[OPE-L:3977] Re: Re: Re: Re: Re: Re: Re: Re: m in Marxs theory

From: Gil Skillman (gskillman@MAIL.WESLEYAN.EDU)
Date: Thu Oct 05 2000 - 17:02:15 EDT

In response to this passage by me:

>>My point is just that you don't need
>>a labor theory of value, understood as a notion that commodity prices are
>>somehow "regulated" by underlying labor values, in order to advance Marx's
>>critique, and in some cases reliance on labor value theory is
>>counterproductive.  Gil

, Duncan writes:

>Doesn't this kind of miss the forest for the trees? I think Marx's 
>point was that capitalist societies operate on the basis of money 
>value calculations, particularly profitability calculations, and that 
>the basic macroeconomic determinants of profitability are the ratio 
>of the value of output to the value of capital (what Tom Michl and I 
>call the "productivity" of capital) and the ratio of profit to total 
>value added (which is a transformation of the rate of exploitation). 

>I take the essence of Marx's theory of value to be the observation 
>that you can't change the rate of profit in the macroeconomy without 
>changing one or the other or both of these variables.

Extending Duncan's metaphor, I'd say that this characterization of Marx's
value analysis depicts the forest as though it were a *single* tree, and at
that one that doesn't grow particularly well in Marx's soil, and one that
can be easily found in other forests, to boot. 

Last point first: 

If I read it correctly, the ratio product that Duncan emphasizes here
corresponds to the identity between the average rate of profit for the
economy and the productivity of capital times the profit share of net
product, or something very close to that.  But you certainly don't need a
labor theory of value to perceive or express any such macro
identity--manifestly it can be stated, is stated, in monetary terms, and
many non-Marxian theories deal with macro entities represented in monetary
terms.  Thus a labor theory of value would have a particular claim of
relevance with respect to this expression only if it offered some special
insight into the determination of the ratios on the right-hand side of the

Which leads me to the middle point:

I doubt that any such claim can be made on behalf of Marx's specific value
theory.  First, the labor theory of value insists on a major detour:
*first* you translate monetary entities, the ones actually observed and
acted on by capitalists, into labor value entities, analyze their movement
in this form (i.e., the form that capitalists don't demonstrably act on),
and then translate the result back into monetary entities.  It would be
much simpler to skip the detour!  

But second, Marx's value theory doesn't have anything specific to say about
one of the ratios on the right-hand side, and the major thing it has to say
about the determination of the other ratio is problematic at best.  On the
former issue, Marx's analysis yields (at best) a story about wage and
profit *rates,* not *shares*.  The basic premise (itself derived
problematically in V. I, Chapter 5) that all commodities exchange at their
respective values in the "pure" case of market exchange suggests that labor
power receives the subsistence wage *rate*.  His analysis in Ch. 25 of
Volume I offers his alternative to the Malthusian account as to why the
wage *rate* tends toward the subsistence level.  [I guess with enough
effort one could tease a theory of wage *share* determination out of Ch. 10
of Vol. I, but I think that would be stretching it.]
Given this emphasis on determination of the wage *rate* rather than the
wage *share*, one would logically get a more direct insight about the
determination of the profit rate, the left-hand side variable, from
something akin to the Sraffian wage-profit frontier, rather than the macro
expression Duncan isolates above.  

On the latter issue, the main claim about capital productivity that Marx
derives from his value analysis is the rather indirect one that the drive
for *relative* surplus value leads capitalists to favor capital-using,
labor-saving technical innovations (i.e. those that increase the organic
composition of capital for a given wage rate).  But this does not follow:
first, individual capitalist firms would logically adopt any innovation
(product or process) that promised to increase profits, no matter what
doing so implied for the organic composition of capital; and second, there
is no reason to think that capital-using, labor saving innovations would
necessarily tend to predominate over other forms, e.g. innovations that
were *both* capital- and labor- saving (a reasonable assessment of the
effects of the computer revolution on many forms of production).

Bottom line, I don't see that Marx's value analysis offers any special
insight to the determination of the right-hand-side ratios in Duncan's
formulation, much less that a story about these ratios constitutes "the
essence of Marx's value analysis," as he suggests.  What's more, Marx
insists on a lot more things than this in his value analysis, which brings
me finally to the first-named point:

I don't see how Duncan infers that the stated identity "was Marx's [main?]
point" in developing his value theory, or that a story about the behavior
of the right-hand side ratios constituted "the essence of Marx's value
theory."  There is so much else that Marx emphasizes as fundamental
implications of his value analysis.  I count at least five substantive
(albeit in some cases highly problematic) claims that are emphasized by
Marx yet not directly reflected in Duncan's formulation:

1)  The notion that that commodity prices are somehow "regulated,"
"rationalized (i.e. rendered non-"imaginary")" or at least in some
meaningful sense undergirded by corresponding labor values, measured by
socially necessary labor time, a notion that Marx twists himself into
logical knots to defend under conditions of pure competition in V.III,
Chapter 10.  A corollary of this is his attempt to establish the aggregate
"transformation" identities in Ch. 9.

2)  The notion that surplus value, and therefore exploitation, is the
fundamental basis of capitalist profit.  [This idea is so fundamental to
what Marx argues in Capital that I'm surprised it finds no direct
reflection whatsoever in Duncan's representation of "Marx's point."]  N.B.:
 You don't need a labor theory of value, as I characterized it at the top
of this post, to make this legitimate point.

3)  The notion that the primary significance of the labor/labor power
distinction lies in accounting for the possibility of surplus value given
the "pure" case that all commodities exchange at their respective values (a
fallacy I expose in an as yet unanswered thought experiment in OPE-L 3538).

4)  The notion, alluded to above, that the desire for relative surplus
labor leads capitalists to adopt predominantly capital-using, labor-saving
technical innovations, leading to persistent unemployment and the
"tendential" immiseration of the working class.
Marx uses this argument to account for the persistence of capitalist
exploitation in the face of capital accumulation.  Its validity requires
some strong assumptions that are obscured by Marx's value-theoretic
analytical framework.

5) The notion that the bias in technical innovation mentioned in (4) is
sufficient to establish a "tendency" for the rate of profit to fall.
Incidentally, Marx's falling profit rate story is not based on an analysis
of the relative behavior of the ratios that Duncan isolates.  

A final note:  a story about profitability only has substantive bite (as a
component of a theory of capitalist crisis, e.g.) if it can distinguish
profits understood as a return to "opportunity cost" (say, of capitalist
impatience or risk-bearing) from profits understood as economic rents
(i.e., returns *over and above* the amount necessary to elicit a given
supply of capital).  Without this distinction, it is logically impossible
to infer that a given fall in the rate of profit has "crisis" implications
for the capitalist system.  *Yet it is a distinction that Marx's labor
theory of value is signally unable to make*:  surplus value may exist
whether or not any portion of it corresponds to payment for capitalist
opportunity costs.  Thus, even were I to grant Duncan's representation, it
strikes me that Marx's labor value-theoretic framework is a singularly
inappropriate one for making use of this theoretical connection.  To cap
Duncan's metaphor, within Marx's theoretical framework we are necessarily
unable to tell whether a tree falling in the forest makes a sound.  

And on that arboreal note, having gotten to the root of the matter, I'll
leave.   Gil

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