[OPE-L:2406] Re: Re: the employment contract and capitalism

From: riccardo bellofiore (bellofio@cisi.unito.it)
Date: Thu Feb 24 2000 - 06:36:30 EST

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Ernesto there are two ways out of your paradox (two ways that to me are
only one):

(i) no exploitation in the Marxian sense if you starts from prices of
production; to have exploitation you must reason with the labour theory of

(ii) perfect equilibrium with no profits is a circular flow which is
definitely not capitalism; this circular flow is regularly broken by
innovation, and innovation is driven by class struggle at the point of

The two ways out are one because the important point of the LTV is not to
deduce prices of production, but to ground innovation in a macro-micro
class based theory of innovation.



P.S.: this is not out of the debate. The LTV *is* the distinction between
labour-power and living labour. No surprise if in your way of framing Marx
a lot of problems arise.

P.P.S.: this has nothing to do with assuming that Marx was always right.

At 19:29 +0100 23-02-2000, Gerald Levy wrote:
>---------- Forwarded message ----------
>Date: Wed, 23 Feb 2000 19:17:07 +0100
>From: Ernesto Screpanti <screpanti@unisi.it>
>Dear comrades,
>It seems to me that the discussion on the employment contract is going in
>several directions that, although very interesting, are inducing us to lose
>focus on the real theoretical problem. Therefore I hope you will allow me
>to try to redress the discussion. And let me start with an attempt to
>bring to light two important theoretical difficulties of Marx's theories of
>exploitation and class. These are the problems that prompted my research
>agenda on the employment contract.
>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). Competition brings about
>this result. Marx and Engels make this assumption to make sure that the
>analysis of exploitation is focused on production conditions and not on
>unequal exchange in the market. In analytical terms the law of value can be
>reformualte as follows: The price of any commodity coincides with its
>production costs and with the present value of its future streams of services.
>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
>exploitation. 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.
>Samuleson would answer: Oh, yes! This precisely what I say. In fact the
>normal profit in competitive equilibrium is nil.
>Marx - But the value of labour power is a subsistence wage.
>Samuelson - But certainly not a purely physical subsistence.
>Marx - Certainly not. There are habits and customs and trade unions and
>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
>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.
>Marx - But the subsistence wage changes slowly, certainly much slower than
>the the market prices of the other commodities.
>Samuelson - This means that the law of value, that you assumed to avoid
>explaining exploitation as a production phenomen and not as a market
>phenomen, does not apply to labour power. You can account for exploitation
>only if the law of value does not apply to labour power.
>Marx - what does that mean?
>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!
>Marx - OPEL comrades, help!
>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. Trade
>Unions and labour movements do exists. Exploitation is the consequence of
>the exercise of power in the labour process. It occurs because the wage
>rate is fixed through bargaining ex ante (before the beginning of the
>production process), while labour productivity is determined by the
>capitalists' power ex post (i.e. in the labour process).
>2) The paradox of "class demarcation". Now I have no time to present you
>this second problem. Let me reserve it for another message.
>Ernesto Screpanti
>Dipartimento di Economia Politica
>Piazza S. Francesco 1
>53100 Siena
>tel: 0577 232784
>fax: 0577 232661

        Riccardo Bellofiore
Office: Department of Economics
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