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

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Wed Nov 29 2006 - 12:36:30 EST

The German word for "surplus value" (Mehrwert, literally more-value) means
simply value-added. As Marx discusses in his manuscript "Theories of Surplus
Value", the political economists struggled theoretically with the problem of
what the ultimate origin of the new additional value was, proposing various
solutions based on concepts of productive versus unproductive labour, earnt
versus unearnt income, and wealth-consuming versus wealth-creating
activities. The only thing that Marx did that was new, was to reduce all
surplus-value to surplus-labour, i.e. the substance of surplus-value was
surplus labour.

In his Phd Thesis, the New Zealand Marxist Ronald L. Meek traced the
theoretical origin of the concept of an economic surplus back to Thomas Mun
((1571-1641), but I think Ibn Khaldun, (1332-1406) already referred to it.
In neoclassical economics, the issue is resolved with the concept of the
"factors of production", each adding to the new value, to which Marx
sarcastically referred as the "holy trinity of political economy".

Friedrich Engels formulated the problem like this: "Whence comes this
surplus-value? It cannot come either from the buyer buying the commodities
under their value, or from the seller selling them above their value. For in
both cases the gains and the losses of each individual cancel each other, as
each individual is in turn buyer and seller. Nor can it come from cheating,
for though cheating can enrich one person at the expense of another, it
cannot increase the total sum possessed by both, and therefore cannot
augment the sum of the values in circulation. (...) This problem must be
solved, and it must be solved in a purely economic way, excluding all
cheating and the intervention of any force - the problem being: how is it
possible constantly to sell dearer than one has bought, even on the
hypothesis that equal values are always exchanged for equal values?"

Gil Skillman has made an argument, that this way of framing the problem does
not really make sense, but I do not know his reasons yet exactly. These
days, of course, very large gains in monetary value can be created simply
through manipulating trading relations, which is one reason why Marx went
out of fashion among many.

The modern sense of "value-added" is simply the value of gross output from
production less intermediate goods and services used up, defined either
"gross" (including value of economic depreciation and various costs
associated with the maintenance of fixed assets) or net (excluding those
items). This concept is formally based on the theory of "factors of
production", with the exception of land - only the value of land
improvements is regarded as adding to new value. Pure land rents are
normally excluded from the concept of value-added. "Production" in this case
is generally defined as the activity of residential institutional units in
transforming inputs into outputs, such that monetary income is generated


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