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 - 14:29:46 EST

Hi Ajit

> Imagine a large capitalist economy which produces a
> huge amount of surplus however employs just a few
> thousand workers (since you guys are not ready to
> accept zero worker situation). Now, if you apply
> Marx's calculation here, then the labor-values of
> commodities would be close to zero and if wages are
> what is necessary to reproduce the labor-power, then
> the rate of profits would be quite high, and this high
> rate of profits (within Marx's calculations) could
> only be explained by a very high rate of surplus
> value.

So to be clear: In your example, it is not merely a small number of
workers (equivalently, a direct labour vector close to zero), but
additionally a small labour force that consumes a small real wage.

In this example, the surplus-value added by this small workforce is
very high. So what?

> That's why I said in the limiting case the rate
> of surplus value will tend to infiniti.

You need to prove that. I spent a few minutes on it. I'd hesitate to
say what the limit is.

I wrote:
> Without human labour (or something like it with its causal powers) then no prices and
> hence no profits.
Ajit wrote:
> This is where you go wrong. An economy can be divided
> into various sectors simply for technical reasons and
> also private property is not contingent upon
> wage-labor or labor of any kind. You can have private
> property with sectoral division of the economy, where
> market would exist with supply and demand for
> commodities and competition among the producers.

I have empirical reality on my side here. I didn't say "wage-labour"
but "human labour". There aren't examples of monetary economies
without the existence of human labour. I don't restrict the value-form
to capitalism. It existed long before the dominance of the
wage-capital relation.

There could be production with highly adaptive robots but not humans.
In which case, I think there could be a value-form that refers to
robot labour. But as I mentioned, this is not so interesting compared
to a mixed economy both with robots and humans.

> Nothing of the market mechanics is contingent on the
> existence of wage-labor.

I follow Marx in thinking that the causal power of human labour
necessarily manifests in the form of value once we have a reasonably
developed division of labour and independent producers. You are asking
me to imagine an economy that uses money but lacks abstract labour. My
point is that the two go together.

> That's why the paradigmatic
> explanation of the market in the general equilibrium
> framework, assumes no wage labor or even production.
> You just begin with given endowments (that is the law
> of private property).

There aren't supply and demand dynamics in the standard Arrow-Debreu
general equilibrium. There are no money flows occurring in historical
time, no waxing and waning of money and commodity stocks. There's no
causal role for money. There is no reallocation of social labour-time.
Even the inter-temporal approach is merely a chain of market-clearing
states with prices that jump with infinite speed from one state to the
next. Money and prices are imputed to the mathematics, but they do not
play the causal role they do in reality. Some of these features are
shared by Sraffian theory by the way. At this point I agree with TSS
critique: these models are by definition incapable of understanding
the relations between social labour and value. Let me state it as
plainly as this: we need to develop a dynamic model to understand the
theory of economic value.

I wrote:
> _______________________________
> > 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.
> ________________________
> This makes no sense to me. Capitalists are in business
> to make profits (M-M'), if a capitalist finds that
> s/he can increase her/his profit by introducing a
> technique that displaces labor, then why wouln't s/he
> do it? As a matter of fact Marx's argument is that
> actually the dynamics of capitalism is such that this
> will keep happening--that's why my limiting case of
> this dynamics is something Marxists cannot close their
> eyes to.
> Again, I do not understand why constant capita (by
> which I understand you mean machines and raw
> materials) will be rendered obsolete if there is no
> wage-labor in the system?

My point is that -- during the historical process of attaining your
hypothetical end state -- if an individual capital eradicates human
labour from its production then its forces of production are entirely
constant. It has become an automaton, unable to adapt and produce new
Competing capitals will invest in variable capital and employ the
creative powers of labour to steal its profits. The automaton won't

> The point is: can there be surplus production without
> surplus labor? You seem to say, yes.

Yes it is conceivable. Rakesh's post is even simpler and also makes
this point. Who can deny that it is possible to imagine an economy
with prices and profits but lacks human labour? But I can also imagine
a horse that talks. That doesn't mean that my theory of horses is

> And that's what
> is my point. It becomes important because in the
> history of political economy Marx is the first major
> political economists who explicitly argues for a
> causal relationship of surplus with (surplus)labor.
> This is nothing but metaphysical. A lot of Marxist
> intellectual energy has been stuck in the mud for a
> long time simply because it confuses a metaphysical
> notion with a scientific one. And Sraffa shows you a
> way out of the mud. Cheers, ajit sinha

Marx explicitly argues for a causal relationship between labour-power
and surplus-*value*, not surplus product. They are not the same thing,
particularly outside the context of static equilibrium models.

In your hypothetical economy there happens to be a surplus-product
that takes the form of nominal profit. But without human labour
nothing is changing; there are no subjects only objects. There's no
need for money. Wouldn't the capitalists quickly realise that, to
consume the very same bundle of goods for ever, they can stop using
money and just habitually repeat their exchanges? After Marx and
Rubin, Schumpeter on the circular flow taught me more on the causal
role of money than Sraffa.

Best wishes,

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