[OPE-L:3478] Re: RE: OPE-L:[3432] Re: "Debunking Economics" and Marx's value theory

From: Steve Keen (stevekeen10@hotmail.com)
Date: Sun Jun 11 2000 - 21:00:06 EDT

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Dear Phil et al,

There was a preface to Phil's note which I neglected to post in
OPE-L:[3477]. I'll precede Phil's comments with his initials, and mine in
reply likewise.

PD: I enclose my response to the chapter and your exchange with Andrew
Kliman. I agree with your interpretation of Marx over the role of
use-value but I think that *he* was dreadfully wrong to get into this
whole dialectic of the commodity business. It is a disaster for his
project, if that project was to show that capitalism was a mode of
surplus labour extraction.

In reply to:
OPE-L:[3432] Re: "Debunking Economics" and Marx's value theory

Steve Keen wrote:

He [Marx] then emphasises that it is vital to properly identify what
is the exchange value of a commodity and what is its use-value, at
least in the case of the commodity labour power:

"Labour capacity is not = to the living labour which it can do, = to
the quantity of labour which it can get done - this is its
*use-value*. It is equal to the quantity of labour by means of which
*it must itself be produced*. The product is thus in fact exchanged
not for living labour, but for objectified labour, labour objectified
in labour capacity. Living labour itself is a use-value possessed by
the exchange value [,labour capacity,] which the possessor of the
product [,the capitalist,] has acquired in trade". (Grundrisse p.
576) [emphasisand interpolation in original - PD]

Steve Keen argues, here and elsewhere, that, starting from 1857, Marx
employed this dialectic of use-value and exchange-value extensively.
I agree that he did but he should not have done. Apart from smoking
all those cigars, it was the worst mistake he ever made. What I
want to get at here, therefore, is why Marx did this.

SK: As an aside, for me it's refreshing to have a critic of my view accept
that Marx did in fact make extensive use of the concept of a dialectic of
use-value and exchange-value. Phil continues:

PD: In ch. 15 of "Debunking Economics" Steve Keen quotes the first
paragraph of Capital I, ch. 6:

"The change of value that occurs in the case of money intended to be
converted into capital... must ... take place in he commodity bought
by the first act, M-C, but not in its value, for equivalents are
exchanged, and the commodity is paid for at his full value. *We
are, therefore, forced to the conclusion that the change originates
in the use-value, as such, of the commodity, i.e. its consumption.*
In order to be able to extract value from the consumption of a
commodity, our friend, *Moneybags, must be so lucky as to find,*
within the sphere of circulation, in the market, *a commodity, whose
use-value possesses the peculiar property of being a source of
value.*" [emphasis added by SK]

Why are we *forced* to the above conclusion? The answer is to be
found within the Grundrisse passage above which Steve Keen quotes:

"The product is thus in fact exchanged not for living labour, but for
objectified labour, labour objectified in labour capacity."

Since, here, both labour-power and the products making up the wage
bundle are objectified labour, equal exchange between them is
possible. The source of value then has to be something else, the
use-value of labour-power.

This is strange. The use-value of a product commodity is the useful
article. By analogy, one might reasonably expect that the use-value
of labour-power to be skill, the capacity to make useful articles,
either alone or in co-operation. To say that the use-value of
labour-power is the source of value is an intrusion of the material
into the domain of the value-form and is deeply suspect.

SK: In other words, use-value is a qualitative phenomenon, an aspect of the
material world, and is therefore irrelevant to Political Economy where value
is the issue. Since Phil argues that Marx *did* in fact make this intrusion,
the following excerpt from Marx's Marginal Notes on Wagner won't phase him
as much as it might some other members of this list. But it implies that
Marx sees a subtlety to his consideration of use-value as quantitative in
this instance which Phil has missed. In Wagner, Marx observes that:

"Secondly, only an obscurantist, who has not understood a word of *Capital*,
can conclude: Because Marx, in a note to
the first edition of *Capital*, overthrows all the German professorial
twaddle on `use-value' in general, and refers
readers who want to know something about actual use-value to `commercial
guides',---therefore, *use-value* does not play any role in his work." (pp.

So I expect that Marx would have been quite willing to defend his "intrusion
of the material into the domain of the value form in this instance". Phil

PD: The root of the problem is that Marx treats labour-power as a
product, with labour objectified in it. Only then can there be
equal exchange between labour-power and normal product-commodities.
This is Marx's monolithic value-form. Everything with a value must
be objectified labour.

The way out is simple, though disorientating. The commodity
labour-power is not a product, i.e. not the result of the expenditure
of labour-power. There is no labour objectified in it.
Consequently, there cannot be equal exchange between the
commodity-product and labour-power. There cannot be unequal
exchange either. Equal exchange is possible between
product-commodity and product-commodity, and, separately, between
labour-power and labour-power. There are two separate systems of
exchange equalisation

SK: Marx was quite aware that labor-power is not a product. However, that
subtlety is one which I believe he planned to address in the never-written
volume on wage-labour. In Capital I itself, he ignored this basic difference
between labor-power and all other commodities, and showed that he could
explain the source of surplus-value simply on the basis of the exchange of
commodities, effectively as if labor-power was produced as are true

The fact that labor-power is both a commodity (because it is bought and
sold) and a non-commodity (because it is conscious, inseparable from its
owner, not produced for a profit, etc.) becomes part of a higher dialectic
which reaches the conclusion that the value of labor-power--which, in
opposition to Phil's interpretation, I argue that Marx clearly and properly
equates to the value of the means of subsistence--is not the actual wage,
but the minimum wage. I have cited these references numerous times before on
OPE (has anyone ever read them, I wonder??), but here we go again:

"The natural price of labour is nothing but the minimum wage." (*The Poverty
of Philosophy*, p. 55 [though this clearly predates his dialectic analysis,
the dialectic made this insight more profound]);

In a section of the *Grundrisse* entitled "*The minimum of wages*", Marx
shows that the statement that labour receives only its value is an
assumption, to be dropped at a later stage of analysis:

Quote: "For the time being, necessary labour supposed as such; i.e. that the
worker always obtains only the minimum of
wages. This supposition is necessary, of course, so as to establish the laws
of profit in so far as they are not determined
by the rise and fall of wages or by the influence of landed property. All
these fixed suppositions themselves become fluid in
the further course of development." (p. 817)

And so on; there are several other instances. Whenever Marx compares the
wage to the value of labor-power, he speaks of the "minimum wage".

This is one of my many dilemmas with conventional Marxists. In attempting to
defend the labor theory of value, they miss the fact that Marx's dialectic
turned his explanation of the source of surplus value upside down. Whereas
prior to the dialectic, he had sourced surplus-value from the unique
characteristics of labor/-power, from then on he sourced it in the general
nature of commodities, and the unique attributes of labor/-power became the
reason why, in general, labor-power will exchange for *more* than its value.
The unique attributes of labor/-power thus give an explanation for a class
struggle over the apportionment of the surplus. They are no longer the
explanation for surplus itself. Phil continues:

PD: The value-form must be seen, not as monolithic, but as complex,
having parts with distinct functions. The product we can allow to
be objectified labour. The role of labour-power is to add to
objectified labour. It is the power to create new objectified

This turns the problem around. It is no longer a question of what
is the source of value. That is labour, the expenditure of labour-power.
It is now a question of what is the value of labour-power.

I consider this to be the central problem in Marxian value theory.

These ideas are more fully discussed in a paper I gave to the IWGVT
2000 conference. It is available at the IWGVT website:


A later version with some corrections is available at:


Well, good luck. But I have to ask you what you're trying to achieve. Will
the battle be over when you find a proof that labor is the only source of
value? Or is that to be merely a first step on the development of a critical
analysis of capitalism? From my point of view, of course, the attempt to
prove the unprovable** has become a quest in itself of economists who
describe themselves as Marxists, to the effective though unintentional
exclusion of the grander quest Marx was on, to "lay bare the laws of motion
of the capitalist system" (pardon a paraphrase).

My argument is that the use-value/exchange-value dialectic was a brilliant
step forward by Marx, which really does enhance his major aim. The fact that
it does so at the expense of one of the notions with which he began--that
labor/-power is the only source of surplus-value, and that value itself is
socially necessary labor-time (rather than simply being measurable in units
of SNLT)--is one of the "prices" one pays for intellectual progress.

Instead, Marx's insight provides (a) a philosophical foundation for the
surplus approach to the analysis of production; (b) an explanation of class
struggle in terms of struggle over the apportionment of the surplus, and
expressed in terms of the length of the working day and the wage; (c) a
non-commodity theory of money [on which basis, I feel compelled to add, I
find most discussion of {commodity} money on OPE-L extremely arid], as well
as many other advances.

If you abandon these, then in my opinion you are hanging on to the bathwater
while throwing out the baby. That is why I have a critical chapter in my
book on Marxist economics, when it is mainly a critique of neoclassical
economics. I believe there is far more to Marx than Marxists realise, and
that the continued devotion to the labor theory of value is holding back
political economy, rather than advancing it.

One consequence of this is that non-Marxist heterodox economists--who, of
course, far outnumber Marxist economists these days, though they are still a
minority themselves--pay too little attention to Marx. I was addressing
myself to that audience, in the hope that they will ignore the labour theory
of value hoopla, and learn from Marx in a way that will enable the
development of a vibrant political economy, as a full rival to neoclassical

Steve Keen

** (because, as you know, I believe Marx proved it wrong--though he then
contorted and obscured his own proof)

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