Re: measurement of abstract labor

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Thu Jun 03 2004 - 04:11:50 EDT

At 11:25 PM -0400 6/2/04, Fred Moseley wrote:

>8.  These presumed quantities of labor-times are then used in Marx's
>theory to determine the PRICES of commodities.  More specifically, the
>prices of commodities (Pi) are determined by the relative quantities of
>labor-times in these commodities (Li ) and in the money commodity
>(e.g. gold) (Lg ), as represented by the equation:
>(1)             Pi   =   Li / Lg
>These prices that are determined by relative quantities of labor-time in
>Volume 1 are very abstract.  They are certainly not actual market
>prices.  Nor are they the actual long-run equilibrium prices, because they
>do not take into account the equalization of profit rates across
>industries (this more concrete phenomenon is explain in Part 2 of Volume
>3).  But at the high level of abstraction of Volume 1, this is the
>"labor" theory of price that is presented by Marx.

Fred, as you suggest, we cannot go straight to the market prices of
commodities with knowledge only of average production time for the
money commodity and the commodity in the relative form. We have to
take into account social demand, I think.

Let me take a simple example from AD Sachs' old book Principles of
Scientific Socialism. Your comments most welcome.

Before production let's say there is need (as backed by effective
demand) for 1000 suits of clothes, given the price that each suit
would sell at if 1000 suits of clothes were produced. Of course this
is only something that is discovered ex post facto.

  Given the techniques available it will take 10,000 hours of social
labor to produce 1000 suits. The social value of each suit is thus 10
hours. If it turns out that exactly 1000 suits are produced, each
suit will command 10 hours on the market and thus market value will
be identical with the value in production (though of course more
efficient producers will be rewarded and vice versa). If however 1100
suits are produced, then market value of each suit  will fall
approximately 10 percent since on the market the entire 1100 suits
will be exchangeable for only 10,000 hours of labor--the amount of
labor time that was allotted for the production of these particular
goods. If 900 suits are produced, the market value on each suit will
be ten percent higher than the value in production because on the
market the same 10,000 hours will be given, as was assigned,
regardless of the fact that the total amount of suits produced in
fufillment of the social requirement is but 900.

I don't think that for Marx value is determined by the conditions of
production alone. Perhaps the value of each individual commodity, by
and for itself, is determined by the conditions of production alone
(so if 1100 suits are produced the extra 100 suits may have had a
production value of 10 hours each, but knowing this won't be helpful
for determining market value); the Marxian value of a commodity, as a
part of the aggregate number of like commodities that have been
produced, is determined to some extent on the market. If 1100 suits
are produced when there had only been effective demand for 1000
suits, the market value of each suit is 9.09 hours, not the 10 hours
if supply had equalled demand.

What do you think? I think what Sachs (who was he?) is saying may be
similar to what Patrick Murray has argued about the conditions of
social demand being built into Marx's--as opposed to the
classical's--theory of value



>2.  Marx assumed further that, in the production of value, one hour of
>skilled labor is equivalent to (or counts as) a multiple of one hour of
>simple, unskilled labor (with different multiples for different kinds of
>skilled labor).
>         "More complex labour counts only as intensified,
>         or rather multiplied, simple labour, so that a smaller
>         quantity of complex labour is considered equal to
>         the product of simple labour, hence it represents only
>         a specific quantity of simple labour."  (C.I. 135)
>Algebraically, Marx assumed in effect that
>                 Lu   =   ks Ls
>where Ls is the hours of skilled labor, ks is the specific skill
>multiplier for each type of skilled labor, and Lu is the equivalent hours
>of simple, unskilled labor.
>3.  Marx did not explain what determines these "skill multipliers" (the
>ks's), that convert hours of skilled labor into a equivalent number of
>hours of simple labor, but instead took these multiples as given, as had
>Smith and Ricardo before him.
>4.  Ricardo's justification for taking these multiples as given was that
>the precise magnitudes of these multiples DID NOT AFFECT THE MAIN
>CONCLUSIONS OF HIS THEORY.  Specifically, they did not affect the trends
>of relative prices over time, especially the relative prices of
>agricultural goods and manufactured goods, and the resulting trend in the
>wage and profit shares in the UK economy, on the assumption that the Corn
>Laws continue to be in effect.  In other words, Ricardo's main question
>was: what effect will the continuation of the Corn Laws likely to have on
>the relative shares of wages and profit?  The precise magnitudes of the
>skill multipliers are not likely to have much effect on this conclusion.
>5.  I think that Marx's assumption of given skill multipliers can be
>justified on similar grounds - that the precise magnitudes of these
>conclusions of Marx's theory are:
>         1.  money is the necessary form of appearance of abstract labor.
>         2.  total surplus-value is proportional to total surplus labor
>         3.  inherent conflict over the length of the working day
>         4.  inherent technological change
>         5.  technological changes causes the rate of surplus-value to rise
>         6.  technological changes causes the composition of capital to rise
>                 faster than the rate of surplus-value
>         7.  therefore, technological changes causes the rate of profit to
>             fall.
>I don't think that the precise magnitudes of the skill multipliers are
>likely to have much effect on these conclusions.  Whatever these
>magnitudes are, and whatever determines these magnitudes, they either have
>no effect (nos. 1-4) or not likely to have much effect (nos. 5-7) on these
>conclusions.  Therefore, they are unimportant in Marx's theory.
>6.  The lack of an explanation of the determination of these skill
>multipliers has long been considered a serious problem in Marx's theory
>(from Bohm Bawerk on), and even a "fatal" weakness.  But this is not
>true.  The precise magnitudes of the multipliers have little or no effect
>on the main conclusions of Marx's theory.
>7.  I think Howard made a similar argument in a post on 28 May in which he
>said that the "causal potency of the theory [Marx's theory] does not
>depend on my being able to conceive it [the reduction of skilled to
>unskilled labor]".  In other words, the causal potency of Marx's theory
>does not depend on it providing an explanation of the reduction of skilled
>to unskilled labor.  The particular reduction does not affect the main
>conclusions of the theory.
>Howard, what do you think?
>I think I will stop there for now, and see what others have to say.
>I also would like to eventually get back to the question of Marx's theory
>of money, and especially his explanation of the endogenous necessity of
>money.  But I hope the above gives us enough to discuss for now.
>Ajit and Howard and others, I look forward to your responses and to
>further discussion.

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