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

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Tue Dec 05 2006 - 08:55:22 EST

--- clyder@GN.APC.ORG wrote:

> Issues being discussed with Ajit
> 1. How do you define a big economy?
> 2. The significance of correlations between market
> prices and values.
> 3. Does Sraffas theory make wrong predictions
> 4. Does his theory ( and that of Marx in vol 3 of
> capital ) make counter factual
> assumptions.
Paul, I don't understand why you are introducing
irrelevent stuff into a simple argument.
Just trying to follow up your suggestion of 'large
simplicity sake let's take a one commodity corn
1 ton of corn + 8 hrs. of labor --> 8002 tons of corn
wages = 1 ton of corn for a day, i.e. 8 hrs. of labor.

What is the rate of profit in the system?
Rare of Profit = 8000/2 = 4000%

What is the value of 1 ton of corn?
Value of 1 ton of corn = 8/8001 hrs. of labor
Surplus value = 8 - 8/8001 hrs. of labor
Rate of surplus value = (64008 - 8)8001/(8001x8)
Now try to tell your students that capitalists get
their profits because workers produce their wages in a
few seconds (8/8001 hrs.) and the rest of the time
they work for the capitalist and see how convinced
they will be. 
I would not be attempting to convince the capitalists
I would be addressing the workers. I think that in
The circumstances I would have little difficulty in 
Convincing them that this was the most outrageous
Exploitation of labour imaginable!

I don't see that the probability that capitalists may not agree with the labour theory of value is a reason to waver in ones support for it. I had always understood that the rise of subjective value theories historically had stemmed from this very unpalatability of the labour theory of value to the property owning classes.
Put a few more zeros on the right hand
side of the production equation and you will see how
ridiculous the argument will begin to sound, and
particularly when you will have billions of people
living with only few thousand workers working.

Why should this situation ever eventuate, if the rate of profit is so high, and there is so much surplus value available for accumulation then capitalists will reinvest leading to higher employment.

This in turn will lead to a stronger bargaining position for workers in the labour market and real wages will rise.

More generally though, I don't see why you think that positing examples that are so far out of the range of the normal is enlightening. The fact that examples with these sort of ratios do not exist indicates that there are dynamical laws which prevent their occurrence.
The other big problem with this accounting is that it
gives a very wrong sense of the notion of
exploitation. A well paid engineer with a comfortable
working environment and a comfortabe life would be
characterised as severly exploited compared to a
worker breaking stones under 45 blazing sun. This
kind of reasoning informs many Marxists to argue in
favour of the so-called 'labor intensive' technologies
against the more productive technologies (and why not,
it at least will reduce the rate of exploitation--the
less productive an economy the less exploitative it
I agree with your sentiments Ajit, but I don't think that they follow from the positions I argue. Allin and I have argued that introduction of labour vouchers as advocated by Marx would encourage the most productive technologies as it is the undervaluation of labour that encourages sweatshop production.
> 2. Correlation between market prices and labour
> values.
> Ajit says:
> "Statistics cannot give you more than corelation and
> corelation can be accidental. But I do not need to
> explain these corelation (and to what extent the
> data
> is reliable to be accepted as correct observation)
> because I don't work in this area."
> I agree that one has to be cautious in placing too
> much reliance on a single
> result, which is why replication is so important in
> science. The high
> correlations between labour value and price might,
> in a single case be
> accidental, but when they have been replicated in
> economy after economy, then
> it strains credibility to mark them as accidental
> rather than systematic to
> capitalism.
> One example of an apparently accidental result was
> Allin and my observation that
> the apparent rate of surplus value ( profit/wage
> ratio) was higher in industries
> with above average compositions of capital. We took
> this to indicate some
> partial equalization of profit rates - the sort of
> thing that the neo-Ricardian
> school assumed as complete phenomenon. However this
> now appears to be a
> peculiarity of the UK data. Zachariahs results
> indicate that it is not
> generally replicated. Thus the theory of prices of
> production seems to have
> somewhat weaker empirical support than we had
> initially assumed.
Paul, The empirical stuff is not relevant in this
case. I'm interested in reading the theories of the
classical authors--Marx for example. Marx did not come
up with the empirical theory of value or prices. If
anything, your results could be treated as an
empirical refutation of Marx's theory of value and
prices of production. No one can deny that Marx put a
lot of emphasis on the gravitational mechanism of the
market, which is nothing but the tendency for the rate
of profits to equalize. By the way, if I remember
correctly a few years ago Dumenil and Levy had come
out with a book on theory of profits, which showed
that empirically in the long term context there is
very strong tendency for the rate of profits to
equalise and this, of course, was presented as a
defense of Marx. Have you seen their work? Cheers,
ajit sinha
I agree that our empirical work could be seen as a refutation of the arguments that Marx advances in Vol III of capital. They do not however undermine the analysis in the first two volumes.

I have seen Dumenil and Levy's work, but I am not convinced by it.
\THEY show no decline in the coefficient of variation of profit.

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