[OPE-L:6454] Re: Re: More on prices, technical choices, and values

From: Gil Skillman (gskillman@MAIL.WESLEYAN.EDU)
Date: Sat Jan 26 2002 - 16:10:37 EST

Deep into our discussion concerning the order of determination of commodity
values and prices, Paul C. writes in 6444:

>The issue of definition is relevant here.
>If you define value to be the average of techniques used by capitalists
>then the rate of exploitation would determine value through its influence
>on choice of techniques. If on the other hand you say that the
>value of a commodity is determined by that combination of the 
>techniques in current use which would if genrally used minimise
>the labour content, then values are independent of prices
>since we define value in terms of the labour minmising technique
>rather than the mean technique. This is one of the abiguities 
>implicit in the notion of socially necessary labour time.

Ah.  It's taken awhile for the lightbulb to click on, but finally it has.
I see now that the issue of definition is not only "relevant" to the
discussion, as you've mildly put it, but central to it.  As your above
comment suggests, I've been presuming a notion of "socially necessary labor
time" based on the mean of production techniques actually in use at a given
time, while you're using a notion based on a hypothetical generalization of
an existing technique that minimizes required labor time.  I should have
picked this up from one of the papers of yours I've downloaded in the
past--sorry about that. In any event, my exploration of this notion over
the past few days leads me to the following comments and questions.

1)  Is your definition really what Marx had in mind?  I agree that the
passage in which he introduces the term leaves some room for maneuver:
"Socially necessary labour-time is the labour-time requred to produce any
use-value under the conditions of production normal for a given society and
with the average degree of skill and intensity of labour prevalent in that
society." [I, 129].  However, it seems more plausible to interpret the
phrase "required...under the conditions of production normal for a given
society" as *average* or mean conditions rather than "the minimum possible
given existing techniques."  Furthermore, in subsequent passages in Volumes
I and III, Marx explicitly uses "normal" as a synonym for "average."  Examples:

"If under normal, *i.e. average* social conditions of production, x pounds
of cotton are made into y pounds of yarn, then a day's labour does not
count as 12 hours' labour unless 12x lb. of cotton have been made into 12y
lb. of yarn; for only socially necessary labour-time counts towards the
creation of value." [I, p296, emphasis added]

"A further condition  [for the determination of socially necessary
labour-time] is that the labour-power itself must be of *normal*
effectiveness.  In the trade in which it is being employed, it must possess
the *average skill, dexterity and speed prevalent in that trade*, and our
capitalist took good care to buy labour-power of such *normal* quality.  It
must be expended with the *average* amount of exertion and the *usual*
degree of intensity...." [I, p303, emphasis added]

"If the *labour-time of the worker is to create value in proportion to its
duration, it must be *socially necessary labour-time.  That is to say, the
worker must perform the *normal social* quantity of useful labour in a
given time.  The capitalist therefore compels him to work at the normal
social *average* rate of intensity....For every intensification of work
above the *average rate* creates surplus value for him...[Resultate, p.
987; emphases in original]

"It is always...in the form of the governing market price or the market
price of production, that the nature of commodity value presents itself,
its character being determined not by the labour-time needed by a certain
individual producer...but by the socially necessary labour-time; by the
labour-time required *under the given average social conditions of
production* to produce the total socially required quantity of the species
of commodity available on the market." [III, p. 780, emphasis added.]

I note in this connection that in the excerpt you cite from Volume I, Ch.
15, Marx never says that the labor value of commodities produced by
"labor-squandering" [but presumptively cost-minimizing!] techniques is less
than the labor actually expended.  Thus, at best it is not clear that the
definition of SNLT you adopt is the one Marx had in mind.  But maybe it
should have been?  What would happen if we did so?
2)  As you've no doubt established under more general conditions than I
examined, when alternative techniques for producing a given commodity are
available to all firms in the market, and these firms take input commodity
prices as given, the labor content-minimizing technique will exhibit a
higher organic composition than the capitalist cost-minimizing technique so
long as surplus value exists.  This result is of course consistent with the
excerpt you cite from Vol. I, Ch. 15 (though perhaps not uniquely so--see
below). Thus arises the *possibility* you note that factors influencing the
cost-minimizing technique need not affect the value-determining technique.  

3)  But does this possibility translate into the categorical result you've
claimed in the passage displayed at the beginning of this post?  I think it
depends on the explanation given for why firms do not universally adopt the
cost-minimizing technique over the labor content- (LC-) minimizing one;
that is, why it occurs that something other than the cost-minimizing
technique is in "current use," since presumably the cost-minimizing
capitalists would be able to compete the LC-minimizing capitalists out of
business. Once this happens, of course, the cost-minimizing and
LC-minimizing technique is the same, and my interpretation of the
connection between commodity prices and values remains valid.

 I can think of four scenarios in which the two alternative techniques
might coexist:

A)   The market for a given commodity is in flux, so there has not yet been
an opportunity for competition among sellers to drive out the
non-cost-minimizing firms.  This interpretation clashes with Marx's
contention that values regulate the respective magnitudes of *average*
commodity prices, that is, those that emerge after netting out the effects
of supply and demand *oscillations* (see, e.g, I,  p. 269, footnote).  It's
also hard to see how such a situation could legitimately be termed "normal."  

B) Some capitalists pursue an objective other than profit, and thus are
willing to forego some profit in favor of meeting some other objective that
somehow translates into LC minimization.  This interpretation clashes with
Marx's stipulation that he treats each capitalist as representative, since
he clearly sees the representative capitalist as intendedly
profit-maximizing and thus cost-minimizing.  Thus, for example, this
passage from Volume III:

"No capitalist voluntarily applies a new method of production, no matter
how much more productive it may be or how much it might raise the rate of
surplus-value, if it reduces the rate of profit.  But every new method of
production of this kind makes commodities cheaper." [III, p. 373]

C)  Some firms enjoy competitive cost advantages not enjoyed by other
firms, leading to a situation of "pure competition" if all firms still take
output prices as given.  For example, some firms have managers with unique
abilities to utilize labor-reducing machines in cost-effective ways
relative to other competitors.  While this scenario is not inconsistent
with Marx, and indeed he explicitly treats it in V. III Chapter 10, it is
precisely the case in this scenario that one *can't* plausibly generalize
the LC-minimizing technique to the entire market, because the production
advantages are scarce and thus non-generalizable.  If this weren't the
case, we'd return to the condition of scenario (A).

D)  There exists monopoly or monopsony power in input markets that
translates somehow into wage discrimination, so that some firms'
cost-minimizing technique produces commodities with less labor content than
others.  This seems inconsistent with the sense that Marx intended the
notion of labor values to apply even to (*especially* to) markets that are
"competitive," i.e.-nonmonopolistic in nature, and again there is a problem
of generalization:  In general, the LC-minimizing firm would be the one
that faces the discriminately high wage rate (per comment 2 above), and to
"generalize" this is to imagine that labor values are constructed by
insisting that actors with market power quit wage discriminating.  

I note that with the possible exception of scenario (D), in none of the
above scenarios is it guaranteed that the LC-minimizing technique is
unaffected by relative input commodity prices.  For example, in (B), even
non-profit-maximizing capitalists might make marginal tradeoffs with
production cost, and in (C), even with unique production advantages,
otherwise cost-minimizing firms would still respond to changes in relative
input prices.  Thus even if one could conjure up 
coherent cases in which LC- and cost-minimizing techniques differ yet
coexist, it would arguably still be the case that relative input prices
influence commodity values even as *you* define them.  

4)  It seems to me that this definition of labor value would be difficult
to implement empirically. That is, if it weren't the case that all firms
use the same technique (in which case, supposing that that technique were
cost-minimizing, my comments about the connection between input commodity
prices and labor values would again apply), one would have to have data on
*all* of the extant production techniques in *each* market in order to
calculate commodity values, rather than average direct and indirect labor
expenditures, which would be a very difficult empirical exercise indeed.
Do you attempt to find and incorporate such data in your empirical work
with Allin, for example?  

5)  Finally.  One way of reconciling the above with Marx's usage of the
term "labor-squandering" in the excerpt you cite is to distinguish two
notions of commodity, one (based on average production conditions) that
putatively relates to commodity prices, and one (based on generalizing the
extant LC-minimizing technique) that relates to a *normative* condition
based on minimizing total labor expenditures.  I wonder if Marx might not
have had something like that in mind.


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