[OPE-L:8118] Re: Marx and the labour theory of value

From: Michael Eldred (artefact@t-online.de)
Date: Wed Dec 04 2002 - 11:45:40 EST

Cologne 04-Dec-2002

Paul Cockshott <wpc@dcs.gla.ac.uk> schrieb Tue, 03 Dec 2002 14:05:20 +0000:

> Michael wrote:
> I presume that "labour values" are something resembling a monetary price? If so,
> then it is hard to see what such an empirical study has to do with the so-called
> labour theory of value. It is stuck in the vicious circularity which Marx
> discusses in the first chapter of Kapital (value [of a commodity product of the
> most complicated labour] equalizes it [the commodity] with the product of simple
> labour (Eine Ware mag das Produkt der kompliziertesten Arbeit sein, ihr Wert
> setzt sie dem Produkt einfacher Arbeit gleich und stellt daher selbst nur ein
> bestimmtes Quantum einfacher Arbeit dar. MEW23:59).
> Marx asserts that _time_ (under a certain qualification) measures the magnitude of
> value. What is being done here is measuring labour _through_ the value-form.
> -----------------------------------
> PC: Not necessarily so there are two methods one can use to work back to
> labour values from the i/o tables.
> One is to invert the table to obtain vertically integrated labour coefficients,
> this then expresses sectoral outputs in terms of the direct and indirect
> wages that went into their production eliminating profit and rent. This
> can be criticised for taking wages as a surrogate for labour itself.
> An alternative procedure converts the wage bill of each industry to
> a quantity of hours by dividing through by the average hourly wage
> in that industry. One then obtains a row in the i/o matrix that is
> in terms of hours. One can then apply the recursive adding up
> method that Marx uses in Capital to get the labour content in hours
> of the outputs of all industries, this gives us a value vector in hours which
> you can compare with the vector of final selling prices.

Only the second method is at all relevant for the LTV and it assumes that the total
(recursively added up) wage bill, which can be broken down into the total number of
hours of labour performed, has something to do with the magnitude of value considered
as the socially necessary labour time embodied in the commodity product. Access to
labour-times is only _through_ the wage value-form, which is used to obtain a number of
hours. But how does one distinguish between the various purported value-creating
potentials of different concrete labours? What is the criterion? If one does not want
to assume that all kinds of labour are equally value-generating, the alternative seems
to be to assume that the various hourly wage levels themselves are to be regarded as
the indexes indicating the differing value-generating potentials of differing kinds of
concrete labour. Either way, the assumption seems arbitrary, but necessary if a
connection is to be made at all between the monetary dimension and the temporal

> PC: The R^2 that one obtains from the latter method for the UK is about 0.95 as
> against
> about 0.97 for the former method. The former method is equivalent to
> making an implicit assumption that the ratio between different wage
> rates is the same as the ratio between their value creating powers -
> i.e., with complex labour having both a higher value creating power
> and a higher wage rate.

The regression coefficients are impressive (which I will accept for the sake of the
argument, without studying the mathematics in detail --Paul Cockshott and Allin
Cottrell "Does Marx Need To Transform?" http://www.wfu.edu/~cottrell/vol3.pdf ).
Empirically applied probability distributions are able to extract regularities from
masses of data previously not amenable to mathematical analysis. But, as far as I can
see at the moment, the latter method too makes the same assumption regarding complex
labour -- or else it reduces all labour to simple labour. The high correlation you
obtain seems to be that between total recursive labour input costs and the selling
prices of commodities. Since these total wage costs include the break-down of constant
capital into wage costs, and rent components from natural conditions of monopoly are
excluded as "outliers", this is not surprising, since the sine qua non of capitalist
production is that advanced capital returns at least without having been diminished.

Employing the aggregative methods of mathematical statistics is like seeking shelter in
large numbers -- in the long run and on the whole, capital manages to valorize, i.e. to
more than recover its total recursive labour input costs.

> >PC:  I think this is unfair on the empirical researchers. Until Shaik did his
> > investigations I don't think anyone expected to get such a close fit
> > between values and prices. His results certainly did not fit in with
> > anyones initial preconceptions. They are so counter to the preconceptions
> > of economists that their implications are only gradually being realised.
> > It took considerable courage on his part to question the preconceptions
> > that abounded about the labour theory of value being empirically
> > invalid and ask : lets see if it really is invalid?
> Michael asks:
> ME: How does one compare "values and prices"?
> --------------------------------------------------------------------
> Paul replies:
> There are a number of different metrics used by researchers, one can
> correlate the two vectors, one can measure the angle between them,
> one can compute their normalised inner product.
> The important thing to recognise is that one has a vector of prices
> and a vector of values for the same set of commodities, one can then
> apply any of a number of well known techniques to compare the similiarity
> of these vectors.

Once one has made the leap from the temporal to the monetary dimension, the entire
apparatus of mathematical statistics stands at one's disposal. That is why I am
concentrating on how times are derived from the data precisely through the value-form
of wages.

> ----------------------------------------------------------
> ME: To take just a minor point: How does one
> take into account factors such as fertility of the soil (for agricultural
> products) or the differences between monetary currencies in different economies?
> -------------------------------------------------------------
> PC:
> This is a good question. Remember that we are dealing with
> the aggregate national product of whole industries.
> Differences of fertility thus do not affect the figures directly
> but there is an indirect effect insofar as the profits of some
> industries incorporate a significant portion of rent. In the UK
> case this is most significant for the crude oil industry. One finds
> that its market price is significantly higher than would be expected
> on the basis of its embodied labour content. The same applies
> to the petroleum refining industry. In these cases the deviation
> of prices from embodied labour content is in line with what
> one would expect from the Ricardian theory of differential rent.
> The differences in currencies between different economies are
> dealt with as follows.
> There is a row vector in the table indicating the exports of each
> industry, and a column vector indicating the imports. Were trade
> in balance one could simply take the total domestic labour content of the
> exports and divide it pro rata among the imports used by each
> industry - since according to Smith, domestic labour is the real
> cost of imports to a country. Since trade is not typically in balance
> one evaluates the mean domestic labour content per Pound
> Sterling exported in the UK case for British exports, and then
> imputes this to each Pound Sterling spent by each industry
> on its imports.
> > PC: It is my experience of doing empirical investigations that they almost
> > always teach you something new that would not have occured to you had
> > you not gone to the trouble of doing them.
> ME: My objection is that the preconceptions (i.e. one's concepts) determine in
> advance
> what is to be empirically measured.
> -----------------------------------------------------------------------
> PC: This is obviously the case, in that if one had no concepts one would not
> know what one wants to measure. But one's preconceptions do not
> determine the results of what you measure.

That's true. But the results also have to be interpreted. What I am questioning is
whether the empirical analysis you describe is a test of the LTV at all but instead
represents a validation that capitalism is capitalism, i.e. that on the whole, money
capital advanced returns augmented.

Instead of searching for empirically verifiable quantitative laws, I want to draw
attention to the groundless and therefore tautologous (it is a movement of the same to
the same) essence of capitalism -- advanced capital either returns without diminishment
or it doesn't. As long as the product produced is saleable at a profit, the costs
(which, I agree, are reducible by reiterative procedure to mainly labour costs) are
recouped and the capital in question survives. As a rule (i.e. _epi to poly_) the
attempt to send capital through its circuit of augmentation works. Why? Because from
experience the entrepreneur knows what will work and what won't. But experience may
become suddenly invalidated. This can be seen, say, in the toy industry where the value
of a toy (its selling price) depends on whether consumers (kids or adults) have become
bored with it yet or not. Suddenly yo-yos are out of fashion again and the existing
stock is worthless.

Aristotle distinguishes between science (_epistaemae_ which is based on principles and
deductions therefrom) and knowledge of regularities (knowledge which pertains 'for the
most part', _epi to poly_). Modern science (natural and social) with its sophisticated
number-crunching techniques and machines can bring regularities to light which then go
in search of explanations. The regularities sought in the empirical data depend on the
scientist's preconceptions of what he or she is looking for. A theoretical
preconception is being tested. But the converse also happens: the scientist notices
regularities in the data which then become the focus of attention begging for a
theoretical explanation.

> In the 70s I did a long term study of the organic composition of
> capital in the UK. My marxian preconceptions were what
> made me choose to measure it, but they did not determine the
> results which revealed some periods when organic composition
> was rising and other long periods when it was falling.
> When one gets a result like that which one has not expected
> you are prompted to ask new questions about what has
> happened and is currently happening.
> -----------------------------------------------------------------------
> > > ME The phenomenon and experience of exchange -- and thus also its concept -- is
> > > richer than you think.
> >
> >PC:  I am sure that this is true, but unless you investigate actual price data
> > you are left speculating about the properties of prices.
> ME: That is assuming already that the value theory is a theory of prices. The LTV
> asserts some sort of proportionality between quantities of labour measured in time
> and money prices of commodities produced by that labour. These quanitities of
> labour are said to be "socially necessary" and it is admitted (see Marx-quote
> above) that there are differences between simple and complicated labour with
> regard to their value-creating potential.
> What is the empirical access to a phenomenon such as "socially necessary"? How
> does one distinguish between simple and complicated labour without passing through
> the monetary dimension?
> -------------------------------------------------------------
> PC: In principle and given access to the reasearch resources one can
> compute labour budgets like Strumlin in the USSR, but for
> western economies today one has to use the I/O tables to compute
> what is necessary - this accurately reflects what is necessary on
> average for an industry. One is not here trying to assess the
> necessity of an individuals labour and whether one individual
> is spending more time than necessary on a task. To judge that
> one must have recourse to work study methods.
> ---------------------------------------------------------------------------
> ME: This is what I meant by the reference to Galileo and his preconceptions. Galileo
> writes in his Discorsi of 1638:
> "Mobile super planum horizontale projectum mente concipio omni seculso
> impedimento, jam constat ex his, quae fusius alibi dicat sunt, illius motum
> aequabilem et perpetuum super ipso plano futurum esse, si planum in infinitum
> extendatur."
> "I conceive in my mind a body thrown onto a horizontal plane and every impediment
> excluded; it follows from what is said elsewhere cumbersomely that the motion of
> the body over this plane would be uniform and perpetual if the plane extended into
> infinity."
> This is what I mean by Galileo's "preconceptions" -- he conceives his experiment
> of balls rolling down an inclined plane and up another plane on the basis of what
> he conceives roughly as Newton's first law of motion. The preconception dictates
> the experiment. The experiment works only within the preconceptions of what a
> physical body is and how motion is to be conceived. This preconception can be
> called the mathematical casting of the physical world, a metaphysical casting of
> beings in their being prior to any possible experiment.
> With regard to the so-called labour theory of value, which asserts a
> proportionality between quantities of "socially necessary labour time" and
> quantitative prices, the great difficulty lies in determining the _social_
> dimension. For, the only _sociation_ of labours (i.e. their social being) in a
> commodity-producing economy takes place through the market, i.e. through the
> monetary dimension itself. This results in the circularity which you yourself seem
> to confirm.
> ---------------------------------------------------------------------------
> PC: I don't agree with this. The I/O table was an invention deriving from the
> method of material balances adopted by Gosplan. This in turn derived from
> the real need that any socialist economy has to determine the socially necessary
> labour time required for projects. The i/o tables prepared by western
> states are deficient in that they contain limited data on disaggregated labour
> types used, but they already encapsulate the aspect of social necessity by
> considering the labour of the entire society at once, much as Engels hypothesised
> would be done in a socialist economy.

The fact that I/O tables were invented in the context of USSR production planning
through Gosplan, I think, highlights my objection. In a total social production plan,
production inputs, including labour inputs, are sociated in the plan itself -- and not
via the market. The sociated form of the products of labour is not (monetary) value but
the overall plan itself in which each kind of labour and each product of labour has a
concrete, differentiated, albeit aggregated position -- not simply an abstract validity
as an amount of money.

Gosplan represents an historical attempt at consciously sociated labour. The conscious
planning by some sort of political apparatus replaces the sociation via the
marketplace. The markets become merely places of distribution according to foreseeing,
precalculative planning. Instead of the dissociated self-interests of producers,
workers, managers, landowners, financiers, etc. primarily driving economic activity
through the mediation of the various sociating value-forms, the motor of consciously
sociated socialist production is politics itself, with all the inertial inefficiencies
of bureaucracy and all the conscious political manipulation and individual abuse that
this is heir to.

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