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

From: Ian Wright (wrighti@ACM.ORG)
Date: Thu Nov 30 2006 - 01:53:21 EST

Hi Ajit

I'm looking forward to your book.

> 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;

As the direct labour coefficients approach the zero vector the value
vector of all commodities will also tend to the zero vector. Hence
both the value of the surplus (S) tends to zero, and the value of
variable capital (V) tends to zero. The rate of surplus-value is S/V.
But you cannot immediately conclude, as both numerator and denominator
tend to zero, their ratio tends to infinity. Limits don't work like
this. So I echo Paul's warning.

From the point of view of economic definition, it seems to me that,
without labour, the rate of surplus-value must be undefined.

I like your thought experiment. But Introducing the concept of taking
limits I think confuses the issue. You state your point more clearly
when you say:

> That is why for Marx when surplus labor in the whole economy tends
> to zero, the rate of profits must also tend to zero.
> But, my argument is that, it is simply not true. The
> physical surplus in the whole economy may not tend to
> zero, and thus you can have an healthy positive rate
> of profits even when the values and surplus value tend
> to zero. In other words, the secret of surplus does
> not reside in surplus labor.

You ask us to imagine the logical possibility of an economy without
labour that produces a surplus. It also has prices. And a capitalist
class enjoying profits. Hence, profits cannot be a value form of
surplus labour. This is the argument in a nutshell, no?

I think your thought experiment takes us too far from economic reality
to tell us anything crucial. First, there's no necessity for the
value-form unless there is a necessity to allocate social labour in
response to changes in technique and changes in consumption in a
distributed and unplanned manner. Without human labour (or something
like it with its causal powers) then no prices and hence no profits.
Second, I don't think your example is a state that can conceivably be
attained under capitalism. Capitalists compete with each other. To do
that they need to employ the creative power of labour. Any capital
that reduced labour to zero will eventually have its constant capital
rendered obsolete. So the "end state" of fully realised
labour-displacing technical change cannot be on any feasible
trajectory of capitalist dynamics.

But putting the unreality aside for the sake of logical possibilities
I think your example does highlight an issue: In static models, of the
Sraffian/Leontief kind, it's simply not possible to theorise the
production of new surplus-value, i.e. labour-power as the cause of
surplus-value. At your "end state" we have capitalists enjoying a
physical surplus, who continue to use money despite the unchanging
nature of production, having quite forgotten who it was that built up
all that constant capital that outputs a physical surplus. I'd say
there's a physical surplus with a vestigial value-form. But no
production of surplus-value.

So the monetary aspect of the economy is an echo of past production
with labour, yet the technique of the economy is such that replacement
costs, measured in terms of labour-values, are zero. Isn't this just a
curiosum? How can stating that it is possible to  conceive of an
economy with monetary profits but zero labour inputs constitute a
critique of Marx's LTV?

As an aside:
> But the problem with this answer is that Profit = S/(C+V) is the wrong formula
> for the rate of profits.
Here we disagree. It's the wrong formula only if we calculate S, C and
V according to Sraffa's (non-conservative) labour-cost accounting.
Once the commodity money-capital is counted, S/(C+V) is identical to
the profit rate.

Best wishes,

This archive was generated by hypermail 2.1.5 : Sat Dec 02 2006 - 00:00:04 EST