[OPE-L:537] Re: International value.

Steve.Keen@unsw.edu.au (Steve.Keen@unsw.edu.au)
Wed, 22 Nov 1995 03:17:37 -0800

[ show plain text ]

Paul's reply to my posting on Hilferding expresses what I have come
to regard as the "conservation of value" approach to (or perhaps
of) marxian economics. This is that the total value of society
is given by the total labor-time workable by the entire workforce,
plus the labor-time equivalent of the depreciation of fixed capital
and the labor-time equivalent of raw materials, etc.

Paul, in putting this case, says that:

|If we accept the argument that the value creating power of labour
|does not change with advances in knowledge, but that goods become
|instead easier to 'purchase from nature' in Smiths metaphor, then
|Steve and Hilferdings argument that training adds additional value
|creating power must be wrong.

Paul is quite correct. However, I argue that what Hilferding was
doing in the passages I quoted was to apply the same analysis to
the question of the reduction of skilled labor to unskilled as
Marx did to the question of the source of value. To recap,
Hilferding argued that education "thus creates on the one
hand new value and transmits on the other to its product
its use-value--to be the source of new value." (p. 145)
The former is the exchange-value of education, the latter is its
use-value; the two will be different magnitudes, and thus
education can be the source of additional surplus-value--so
that, as Marx himself mused, an hour of skilled labor could be
worth six hours of unskilled labor in value terms.

This means, in effect, that education "multiplies" the value-
creating capacity of unskilled labor, whereas Paul is arguing
that the value creating capacity of labor is a constant (measured
in units of unskilled labor time) and all that education does is
contribute to the cheapening of the exchange-value of this
fundamental numeraire.

It may seem to be a defence of Marxian orthodoxy to claim that
Hilferding is wrong in his analysis of skilled labor. But if
Hilferding is "wrong" on this point, so too is the logic
Marx used to uncover the source of surplus value, which he,
as Hilferding later does for skilled labor, identified in the
difference between the exchange-value of labor-power, and its

"The past labor that is embodied in the labor power, and the
living labor that it can call into action; the daily cost of
maintaining it, and its daily expenditure in work, are two
totally different things. *The former determines the
exchange-value of the labor power, the latter is its
use-value.*" (Capital I p. 188. Emphasis added)

Marx reiterates elsewhere that the source of surplus value
is to be found in the use-value of labor-power, and the
fact that this use-value is unrelated to its exchange-value,
when he criticises Smith for failing to see how "More labor
is exchanged for less labor ... through labour-power itself
becoming a commodity, and in the case of this specific commodity
its use-value--which therefore has nothing to do with its
exchange-value--is precisely the energy which creates
exchange-value." (TSV I pp. 87-88)

So criticising Hilferding on this point is akin to criticising
Marx on a rather more fundamental point, since this is, to
my knowledge, the only instance of a Marxist after Marx using
the concepts of use-value and exchange-value to solve a
dilemma for Marxist analysis.

It also throws away a solution to an otherwise unsolved
problem. We conserve the concept of the conservation of value,
but we can no longer explain how it is that capitalists have
an interest in training labor. The explanation that they
can reap additional surplus value is a potent one; without it,
we must fall back on a variation of the arguments applied to
the question of why capitalists invest in capital-intensive


There remains the question of whether Marx himself accepted
the "conservation of value" concept. Paul is almost quite right
when he says that:

|But this merely restates the growth of physical productivity.
|The question is, whether we are to regard this as a rise in the value
|creating capacity of labour or, alternatively, as a fall in the per-unit
|value of most commodities?
|The answer of Marx and classical political economy was that it should
|be interpreted as a fall in the value of commodities. This at least has
|the merit of giving human labour time as an invariant standard of value.

The answer Marx gave every time *bar one* was as Paul put it, which
supports the concept of a conservation of value. However, there is
one occasion when he gave an arithmetic example which cannot be
interpreted as showing the conservation of value (John Ernst and
I have been discussing this on and off the marxism list). This is
as good a time as any to throw it into OPE-L.

While considering the question of why a capitalist might rationally
decide to introduce new technology which increases the organic
composition of capital, Marx provides several examples where, in
effect, value is conserved: the total value created in production
equals the depreciation of fixed capital, the value of materials
used up, and the labor expended (with surplus coming
only from the difference between the value of labor-power, and
labor itself, both measured in labor-time). A more capital
intensive technology has a higher depreciation contribution to
output, but the same necessary and surplus labor.

Then Marx says:

"It also has to be postulated (which was not done above) that *the
use-value of the machine significantly (sic) greater than its value*;
i.e. that its devaluation in th service of production is not
proportional to its increasing effect on production." (The Grundrisse,
p. 383. Emphasis added.)

Marx then presents the following example of technical change:

Capital Deprec- Mat- Labor Profit Output in Total
ist iation erials Sheets Price
I 3 30 40 10 30 83
II 6 100 40 13 1/3 100 159

Any takes on this?

Steve Keen