[OPE-L:3375] Re: Re: Re: Gil's criticisms

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Tue May 30 2000 - 13:07:30 EDT

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Hi Fred,

>This is a response to Gil's recent posts. Gil, thanks for your helpful
>posts. I think we are inching forward and maybe on the verge of making
>significant progress.
>1. I am glad that Gil agrees with Marx's argument in Chapter 5 - that
>surplus-value cannot be created on the basis of exchange alone, either the
>exchange of equivalents or the exchange of non-equivalents. The creation
>of surplus-value is possible only with additional labor.

Yes but is additional labor possible without exploitation? Isn't this the
point of the agio theory? If the working class just happens to overvalue
present goods, where is the exploitation? Everything is done in the realm
of equality and freedom. Of course this argument assumes a subjective
theory of value (as Duncan's very helpful discussion on p.47-48 underlines
in Understanding Capital), but I don't think Marx has given an airtight
case in part one for the labor theory of value, his abstraction of labor as
the common measure of commodity value (since he has ruled out of his
discussion non reproducible goods, what else but labor could he have
derived as the common substance, though of course it is difficult to
understand how utility can be a varying magnitude as abstract labor); at
any rate, Marx's derivation can only be confirmed by its success in
explaining and predicting various phenomena.

And bourgeois economics does indeed have an explanation (or two or three)
for the *persistence* of productive interest. It does try to account for

Also is the permanence of productive interest possible in a static system
even if moneybags finds commodified labor power freely available? Isn't
Schumpeter's argument that without a heroic entrepreneur, transforming the
conditions of production, productive interest in particular will disappear
as the reserve army of labor is exhausted and there are declining marginal
returns on any given technique? In short, that the persistence of
productive interest can only be explained on the basis of Innovation.

Schumpeter's dynamic theory, which as Riccardo has argued builds the
workings of the credit system into the ground floor, would seem to provide
a solid basis for establishing the endogeneity of innovation to a profit
making economy. So he is able to account not only for the persistence of
productive interest but the hallmark of capitalist reality--the continuous
revolutionisation of the forces of production undertaken on the basis of
credit which alone allows for a reorganization of the productive factors.

  A reasonable person could say that Schumpeter's non exploitative theory
has at least some level of realism to recommend it over all rivals, however
absurd his paean to the entrepreneur hero may strike us. Of course his
theory also seems incompatible with a subjective theory of value since his
entrepreneurs are themselves reshaping consumer wants.

To the extent that Marx is presenting a critique of economic theory, we
can't blame him for not anticipating future developments in bourgeois
economics (the agio and innovation theories of productive interest), but
given them, I don't think we can say that chs 5 and 6 in themselves prove
the exploitation theory of surplus value. Or that the other theories must
be ruled out because they are incompatible with the labor theory of value
for which Marx has already given an airtight logical case.

I wish we could at some point assess such rival theories instead of only
discussing Marx's putative logical errors in chs 5 and 6. For example, I
think it should be added to Duncan's discussion of the neo classical theory
of interest that in fact wages are not exchanged against time, but are only
paid after labor has been ratified. This means Marx and the neoclassicals
are not simply giving "different interpretations of the same situation."
The situation is or should in fact be described differently.

And we may want to say that Schumpeter has confused extra surplus value
with surplus value. But then we wouldn't want to make the former any less
intrinsic to the capitalist process than the latter. Again, I think
Riccardo has much to teach us here.

> This conclusion follows from
>Marx's assumption that labor is the source of all value (derived in
>Chapter 1). In this way, Marx's conclusion that labor-power is the one
>feature in capitalist production that produces surplus-value is NOT
>CIRCULAR, but rather follows as a straightforward logical deduction from
>his assumption of the labor theory of value:

Again I don't think we can say that the labor theory of value is logically
derived in volume 1. It is proposed, hypothesized; it can only be verified
to the extent that it can make sense of evident anomalies and explain the
actual course of capitalist development. And this is not done in part 1.

Yours, Rakesh

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