[OPE-L:3440] Re: Re: Re: Re: Re: Re: Re: Re: Re: objectivity of value

From: Steve Keen (stevekeen10@hotmail.com)
Date: Tue Jun 06 2000 - 21:15:49 EDT

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I remember this debate from some years ago on OPE-L. I posted the
proposition then that the only Marxist who'd ever handled it well was
Hilferding. Below I've excerpted from a paper of mine in which Hilferding's
approach to the reduction of skilled labor to unskilled is discussed.

The Reduction of Skilled Labor to Unskilled

The historiography of the technical interpretation of Marx
initially appears to be straightforward. It is obvious that
Bhm-Bawerk misinterpreted the role of use-value in Marx's
economics, while it appears that Hilferding mirrored this in his
defence of Marx, thus letting the misinterpretation take root in
the Marxian camp, to be subsequently popularized by Sweezy. From
then on, subsequent scholars of Marxup until the publication of
the Grundrisse and the works of Rosdolsky and Grollsimply
repeated the errors of their forbears. However this relatively
simple interpretation is complicated by the issue of the
reduction of skilled labor to unskilled: despite his apparent
protestations that use-value lies outside the realm of political
economy, Hilferding explicitly employed the concept to solve the
problem. Hilferding's method and results, when compared with
those of Sweezy and Meek, provide an interesting illustration of
the superiority of the economic, dialectical approach over the
technical, labor theory of value approach.

Discussing the reduction of skilled labor to unskilled labor,
Bhm-Bawerk quotes Grabski as saying that "`an hour of skilled
labor contains several hours of unskilled labor.'" However,
Bhm-Bawerk argues that if the labor which went into educating a
workman simply reappeared in the product, then "there could only
be actually five hours of unskilled labor in one hour of skilled
labor, if four hours of preparatory labor went into every hour
of skilled labor" (Bhm-Bawerk 1896, pp. 84-85). Thus, according
to Bhm-Bawerk's interpretation of Marx's reasoning, the ratio
of skilled labor to unskilled labor would in practice be at most
of the order of two, and not, as Marx muses, of the order of six
(Marx 1867, p. 192).

Marx did not actually consider the mechanism by which skilled
labor is reduced to unskilled labor, in Capital or any other
work. Nonetheless, Bhm-Bawerk accurately characterizes the
reasoning subsequently used and the results reached by Sweezy
and Meek, where they effectively followed the same procedure as
Marx employed in considering the value contribution of the
non-labor inputs to production. But though a recent critic
(Harvey 1985) attributes this technique to Hilferding, it in
fact originated with Sweezy. Harvey's argument that Hilferding
used the same method is based on an inadequate reading of
Hilferding's work. He says that for Hilferding,

"skilled labor is seen as an expenditure of simple labor to
which is added (1) a proportionate share of the worker's own
past simple labor spent learning the skill, and (2) a
proportionate share of the direct and indirect labor of others
who contributed to the training process. In Hilferding's words
an expenditure of skilled labor, `signifies the expenditure of
all the different unskilled labor which are simultaneously
condensed therein'." (Harvey 1985, pp. 86-87)

Harvey calls this as a "brief description" of Hilferding's
method, which indeed it is. The full quote from Hilferding is:

"The labor of the technical educator thus transmits, not only
value (which manifests itself in the form of a higher wage), but
in addition its own value-creating power. The formative labors
are therefore latent as far as society is concerned, and do not
manifest themselves until the skilled labor power begins to
work. Its expenditure consequently signifies the expenditure of
all the different unskilled labors which are simultaneously
condensed therein." (Hilferding 1904, p. 145)

The opening sentence indicates that Hilferding distinguished
between the transmission of the value of the education, and the
transmission of its value-creating powerits use-value. To
explain how education can increase both the value of skilled
labor and also the value-creating power of that laborthus
enabling an hour of skilled labor to produce much more value
than an hour of unskilled laborHilferding refers to education
transferring both value and use-value to the student. He first
hypothetically reduces the labor of the tutor to "a number of
unskilled labors". Then in an expression which demonstrates the
proper application of Marx's use-value/exchange-value dialectic,
he characterizes the value-creating power as the use-value of
the technical educator: training "thus creates on the one hand
new value and transmits on the other to its product its
use-valueto be the source of new value." (ibid., p. 145).
Hilferding thus gives use-value a specifically economic role as
the motivation for training labor in the first placeto increase
its value-creating capacity. He also completely separates the
quantitative valuation of this use-value from the cost of
training, its exchange-value. This analysis thus allows
education to be an additional source of surplus valuean insight
which eluded Sweezy and Meek. Hilferding is thus comfortably
able to conclude that skilled labor is worth multiples of
unskilled labor in value creation terms. It is instructive to
contrast Hilferding's treatment of the reduction with that
followed by Sweezy and Meek, since Hilferding illustrates the
correct application of Marx's dialectic, while the others show
the consequences of approaching the issue armed solely with the
belief that labor is the only source of value.

Sweezy reduces skilled labor to a multiple of unskilled labor by
a simple addition of the laborer's training time to his working
time. This results, as Sweezy's example attests, in a very
limited ratio between the value of a skilled laborer and an
unskilled one. A skilled worker, says Sweezy,

"expends in production not only his own labor but also
indirectly that part of the labor of his teachers. If the
productive life of a worker is, say, 100,000 hours, and if into
his training went the equivalent of 50,000 hours of simple labor
(including his own efforts in the training period), then each
hour of his labor will count as one and a half hours of simple
labor." (Sweezy 1942, p. 43)7

Meek likewise argues that Marx

"was simply saying (a) that the value of the skilled labor power
was higher because it had cost more labor to produce; and (b)
that because it had cost more labor to produce, it was able to
create a product of a higher value If p hours is his expected
productive life, and t hours of simple labor have been expended
upon him and by him during the training period, then when he
starts work each hour of his labor will count as 1 + t/p hours
of simple labor." (Meek 1973, p. 172)

Both Meek and Sweezy succumb to the problem mentioned by
Bhm-Bawerk, that if one simply sees education as transferring
the hours spent in training into an identical number of hours in
work, it is impossible to account for the significantly higher
output of skilled labor. In Meek's algebraic expression, t would
need to be five times p for skilled workers to be as many times
more productive than unskilled as Marx assumes. Sweezy uses a
very low multiple compared to that nominated by Marx, but even
this entirely arbitrary ratio is unwarranted. If one takes the
simplest and most intensive example of training, a four year
one-on-one apprenticeship, both his example hours and his
hypothetical ratio are unrealistic. With a 48 week year and a 40
hour week, total training hours for both trainer and apprentice
sum to 15,360. If the average working life was 40 years, the
educated apprentice would clock up a further 76,800 hours of
labor. This results in a pitiful skilled labor to unskilled
ratio of 1.2 to 1.

An accurate quantification of the Sweezy/Meek conversion
requires that the input of the trainer be counted as skilled
input (as Hilferding acknowledges in a convoluted manner), which
results in a slightly higher ratio. The equations needed to
solve the erroneous Sweezy/Meek reduction of skilled labor to
unskilled are as follows:

With the values suggested above, these equations give a skilled
to unskilled productivity ratio of 1.2105:1. The ratio rises if
the value of the means of production used in education are
added, but it still falls far short of the productivity ratio
assumed by Marx. Thus according to the Sweezy/Meek analysis,
skilled labor is worth in the region of 25 per cent more than
unskilled labor to the capitalist. Bhm-Bawerk's comment that
this is well below the actual productivity advantage of skilled
labor over unskilled labor is all the more valid today than in
his time.

Using Hilferding's method, the training inputs will determine
the wage paid to skilled labor,8 but the additional productivity
of the skilled laborer--the use-value of the education imparted--is
independent of the cost of education, and the "value-creating
power" of education can only be determined ex-post. Skilled
labor can therefore add much more value than the education
costwhich as Hilferding points out means that education can be a
source of additional surplus value. In contrast, as Harvey
observes, the Sweezy/Meek characterization of education echoes
Marx's portrayal of machinery as "unproductive" in that it
simply preserves value, rather than increasing it (Harvey 1985,
p. 87).


>From: bhandari@Princeton.EDU (Rakesh Bhandari)
>Reply-To: ope-l@galaxy.csuchico.edu
>To: ope-l@galaxy.csuchico.edu
>Subject: [OPE-L:3433] Re: Re: Re: Re: Re: Re: Re: Re: objectivity of value
>Date: Sun, 4 Jun 2000 18:50:21 -0400 (EDT)
>The labor reduction problem seems to me to be more theoretically difficult
>and practically relevant.
>1. How can labor time itself be the social content of value if the day's
>labor of skilled worker equates a week's work of another? There would seem
>to be no truth to the idea that value of a commodity is determined by labor
>time alone.
>2. Marx can counter that the reduction is a dynamic social process so that
>skilled labor which results from either special training or use of a better
>machine is dynamically reduced over time to some multiple of simple average
>labor, as rationalized training courses are made widely available and
>skills are progressively built into the machines (e.g., CAD)
>3. But there seems to be no empirical evidence that wage differentials have
>been reduced to say differences in training and reproduction costs; skilled
>labor's relative wage advantage may simply result from the scarcity of
>ability or some other heritable attribute, which then vitiates this thesis
>that labor time is the sole basis of value.
>4. Marx can counter that instead of invoking dubious scarcities, we can
>look for the interference to the law of value. The rate of surplus value
>may indeed not be uniform as certain groups of workers enjoy *relative*
>immunity from immigration and trade pressures.
>In technologically dynamic activity centers there is an artificial shortage
>of skilled labor due to at least the following reasons: immigration
>restrictions, arbitrary professional licensing and refusal to or technical
>difficulty in transfer of proprietary technology through the assimilation
>of which the suppy of skiled would increase on a global scale (learning
>from doing and all that)
>This has not only reduced the rate of exploitation for a specific group of
>skilled workers (high wages do not mean high rates of surplus value
>production, which is why capital fights for H1 visas and attempts
>outsourcing to that old British cantonment) but also created a scarcity of
>and thus monopoly price of skill intensive goods.
>Persistent differentials of wages and divergence of product prices can only
>be understood in terms of interference with the law of value, not any
>reference to a natural skill scarcity. Marx underestimated or abstracted
>from all this. There is no clear bridge from his theoretical enquiry
>conducted on the basis of several idealized assumptions (no national
>interference, uniform rate of surplus value) and real world dynamics.
>One only thinks what would happen to the wages of America's vaunted skilled
>economists (the physcists of the social sciences) if Indian postgraduates
>who can already speak English just fine were allowed to compete with them
>on the basis of an ability to handle problems in matrix algebra and
>econometrics. I can think of no greater way to rid ourselves of bourgeois
>Yours, Rakesh

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