[OPE-L:5356] RE: Luxury goods and profit rate

Duncan K. Foley (dkf2@columbia.edu)
Tue, 5 Aug 1997 20:11:05 -0700 (PDT)

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>To my question:
>>>Why you don't want to go back to 'embodied labor' in workers consumption
>>>idea? What are your fundamental problems with it?
>Duncan wrote:
>>I always looked at the value of labor-power at the point where capitalists
>>buy labor-power from workers for money. At this point what the workers
>>spend the money on is unknown, and in fact different workers may spend on
>>very different baskets of commodities, with different embodied labor. I'm
>>not opposed, however, to the idea that a socially and historically
>>determined standard of living may be an important _determinant_ of the
>>level of wage.
>Just to get the ball rolling. Let me say that, as I see it, the idea of
>exchange between *a* worker and *a* capitalist is not important in the
>context of Marx's theory of wages and the transformation problem.

It seems to me this kind of prejudges the issue. I think there are two
sides to Marx's analysis. In Volume II he takes the point of view of the
reproduction of capital, where the value of labor-power is important
because it represents a cost (a money cost) to the capitalist. In Volume I,
in my opinion, he strives for a more "pedagogical" approach that links his
theory up closely with the Ricardo-Smith labor theory of value, and it's
here that he tries to link up the value of labor-power with the commodities
workers consume. It is important for the transformation problem, because,
whether you accept the "new interpretation" or not, the reasoning shows
that the conservation of surplus value in profit is closely connected to
this issue.

>I think
>the idea of 'exchange' between the *working class* and the *capitalist
>class* is the relevant idea here. Given that your own interpretation of the
>transformation problem is more 'macro accounting' oriented, I hope you would
>agree on the point that the wages question is eaaentially about the
>'exchange' between the two classes, and not individual exchanges as such.

But aren't there two stages? The class relations emerge from the repetition
of the individual relations all over the society. The "exchange" between
classes is not a real, direct, transaction at the macro level but a social
reality that emerges from innumerable individual transactions.

>Now, when we take the class oriented position, then the relevant information
>we need to know to determine the real wages is how much of various goods and
>services are consumed by the working class as a whole.

Is this all? Couldn't wages deviate from the value of labor-power in
periods of intense class struggle in one direction or another, for example?

>This information can
>be gathered without any reference to individual workers' subjectivities an
>choices. Once we know the aggregate consumption of the working class and the
>total numbers of workers employed/labor-time spent in the production
>process, we can easily determine the 'average' real wages per worker/unit of
>time. Thus, I think the problem of different workers might be having a
>slightly different basket of consumption is irrelevant. What we are after is
>the aggregate and the average derived from it. What would be your main
>problem with this approach?

As I said in my 1982 RRPE paper and in _Understanding Capital_, one must
distinguish the _definition_ of the value of labor-power from the
_determination_ of the value of labor-power. The NI involves only the
definition. As long as you maintain the definition that the value of
labor-power is the money wage divided by the monetary expression of labor
time, you are perfectly free to argue that the wage is _determined_ so that
it can pay for a certain historically and socially determined workers'
standard of living. This is _not_ the same, however, as defining the value
of labor-power as the labor time embodied in the commodities workers
actually consume, as the Morishima/Seton/Roemer/etc interpretation does.


Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947
e-mail: dkf2@columbia.edu