Re: [OPE-L] SV: [OPE-L] what is irrational in the functioning of capitalism?

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Wed Nov 29 2006 - 07:09:19 EST

--- Ian Wright <wrighti@ACM.ORG> wrote:

> Hi Ajit
> Let me try to think through your question. I don't
> have definitive
> answers, so I may stumble.
> > Actually, I do not understand why "labor" is
> > particularly important in the context of
> production of
> > profit. Do we think that "surplus" cannot be
> produced
> > without labor? But why can't we imagine a system
> of
> > production completely operated by robots? In this
> > case, why can't we imagine the system producing a
> > "surplus" and a market with prices of commodities
> with
> > a rate of profits to boot. The question is, can we
> > make a logical claim that a system of production
> > without labor will not be able to produce
> "surplus".
> > If not, then there is a serious problem with
> Marx's
> > concept of "surplus value". Cheers, ajit sinha
> First, let's distinguish between production of a
> physical surplus and
> production of surplus-value. The former can exist
> without the latter.
> For example, consider a completely automated
> terra-forming factory
> that is preparing a planet for humans. It extracts
> energy from raw
> materials, processes them, and outputs oxygen as a
> physical surplus.
> And it reproduces itself on an ever-expanding scale.
> We can imagine
> that this factory might be composed of all kinds of
> special-purpose
> machines and robots. Let's assume its productive
> activity is entirely
> planned in advance. The factory has special-purpose
> responses to
> throttle its output according to local availability
> of extracted
> energy etc. In this kind of system, there is no need
> to continually
> allocate a general-purpose resource to new kinds of
> activity. So there
> is no need for the value-form. There is no need for
> commodity
> production with prices. The system lacks
> general-purpose labour-power.
> The human designers decided not to implement a
> price-based market
> allocation strategy for the internal operation of
> the factory for this
> reason. Stretching terminology, the factory is
> composed solely of
> "constant capital" (scare quotes because in this
> example there isn't
> money-capital to represent the value of parts of the
> factory). There
> is no agent that functions as "variable capital",
> and hence no
> production of surplus -value.
> My point is that it would be wrong to divorce money
> as a technique for
> organizing production from the existence of
> particular kind of causal
> power, that is human labour, and a particular kind
> of social relation,
> that of equal and independent producers lacking a
> global plan. So a
> thought experiment that considers the existence of a
> value-form,
> without including the existence of a causal power
> that the value-form
> refers to, may cause confusion. (I do feel that the
> static, linear
> algebra approach of the "surplus school" distracts
> our attention from
> the dynamism of real economies, particularly ongoing
> innovation, and
> the causal role of money flows in the process of
> continually
> reallocating social labour over time.)
> More to say, but I'll stop here and await your
> feedback. The
> interesting case is a mixed economy with highly
> adaptive robots and
> human labour. The less interesting case is an
> economy consisting of
> highly adaptive robots that are independent
> producers without human
> labour. In this case, subject to certain caveats,
> there might be value
> and surplus-value. The contemporary case is an
> economy consisting of
> non-adaptive, special-purpose machinery and human
> labour.
> Best,
> -Ian.
Ian, I think you have missed the point. So let me try
to get at it another way. Now, the idea of labor
displacing technical change plays an important role in
Marx's theory (Ricardo had already acknowledged in the
3rd edition of the Principles that at least logically,
if not empirically, machine can displace labor in
aggregate terms). Now, follow Marx's logic to the
extreme. Allow technical change to continuously
displace labor to the extent that the live labor's
role in the production process becomes negligible. At
this limiting case, if you apply Marx's exercise then
either you have to argue that the value of all the
commodities must tend to zero and the rate of surplus
value must tend to infinity; or that the rate of
profits must tend to zero. Now, Marx's or many
Marxists position could be that of course the rate of
profits must tend to zero because the case represents
the c/v tending to infinity. But the problem with this
answer is that Profit = S/(C+V) is the wrong formula
for the rate of profits. What I'm asking is: can you
logically claim that when V tends to zero, then the
physical surplus of the system must also tend to zero?
If not, then it can be easily shown that this limiting
system will have well defined prices of commodities
along with positive and equal rate of profits.

Now I come to why I think it is specifically a serious
problem with Marx. The Physiocrates had a notion of
surplus, which was physical surplus produced in the
agricultural sector and explained as "gift of nature".
On my reading of Smith, rent is the only surplus
category in Smith's framework and profit is a
necessity. And he also explains rent (on land that is
capable of producing food and not mines) on the same
Physiocratic principle of physical surplus and as a
"gift of nature [I'll be presenting several
controversial theses on Smith at a seminar on 8th of
December organized by ERMES-PHARE at 6 O'clock at
Maison des Sciences Economiques--anyone who happens to
be in Paris on that day is welcome to the seminar--I
think they are planning to put my chapter on Smith on
their web page as well, otherwise the details will be
revealed when my book comes out]. Any way, as far as
Ricardo is concerned, on Sraffa's reading of Ricardo:
Ricardo's fundamental proposition in his 'Essays on
Profits' of 1815 that "it is the profits of the farmer
that regulate the profits of all other trade" was
based on a rational foundation of a 'corn model'. If
you accept the 'corn model' story then again Ricardo's
explanation of surplus is physiocratic as Sraffa has
himself acknowledged that. If you don't accept the
'corn model' story and go along with J.H. Hollander's
(1904) story then on my reading of Ricardo, Ricardo
has no explanation for the surplus (and profit is a
surplus in his system). He actually is not too
concerned about it because his main concern is to show
that a change in (absolute)value of a commodity can be
explained by the change in its labor content solely
and that's where his concern for the 'invariable
measure of value' comes in (again the details will be
revealed when the book comes out). In any case, no
major political economist before Marx argued that the
*cause* of surplus production was labor, i.e. there is
a one to one relationship between surplus production
and labor. Remember, that for Marx all class societies
are built on surplus production and the surplus is
always explained by exploitation of labor (whether it
is the exploitation of slave labor in slave society,
or serf labor in feudal society or wage labor in
capitalist society). It is only the form in which the
surplus appears changes. My limiting case shows that
this one to one relationship of surplus with labor
breaks down, which is a serious problem with Marx. In
a note entitled 'Metaphysics', Sraffa on November 26,
1927, wrote: "The typical case of Marx's metaphysics
is his statement that 'only human labour produces
(causes) values', 'values are embodied human energy
(crystallised)'. There is no doubt that he attached to
it some metaphysical meaning." Cheers, ajit sinha

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