised universal equivalent, except by being converted into money. That money, however, is in some one else’s pocket. In order to entice the money out of that pocket, our friend’s commodity must, above all things, be a use-value to the owner of the money. For this, it is necessary that the labour expended upon it, be of a kind that is socially useful, of a kind that constitutes a branch of the social division of labour. But division of labour is a system of production which has grown up spontaneously and continues to grow behind the backs of the producers. The commodity to be exchanged may possibly be the product of some new kind of labour, that pretends to satisfy newly arisen requirements, or even to give rise itself to new requirements. A particular operation, though yesterday, perhaps, forming one out of the many operations conducted by one producer in creating a given commodity, may to-day separate itself from this connection, may establish itself as an independent branch of labour and send its incomplete product to market as an independent commodity. The circumstances may or may not be ripe for such a separation. To-day the product satisfies a social want. To-morrow the article may, either altogether or partially, be superseded by some other appropriate product. Moreover, although our weaver’s labour may be a recognised branch of the social division of labour, yet that fact is by no means sufficient to guarantee the utility of his 20 yards, of linen. If the community's want of linen, and such a want has a limit like every other want, should already be saturated by the products of rival weavers, our friend’s product is superfluous, redundant, and consequently useless. Although people do not look a gift-horse in the mouth, our friend does not frequent the market for the purpose of making presents. But suppose his product turn out a real use-value, and thereby attracts money? The question arises, how much will it attract? No doubt the answer is already anticipated in the price of the article, in the exponent of the magnitude of its value. We leave out of consideration here any accidental miscalculation of value by our friend, a mistake that is soon rectified in the market. We suppose him to have spent on his product only that amount of labour-time that is on an average socially necessary. The price then, is merely the money-name of the quantity of social labour realised in his commodity. But without the leave, and behind the back, of our weaver, the old fashioned mode of weaving undergoes a change. The labour-time that yesterday was without doubt socially necessary to the production of a yard of linen, ceases to be so today, a fact which the owner of the money is only too eager to prove from the prices quoted by our friend’s competitors. Unluckily for him, weavers are not few and far between. Lastly, suppose that every piece of linen in the market contains no more labour-time than is socially necessary. In spite of this, all these pieces taken as a whole, may have had superfluous labour-time spent upon them. If the market cannot stomach the whole quantity at the normal price of 2 shillings a yard, this proves that too great a portion of the total labour of the community has been expended in the form of weaving. The effect is the same as if each individual weaver had expended more labour-time upon his particular product than is socially necessary. Here we may say, with the German proverb: caught together, hung together. All the linen in the market counts but as one article of commerce, of which each piece is only an aliquot part. And as a matter of fact, the value also of each single yard is but the materialised form of the same definite and socially fixed quantity of homogeneous human labour.” (Marx 1906: 119–121.Here Marx is actually saying that the amount of abstract socially necessary labour time appropriate for the production of any given commodity is not independent of the market demand for that commodity: market demand will determine the socially necessary labour time for each unit, so that if there is an excess of supply in relation to demand, then the amount of social labour expended in the production of the aggregate output has been too high and some labour time wasted: it is as if all labourers had spent more time than was socially necessary for the production of each unit.
At this point, Marx’s socially necessary labour time as an independent determiner of exchange value or price has been shaken to its foundations. For in the example above market exchange actually determines unit abstract socially necessary labour time.
Marx cannot (1) explain exchange value or price independently of use value, nor (2) can he explain the abstract socially necessary labour time supposedly required for the production of any given commodity independently of market demand.
BIBLIOGRAPHY
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.
Percival, Ray Scott. 2012. The Myth of the Closed Mind: Understanding Why and How People are Rational. Open Court, Chicago.
LK, you're simply wrong. "Use value" can determine quantity, and labor embodied can determine price. At least logically, this is perfectly tenable.
ReplyDeleteLogically, in purely abstract models a general equilibrium theory is "perfectly tenable."
DeleteIf you are saying the LTV is "perfectly tenable" in that sense, who cares?
To judge an apriori or theorical thing you've to look at the real world data. Even general equilibrium has some empirical value (elasticities are very low but usually are of the "right" sign). Maybe same thing for LVT. But first of all you've to stop cheating about it, and stop throwing disquilibrium arguments at it (bad harvest, i've found the diamond without working, and similars).
DeleteAnd despite a lot of posts on LVT, you still haven't provided a convincing argument against it. And by the way, I don't think the footnote means that "value" is something else than the long term equilibrium price.
ReplyDeleteI'm not sure there is a contradiction here.
ReplyDeleteWhat he means is that you can't directly compare different the different use-values of different commodities. But you can, supposedly, directly compare labour-time.
If one commodity takes one hour to produce, and another totally different commodity also takes one hour to produce, you can say that they are both the same in that respect, even if their individual use-values are so different that they cannot be directly compared.
In other words, the cost of producing each of these commodities, in terms of labour-time, is the same. Their cost of production is an objective measure in that respect, whereas their use-value is subjective.
On the one hand, we can totally ignore use value in ultimately explaining exchange values, but on the other hand – only a few pages later – nothing without utility (by which Marx no doubt means “use value”) can create value and by implication price. This is a bad contradiction, and requires that being an object of utility is a necessary condition not only for having labour value but also an exchange value.
ReplyDeleteThis really confirms my suspicion, mentioned under your last post, that you still do not grasp what it means for something to have both a concrete and an abstract character. Can you explain in your own words, perhaps with an example (doesn't even have to be from economics), the concrete/abstract distinction?
Here Marx is actually saying that the amount of abstract socially necessary labour time appropriate for the production of any given commodity is not independent of the market demand for that commodity: market demand will determine the socially necessary labour time for each unit, so that if there is an excess of supply in relation to demand, then the amount of social labour expended in the production of the aggregate output has been too high and some labour time wasted: it is as if all labourers had spent more time than was socially necessary for the production of each unit.
Well, yeah. It makes no difference whether the unsold commodity is linen or a "mudpie"; if it goes unrealized, then the labor in question did not produce value. To the capitalist, it's a waste of labor and thus money, even if useful things are made as a result; the capitalist cares about a thing's value in exchange, not use.
I've never seen someone so scandalized by the idea that capitalism requires both sellers and buyers.
(1) This is not about concrete versus abstract labour. Concrete labour is a qualitative difference in various types of labour. Abstract labour is a quantitative difference expressed in SNLT.
DeleteThe issue at hand is Marx's statement:
""But the exchange of commodities is evidently an act characterised by a total abstraction from use-value.” …."
Yet clearly it CANNOT be, if he says nothing can have value without having a use value.
(2) you utterly fail to understand the point about linen: Marx is saying that the actual amount of SNLT by unit of linen can be determined by market demand, when he has already given us a definition that makes it independent of demand.
LK, Marx is simply following Ricardo footstep completely on this "demand" problem. There is nothing new and no contradiction. But I agree with you that Hedlund post are unredable if not meaningless. Probably meaningless i would say.
Delete(1) If you say so. I read Marx's point as "commodities have to be use-values to have value, but this has no quantitative effect on said value," but to each his own I guess.
Delete(2) I understood your point perfectly, and addressed myself to it directly. If you can't find a buyer because no one has a use for what you're selling, then you haven't got any commodities at all, dependent as they are on being use-values. It doesn't matter what shape the thing-no-one-wants takes, whether mudpie, linens, or locusts.
But I agree with you that Hedlund post are unredable if not meaningless. Probably meaningless i would say.
Amen.
Hedlund, can you explain to me without using terms that are plagued by interpretation issues themselves where and how your interpretation differs to mine?
Deletei recall you that my interpretation is that Marx changed opinion over time (thanks to LK for explaining this very well), and at the time of Capital volume 1, he believed that relative prices converge to relative values, and that the key determinant of value is labor embodied, and labor is to be intended in some vague aggregate sense (and this is *obviously* a simplification for the sake of analysis). Moreover, all this is obviously applicable only to the values of producible goods. I also think the footnote on "average price" being different from "value" has no relevance at all because averaging and taking the limit are clearly different things.
As i side note, i also think it's an horrible and fundamentally dishonest idea to invent new labels (example: socially necessary labor) for already existing concepts (labor used in production in equilibrium). Even worse is to reuse some old labels that have some clear meaning (example: bourgeoisie) and redefine them to mean something else (exploiter). So, if you want to make me a favor, please use English, and not the English as distorted by Marx or your interpretation of him.
Hello Anon. I do apologize; I did not see your comment last night.
DeleteHedlund, can you explain to me without using terms that are plagued by interpretation issues themselves where and how your interpretation differs to mine?
This is tricky, since people can misinterpret basically anything. But what the hell, I'll give it a try.
at the time of Capital volume 1, he believed that relative prices converge to relative values
Here's your problem. Capital volume 1 simply does not support this reading. This is clear as early as chapter 3.
and labor is to be intended in some vague aggregate sense
How do you mean, vague? I don't think Marx ever advocated treating labor "vaguely."
I also think the footnote on "average price" being different from "value" has no relevance at all because averaging and taking the limit are clearly different things.
You mean like a limit equation? Why would you use one of those?
To say the difference between average price and value "has no relevance," I hope, should be self-evidently false. Why have a theory of value if you're not interested in the category of value?
I can't say how my interpretation differs from yours more generally (i.e., where we each stand on the simultaneous/temporal or dual/single system issues, et al), because you appear to be snagged on some really fundamental points, even before we get to the substantive issues debated by modern Marx scholars.
As i side note, i also think it's an horrible and fundamentally dishonest idea to invent new labels (example: socially necessary labor) for already existing concepts (labor used in production in equilibrium).
Part of your problem is that the two parenthetical phrases don't even refer to the same thing. Socially necessary labor time is a social average, not a static equilibrium magnitude.
In a more general sense, I don't see it as "dishonest" at all to invent new labels. The referent is what matters, not the wording. Neologisms can be annoying, but there's nothing inherently wrong with using one word vs. another. Plus, let's face it, Marx was writing well before almost any economist whose name people would recognize these days, so the point is moot.
Even worse is to reuse some old labels that have some clear meaning (example: bourgeoisie) and redefine them to mean something else (exploiter)
I disagree here, as well. Virtually all modern usage of "bourgeoisie" treat it as a sociological category (as did Marx), but even this derives historically from its original context. Interpreting it simply as "exploiter" is simplistic to the point of caricature.
So where i should look at chapter 3? Give me some quotes that clearly refute what i've said.
DeleteAnd about terminology, i correct a little what i've said. Inventing new words for same technical word is bad but not that bad. Misappropriating words like bourgeoisie instead is horribly ugly. It's not a caricature, it's a reality. Here we've taken a word that covers all people living in urban areas and blamed them for world poverty. This is not a small thing.
Delete"Socially necessary labor time is a social average, not a static equilibrium magnitude."
DeleteWhat's difference between average and social average? What's difference between social hours worked and hours worked? I don't see any difference. I understand Marx may have wanted to emphasize holistic point of view, but please don't tell me that these words mean something more or different than their "simpler" cousins.
So where i should look at chapter 3? Give me some quotes that clearly refute what i've said.
DeleteIt's literally right in Section 1.
"But although price, being the exponent of the magnitude of a commodity’s value, is the exponent of its exchange-ratio with money, it does not follow that the exponent of this exchange-ratio is necessarily the exponent of the magnitude of the commodity’s value. Suppose two equal quantities of socially necessary labour to be respectively represented by 1 quarter of wheat and £2 (nearly 1/2 oz. of gold), £2 is the expression in money of the magnitude of the value of the quarter of wheat, or is its price. If now circumstances allow of this price being raised to £3, or compel it to be reduced to £1, then although £1 and £3 may be too small or too great properly to express the magnitude of the wheat’s value; nevertheless they are its prices, for they are, in the first place, the form under which its value appears, i.e., money; and in the second place, the exponents of its exchange-ratio with money. If the conditions of production, in other words, if the productive power of labour remain constant, the same amount of social labour-time must, both before and after the change in price, be expended in the reproduction of a quarter of wheat. This circumstance depends, neither on the will of the wheat producer, nor on that of the owners of other commodities.
"Magnitude of value expresses a relation of social production, it expresses the connexion that necessarily exists between a certain article and the portion of the total labour-time of society required to produce it. As soon as magnitude of value is converted into price, the above necessary relation takes the shape of a more or less accidental exchange-ratio between a single commodity and another, the money-commodity. But this exchange-ratio may express either the real magnitude of that commodity’s value, or the quantity of gold deviating from that value, for which, according to circumstances, it may be parted with. The possibility, therefore, of quantitative incongruity between price and magnitude of value, or the deviation of the former from the latter, is inherent in the price-form itself. This is no defect, but, on the contrary, admirably adapts the price-form to a mode of production whose inherent laws impose themselves only as the mean of apparently lawless irregularities that compensate one another."
Here we've taken a word that covers all people living in urban areas and blamed them for world poverty. This is not a small thing.
That is not what's happened. The referent has changed from city dwellers as such to a sociological/economic class historically derived from the movement from feudal to capitalist society.
"Blamed them for world poverty" is a crass simplification that misses the broader picture. It reduces the whole thing to "this class is bad," which is not at all the point. The beginning of chapter 1 of the communist manifesto even heaps praise on said class. But severe contradictions have become apparent in this class rule. The point is, it's just one more phase in the broader process of human history, of which we are certainly not at the end.
What's difference between average and social average? What's difference between social hours worked and hours worked? I don't see any difference.
The only point is to make it clear that the average is of the broadest sort you can ascertain, rather than confined to a given firm or region. If this is already understood, then fair enough.
"The possibility, therefore, of quantitative incongruity between price and magnitude of value, or the deviation of the former from the latter, is inherent in the price-form itself. This is no defect, but, on the contrary, admirably adapts the price-form to a mode of production whose inherent laws impose themselves only as the mean of apparently lawless irregularities that compensate one another."
DeleteHere Marx does the error that he describes in the footnote. Confuses values (what prices tends to) with average prices. Anyway, no, i don't see any of what you've pasted as contradiction of "my" interpretation. Prices are not identical to values obviously. Otherwise we wouldn't use two different words. Values are attractors, center of gravitation, long term tendency, etc. You can use your favorite classical phrase to say it.
That's not an error; values are not attractors, or tendential prices, in this system. You're thinking of "prices of production," which are distinct from both market prices and values.
DeleteLK quoting Marx - "This common ‘something’ cannot be either a geometrical, a chemical, or any other natural property of commodities. Such properties claim our attention only in so far as they affect the utility of those commodities, make them use-values. But the exchange of commodities is evidently an act characterised by a total abstraction from use-value.” …."
ReplyDeleteLK - “According to Marx’s argument, we must totally abstract from a commodity’s “use value” to determine the ultimate thing that underlies the equality of exchange and what ultimately determines exchange value. “
LK quoting Marx - ““Lastly, nothing can have 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 1906: 48). “
Hey LK – I think what Marx is saying here is not that we, in our analysis, must make the abstraction, but that the exchange of commodities in this mode of production makes this abstraction for us. You cannot realize the use-value of something at the same time as realizing its exchange value – that is to say, you cannot exchange a shovel for a quantity of money while also using the shovel yourself. And in its exchange, you are not concerned with its use-value, only how much of some other thing that it will command (money).
However, in order for a commodity to exist, it must have a use-value itself. There is no contradiction here. A commodity is contingent upon having a use-value, but the use-value is not realized in its exchange.
LK - “Here Marx is actually saying that the amount of abstract socially necessary labour time appropriate for the production of any given commodity is not independent of the market demand for that commodity: market demand will determine the socially necessary labour time for each unit, so that if there is an excess of supply in relation to demand, then the amount of social labour expended in the production of the aggregate output has been too high and some labour time wasted: it is as if all labourers had spent more time than was socially necessary for the production of each unit. “
Please keep in mind that when marx is analyzing the commodity (which he is here – that's what volume 1 is about) he is talking about SOCIAL use-value. He explains this in a paragraph or two (I don't have my copy on hand right now), but then after that just sort of assumes the reader will understand the context when he says “use-value”. He does this with a lot of words, which is why I think it is easy to misread him.
Marx is saying that in order for a commodity to have SNLT AT ALL, not just an amount of it, but AT ALL, it must have a social use-value. This doesn't mean that demand determines amount of SNLT in a unit of 'x' commodity, it just means that demand determines how many units of 'x' commodity are actually socially necessary.
Anyway, I look forward to future critiques you levy against Marx/marxism. It is very interesting. I personally love the work you've done on praxeology.
Marx is saying exactly same thing Ricardo said. His whole Capital is largely a copy of Ricardo with some questionable twists. There is no mystery to be solved. LK should have read some economic theory history to familiarize with terms.
ReplyDeleteSome of the contradictions within Marx's work are problematic, but the way I see it there are three key problems that Marxists have not been able to solve, and that render the labour theory of value unsound:
ReplyDeleteI.)Marxists have proven unable to convert actual, observed concrete labour time into abstract labour time, and proven unable to convert heterogeneous units of concrete labour into homogenous units of 'abstract' labor. Without these conversions there is no way to articulate socially necessary abstract labor, and Marx is left with no universal quantum of value, and so no ability to measure value.
II.)Marxists have proven unable to determine either an a priori or a posteriori basis on which to effectively distinguish between productive workers who create value and unproductive workers who do not.
III.)Even when one grants that there is such a thing as socially necessary abstract labour, Marxists have not been able to find a sound way to 'transform' the socially necessary abstract labour time of workers into money prices. This applies both to the first, analytical, step of the transformation in which one translates labour values into so-called production prices (equilibrium prices in a perfectly competitive capitalist economy) and the second step in which one translates these theoretical production prices into actual market prices. (since a real capitalist economy is rarely if ever perfectly competitive or equilibrated)
Marxists have written thousands of scholarly works attempting to bypass or evade these three hazards, none of them ultimately convincingly putting the issues to rest. I don't envy their task--they have to begin with an ambiguous unit of abstract labour, apply it to a sphere of production which cannot be delineated, and use a dubious and circular method of calculation to convert these labour values into prices. It is hardly surprising that they have failed.
Fortunately they have also produced many good insights in the process of trying to salvage the labour theory of value. Even if, at the end of the day, they have been unable to salvage it. To be honest, they'd all be better off if they jettisoned it entirely and let the insights they make in attempting to save it stand on their own.
"they have also produced many good insights in the process of trying to salvage the labour theory of value"
DeleteSuch as?
I) Well, that's just plain false; it's extremely easy to take averages, and that's all that's being discussed.
DeleteII) I don't see how that's possible, since it's pretty straightforwardly a question of producing value for capital. "Do you work for a wage? Is the output of your work a use-value exchanged for money? Did your firm realize a profit?"
III) The transformation problem only exists for certain interpretations of Marx. Hence why I focus on one that does not encounter it.
You should take a gander at my comments below the last two months' worth of posts. I've been spelling out these issues at length, over and over in the face of the same repetitive charges. The process is often tedious, but still, I soldier on.
(1) so how do you aggregate the labour of a poet, a painter, a doctor, a lawyer, a bricklayer, and bus driver?
DeleteIf we are assuming for the sake of the example that all of those are examples of wage labor employed in the production of a commodity, then you aggregate concrete labors as labor qua labor, measured in units of time. It's the same way you can aggregate Ford Tauruses, Honda Civics, and VW Bugs as "cars." There's no mystery to it; it's just an abstraction, something humans make every day of their lives without issue (until the name "Marx" is attached).
Delete"If we are assuming for the sake of the example that all of those are examples of wage labor employed in the production of a commodity, then you aggregate concrete labors as labor qua labor, measured in units of time."
DeleteThis demonstrates once and for all how you do not even understand Marx's theory. That is not how he thought one could measure SNLT:
"But the value of a commodity represents human labour in the abstract, the expenditure of human labour in general. And just as in society, a general or a banker plays a great part, but mere man, on the other hand, a very shabby part, 1 so here with mere human labour. It is the expenditure of simple labourpower, i.e., of the labour-power which, on an average, apart from any special development, exists in the organism of every ordinary individual. Simple average labour, it is true, varies in character in different countries and at different times, but in a particular society it is given. Skilled labour counts only as simple labour intensified, or rather, as multiplied simple labour, a given quantity of skilled being considered equal to a greater quantity of simple labour.""
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. p. 51.
---------------------
In other words, you cannot simply aggregate raw/concrete labours to get SNLT. Skilled labour -- and indeed all forms of labour from the least to most complex -- needs to be reduced simple labour units and then aggregated.
That's wrong.
DeleteI've already explained that trained labor incorporates the cost of training. Aside from training, licensure fees and other such hoops, there is no magic that makes one hour different from another hour, in the abstract. Differences in training average out in aggregate, as do differences of skill.
To put it simply: You have it exactly backwards. One does not reduce to simple labor and then aggregate; rather, aggregating and averaging are precisely what yield a reduction to simple labor.
Hedlund, defending Marx aggregated labor as you do makes as much sense as defending representative agent not on the ground on practicality but on the ground that there is in reality a single average agent. That is just bullshit.
DeleteHedlund:
Delete"That's wrong.
I've already explained that trained labor incorporates the cost of training. Aside from training, licensure fees and other such hoops, there is no magic that makes one hour different from another hour, in the abstract. Differences in training average out in aggregate, as do differences of skill.
To put it simply: You have it exactly backwards. One does not reduce to simple labor and then aggregate; rather, aggregating and averaging are precisely what yield a reduction to simple labor."
But you run into a problem here, like Hilferding, because when you aggregate you can only account for the hours of training that the worker and his employer *paid* for.
But much of the training that goes on is *free*. It is provided by the household, by culture, by the government. Also, because the economy is rarely if ever in equilibrium, there is no guarantee whatsoever that the education and training procured are transacted at value.
Hedlund, defending Marx aggregated labor as you do makes as much sense as defending representative agent not on the ground on practicality but on the ground that there is in reality a single average agent. That is just bullshit.
Delete...what? That's the strangest thing I've heard in this entire discussion.
If six workers produce an output of {2,2,3,5,6,6} respectively, then they produced an average output of 4 each. Would you scoff at that and go "bullshit! I just read that list and none of those workers produced 4!"
I'm talking about averages, here. Averages. This is stuff we all learned in the earliest years of primary education, and yet some people here seem as spooked by the concept as horses hearing thunder for the first time. It's not magic; just arithmetic.
But you run into a problem here, like Hilferding, because when you aggregate you can only account for the hours of training that the worker and his employer *paid* for.
That's hardly a problem if the system we're setting out to analyze is typified (instantiated, even) by the wage relation. Household labor, for example, is outside the scope of the discussion.
But much of the training that goes on is *free*. It is provided by the household, by culture, by the government.
Yup. But the difference between unpaid labor of the household or personal or customary variety and of the capitalist variety is that the latter still does appear in the system of accounts — as profit. It doesn't just whiff off into the aether.
Also, because the economy is rarely if ever in equilibrium, there is no guarantee whatsoever that the education and training procured are transacted at value.
That's only a relevant concern if you're a dual-system theorist. For a single-system interpretation, the contribution of inputs to output value is not the input value but the input price. That is, when evaluating the value of an output, we consider the new living labor applied, and the value needed to obtain the means of production (i.e., the amount of value contained in the money needed to purchase them).
"That's hardly a problem if the system we're setting out to analyze is typified (instantiated, even) by the wage relation. "
DeleteAnd what does that gibberish even mean??
And what does that gibberish even mean??
DeleteI'd comment on the aggressive tone, but just the fact that you're asking questions means the world to me. :)
Expanding it: the system we're analyzing (i.e., capitalism) is viewed in its basic elemental relations when we view the wage relation. In fact, it is even "instantiated" by it. In other words, it is effectively created as the product of said relation. Capitalism cannot exist independently of the wage relation, and the reproduction of the wage relation is effectively the reproduction of capitalism itself, taking into account the further consideration that capital, in the sense of our analysis, can only exist as many capitals (that is, multiple capitalists independently seeking accumulation, which is the process that results in the emergent "laws" Marx discusses).
[i]II) I don't see how that's possible, since it's pretty straightforwardly a question of producing value for capital. "Do you work for a wage? Is the output of your work a use-value exchanged for money? Did your firm realize a profit?"[/i]
ReplyDeleteYes, that is the Fine and Harris solution, where "only labour which is performed under the control of capital (on the basis of the sale of labour power from workers to capitalists) , and in the sphere of production, is productive."
But that means to identify productive labor we need to identify a.)what constitutes 'production', and b.)which aspects of production come under 'direct control of capital'.
Marxists typically try to distinguish 'production' from other activities by saying that production mediates 'the relationship of society to nature' while circulation and the reproduction of the social order affect historically specific 'relations among human beings'; but in modern markets their distinction remains untenable. Look at the recent economic crisis--the firms at the center of it were Fannie Mae and Freddie Mac, AIG, and large financial institutions. Marxists must hold that these companies/corporations' employees do not create surplus value--they are not 'productive'--because they are dedicated to circulation and not to the mediation between nature and society. Consistency would require the extension of this to R&D, cost accounting, strategic planning and industrial relations. But all of these processes, these companies and the credit system they use allocate the resources to 'productive' corporations that allow for the very process of production to operate in the first place! The crisis proves it--the collapse of these supposedly 'unproductive' financial institutions completely rearranged society's relationship with nature. How could they *not* be part of the system of production in the face of this fact? How could their employees not create surplus value?
[i]I) Well, that's just plain false; it's extremely easy to take averages, and that's all that's being discussed.[/i]
Averages are all well and good, but how do you quantify abstract labour,? Marx attempted to make it possible by falling back on a distinction between skilled and unskilled labor. He equated abstract labour with unskilled labour, and claimed that skilled labour was simply unskilled labour intensified or 'multiplied'. But the use of this distinction contradicts Marx's basic assumption--'skilled' and 'unskilled' labour are two kinds of concrete labour that belong to the *qualitative* sphere of use value. Yet Marx claims that labour skills are related to each other *quantitatively* and that this relationship is, in point of fact, the very basis for value itself.
The problem persists even if one grants him this parity. In cases where a commodity is produced entirely by unskilled labor we could count up the number of abstract labour hours required to make it. But how do we do this in the case of skilled labour? Marxists have tried to do so by counting the number of labour hours put into training an unskilled laborer into a skilled one, but they always run into the problem of being unable to specify the process of 'producing' the skill. Skills are developed not only though on-the-job learning, but cultural influences, personal training, education, etc. These are all complex, 'joint' activities that can't be broken down into simple labor hours.
Consistency would require the extension of this to R&D, cost accounting, strategic planning and industrial relations.
DeleteNot necessarily! It's all about the relationship to capital and the process of accumulation. Remember: this is all from capital's perspective. For example, bookkeepers, dealing with changes in titles of ownership and related tasks, are much of the time "unproductive," true, but if that same person were employed by a firm that provided bookkeeping services to other capitalists, at a profit, then that would be productive, as the labor has specifically become commodified.
The question of "is it/isn't it commodified?" is the golden rule of this issue.
But all of these processes, these companies and the credit system they use allocate the resources to 'productive' corporations that allow for the very process of production to operate in the first place! The crisis proves it--the collapse of these supposedly 'unproductive' financial institutions completely rearranged society's relationship with nature. How could they *not* be part of the system of production in the face of this fact? How could their employees not create surplus value?
First of all, I appreciate this thoughtful question!
The point is not so much that financial institutions produce surplus value (they don't), but that they are the apparatus of control of the economy. That's a consequence of the relations of private property, and a consistent point in Marx is that mere ownership (and the social control that flows from it) does not suffice to create value. A society that does not produce, does not reproduce itself, regardless of who happens to sit at the head of the table. Just as a feudal lord with all the stamped writs and vested authority in the world is nothing without serfs, bankers are nothing without industrial capitalists, who in turn are nothing without workers. (Workers organizing themselves, however, can proceed just fine!)
Averages are all well and good, but how do you quantify abstract labour,?
Hours, days, any temporal unit. Take your pick. But I'll let you get to your point:
'skilled' and 'unskilled' labour are two kinds of concrete labour that belong to the *qualitative* sphere of use value. Yet Marx claims that labour skills are related to each other *quantitatively* and that this relationship is, in point of fact, the very basis for value itself
Not necessarily. A master glassblower might work at ten times the rate of a novice. That's a pure quantitative relation of skill.
To the extent that a doctor's labor is more valuable than that of a bricklayer, it must be borne in mind that one cannot be a doctor without a certain amount of (expensive) training, licensing, insuring, etc. A doctor may also be more or less skilled than another doctor. However, to the extent that an absolute novice doctor can be related to an absolute novice bricklayer, it is by the difference of the costs of training (and thus producing) that kind of labor.
Marxists have tried to do so by counting the number of labour hours put into training an unskilled laborer into a skilled one, but they always run into the problem of being unable to specify the process of 'producing' the skill.
A single-system interpretation, again, would judge it on costs. For perspective: A capitalist's account only sees the final $ figure for the means of production, irrespective of the breakdown of costs of the firm that produced it.
Thus, aggregate labor-hours and aggregate realized money price (via the agg price/value equality) still suffice to yield the raw figures for calculating the relevant averages.
"Not necessarily. A master glassblower might work at ten times the rate of a novice. That's a pure quantitative relation of skill."
DeleteBut it is equally possible they work at half the rate of the novice but produce something twice as profitable for the capitalist due to their 'masterful' skill. So one cannot objectively quantify that qualitative distinction into abstract labor hours.
"A doctor may also be more or less skilled than another doctor. However, to the extent that an absolute novice doctor can be related to an absolute novice bricklayer, it is by the difference of the costs of training (and thus producing) that kind of labor."
But the point at which a 'novice' becomes something more than a 'novice' is also a qualitative distinction, and there is, again, no *objective* measure by which that qualitative distinction can be quantified into abstract labor hours.
"A single-system interpretation, again, would judge it on costs.
Thus, aggregate labor-hours and aggregate realized money price (via the agg price/value equality) still suffice to yield the raw figures for calculating the relevant averages."
But as mentioned before, because not all of the training that bears on the development of the skill is paid for, costs prove insufficient to determine how many labor hours are involved in the final dollar figure for the means of production. If a worker, hoping to move up in a company, goes home and engages in self-directed training--say by reading a guide on how to develop his skills on his own time, practicing his skill set, or other autodidactic activities--he may return more skilled than before. This augmentation of his skill set still bears on profitability--it may produce more value and more profit for the capitalist. Yet the labor hours he has spent training himself, though yielding more profit and more value for the capitalist, will not appear as a cost and will not be priced into the final dollar figure of the means of production. This ultimately makes it impossible to assign a definite value that corresponds to the money price, and so makes the LTV untenable.
"The point is not so much that financial institutions produce surplus value (they don't), but that they are the apparatus of control of the economy."
This does not solve the problem, however. The problem is that you cannot meaningfully separate certain aspects of activities that involve the redistribution of ownership from aspects that guide reproduction. Take things like insurance, which Marxists classify as purely redistributional. Yes, they do redistribute ownership claims, but insurance--and by extension insurance salesman, analysts, etc.--also helps lower uncertainty in the production process, which is a crucial part of the production process itself, and thus, according to the Marxist, something that creates surplus value. Without the ability to make these distinctions, 'productive' and 'unproductive' activities cannot be meaningfully distinguished. Marxists would certainly not call AIG a 'productive' institution that 'creates surplus value'; but if AIG helps lower uncertainty in the production process for the firms it insures, even if only for a certain period, how can it be called 'unproductive'? And, again, if you cannot separate the unproductive from the productive, you cannot ultimately identify and determine what counts as abstract labor, thus leaving the LTV without its basic particle.
Von Minsky, I hope you don't mind, but I've summarized the sections I'm replying to instead of quoting, since this 4,096-character limit is murder.
Delete[half as fast, twice as profitable]
Sure, you can quantify it. The whole point of abstraction is to bridge gaps of precisely this sort.
If you're considering it a separate use-value, and thus a separate commodity, then the exact same procedure applies. I say this every so often but it must be remembered: "Consider this from the perspective of capital." In a capitalist's accounts, it does not matter what use-value is being considered. It's still $X input plus $Y labor that yields $Z output.
[novices vs experts as a qualitative distinction]
It's definitely quantifiable. It involves averages, and their output relative to those averages. There is a tendency among modern readers to kind of twist the precise point at which quality and quantity diverge — perhaps a sort of Platonist tic? When we say 'novice,' we just mean the average person with no experience in a given craft. But in fact, there is no abstract "average" composite human, and a given novice will probably perform better or worse than other novices. As such, billing the distinction between novice and non-novice status is less a question of hard, ideal categories, and more of a continuum. It's the difference between seeing blue and green next to one another on a palette, and looking at a gradient shift from blue to green and trying to point out the exact place where "now" it's teal. It's not so straightforward.
But the quantitative relationships between time and output can be measured regardless of what arbitrary skill designation we apply.
[worker trains self, free to the capitalist, will not appear in avg. training cost]
In your example, by training outside of the economic sphere, it appears to the capitalist that something for nothing has been gained (since the training happened out of view -- out of the whole sphere, in fact). Thus, they're getting an exceptional deal, a lot of bang for his or her buck. The way we evaluate such bang/buck ratios is in terms of averages. Whenever we speak of "opportunity costs," there is often an implicit consideration of what the "typical" outcome of one strategy over another.
You probably see where I'm going with this, but I'll wrap it anyway: the fact that one's mileage may vary is of no real bearing to this analysis, since averages remain averages. One person training himself may adjust that average imperceptibly, such that he's still a great deal. If literally every prospective candidate has spent a great deal of time training himself, then as far as capital is concerned, the average cost of training itself is lower, such that suddenly one doesn't seem so obviously great a deal over the other.
[you cannot meaningfully separate ownership questions from production]
Yes, you most certainly can. One does not consume uncertainty. Those things that one does consume need to be produced -- via useful labor. And in order for capitalists to accumulate, said useful labor must also be deployed towards the production of surplus value, i.e., it must be remunerated less than it has created. It's really no more complicated than that.
Insurance, in your example, is still merely shifting around claims. If a capitalist won't pursue an investment because it seems too risky without insurance, that's still ultimately a question of ownership dictating control on the basis of profit, which is an altogether separate consideration from the actual labor process. And nor, accordingly, does insurance create surplus value (though it may contribute to determining what fields in which a capitalist may choose to pursue profit and therefore surplus value).
ReplyDelete"One does not consume uncertainty."
Neither does one 'consume' time, but time is nonetheless part of the process of production. Similarly, the production of the things we do consume is concretely effected guided by the level of uncertainty involved in the production process--there is no hard line that separates the former from the latter.
"If a capitalist won't pursue an investment because it seems too risky without insurance, that's still ultimately a question of ownership dictating control on the basis of profit, which is an altogether separate consideration from the actual labor process."
But differences in insurance policies may also cause the capitalist to alter the way he structures production, the number of laborers he uses, where he builds his factory and what machines he uses, how he manages his costs--it all gets built into the "process by which the things people consume are made". I still don't see by what *objective* criteria you can say something like insurance belongs definitively to 'circulation' and NOT 'production'; you've provided only subjective criteria here, which are not the basis for a scientific theory delineating the production process.
" Those things that one does consume need to be produced -- via useful labor. And in order for capitalists to accumulate, said useful labor must also be deployed towards the production of surplus value, i.e., it must be remunerated less than it has created. It's really no more complicated than that."
"Consider this from the perspective of capital." In a capitalist's accounts, it does not matter what use-value is being considered. It's still $X input plus $Y labor that yields $Z output."
Perhaps we're coming to the heart of the problem here: if you're going to articulate the LTV in this way, it doesn't make much sense to think of it as a theory of value. It is not a scientific theory in the sense that cause x (value) explains effect y (price). You're just asserting labor creates all value, then coupling that with the truism that current money prices are the sum of past money prices plus a deviation. You don't even need information on labor to do the relevant computations--only information on the money wages paid to workers.