[OPE-L] empirical measurement of changes in the value of labour-power

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Fri Dec 14 2007 - 16:16:41 EST

Ian Steedman provided some evidence to suggest that "There is no reason to suppose that the Classical [political] economists ever took such phrases as 'value of labour' or 'natural price of labour' to mean anything other than the 'value or natural price of the worker's subsistence'" (Steedman, Marx on Ricardo, in: Ian Bradley & Michael Howard (eds), Classical and Marxian Political Economy, p. 150). 

This leads him to the conclusion that "His concept of labour power does not permit Marx to do anything other than he critised Ricardo for doing: that is, taking it as a simple fact about capitalism that workers work longer than would be necessary to produce their wage goods. To describe this fact by saying that the total labour performed exceeds the value of labour-power does nothing whatever towards providing an explanation of the fact." (ibid., p. 152).

In the same volume of essays, Mark Blaug argues that "The labour reduction problem can only be solved at a stratospheric level of abstraction that totally ignores real-world evidence about the determinants of relative wages, the rates of return to educational and training activities, and the patterns of occupational mobility. (...) Marxists have been so busy solving analytical brain teasers (like the labour reduction problem) which they have themselves created that they have sorely neglected the task of studying how capitalist economies actually work." (op. cit., p. 198-9). I have some sympathy for that view.

For some useful empirical-theoretical research, see e.g. Peter Scholliers (ed), Real wages in 19th and 20th century Europe: historical and comparative perspectives. NY: Berg, 1989 which includes papers by Bairoch and Mandel among others. The critique of the Marxist position given in this volume is, that the value of labour power determines the wage, but the wage in turn determines the value of labour power, in which case all you are really saying is, that the longterm evolution of real wages depends on the demand and supply of labour, inflected by the balance of power between capital and labour (op. cit., p. 196). In this case the concept of the VLP seems to be redundant, just like Steedman and Blaug say it is. 

However, the VLP concept is not redundant, if we acknowledge the physical and social necessity that definite reproduction requirements must in reality be met for the employability of the worker, regardless of any price fluctuations, i.e. a structure of physical and social needs exists which must be met, and which in turn carry normal or average costs in real terms, which do not vary greatly in the short run. These costs exist quite independently of what wage rates may happen to be, and indeed independently of the balance of power between capital and labour (which could force wages up or down). That is, in my opinion, exactly what Marx has in mind, and therefore I think Steedman's conflation of the value of labour power with the "natural price of labour" mistakes Marx's argument, because Steedman connects this natural price to wage rates and this creates the problem of circularity.

In the course of research, I found at least one clear "equilibrium" quote Marx actually published in Cap. Vol. 1 ch. 14 which is worth mentioning here.
 http://www.marxists.org/archive/marx/works/1867-c1/ch14.htm#S4 http://www.mlwerke.de/me/me23/me23_356.htm#Kap_12_4

The official translation is inventive, but far from accurate, as usual. My alternative, more literal translation is as follows:

"To be sure, the various spheres of production constantly seek to place themselves in balance, inasmuch as, on the one side, each commodity producer produces a use-value which must satisfy a specific social need, the magnitude of these needs however being quantitatively differentiated and chained to a naturally growing system by the intrinsic bond of the different masses of needs; while on the other side the law of value of commodities determines, how much of its total disposable labour time society can devote to the production of each specific type of commodity. But this constant tendency of the different spheres of production to place themselves in balance, manifests itself only as a reaction to the constant annulment of this balance [i.e. precisely the imbalance of demand and supply is what prompts economic actors to act, but the balance is never reached - JB]. The a priori and planned regularity followed by the division of labour within the workshop operates in the division of labour within society only a posteriori, as as an inner, mute, natural necessity, observable in the barometrical fluctuations of market prices, which overpowers the unordered caprice of commodity producers. Division of labour within the workshop assumes the undisputed authority of the capitalist over people, who form the bare limbs of a collective mechanism that belongs to him; the societal division of labour counterposes independent commodity producers, who do not recognise any other authority than that of competition, of the compulsion, of the pressure which their mutual interests impose on them, just as in the animal kingdom, the bellum omnium contra omnes also more or less preserves the conditions of existence of all species."

Of interest, in the context of this discussion, is Marx's reference here to an "intrinsic bond of the different masses of needs" ("ein innres Band [von] verschiednen Bedürfnismassen", a concept totally lost in the official translation), something which Ian Gough has researched in much more detail. 

Marx's idea is, that a structure of mutually presupposed needs exists, which necessarily must be satisfied somehow, physically and morally, quite irrespective of what prices for labour happen to be. The satisfaction of those needs carries an average or normal cost-of-living ('the going rate") in a given society, specifiable in labour hours or money, and it is this which the VLP refers to. This "normal cost of living" in a given society and in a given epoch reflects a normal "standard of living", and this is not simply determined by wage rates, unless you are willing to argue that the total cost structure of production and the market value of all assets is determined by wage rates.

If this is the case, the neo-Ricardian critique of the concept of the VLP does not seem wellfounded. 

This type of Marxian interpretation also allows us to specify clearly what it means if wages fall below the value of labour power. It simply means that the wage no longer suffices to meet the satisfaction of the normal structure of needs that was previously customary in a society, as a normal condition of employability, which, depending on the severity of the fall, could mean that the worker is no longer able to survive at all, and dies quickly (e.g. the Bolivian tin miners in the past). 

In the first instance, of course, the worker will try to meet those needs for which he has no cash by non-market methods, or by borrowing. But in the longer term, he does not do anything anymore to satisfy the needs he cannot meet, if this strategy fails, i.e. he makes do with less, and in that case, the value of labour power itself declines, because the need-satisfaction to which it refers shrinks in scope, i.e. the average standard of living (in terms of the consumption pattern) declines both quantitatively and qualitatively, whether measured in quantities of abstract labourtime, or in terms of money, or in terms of actual goods and services consumed, or as a relation between the different variables involved. 

The VLP can of course also decline simply if all the consumer items that make up the given, normal living standard can be produced more cheaply through increased productivity, or advantageous trading conditions (e.g. importing cheaper equivalents), so that it takes in total less labour-time to produce all the things that make up a normal standard of living. The presumption here is that the structure of normal needs does not expand, i.e. that average consumer requirements stay fairly stable. 

To summarise, the connection between falling real wages and a falling VLP has to be understood vis-a-vis a normal standard of living which is not simply determined by wage rates. It is not that falling real wages mean a declining VLP directly, but that a falling average standard of living means a declining VLP. This point is particularly important if workers incur a large amount of debt.

Precisely because the VLP contains a moral-historical element, as Marx says, the proof of the concept cannot really be found in econometrics, but rather in legislation. In New Zealand in the later 1930s, for example, the legal norm explicitly adopted was that the wage must be sufficient for the upkeep of the worker, his wife and two children (the concept of the "family wage"). In Holland today, there is e.g. a finely graded system of unemployment benefits which are directly related to age, health, ability to work, years worked, family status, household status, marital status and previous income-level. If however the value of labour power declines, the wife must also work for pay to sustain the standard of living. And indeed this is precisely what is happening: the "family wage" concept has been abolished. What seems like an economic paradox (the fact that the commodity labour-power is not produced by capital like any other commodity, and that the consumption level is not a fixed amount that can be established econometrically) is resolved by legislation.


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