Value and labour (from Jurriaan)

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Tue May 13 2003 - 11:34:40 EDT

 From Jurriaan Bendien

Hi Rakesh,

Thanks for your interesting post on OPE-L. You wrote:

>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.

I think this is correct. There is no logical or theoretical proof,
only a matter of theoretical coherence, of logical consistency. The
law of value is, if anything, a hypothesis. But a hypothesis must be
internally logically consistent, and have explanatory power, that is a

>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.

I think here Marx's dialectical exposition is apt to lead to confusion
rather than clear it up. It is not the (logical) reconciliation of the
law of value with the market phenomena that contradict it, this is
impossible, rather the law of value in its capitalist expression is
supposed to ultimately causally explain the movement of prices and the
behaviour of economic agents in a period of historical time, by
setting limits within which prices can move. (But if we talk about
"regulation" we also permit probabilistic variations within certain
limits). Thus, in order to explain relative price movements over a
period of historical time, we refer to value relationships, to values,
i.e. we relate prices to labour time. The only proof of the existence
of the law of value is not a logical proof, but an empirical proof,
namely what people actually do, the observable behaviour of economic
agents, and whether this is consistent with what the existence of the
law of value would lead us to expect or predict. It is therefore quite
pertinent to ask, can the law of value in its capitalist expression
predict medium or long-term price movements ? If the law of value is a
true description of reality, what would we expect to see in economic
behaviour within historical time, and do we indeed see that ?  And if
not, what would explain the price movements and economic behaviour ?
Of course, alternative explanations are possible, and Marx's
discussion of exchange relations is pitched at a high level of
abstraction, and does not exhaustively describe real exchange
relationships. But the intellectual and scientific challenge is
whether you can explain all price movements in principle from within
the same theoretical framework, and in this sense Marx's theory offers
promise, because all other approaches reject the possibility of
explaining all price movements within one and the same theoretical
framework. Indeed, non-Marxists would say that e.g. "to explain the
trend in the trade balance of the USA, I do not need the hypothesis of
a labour theory of value" and this is correct, you don't necessarily
need it, you can have a more limited explanation. You can also explain
the determination of some prices in one framework, and other prices in
another framework, be it at the expense of eclecticism. Indeed, the
non-Marxist would say "how much theory do you really need, I don't
need all that theory, I do not need to think that abstractly". But at
issue here is what your scientific or explanatory objectives are.  The
inability to explain all price movements within one and the same
theoretical framework implies the inability to explain price as such,
what they are, what they represent and where they come from, i.e.
price in general, the concept of price.  Marx's theory of capitalism
has the merit of elegance and simplicity, and it has considerable
explanatory and predictive power. I think Marx understood this full
well, hence his great emphasis on theoretical coherence, his critique
of the incoherence or inconsistency of the classical political
economists, etc. In science, a unitary theory is ultimately always
preferable to eclecticism, but it may be that eclecticism is
necessary, either because of the nature of the phenomena investigated
(they do not permit a unitary theory) or, we are not yet able to form
a unitary theory, or, for our pragmatic purposes an eclectic approach
is sufficient. Thus economists might say, I do not need a unitary
theory (I do not find it useful), or they might say a unitary theory
is impossible, but the latter is normally strictly a dogma, since we
don't know a priori whether it is impossible (although sometimes we
may possibly be able to prove that the nature of the object of
investigation simply does not permit anything other than an eclectic

>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.

I think you are correct here. Gerald Cohen already noted that the
materialist conception of history is logically independent from Marx's
theory of value, after J. Witt-Hansen had already noticed this. Rudolf
Hilferding also noted that Marx's theory of capitalism (or, for that
matter, his conception of history) did not necessarily entail any
particular type of political practice either. It is quite possible to
respect Marx's aims and intentions in scientific inquiry, but to
create another theory or series of theories which do the job just as
well, or better, both by socialists, and by non-socialists. It is also
possible to respect Marx's political objectives (the emancipation of
the working class and/or the achievement of a socially just,
egalitarian, non-exploitative and non-oppressive society,of socialism)
independently of his scientific achievements yet apply a different
theory or political practice for this purpose.

This insight has a number of implications, but let me just explore
briefly just one of them. Marxists argue that the only correct
critique of capitalism is Marx's, which leads to the conclusion that
if we criticise capitalism, then we should be Marxists. But what if
there are lots more valid critiques of capitalism than Marx's ? I
think there are, I think Marx wouldn't deny it for a second. If we
think about this more, then we will understand the political failure
of Marxism.

Personally, I prefer to retain Marx's theory of economic value,
because I have seen nothing substantially better in the economic
literature, and no solid data or compelling reasons for dropping it.
It's a pretty good hypothesis, although it needs to be further
elaborated. All I have seen is (1) people who attack Marx's theory who
have different explanatory objectives than Marx, and (2)
political-ideological argumentation about norms and values, including
those which supposedly flow from the acceptance of a scientific or
proto-scientific theory. Often, as you know, the two get mixed up. Be
that as it may, I am not a Marxist, just a socialist, who acknowledges
many valid socialist approaches and many valid critiques of
capitalism. This is incidentally totally consistent with Marx, who
said "tout que je sais, je ne suis pas Marxiste". And, in introducing
his book Capital, he emphasises one must think for oneself.


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