[OPE-L:3383] Re: Re: further replies to Gil

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Tue May 30 2000 - 22:44:24 EDT

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Back to Gil

>Surplus value arises from the circuit of industrial capital (or, indeed,
>any circuit that finances the creation of new value) if capitalists are
>able to appropriate a portion of the newly created value financed by this

I think we are confusing two issues: how/why the capitalists lay claim
to or "appropriate" surplus value and the origins of surplus value. Do
you agree that the latter at the level of the system as a whole (Mike
W) can only be produced by new labor (Fred)--this is the labor
theory of value which it seems to me you are rejecting. I would hope that
you do so openly.

 As I have tried to suggest, Marx's exploitation theory is by no means an
obvious conclusion even on his own ch 5 and 6 assumptions, given the agio,
innovation, and physical surplus theories of the permanence of productive
interest--though Heilbroner may be correct that Sraffa really does
not provide a theory of the origins of surplus value. I think your actual
theory of *the origin of surplus value* is being obscured in this endless
discussion of the putative price-value stipulation, and I would like to
draw it out.

>Wait a second. If constant returns to scale don't exist at the sectoral or
>industry level--the level at which neoRicardians effectively invoke the
>condition--then labor values are necessarily demand driven, because market
>demand always determines average and marginal production conditions in the
>absence of constant returns, and Marx's labor theory of value goes straight
>down the tubes. In particular, Marx's Ch. 1 claim that labor values are
>determined by *average* rather than *marginal* production conditions is

No demand is a precondition for value emerging and for value itself.
Justifying my crude analogy to quantum measurement, Marx writes:

"The point of departure is not the labour of individuals considered as
social labour, but on the contrary the particular kinds of labour of
private individuals, i.e., labour which proves that it is universsal social
labour only by the supersession of its original character in the exchange
process. Universal social labour is consequently not a ready -made
prerequisite but an emerging result. Thus a new difficulty arises: on the
one hand, the labour time of individuals becomes materialised universal
labour time only as a result of the exchange process." Critique of Poltical
Economy, p. 45

Without that commodities have NO value, but that does not MEASURE their
value. I am not saying that relative prices are measured by measurable
utilities--the trumpet does not cost 50x the silk hanky because it is 50x
more pleasurable to blow into one than the other. And if there are rising
rates of return, this only will lessen proportionally the socially
necessary labor time needed to reproduce the commodity--which is the basis
of its value, not the satisfications its consumption enables.

 The measure of labor is thus implied in Marx's understanding of value as
socially necessary labor time, i.e., the quantity of labor that society
will of necessity expend for its production, when that society requires
that expenditure. This notion of reproduction is based on labor time as
measure of value, not utility.

Maybe I am missing your point?

>Furthermore, the Marxian depiction of competition must fundamentally change
>in the absence of constant returns: in the case of increasing returns at
>the industry level, to a model of "natural" monopoly; in the case of
>decreasing returns at the industry level, competition would logically only
>equate *marginal* rather than *average* rates of profit, and yet *another*
>reason to invalidate the case of price-value equivalence would then arise.

You know I just don't get this value price equivalence stuff. How could
commercial capital ever make a profit if all commodities sold at value? Do
you think Marx's theory is based on value-price equivalence even as an
approximation? What then do you make of his theory of commercial capital?

As for market prices, of course some capitals and perhaps branches will
make more and others less than the average rate of profit. Do you think the
Marxian theory of competition rules out the centralisation and
concentration of capital? Perhaps you need to reconsult Leontief's praise
of Marx for having predicted such trends long in advance?

>First, neoclassical theory does not speak of the "exchange of equivalents"
>except in the very narrow sense of "exchanging at average cost" under
>perfectly competitive partial equilibrium conditions. Even this doesn't
>necessarily obtain in the general equilibrium form. I also don't think
>"exchange of equivalents" means much more than a tautology, if anything, in
>Marxian theory, since we know commodities don't typically exchange at their
>respective values, even in theoretical terms.

Gil, can we agree that some version of neo classical theory attempts to
provide an explanation of the permanence of productive interest which is
not grounded in exploitation (see Guy Routh, Origin of Economic Ideas on
marginalism for example)? Are you saying that it is possible to prove the
injustice of productive interest despite its not being grounded in
exploitation? Are you an ethical socialist?

  Roemer has demonstrated this.
> That is, it's possible to distinguish Marx's labor theory of
>*exploitation* from his labor theory of *value*.

OK new debate topics are finally emerging.

>Third, if the phrase "Marx's value-based exploitation theory" translates as
>"Marx's exploitation theory developed on the premise that there is some
>systematic connection between commodity prices and values", I'd choose the
>neoclassical framework for analyzing exploitation, because, as indicated
>above, the possible connection between prices and values is entirely
>irrelevant to the account of exploitation. Furthermore, the neoclassical
>framework, in contrast to the value-based framework, makes clear what are
>the underlying conditions that make surplus value possible. Finally,
>asserting a systematic connection between prices and values leads to a
>potentially very misleading understanding of the basis of capitalist
>exploitation--see below.

I do take the blame for not understanding this.

. That
>critique suggests a reformulation of Marxist political economy, yes, but in
>no way its *abandonment*--not unless one insists that Marxism *requires*
>the labor theory of value. Now *that* would be evidence of superstition
>and totemism, not to mention fetishism.

Of course I so insist. The existence of value and surplus value is evidence
of the existence of fetishism; I think you fundamentally misread Marx's
theory of fetishism here.

 But it's nice to get you lay your cards on the table finally after five
years. You don't really just want us to correct a logical error in chap 5
or derive the commodification of labor power in historico-strategic terms;
you want us to give up the theory that exploited wage labor is the source
of surplus value. Is it asking too much after five years that you lay out
your rival theory for the persistence of productive interest?

>First: It's true that I'm arguing for the relevance of (much of) Roemer's
>analysis for Marxian theory.

Which aspects?

  This conclusion does not involve any specially
>different treatment of "property relations" or "the legal basis of the
>scarcity of capital." *Marx* quite explicitly requires capital scarcity in
>his account of surplus value. Whatever the *social and historical basis*
>for this condition is, Roemer simply shows that it is also generically
>sufficient for surplus value to exist.

OK, so is this not only the basis but the sum of your alternative theory of
the persistence of productive interest? The scarcity of capital?

Yours, Rakesh

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