Saturday, May 30, 2015

Karl Popper on the Labour Theory of Value

Karl Popper in The Open Society and its Enemies (vol. 2) makes a very interesting point about Marx’s labour theory of value:
The strange thing about the value theory is that it considers human labour as fundamentally different from all other processes in nature, for example, from the labour of animals. This shows clearly that the theory is based ultimately upon a moral theory, the doctrine that human suffering and a human lifetime spent is a thing fundamentally different from all natural processes. We can call this the doctrine of the holiness of human labour. Now I do not deny that this theory is right in the moral sense; that is to say, that we should act according to it. But I also think that an economic analysis should not be based upon a moral or metaphysical or religious doctrine of which the holder is unconscious. Marx who, as we shall see in chapter 22, did not consciously believe in a humanitarian morality, or who repressed such beliefs, was building upon a moralistic basis where he did not suspect it—in his abstract theory of value. This is, of course, connected with his essentialism: the essence of all social and economic relations is human labour.” (Popper 1949: 329, n. 24).
And we can go on and say: from an economic perspective the labour theory of value – if it really is meant to be an empirical concept – is empirically unsupported and untenable.

If we consider a given array of factor inputs used in a production process, what can transform those factor inputs into an output commodity that can fetch a price on a market? The following factors:
(1) some type of labour to transform the factor inputs into an output commodity, and

(2) a demand for the output commodity and a person or people willing to buy it.
But is free human wage labour the only thing that can fulfil (1)? It is clearly not.

We have a number of sources of labour power as follows:
Types of Labour Power

(1) slaves;

(2) free human wage labour;

(3) animal labour;

(4) machines powered by forces of nature (e.g., wind driving a wind-mill or water driving a water wheel) or machines and robots powered by natural forces produced by human technology (e.g., steam or electricity).
You can produce commodities that fetch money profits by methods (1), (3) and (4) and clearly Marx’s nebulous labour value and surplus labour value are not necessary conditions for either production of commodities or monetary profits.

In fact, animals are a much underrated source of labour power: right into the early 20th century animal labour power was a fundamental source of labour even in advanced capitalist economies (think here of horse power used in transportation and farming). Even today all over the developing capitalist world animal labour is very important, just as it was in the 19th century.

What is more, as production becomes more and more automated by machines, robots and artificial intelligence, we could easily imagine a world in which capitalism continues and money profits continue, but human labour falls towards zero. So where, if surplus labour value is the source of money profit, would profit come from in such a world? Of course, this is just a pseudo-problem because the labour theory of value is false and does not explain profits in the first place.

In short, the Marxist labour theory of value makes a fetish of free human labour power, and, as Popper argued, probably as a moral idea, not as a meaningful and justifiable economic concept.

BIBLIOGRAPHY
Popper, Karl Raimund. 1949. The Open Society and its Enemies, Volume 2. Routledge & K. Paul, London.

63 comments:

  1. brilliant. Popper is spot on again. In my view, Marx never was an economist, but a moral philosopher, and not even a good one for that matter. In fact, Adam Smith was a bette

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  2. Actually things stand right the other way, KM has been the greatest economist since ever, of a science which is a moral science.
    The labor theory is not false since KM would know perfectly that the organic composition of capital is not the same along different industries, so the capitalists must be communist and share proportionally the plus-value.
    Lol, you can imagine a world where labor tends toward zero and it just means that its productivity is very high, however, most will tend to get zero income in that medieval capitalism.
    Last but not least capitalism is a social relation for KM.
    You can get a surplus in other way of production, but his moral standing demands a pro quota for everybody.
    Maiko

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  3. The ought-is (sic) fallacy.

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  4. LOL. I have never read such bad interpretation of Marx's theory. Let's even say that he believes that human labor is somehow fundamental. Why the hell would that mean that it is a moral theory?! Marx believes that human labor is as natural as any other process, but there is also a social dimension of human labor, because we are social, intentional beings, while animals are not. Popper doesn't understand that distinction. Human labor is at the same time natural and social. Animal labor won't give any profits without human labor, animal labor has to be organized somehow, the same is with machines. Do animals sell their labor power freely on the market? Just by themselves, as human do? Machines in Marx's theory are DEAD labor and they still need some live labor, to make any profit. MC

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    1. "there is also a social dimension of human labor, because we are social, intentional beings, while animals are not"

      So you are so stupid and ignorant you actually believe no animals are social beings with intentions? No animals can have an intention to do anything?

      "Animal labor won't give any profits without human labor"

      So what?

      We could think of a world with labour virtually all done by machines and where governments maintain aggregate demand (and hence demand for capitalist output) and where money profits continue to exist. So if money profits come from surplus labour value where would money profits come from in such a world?

      "Do animals sell their labor power freely on the market?"

      No. So what? Slaves do not sell their labour either: But a slave economy can create commodities where money profits exist.

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    2. LK, good lord,i thought this LTV discussion was pre-discussed in and out and settled already in the 1960-70s.But just as a little curiosity LK, did you know that, even Joe Stalin rejected the LTV, as "speculative methaphysic"? Infact he did. It was Oscar Lange, who during his time as a mediator between the US-Soviet were trusted on economic issues, by Stalin, that convinced him of flaws of LTV. I don´t have the source here right off the bat,but i should try find it.

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  5. "So you are so stupid and ignorant you actually believe no animals are social beings with intentions? No animals can have an intention to do anything?"

    You are so full of yourself. Do animals transform nature in a purposive and intentional way as we do? No. Simple answer. Do they have as complicated social relations as we do? Do they discuss like we do? Do they understand the concept of "labor"? There are tons of philosophers who share my view (R. Brandom for instance).

    "So what?"

    So it means your argument is wrong. Animal labor requires human labor. Just as fixed capital needs variable capital.

    "We could think of a world with labour virtually all done by machines and where governments maintain aggregate demand (and hence demand for capitalist output) and where money profits continue to exist."

    We could think of many different things. Who will construct these machines? Who will command them? There is some amount of human labor needed anyway.

    "No. So what? Slaves do not sell their labour either: But a slave economy can create commodities where money profits exist."

    If the economy is based only on the slave labor it is not a capitalistic economy. In that kind of economy there is no surplus value.

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    1. "Do animals transform nature in a purposive and intentional way as we do? "

      For christ's sake, have you never seen beavers building a dam in a nature documentary? Gorillas construct nests for sleeping in? Ants construct ant hills? Bees build hives?

      That animals do not think in language or understand labour as we do or have wage labour for money (all true) still does not vindicate the LTV.

      "Who will construct these machines? Who will command them? There is some amount of human labor needed anyway."

      In a society with a sophisticated enough science and technology, machines could easily construct and even design other machines.

      Humans may give orders and have some small labour to do but you haven't answered my question: where would money profits come from in such a world?

      "If the economy is based only on the slave labor it is not a capitalistic economy."

      lol.. yet profits exist, and profits are supposed to be explained by surplus labour value. Your Marxism claptrap has zero explanatory power.

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    2. That animals do not think in language or understand labour as we do or have wage labour for money (all true) still does not vindicate the LTV.

      Hint: 'value' to ants and to beavers, insofar as we'll assume they have an internal syntax capable of constructing it as a concept, is different from 'value' to a capitalist.

      I wonder what sequence of words will finally make this point click for you.

      lol.. yet profits exist

      ...You assert, of the characteristics of the ahistorical utopia you've posited.

      "B-but, I can IMAGINE it! Easily!"

      Sorry, boss. That's not an argument.

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    3. "Sorry, boss. That's not an argument."

      Yes, it is. Counterfactuals are a valid way to test theories and their implications.

      And not one of you could answer my question: where would money profits come from in such a world?

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    4. "For christ's sake, have you never seen beavers building a dam in a nature documentary? Gorillas construct nests for sleeping in? Ants construct ant hills? Bees build hives?"

      Here is Marx's quote:
      But what distinguishes the worst architect from the best of bees is this, that the architect raises his structure in imagination before he erects it in reality. At the end of every labour-process, we get a result that already existed in the imagination of the labourer at its commencement. He not only effects a change of form in the material on which he works, but he also realises a purpose of his own that gives the law to his modus operandi, and to which he must subordinate his will. And this subordination is no mere momentary act.

      So yes, for Marx there is a fundamental difference in human labor and the rest. Marx was a very German philosopher in that matter. Marx treated labor as a way of interacting with nature and we do this in a creative way, much more creative than animals. It doesn’t mean that human are better in some ontological way (that’s Popper’s and yours stupid conclusion about holiness).

      "Humans may give orders and have some small labour to do but you haven't answered my question: where would money profits come from in such a world?"

      Probably that small amount of human creative labor or machines' creative capacities, which would transform dead labor.

      "yet profits exist, and profits are supposed to be explained by surplus labour value"

      It depends on what you mean by slave economy. In general it is possible that slaves produce surplus value and profit is derived from that. There are some Marxists (Value Form Theory), who would say that only in capitalism that kind of profit (derived from surplus *value*) is possible, they would probably say that in ancient Rome (which was a slave economy) profit was derived directly from surplus labor.
      MC

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    5. Yes, it is. Counterfactuals are a valid way to test theories and their implications.

      I love counterfactuals — historically grounded ones. Yours is more of the order of "what if instead of up from the ground, trees grew downward from the bottoms of clouds?" Can you spell out for us how we get from point A to point B, as it were? The economic process by which capitalism is retained, and much of the labor force is retired, but mass pauperization is not the norm? Because we've had some two centuries of history to draw upon. Aside from some hard-won legal gains, which are constantly in danger of being scaled back, built by an aggressive and organized worker movement that in many cases no longer exists, we have no sign that there's a tendency towards any such thing. If anything, where not shaken by crisis, labor force participation has trended upward in recent history.

      The only historically grounded interpretation of "most of the labor under capitalism will be performed by machines" is the second reading I presented below, and that one does not obviously make the case you wish it to. The class struggle would be quite clear, as the world would be divided into people on the dole and an owning class. The latter would fight to make the dole as small as possible, and given all we know about the disproportionate power money commands in politics, it would just be a matter of time until the aforementioned pauperization sets in.

      Or, if I'm wrong, and the threat of such is enough to mobilize the dole-class, then it is equally probable to suppose that, the opposite would happen. The class of capitalists would be a class of inheritors of great wealth, and if our dole-class sees no reason to remain irrationally beholden to the privileged few, there's ample reason to suspect they'd dispossess this new aristocracy and socialize the fruits of society's collective effort.

      So like, you need to give us more than "assume the thing I need prove is the case." That's the very definition of begging the question.

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    6. "The economic process by which capitalism is retained, and much of the labor force is retired, but mass pauperization is not the norm?"

      I've already told you below: through a government guaranteed minimal income (say, $40,000) and transfer payments to people who lack inherited wealth or money savings. Since we already have pensions and some counties have extensive welfare systems, the fact that you think such a world is impossible only demonstrates how fanatically and unreasonably dogmatic you are mired as you are in your Marxist cult.

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    7. First of all, disappointing to see you're still willing to take the low road with your insulting rhetoric. I'll add it to the list of remarks for which I'll never get an apology, because you have never spared a thought for decency from the moment our points of view diverged. As you may recall, up until you began bungling Marx, our discussions over the years had been marked by cordial commonality. But the moment I step out of your preferred boundaries, you throw a fit and hurl invective predicated on misunderstanding. Frankly, your animosity towards pluralism is far more severely dogmatic than my views have ever been nor could ever be.

      With that unpleasant business out of the way...

      You're taking an awful lot for granted. For one thing, that such programs won't ever be whittled away from years and years of political pressure from the owning class. Has the slow death of social democracy in the grip of neoliberal doctrine in the last 30-40 years meant nothing at all to you? Nor the fact that the greatest gains of the labor movement (such as the five-day workweek) were the result of direct action by labor rather than reformist twiddling? Moreover, the first world's high standard of living owes in no small portion to the exploitation of the third world. Zak Cope illustrates that in 2009, roughly 1/6 of the OECD nations' income can be traced to uncompensated value transfers from non-OECD nations. Nations like Norway would not be able to sustain their levels of consumption without this imperialist trade gain.

      You can't just assume a social program into being, let alone its existence in perpetuity; you've got to start with reference to the real conditions of the world. (Oops, is that a cultic remark?)

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    8. "Zak Cope illustrates that in 2009, roughly 1/6 of the OECD nations' income can be traced to uncompensated value transfers from non-OECD nations"

      You mean assume as true (labour value) the very thing you have failed to prove? lol

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    9. "You can't just assume a social program into being, let alone its existence in perpetuity;

      First of all, an abstract counterfactual is entirely valid as long as it does not violate the laws of logic (e..g, the law of non contradiction).

      Secondly, as I have said, it is empirically probable that such a world I have describe could arise, even if it **might**, once established, come under right-wing or neoliberal political attack. But that is a separate issue.

      But you are so obviously dogmatic you will not answer the question: in the world I imagine, where would money profit come from? Your answer is incoherent.

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    10. You mean assume as true (labour value) the very thing you have failed to prove? lol

      No, not assumed; measured. It's like assuming, just with evidence. I can see how you might miss that distinction.

      And, as always, it falls to me to remind you for the zillionth time that the thing to be "proved" is not the method of the theory (which is, pleonastically, a method and not a hypothesis). If you don't understand it, do me a favor and at least pretend you do. You've illustrated here that you have a fantastical imagination, so why not put it to use?

      First of all, an abstract counterfactual is entirely valid as long as it does not violate the laws of logic (e..g, the law of non contradiction).

      I've argued that it does exactly this, though. You wish it to possess the structure of the capitalist world economy without the capitalist mode of production, when the former is the direct consequence of the latter. When I ask you how this might be either attainable or sustainable, you fall silent, beyond some vague "give everyone 40k" scheme (how would you implement this? what about the pushback from people with power? would this necessitate the workforce already being shed, or would this enable it? how would you enforce it in the long term or at least maintain its value amid a shrinking social surplus? Or would we already need to have a fully automated economy? How do we get that?).

      Secondly, as I have said, it is empirically probable that such a world I have describe could arise

      Empirically? Then you can back this assertion somehow?

      No?

      Okay, then.

      even if it **might**, once established, come under right-wing or neoliberal political attack

      So what you're saying is, you're pitching an unstable and untenable social order that is little more than a transitional point to something else (arguably cutting the public dole until people are once more forced to find work somehow -- i.e., a restoration of capitalism more in line with the status quo). And this assumes we can even illustrate how to reach it, which so far we cannot.

      Odd, when you were talking about imagining a hypothetical economy, one would think you were at least referring to something capable of reproducing itself.

      But you are so obviously dogmatic you will not answer the question: in the world I imagine, where would money profit come from? Your answer is incoherent.

      Hm. Which is it? Didn't answer, or didn't answer well? You appear confused.

      I, however, am not, and I don't believe it's either. I've given you a historically grounded answer based on a consistent analysis, and if you reject it out of hand, that's your business. It's no great leap to suggest that in an economy where 99.9999% of expenses are capital expenses, the rate of (net) profit would barely register as a blip. You don't need to be a Marxist to notice the fall in the rate of profit; even Deloitte's 2013 Shift Index devoted space to the problem.

      If I'm not imagining your idealist fantasy hard enough with my insistence on dull old realist materialism, then that's unfortunate, but I'm not here to visit with unicorns on floating kingdoms.

      What's particularly interesting here is that, far from not answering the question of where profit would come from, I am in fact the only one of the two of us who has. By all means, pitch me your counter theory. Not that we can test your Cloud City Hypothesis, but we may as well lay our cards on the table, no?

      Please, be thorough. Leave no question begged.

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    11. "I've argued that it does exactly this, though. "

      Rubbish. In fact, you've now demonstrated that you very probably do not even understand the laws of logic.

      The laws of logic/thought:
      (1) the Law of Identity
      any entity x is identical with itself (or x = x). With respect to propositions, it means that, if a proposition p is true, then it is true (or p → p).

      (2) Law of Noncontradiction
      One cannot assert as true a proposition p and its negation at the same time (or p ∧ ¬p is false).

      (3) the Law of Excluded Middle
      Every meaningful proposition is either true or false. There is no third option: p ∨ ¬p must be true.

      Tell me how my counterfactual violates these laws.

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    12. "Empirically? Then you can back this assertion somehow?"

      I did before: I mentioned how people have built societies with strong welfare states (think Sweden in its heyday or the UK under Attlee), despite opposition from the right and laissez faire liberals.

      It is entirely probable that with the intense drive to automation and revived strong left wing movements that a welfare state of type I envision could be built in advanced economies in the future.

      You just refuse to engage with the counterfactual.

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    13. "So what you're saying is, you're pitching an unstable and untenable social order that is little more than a transitional point to something else (arguably cutting the public dole until people are once more forced to find work somehow -"etc.

      I said so such thing you fool.

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    14. "It's no great leap to suggest that in an economy where 99.9999% of expenses are capital expenses, the rate of (net) profit would barely register as a blip. "

      Garbage. As long as the government maintains aggregate demand and money incomes and economic growth, there is no logical or empirical reason why money profits would not continue.

      Also, with the deflation that would happen as costs fall with automation, one woudl have to look at inflation adjusted real profits.

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    15. Tell me how my counterfactual violates these laws.

      Well apart from the fact that you want a non-capitalist capitalist economy (which is already a P&-P situation), you're using static logic to address a temporal contradiction. Think dialectically for once, and examine causes and effects, powers and tendencies, and the way they interact. Introduce TIME into your weird, static considerations! I've already pointed out all the ways that your example is untenable. And you defend this idea on, what, the law of noncontradiction? Seriously? "Space gorillas sip Earl Grey poured from Russell's Teapot" is a valid proposition by that criterion. That's not enough, not by a long shot.

      Seriously, think about how silly your supposition is. You'd sooner imagine nixing the relations of production altogether than changing them in a humane way. You're using an utterly improbable, still unexplained Rube Goldbergian superstructure to retain capitalism beyond its modal existence, in this case characterized by constant, aggressive movements to safeguard the rights of non-owners instead of just removing the internal contradictions that result in those rights being threatened in the first place.

      You're the sort of guy who'd see his sprinkler floods his lawn every time it goes off, and decide that instead of just replacing it with a newer model, it would make more sense to stand by with a pump near the storm grate every day. Problem is, you need to maintain a high level of vigilance, and sooner or later, being human, you'll falter and your lawn will die. It's far more sensible to just repair the problem.

      LK, serious question: Are you a member of the Cold War generation? If you are, then please just tell me. It would save a lot of frustration.

      Garbage. As long as the government maintains aggregate demand and money incomes and economic growth, there is no logical or empirical reason why money profits would not continue.

      So, pure "vertical" money creation at full capacity utilization, JUST to inflate minuscule profits in the face of ever expanding constant capital relative to variable, and keep the owners happy? And you call it "democracy," huh?

      Probably won't work so well for the non-owners. How does that sit with you? My prediction is that you don't particularly mind, so long as there's no dirty socialists rooting about for egalitarianism. Based on the extent to which you'll entertain nonsense to avoid that, I suspect this is a scratch-a-liberal-find-a-reactionary situation.

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    16. "you're using static logic to address a temporal contradiction. Think dialectically for once, and examine causes and effects, powers and tendencies, and the way they interact. Introduce TIME into your weird, static considerations! etc."

      This is gibberish. You've confirmed you do not understand the laws of thought.

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    17. I mentioned this theory once before. MF used to be a Marxist so is conversant with the jargon. Doesn't Hedlund remind you of MF? With the same solid grasp of empricism and logic?

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    18. You're low, Ken.

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  6. I'm glad to see some other people stepping up to call shenanigans.

    As the above commenters have pointed out, (1), (3), & (4) are all things that are specifically and wholly owned, and used until they are spent. A wage laborer is not owned, but must be sought out and reasoned with, ultimately arriving at a "fair" payment for their laboring capacity for a limited time. This relation is what enforces the law of value as an emergent effect. It's nothing about labor that's "magic" or "moral" or "mysterious" or whatever other M-word you care to bring up. It's the relations that are key! I'm certain I've said this like a hundred times by now, but it's not clear to me you've ever paused to consider what might be meant by this, since it tends to get glossed over in your posts when you go back to pondering the question of labor in isolation. Marx could not have been clearer that the fundamental units of his analysis are relations.

    You remember the classic trick for figuring out how to split a piece of cake fairly between two children, each concerned they won't get as large a portion as the other? You say to one child, "you cut it," and to the other one "you get first pick of halves." They'll probably get out a ruler. It's not how careful, thoughtful, steady-handed or greedy either child is, but how they are brought into relation that makes this situation work.

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    1. " A wage laborer is not owned, but must be sought out and reasoned with, ultimately arriving at a "fair" payment for their laboring capacity for a limited time."

      And yet you have already admitted in previous comments that slaves -- human beings who are owned -- CAN rent their labour (and there are real historical instances of it), so being owned and sought out cannot be the relevant differences between slaves and free labourers.

      Just because a person is paid a wage to work, it does not follow that they create some labour value in commodities or that alleged value explains price.

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    2. And yet you have already admitted in previous comments that slaves -- human beings who are owned -- CAN rent their labour (and there are real historical instances of it), so being owned and sought out cannot be the relevant differences between slaves and free labourers.

      Yes, and you still appear to miss what a silly argument that is. If a slave gets some time off from slaving with which to go work for a wage, then that productive relation at that time is wage labor and not slavery. I'm not even sure what's tripping you up about this. It's fantastically straightforward.

      Just because a person is paid a wage to work, it does not follow that they create some labour value in commodities or that alleged value explains price.

      Once again, you're looking at the laborer in isolation. Consider the relation holistically. If the person who paid the laborer is a capitalist, then why specifically did they purchase labor-power? What's the goal that characterizes the whole nature of the relationship?

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    3. Hedlund, it seems to me at that point we're kind of just playing a semantic game--in that case one can argue you're merely displacing the 'moral' and 'mysticist' view of labor in isolation onto the labor relation. You are, in effect saying there is something special about the labor relation that creates value, and no other relation that plays a role in the process of production can create value in the same way. What is the scientific foundation of that assertion? What excludes, say, the relation between the capitalist who commissions the production process and other capitalists with which he competes or colludes from creating value? Or the relation between the capitalist and the government officials who enforce his contracts and erect the laws and regulations that condition how he can carry out production? It seems to me your designation of the labor relation as the sole value-creating element of the production process is still arbitrary.

      The same point can be made in regards to slavery. What principle objectively stipulates in a non-arbitrary fashion that the relationship between a slave and his master--and let's say this master is a capitalist--cannot create value for the master? Indeed, it seems rather absurd to me that, for example, you can seriously say that the price of slaves during the era of American slavery had no impact on the pricing of the goods American slaveowning capitalists used their slaves to create, since it factored directly into the cost of production. The more expensive the slaves, the more expensive it was for the owner of the slave plantation to produce his goods for sale on the market.

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    4. It seems to me your designation of the labor relation as the sole value-creating element of the production process is still arbitrary.

      I'm not sure how this is possible to argue. All of those relations you just rattled off depend upon production. In order to compete, you've got to have markets; in order to have markets, you need to have products; in order to have products, you need production, and thus labor. Etc. These other relations all determine claims upon product, but claims must be redeemable to be worth anything. Or, put far more simply: you cannot consume what has not been produced. It's the elementary, materialist point at the heart of this whole analysis, and it's a point I've made before.

      Indeed, it seems rather absurd to me that, for example, you can seriously say that the price of slaves during the era of American slavery had no impact on the pricing of the goods American slaveowning capitalists used their slaves to create, since it factored directly into the cost of production.

      Show me where I've made this claim.

      The claim I recall having made is that slaves are treated as means of production, not labor. And as you may be aware, more expensive inputs (whether machines, raw inputs, or even slaves) do tend to result in to more expensive output. You've switched mid-paragraph from discussing value to discussing price, so I'm not really sure what point you're trying to make. I've been very detailed in my previous examinations of the slaves/value question, though, so if you go back through previous posts and ctrl+F for "slave," you should find it before too long.

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    5. "I'm not sure how this is possible to argue. All of those relations you just rattled off depend upon production."

      Indeed, but they are part of the production process as well--and the wage relation *also* depends upon production. It cannot exist, much less have its magnitude determined, without it, as I'm sure you can agree.

      The relations I mentioned do not 'only' determine claims on product. The process of production--both in aggregate and at the level of each individual capitalist's production enterprise--in a market where 10,000 capitalists are in a frenzied process of competing profits away with each other is going to look different than the process of production in a market where 3 to 4 capitalists are competing with each other in a sluggish oligopoly. Products will be made differently using different arrangements of machines and laborers due to a variety of effects of having a 'crowded' vs 'oligopolistic' number of competing capitalists. Likewise, if government regulation outlaws certain kinds of production practices--say laws requiring machines with certain safety standards to be used rather than machines deemed 'unsafe', each with differing costs and levels of productivity--the production process will look different and operate differently than if such regulations were removed. To say these relations are *not* built into the process by which we 'produce what we consume' ignores such realities.

      "The claim I recall having made is that slaves are treated as means of production, not labor."

      But, problematically, the slave walks, talks, acts and does all the things that laborers do--only they don't get paid wages. They enter into social relations. More importantly, they can work slowly, inefficiently, and not very productively, or they can work quickly, efficiently and very productively. They do not have the consistency of machines. And so they may produce more or less for the capitalist depending on how productive they are; they may be treated differently at a social level depending on how productive they are. This is not the hallmark of constant capital--these are the qualities of variable capital. What bars them, given that they are laboring human beings, from creating new value? That the capitalist may treat laboring human beings as something else during the production does not make them something else; indeed, if the heart of your analysis is to be strictly materialist, this is fairly straightforward.

      If you are going to respond by saying that what bars them from creating value is that they are not paid in wages, then we end up with circularity and the LTV ceases to be a 'theory of value'--because it ceases to be a scientific theory in the sense that 'cause x (value) explains effect y (price)'. Indeed, at that point and from that perspective you wouldn't even need to know anything about the laborers involved in production, only the money price paid to them in wages. What kind of *labor* theory of value needs no information on laborers? Marx's theory merely becomes a tautology that asserts all value is created by labor, then couples that assertion with the truism that all money prices are determined by past money prices plus a deviation. It's not even all that different from the neoclassical assertion that the quantity of capital is defined by its price and the marginal product of labor by the wage rate.

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    6. [10,000 capitalists w/ competition vs 3 oligopolists]

      You're talking about the rate of adoption of new technology or what?

      To say these relations are *not* built into the process by which we 'produce what we consume' ignores such realities.

      Not at all. Adjusting the technical composition of the economy and making it more expensive to produce this or that good does not change this fundamental fact.

      But, problematically, the slave walks, talks, acts and does all the things that laborers do--only they don't get paid wages. They enter into social relations.

      You make it sound like an internship, ffs.

      As you say, it's a different relation. When it's the structuring economic relationship, it corresponds to a different allocation of surplus than that seen under capitalism. Marx is only analyzing capitalism. When slavery is folded into a capitalist enterprise, slaves are treated in the books (the only place that counts to capital) the same way as all inputs outside the wage relation — as means of production.

      More importantly, they can work slowly, inefficiently, and not very productively, or they can work quickly, efficiently and very productively. They do not have the consistency of machines.

      What? Machines can stutter or break down early, etc.

      The point is that the value transfer reappears exactly; if a $100 machine produces 100 or 10,000 units before breaking, then that $100 is depreciated across the total irrespective of whether that means $1 or $0.01 of it appears in each unit of output (whether as price or as writeoff).

      This is not the hallmark of constant capital--these are the qualities of variable capital.

      That's not the distinction, though.

      That the capitalist may treat laboring human beings as something else during the production does not make them something else; indeed, if the heart of your analysis is to be strictly materialist, this is fairly straightforward.

      Dialectical materialism takes social relations into account as their own stratum, as it were. Physical conditions shape our physical existence, and social conditions atop them shape our social existence.

      In this case, the system itself, represented in its accounts, does not recognize them as labor. We can morally object to this fact, but it is a fact to which we object.

      If you are going to respond by saying that what bars them from creating value is that they are not paid in wages, then we end up with circularity and the LTV ceases to be a 'theory of value'

      I make a big deal about the accounting so people know these are concrete figures, but don't mistake the map for the territory. What is a "wage"? It's something that you enter into freely, that you are then to spend on the market in an exertion of your own agency. It pays you to produce more than you consume, so that the capitalist can consume more than he produces. But at the end of the day, the laborer has X-s to spend, while the capitalist has s, to cover the output of new realized values (i.e., from living labor) totaling X. If less than X is sold, then the left-hand side of the equation is also lowered, consistent with the identity.

      A slave, in the capacity of slavery, is maintained like livestock or machinery. It would be part of that portion of capital that doesn't resolve into income in the case of new output. Instead, a field whip might get paid X-s, and the capitalist probably gets a bigger s than in a non-slaveowning enterprise. But it looks the same on the books as the case of the enterprise with more advanced machinery relative to its peers.

      If you're setting out to analyze capital on its own terms (hence the name of the book), then this is how you do it. This is Marx's method of critique; give full weight to your opponent's perspective, understand it thoroughly, and carry it out to its logical ends until contradictions emerge.

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    7. "In this case, the system itself, represented in its accounts, does not recognize them as labor. "

      Yes, it does: as slave labour. The accounts of slave owners showed the business expenses of owning and maintaining slaves. Just like Rothbardians, Marxists do not care about empirical reality.

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    8. Yes, it does: as slave labour. The accounts of slave owners showed the business expenses of owning and maintaining slaves.

      They were treated as capital, and I am the only one who has actually provided evidence (in this case an NBER paper), you pathological liar.

      You're sticking the word "labor" on it, but semantics won't mask the referent, the relation embodied.

      Funny that you should mention Rothbard. Know who else was willing to lie to win an argument? That's right...

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  7. Marx was analysing capitalism -- a system based on free-labour or, more correctly, wage-labour. He did not discuss slavery because that mode of production was on its way out.

    In other words, he was not analysing all economic systems -- rather just one, capitalism. The focus of wage-labour flows from that. It is the social relationship of the worker selling their labour (and liberty) to the boss which is unique to this mode of production (an insight Marx did not invent -- Proudhon had noted it first).

    In terms of the animals and machinery, these improve the productivity of human labour and are taken into account by reducing the socially necessary labour-time to produce a commodity. This was also the position of Smith, Ricardo, Proudhon, etc.

    Also, Marx was well aware (even if he hide the fact for political polemics) that commodities existed before capitalism. So a slave-owner could sell the product of his slave's labour in the form of a commodity. So could the artisan or peasant (i.e., those workers who owned their means of production). The dynamics of those economies would be different as the social relationships within them would be different.

    In terms of an economy where machines would produce commodities, that would not be capitalism as there would be no wage-labour. Its economic laws would be different to capitalism's just as a slave economy or artisan economy would be.

    Of course Marx rejected the idea that socialism could be based on markets (e.g., Proudhon's mutualism) but to do that meant he had to suggest that an economy without wage-labour (i.e., one based on co-operatives) would be the same as capitalism -- which violated his own position that different economic systems had to be understood in their own terms (i.e., universal economic laws did not exist).

    In terms of treating human-labour as special, well, humans are special -- we are autonomous individuals which wage-labour degrades. David Ellerman's work on this is of note -- but read Proudhon's "What is Property?" for the classic introduction to why we need to end property and its theft and despotism.

    Iain
    An Anarchist FAQ
    http://www.anarchistfaq.org

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    1. "In terms of an economy where machines would produce commodities, that would not be capitalism as there would be no wage-labour. "

      So let me get this straight. If we had an economy where:

      (1) most capital goods were owned privately and production and investment decisions are decentralised and taken privately;

      (2) where private property rights were very strong

      (3) where owners of capital produce goods for sale and for money profit, but

      (4) where virtually all labour is done by machines,

      you want us to believe that this is not a capitalist system any more?

      To any reasonable person, however, it would clearly be just another type of capitalism. It certainly would not be socialism or communism or feudalism, nor any other type of economy I can think of.

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    2. (4) where virtually all labour is done by machines,

      You're saying one of two things, here. Either a) that there will be virtually no need for human labor, or b) that the needs of human labor will roughly continue apace, but machinery will account for an ever-increasing productivity of labor, such that ever-growing output can be achieved with a constant labor force.

      If you mean to say the first, you've created something potentially quite dystopian; people still need to eat, after all, but no one's hiring. And since private property remains "very strong," the class struggle persists; entitlement programs will always be under debilitating pressure from corporate interests seeking to expand beyond the narrow schedule of their automated growth. It sounds to me as though you'd have a few people who owned most of the production of society and a whole lot of people on an ever-shrinking dole. Until, of course, they've had enough. ;)

      If you're saying the latter, however, you're begging the question. This becomes clear the moment you attempt to historicize this point. Relative to the work performed in, say, the 1850's, it's quite clear that we *already* live in just such a time. If you find that thought sobering, then I've made my point.

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    3. I see nothing inherently improbable about a future world where most production is done by machines with minimal human labour but governments guarantee not only a minimum income to all citizens but maintain aggregate demand through transfer payments.

      All you can do is change the terms of my counter-factual to evade the question of where profit would come from in such a world.

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    4. If capitalism it be, then profit would come from what small human labor remains to be done. If that sounds at all odd, this is a problem with your example, which I would say is contradictory and therefore indeed inherently improbable.

      Capitalism depends on certain relations that you insist would no longer exist, yet you insist that it is still capitalism somehow, and not some trans-capitalist state or other. It's ill-conceived, and I spell out why in my remarks above, in the leg of the comments where you're talking to me an "MC." I'd link it, but you insist on approving every single post, so it's not live yet. Of course, I don't agree that that's a very good way to run a comments section in the Year of Our Lord 2015, but to each his own.

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    5. lol.. profits throughout the economy would come from the few people who continue to work?? Even where money profits would exist in businesses where all labour is done by machines and robots?

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    6. From the people who continue to work, or from capital losses in other firms elsewhere, yes. It does not strike as a particularly sustainable arrangement on that basis alone, let alone the ones I gave earlier.

      Let's be clear: In the edge case of your fiction, without any human involvement in production, then that is not a capitalist system, since capitalism derives from the relations of production. You'd need a different analysis altogether, a different value theory. Some flavor of marginalist analysis might be closer to describing reality, because after the marginal revolution economics by and large neglected production relative to distribution and exchange.

      In fact, your whole supposition is distinctly in that vein, since the whole point of it appears to be to take production off the table. You're taking a historical contingency (an economy organized on the basis of profit) as a universal given, and dismissing a universal fact of human existence (reproduction of our own societies) as a contingency. It's downright backward.

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    7. “lol.. profits throughout the economy would come from the few people who continue to work?? Even where money profits would exist in businesses where all labour is done by machines and robots?”

      How can capitalist increase the productivity of robots in that world and gain extra profits? He would hire someone to invent better, more productive robots. Value of labor of that engineer would be very high and the profits would be realized in a very long term. Otherwise that would be a stagnant society. Profits would come only from realizing dead (human) labor in robots. MC

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    8. It is more likely that at that stage of human technology and scientific development machines could be designed to themselves design and build new generations of machines to increase productivity.

      As long as governments maintain aggregate demand and money supply and owners of capital continue to desire money profits (no reason why this would change), then money profits would continue.

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    9. That would be similar to slave economy. I don't think that there would a need for profit in that kind of developed society, but let's assume that there is. Creative labor of robots would be "exploited" (LOL) in that case. Surplus value would be the difference between costs of variable capital (costs of maintaining the robots) and their actual, creative labor. BTW. Marx predicted that fixed capital, machines and technologies will be more and more significant - " [It is,] hence, the tendency of capital to give production a scientific character; direct labour [is] reduced to a mere moment of this process. As with the transformation of value into capital, so does it appear in the further development of capital, that it presupposes a certain given historical development of the productive forces on one side -- science too [is] among these productive forces -- and, on the other, drives and forces them further onwards."

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    10. It is doubtful that machines can do that on their own, as computers machines are always stupid.

      However that is not the big point, the big one is of political order, for KM that is possible but not so easily in capitalism since capitalism and capitalists would not allow it..
      The exchange value must be realized, but how people out of working would get any money?
      KM would say maybe look at Malthus and do as he would do, lol.
      Maiko

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    11. "Machines are always stupid."
      So, will marxist theory be refuted by AI? You do know that machines to do calculus are 50 years old, and the best chess players in history are machines, right?

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    12. Seems pretty likely to me that in a world where machines did virtually everything, the value (price) of everything, along with profits, would fall nearly to zero.

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    13. I don't think so: (1) it would mean massive demand for commodities from people on very low incomes from the developing world; and (2) there would still be scarce factor input and energy prices that would mean prices would hardly fall to nearly to zero.

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    14. Not convinced of TSSI, but I don't think this point is a strong one for critics since automation tends to lower prices.

      So these people in the developing world would not have access to machines? Surely that isn't a world where virtually everything is done by machines, and these people would presumably work for wages in order to pay for their goods? Even in your example, prices would have to be low for people on low incomes to afford them, so the rate of profit would be pretty low. But if machines were everywhere then everything could be done virtually costlessly, even in the developing world (which obviously would no longer be developing).

      As to your second point, are you suggesting non-renewable resource owners could still accrue rents? The cost of renewable energy has been falling massively as it's become more widespread and technology has advanced, so I'd guess the source of scarce inputs would have to be non-renewables. Would labour be expended in the extraction of these? If everything were done by machines then even oil would be extracted automatically and I'd be happy to bet the price would fall. Also, since renewable energy is sold on the same market, the 'socially necessary' labour time to produce energy would fall. In non-marxist terms, the availability of substitutes would reduce overall profits in the industry.

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    15. "Even in your example, prices would have to be low for people on low incomes to afford them, so the rate of profit would be pretty low"

      In real (inflation-adjusted) terms, it would not follow that they would be very low.

      On energy, I think you miss the point that non-human labour factor inputs would still exist, even for renewable energy.

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  8. Lord Keynes,

    I thought I'd pop in and suggest, now that you're doing research on the labor theory of value, sitting down with Jonathan Nitzan and Shimshon Bichler's book 'Capital as Power: A study of Order and Creorder' and reading it cover to cover.

    It basically catalogues all the problems with the LTV, and all the different attempts by various Marxian schools over the years to salvage it, and addresses why each attempt is ultimately insufficient. (It also contains a similar refutation of neoclassical value theory, which might be enlightening but with which you are already familiar.) And it does so through deep analysis of Marx's work and an expansive knowledge of Marxian scholarship, as well as a sound historical understanding of the development of capitalism. Because it covers so much ground I think it could help you a lot in your own research. (Plus it's written in very straightforward, non-pretentious language.)

    It also articulates its own theory of value, which seems to be a modified radical subjectivist view, which might be of less interest to you but is also really compelling reading, even if you ultimately don't agree with it.

    You can read it online here, though if you have access to a university library it will probably have a physical copy too:

    http://bnarchives.yorku.ca/259/2/20090522_nb_casp_full_indexed.pdf

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    1. Rob G,

      Nitzan and Bichler's Capital as Power: A Study or Order and Creorder is a most fascinating book. I have been reading their chapter on the LTV: it is very well written, clear and insightful.

      Thanks indeed for this recommendation.

      LK

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  9. Karl Popper's comment is stupid on its face, and entirely misses validly criticizing LTOV.

    Economics considers all human values as different than all other processes in nature (as opposed to, say, bumblebee economics.) Shall we say then that economics has a doctrine of the "holiness of human values"?

    His statement proves too much, throwing away plenty of valid theory along with LTOV.

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    1. Karl Popper is completely irrelevant, it will be forgotten soon.
      Maiko

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    2. Nonsense. Popper identifies the moral issue and then notes that the LTOV still posits an essence imparted by purchased human labor, as opposed to bovine, mechanical, or slave labor. As if my plowed field is different if the plow was pulled by a hired man, an owned man, or an ox. This is as mystical as Rothbard.

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    3. Ken B,

      Spot on. Piero Sraffa made essentially the same point:

      http://socialdemocracy21stcentury.blogspot.com/2015/03/piero-sraffas-damning-verdict-on-labour.html

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    4. Yes, we get it; you two don't think value is a social relation. That's fine. You're entitled to your own theory. But if you want to judge Marx's, you've got to grapple with it on its own terms, and in its terms, the system examined is capitalism, value is a social relation, and the labor to which Marx refers is party to the relations of production that characterize capitalism.

      Disagree as you please, but if you refuse to start from the same foundation, you can't mount an immanent critique, which is the only kind that can disqualify a theory from the possibility of being true. And I want y'all to be able to follow your dreams and refute Marx.

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    5. very protean, your "labor value". How it is measured? Not in units produced, because the slaves would produce value. Not in any measurable transformation of the world, because then machines could produce value. Units of consent? Hours? Units of "social relation"? Why not in "hedlunds", a new unobservable?

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    6. Ken B!

      Check out how Bala is now attacking Bob Murphy in the comments section at Free Advice. It is priceless!!:

      http://consultingbyrpm.com/blog/2015/06/potpourri-282.html#comment-1500203

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    7. Ken B:

      How it is measured?


      "Hey, person who's never done anything to me who I nevertheless treat with utter contempt, explain this thing you've explained like 200 times. I know you've already spelled out units, indicated where the relevant data can be found, and even provided an explicit algebraic equation to solve for an individual commodity's value, but ehhhhh... still seems kinda vague to me. Heh."

      Sorry, Ken, either own up and apologize for your behavior towards me, or get lost. I don't make time for bullies.

      If that's really the kind of person you are, then I won't lose sleep over whether or not you find anything I say plausible or comprehensible.

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    8. I must be going soft, because Bala's comment there seems well reasoned to me. Of course it does clearly involve utility being a "manifestation" of emotional rewards felt by the person trading.

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  10. Not sure if this point has been made yet, but in volumes 1-3, Marx is talking about a 'pure' capitalism where there's no state and no redistribution of income.

    Marx believed you had to understand how a pure capitalism would work before understanding how actually existing capitalism worked.

    So Marx is correct is saying that there would be no profits without human labor *because there would be no basic income*.

    But this doesn't mean Marx actually believed that would ever happen.

    Finally, I'll note that it's obvious that the persistence of the 'class struggle' doesn't necessarily entail capitalists would never want a basic income that wasn't substantial - like they might be smart enough to know it would be needed to guarantee effective demand and prevent a socialist/fascist revolution.

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  11. Another thing to keep in mind: Marx's focus in Capital was on critiquing the existing work in political economy. So he used *their* categories and subjected them to critique - Marx's focus wasn't on building a new political economy from scratch w/ his own categories.

    So *among* their categories - capital, land, and labor - value is clearly coming from labor (their categories assume or ignore the existence of other things, like the sun - a good theory of value, I appreciated the George Carlin reference in another one of your posts).

    So since Marx was critiquing the existing categories of political economy and analyzing what would happen in a 'pure' capitalism, it made sense Marx would say all value came from labor, but this doesn't mean Marx was literally saying "ALL value in any capitalist economy comes from human labor no matter what, forget about the sun, and forget about maintaining demand with a basic income."

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