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Hello, Rakesh. You write:
>1. OK. let's confine ourselves only to the circuit of industrial capital
>and then *also* rule out by assumption direct value producers (hence no
>usury) and putter outters (hence no mercantile profit), i.e., assume the
>complete expropriation of labor and thus the full commodification of labor
>power which can only be bought under conditions of free and equal market
>exchange. Now--and I take this to be Fred's question-- how do you explain
Surplus value arises from the circuit of industrial capital (or, indeed,
any circuit that finances the creation of new value) if capitalists are
able to appropriate a portion of the newly created value financed by this
circuit. Or, to put it the other way around, workers whose productive
activity is financed by this circuit expend more labor than is embodied in
the portion of their output which they retain in the form of compensation.
Note that this conclusion requires no reference whatsoever to the
connection between commodity prices and values. Conversely, stipulating
such a connection tells you nothing at all about what makes surplus value
possible. So I'd say that whatever else is true, you certainly don't
explain surplus value by asserting some association between prices and
values. That's utterly beside the point.
>Now barring neo Ricardianism due to its untenable assumption
>of constant returns to scale (Patrick, thanks for the Freeman and Mandel
>reference, the Jesus Albarracin essay p.190-91 seems decisive but I don't
>know more matrix algebra than in Meek and Bradley),
Wait a second. If constant returns to scale don't exist at the sectoral or
industry level--the level at which neoRicardians effectively invoke the
condition--then labor values are necessarily demand driven, because market
demand always determines average and marginal production conditions in the
absence of constant returns, and Marx's labor theory of value goes straight
down the tubes. In particular, Marx's Ch. 1 claim that labor values are
determined by *average* rather than *marginal* production conditions is
Furthermore, the Marxian depiction of competition must fundamentally change
in the absence of constant returns: in the case of increasing returns at
the industry level, to a model of "natural" monopoly; in the case of
decreasing returns at the industry level, competition would logically only
equate *marginal* rather than *average* rates of profit, and yet *another*
reason to invalidate the case of price-value equivalence would then arise.
I have problems with the Neo-Ricardian approach as well, but these are
*necessarily* less severe than the problems with Marxian value
theory--especially if you depart from constant return conditions. Marxian
value theory only avoids these issues by obscuring them.
>the debate comes down
>to the question of the neoclassical theory of a diachronic exchange of
>equivalents vs. Marx's value based exploitation theory
There is much more to this representation than meets the eye.
First, neoclassical theory does not speak of the "exchange of equivalents"
except in the very narrow sense of "exchanging at average cost" under
perfectly competitive partial equilibrium conditions. Even this doesn't
necessarily obtain in the general equilibrium form. I also don't think
"exchange of equivalents" means much more than a tautology, if anything, in
Marxian theory, since we know commodities don't typically exchange at their
respective values, even in theoretical terms.
Second, it is possible to establish Marx's theory of exploitation,
containing all the elements mentioned above plus his definition of
exploitation, using the neoclassical theory. Roemer has demonstrated this.
That is, it's possible to distinguish Marx's labor theory of
*exploitation* from his labor theory of *value*.
Third, if the phrase "Marx's value-based exploitation theory" translates as
"Marx's exploitation theory developed on the premise that there is some
systematic connection between commodity prices and values", I'd choose the
neoclassical framework for analyzing exploitation, because, as indicated
above, the possible connection between prices and values is entirely
irrelevant to the account of exploitation. Furthermore, the neoclassical
framework, in contrast to the value-based framework, makes clear what are
the underlying conditions that make surplus value possible. Finally,
asserting a systematic connection between prices and values leads to a
potentially very misleading understanding of the basis of capitalist
>2. The historical hows and the strategic whys of labor power tending to be
>fully commodified can be deferred (until part 8 of vol 1); that's not
>Marx's question here--you of course have very interesting things to say
>about this. But in terms of the chapter 5 and 6 questions, we can say this
>is not relevant.
You can legitimately insist that this isn't the part of my chapter 5
critique that concerns you, but as a general thing I include it because it
provides the grounds for part of the critique. Specifically: I'm saying
that not only is price-value equivalence an unnecessary and irrelevant
basis for exploring the logic of surplus value, but it's potentially
seriously misleading about the significance to that logic of capitalist
production and the purchase of labor power *as a commodity.* We can
readily set this point aside if it is granted that Marx's focus on the
latter does not follow as a necessary conclusion from his argument in ch.
5--contrary to what Marx says at the beginning of Ch. 6.
>3. Why do you rule out excessive accumulation? Even if rate of profit
>falls, mass of surplus value that needs to be valorized can become
Excessive accumulation, in the sense I used it, means not only the rate but
the mass of surplus value is driven to zero. Clearly the existence of
surplus value requires that this hasn't happened.
> The valorization base may indeed not be sufficient; in fact much
>of real world capitalist dynamics over the last 150 years seems not
>understandable if we simply assume that the valorization base is by
>necessity sufficient, if the presupposition is simply posited (think of the
>debates over immigration, the export of capital via imperialism). The rate
>of accumulation can be slowed down by political or monetary machinations,
>or over accumulated capital can be exported.
I agree. Nothing in my critique disputes the needs to provide historical
grounds for logically valid theoretical points. My characterization in
theoretical terms of Marx's necessary conditions for the existence of
surplus value is not contradicted by the above.
>4. Gil, are you presenting here some version of the Roemer argument that
> exploitation is based on property rights since that it is the real
>basis of the scarcity of capital, and hoping that by first getting us to
>understand the explanatory primacy of the scarcity of capital in the
>understanding of the phenomenon of interest , we will then be led
>into examining the legal basis thereof. And then get into questions of
>voucher socialism, and thus move beyond point of production class
>struggle. And as we enter the so called information age of the 21st century
>we can then leave behind Marxism with all the other materialist
>superstitions and totemisms of the 19th century?
These are relevant questions, but the above is a caricature of what I'm
arguing, and not at all a necessary consequence of my critique. That
critique suggests a reformulation of Marxist political economy, yes, but in
no way its *abandonment*--not unless one insists that Marxism *requires*
the labor theory of value. Now *that* would be evidence of superstition
and totemism, not to mention fetishism.
First: It's true that I'm arguing for the relevance of (much of) Roemer's
analysis for Marxian theory. But the rest of your characterization is not
relevant. At a first order of approximation, the substance of what Roemer
has done is to show that conditions identified by *Marx* as necessary for
the (re-)production of surplus value are also generically *sufficient* for
that effect as well. This conclusion does not involve any specially
different treatment of "property relations" or "the legal basis of the
scarcity of capital." *Marx* quite explicitly requires capital scarcity in
his account of surplus value. Whatever the *social and historical basis*
for this condition is, Roemer simply shows that it is also generically
sufficient for surplus value to exist.
There are important caveats to this, of course: first, Roemer's atemporal
framework can't account for the dynamics of capital accumulation that
ensure continued capital scarcity, and second, he doesn't account for the
role of capitalist production in the reproduction of surplus value. But as
I argue elsewhere [see my Ec & Phil article if interested], it's possible
to extend the theory to account for these features in a manner entirely
consistent with Marx's historical account--without the distortions
introduced by Marx's value theory, and without qualitatively altering
Roemer's basic conclusions.
Second, it's an open question at this point whether following Roemer's
framework, suitably modified as per above, forces us to "move beyond point
of production class struggle." Even more emphatically, it's not clear that
Roemer's arguments force this result any more than do Marx's. Consider
Marx's concluding statement of V. I:
"...the capitalist mode of production and accumulation, and therefore
capitalist private property as well, have for their *fundamental
condition*...the expropriation of the worker."
Well, even "voucher socialism," as little as you think of it, necessarily
de-expropriates workers. But the consequence of this, by Marx's own
estimation, is that this would fundamentally challenge the capitalist mode
of production and accumulation as well.
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