[OPE-L:6457] Re: Re: Re: More on prices, technical choices, and values

From: Paul (clyder@gn.apc.org)
Date: Sun Jan 27 2002 - 17:24:00 EST

On Sat, 26 Jan 2002, you wrote:
> 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:
Followed by a series of examples familiar to us all

Gil is certainly right in saying that there is every justification in Marx for
assuming that he defines value as the mean labour content of a 
commodity, integrating over the various techniques of production
then extant.

However he also defines it as 'socially necessary labour time' and makes
the observations that I quoted about capitalist calculations tending
to be labour squandering.

Gil asks what Marx really meant here, did he really favour the definition
interms of the choice of technique which would minimise labour or 
the average technique?

Well in one sense this a rather fruitless question since we can
never really know what he meant. I would rather take the approach
of Althusser and say we have to look at the problematic at work and
see if there are hidden contradictions in it, which Marx may or not
have been aware. I think the issue is analogous to the contradiction
that Marx brings out in Smith's labour commanded definition of value.
Its fine until one starts considering wage labour, when the problem of
surplus value crops up. Until you consider wage labour, labour 
commanded and labour embodied seem the same thing.

At first sight the definition of value in terms of socially necessary labour
and in terms of average expended labour appear to be the same thing.
But when you start to look at how techniques are chosen in the presence
of surplus value, then the hidden contradiction in Smiths definition appears
again but at one level deeper of logical recursion. If there was no surplus
value, if labour commanded and labour embodied were the same thing,
then the choice of technique would always be the labour minimising one,
and this would act as the attractor or center of gravity around which
individual producers would cluster.

Once one drops the identity between labour commanded and embodied
then the average labour content of a product comes to depend upon
the rate of exploitation, whilst the socially necessary labour time  
could mean something different. This difference is a reproduction of
Marx's critique of Smith and is brought out in the passage on labour
squandering. A sum of money commands more direct labour than
indirect labour, thus a cost minimising technique is only a labour 
minimising technique if Smiths ambiguity is held to. If we consistently
stick to the Ricardian labour embodied definition, taking into account
the theory of surplus value, then labour minimising and cost minimising
are different. This problematises the whole definition of value, in that
value as average labour embodied now depends uppon the current
wage rate, insofar as this shifts the average techniques used. When
wages are high, techniques will tend to be more labour minimising than
when they are low.
> 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:
Gil then gives 4 reasons as to why there might be such a mix of
techniques. None of these are ones that would have occured to
me, though they may well be possible. I would have tended to
simply take it as given that there will be a dispersion of different
production techniques practiced. This variety of techniques will
have all sorts of origins: differences in knowledge, different ages
of plant, variations in wage rates etc. Decisions to adopt a 
particular production technique are bound to be affected by a
whole mass of particular circumstanced relating to the time
and place at which it was done, the knowledge of the engineers
and managers, the customary working practices etc. 

The cost of production of different firms varies and firms are only
forced out of production by competition if their cost of production
exceeds the market value. The labour minimising firm will still
have costs below the market value, and so will not actually be
forced out of production, it may simply have lower profits
than the price minimising firm.

Take an example, suppose that there are two ways of
digging a ditch:

Mthod A uses 100 hours of direct and 100 hours of indirect
labour. If the wage rate is 3 pounds per hour and the price
of a commodity incorporating an hours labour is 7 pounds
the cost of production is 1000, 

Method B uses 50 hours direct and 125 indirect labour. This
is clearly the labour minimising technique, but its cost of
production will be 1025. 

If we assume that market value is determined by the first,
technique, and the the rate of surplus value is 133% as
implied by the ration of 7/3 for embodied labour to the wage
then the market value of a ditch will be 200 hours or 1400 pounds.
The labour minimising firm will still earn a profit of 375 on this
price, but the firm using technique A will earn a profit of
> 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?  

This definition of value can not practically be calculated for capitalist
economies using official statistics. It could in principle be calculated
for a planned economy with more detailed statistics.

> 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.

He may well have, we will never know for certain, but that is certainly 
the way I use the point in argument.

Paul Cockshott

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