Re: value and labour

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Mon May 12 2003 - 22:15:28 EDT

Hi Andy,
As someone who has thought long and hard about these matters, may I
ask you to address my worries about the theory of value?

You write:

>  The peculiarities of
>commodity relations and capital entail that labour stripped of all
>sensuousness takes independent effect as value. The key to
>grapsing this is: (i) to grasp that there *must* be a 'third thing', a
>material thing, constituting commodities as values, a necessity
>which stems from basic materialist premises in the context of the
>specific historical form of the commodity; (ii) to see that this thing
>can only be abstract labour, since labour time is the only material
>property of commodities not abstracted from in exchange (this
>cannot be grasped without recognition of products as embodiments
>of labour).

I guess I am having difficulty seeing how abstract labor is in fact
abstracted in exchange.

  A buyer sets out not to pay a price for a commodity which reflects
more than the social labor time needed to reproduce it; I suppose you
are suggesting that he'll look for the "best value", the price which
reflects just that time to reproduce it with the most advanced
technique, or even for a price less than value (say a distress sale).
But the consumer's estimation of a commodity's value is more or less
subjective. He doesn't know the actual value of the used up means of
production or the actual direct labor time expended. In fact, in
making an estimate of the commodity's value, he'll at best add up the
costs of its production in his head, not the number of hours expended
which he'll then translate into a money price based on his estimate
of the prevailing monetary expression of labor time.

If the consumer remains in the putatively fetishistic  world of
prices, this seems to be the case with the seller, too: the seller
wants to sell that commodity for what it cost him. But the seller
neither knows nor cares about the unit value of his commodities. He
knows the money price, not the value,of the used up means of
production; and he accustoms himself to a reasonable return on the
money capital which he has invested, not the actual surplus value

So if value is a subjective estimate of the consumer and an unknown
and unobservable entity to the seller, then how does it or how can it
possibly  come to regulate exchange and production in bourgeois
society? That's my first question.

Shouldn't we look for some theory of prices and profits which makes
no appeal to  variables which are unknown, unobservable and
practically ignored in the processes of price and profit setting?

Since the Sraffian theory seems to do just that--no value, no
preferences, no metaphysical posits--shouldn't we adopt it on the
basis of what some would call Ockham's Razor? As Ajit reminded us, we
don't even need an unknown, unobservable and practically ignored
entity like surplus value to solve for prices and profits with the
development of simultaneous equations. Why do we have to posit the
existence of this peculiar substance of abstract labor? That's my
second question.

Even if Marx is able  to reconcile logically the law of value through
mediations and abstractions with the observable phenomena of profits
(redistributed surplus value), rent (extra surplus value), wages
(value of labor power), this doesn't prove the existence or reality
of value in itself.

But Marx seems to have made just that mistake; he took the object of
economic science to be the reconciliation of the law of value with
the market phenomena that seemed to contradict it. And let's say that
his reconciliation is in fact perfectly logical (for different
reasons, we both don't think there is logical transformation
problem).   But this still presupposes the regulatory power of the
law of value; it does not prove it.

Perhaps Marx's  theory of value has been validated by the occurence
of the developmental tendencies which he predicted on its basis
(alternation between prosperity and depression, concentration and
centralization, absolute increase in the size of the exploited
proletariat, rising rate of exploitation, development of the world
market, absolute growth in the industrial reserve army of labor and
surplus population) . But I can see no other basis for concluding
that the substance of abstract labor has explanatory power over
prices, profits, rent and wages. And the task of validating Marx
seems difficult. And Gil (as well as Daniel Little) would of course
argue that these developmental tendencies can be "derived" simply
from the proper institutional specification of capitalism; there is
no need for the theory of value.

What do you think of the empirical attempts to validate the labor
theory of value as an explanation for prices?

Yours, Rakesh

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