[OPE-L:2404] Re: Re: the employment contract and capitalism

From: Rakesh Bhandari (bhandari@mmp.Princeton.EDU)
Date: Wed Feb 23 2000 - 16:15:53 EST

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Ernesto, I have printed out your chapter but not yet read it.

>1. The "labour-power value" paradox. Marx and Engels assume the so called
>"law of value" or "low of exchange", whereby any commodity is paid in the
>market its real value (to avoid entering the TLV question, let me assume
>that commoditities exchange at production prices).

But of course the commodity labor power can't exchange at a production
price into which the average rate of profit enters.

: The price of any commodity coincides with its
>production costs and with the present value of its future streams of services.

The value of any commodity coincides with socially necessary labor time
necessary to reproduce it. In the case of capitalistically produced
commodities, an average rate of profit is part of what is socially

>The question is: Where does a positive profit come out if labour power too
>is a commodity? If competition compels it to receive a price coinciding
>with the present value of its future streems of services, there can be no

Your understanding of the dynamics of the determination of the value of a
commodity, labor power included, is different than Marx's.

Marx would answer - If the capitalists earn no profit they
>reduce investments, the industrial reserve army rises, etc. etc. Therefore
>the capitalist must earn at least a "normal" profit.

Only if accumulation is proceeding on the basis of a constant technical
composition of capital; otherwise no reason to think IRA will be
exhausted--in fact, it will be enlarged.

>Samuelson - No. You assumed comnpetition. Therefore no bargaining.

>Marx: OK. So what?
>Samuelson - The long run equilibrium prices are fixed by the forces of
>competition at the level that makes them coincide with the cost of
>production. The value of labour power must be established accordingly, if
>labour power is a commodity. And also the production conditions of labour
>power must be determined accordingly

Marx sets the wage at the value of labor power which is the socially
necessary labor time required to reproduce it, though due to bargaining it
could be above or below that. The boundaries on the value of labor power
are determined by the intensity of the labor process, the education and
training required for the working class to operate and design continuously
new vintages of machinery, the degree of the development of the productive
forces. Within these boundaries the trade union struggle matters. A
subjective element enters into the value of labor power.

>Enters Veblen - Pricesely what I say: Habits and customs are endogenous in
>the long run.
>Marx - Yes, but I insist: so what?
>Samuelson - If there is a positive profit, investements increase, the
>industrial reserve army shrinks and wages (and habits and customs, in the
>long run, and therefore the real production cost of labour power) rise to
>their equilibrium value. When they reach this value profits must be nil.

Again only on the assumption of a constant TCC.

>Marx - But the subsistence wage changes slowly, certainly much slower than
>the the market prices of the other commodities.

This would mean a rising rate of exploitation, the production of relative
surplus value which indeed is the foundation of capitalism.

>Samuelson - It means that you are explaing exploitation as a market
>phenomenon: there is exploitation because there is no perfect competition
>in the labour market!

Not at all. Marx explains surplus value while never allowing labor power to
sell above or below its value (though that, along with all of his concepts,
is a dynamic entity).

>Screpanti - there is only one way out: Labour power is not a commodity. The
>wage is not a price of a commodity. The labour market does not exist.

What do we make of Marx then: "In order that the possessor sell it as a
commodity he must be able to dispose of it, thus be the free owner of his
labor capacity, of his person, He and the possessor must meet on the
market, and enter into a relation to each other, as possessors of
commodities, who are of equal birth, different only in that one is buyer,
the other seller, hence both are juridically equal persons."

It's not the labor market that is a myth; what's mythical is the existence
of juridical persons whose formal equality and formal freedom--though
having no real content--is necessary for the sale and purchase of labor
power. Of course the equality is a fiction, the freedom a deception. And
the juridical person who appears in this relation is nothing more than an
outward mask of a human being. While in reality it is mere appearance but
in the law there is no other reality. See Lawrence Krader Dialectic of
Civil Society, p. 232

Yours, Rakesh

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