(OPE-L) Measurement of abstract labor

From: glevy@PRATT.EDU
Date: Fri Jul 23 2004 - 12:07:10 EDT

---------------------------- Original Message ----------------------------
Subject: Measurement of abstract labor
From:    "Jurriaan Bendien" <andromeda246@hetnet.nl>
Date:    Thu, July 22, 2004 12:00 pm
To:      glevy@pratt.edu

In reply to Claus Germer:

I cannot discuss monetary now, too much other stuff going on and I haven't
settled my final position on it, but, basically, I regard Marx's theory as
the best foundation for an adequate theory of money, since it is solidly
based on the real history of economic exchange. But modern monetary theory
must come to grips with the economic effects of massive credit-creation
and fiduciary money, and the abandonment of the gold-dollar standard.

Fiduciary currency already existed in China in the 11th century and in the
15th century in Europe, it's nothing new, what is new is the very large
and growing magnitude of it these days. Modern thinking seems to be, that
what matters now is not the convertibility of currency into gold
specifically, but the demand for currency and the convertibility of
currency into tangible property of any kind that has value (this reflects
the reality of
dollar-imperialism and the growth of the service economy). So long as
people are forced to use a currency, in a highly developed market where
everything is monetised, no gold-standard is necessary. That is the basic

I do not think that you can credibly postulate theoretically a one-to-one
mapping of currency units to abstract labor-time, as a sort of "accounting
theorem", although this might be useful for some analytical purposes to
understand the relationship between money-units and working hours. Marx
himself rejected any idea of labor-tokens.

In a real economy, it is not just net output that has value, and in fact
the majority of products and assets which have value are actually not
being traded at any time (they have ideal prices only).

All assets and products produced in previous cycles of production
obviously also have value. But the Marxian argument is, that it is as a
rule the CURRENT average replacement cost of products that sets the value
(not market price) of both old products and new products, and only in this
sense is "socially necessary labor-time" the substance of value.

If you wanted to understand the value-structure of assets, you would look
at the evolution of current replacement costs.

Valuations of labor-time by money may fluctuate markedly, but Marx's
argument is that exchange relations, mediated by money, must ultimately
adjust to the real allocation of labour-time achieved, however much they
may episodically diverge from that allocation. And economic relations in
the last instance determine political and military relations, the
"bargaining position" in capitalist competition. The foundation of that is
the labor-productivity of workers and peasants.

Sometimes it is helpful to think of Marx's "value" as an "ideal price", as
many economists do, but that is clearly not Marx's argument. Value
explains price, and value for Marx exists as an attribute of products
because of a double relationship - between people, and between people and
the products of their labor.

Hence, for Marx, societal equilibrium has nothing to do with supply-demand
equations but with private property relations. Equilibrium equations apply
only to the supply and demand for specific outputs, but to say that they
can explain societal equilibrium is an economistic error.

It would be more correct to say value as such = abstract labor-time, a
social characteristic of products of human labor which exists objectively
only by virtue of the socio-economic relationship between people and their
products, and between people who are engaging in negotiations and

Marx's concept of value, as distinct from exchange-value, says that value
pre-exists commodity exchange, because the attribution of value to
products does not require exchange, but only requires that those products
take labour-time to make or replace. Thus, products of human labor have
value, regardless of whether they are exchanged or not.

I think this insight, which is denied by many Marxists, is essential to
understanding how the capitalist transformation of society imposes the
value-form on labor, such that labor becomes a capital-value, an abstract
"labor force" which exists as a quantity separate from any particular

That is to say, in my own interpretation of Marx, products are already
related as labour-values prior to any exchange processes, and prior to the
use of money.

All that the market and the use of money accomplishes is that (1) the
value of every product can be related to every other product using
quantitative yardsticks enabling the relations to be more exactly and
objectively known, and (2) an abstraction in thought is transformed into a
real abstraction, in that the structure of value-relationships between
products confronts people ever more objectively as a reality they have to
deal with, independently from any negotiation or bargaining position.

This view is radically different from the view of Mark Jones, who argued
that with the abolition of capitalism, value goes out of existence. I
think this is vulgar leftist rubbish. At most you could say, that value is
no longer the main criterion for the allocation of labor in a
post-capitalist society, because there are other criteria which can be
applied - something which is possible, because of the high level of
labor-productivity that has been achieved. Consequently, my theory of
socialism is also radically different from that of Mark Jones.

Many economists argue however that labour-values are no longer decisive to
the allocation of resources in modern society. Just how ridiculous this is
can be seen when you realise how concerned employers are with saving every
little bit of labour time and labour-costs they can.

The fact is, that faced with rising costs and falling sales, over which
they have no control, this is the only thing they can economise on. And
labor-time economising is precisely what drives the capitalist market,
because enterprises generally aim to produce goods and services below
their socially established value, in order to pocket as large a difference
between their own costs and the ruling market price as they can.

When Marx talks about the "law of value", he is essentially talking about
the social and physical necessity for the regulation of exchange-processes
by labor-time, in a market-dominated society which has no other mode for
regulating and coordinating its economic reproduction.

People can no more cease to produce than they can cease to consume, but to
consume they must produce. All the theoretical "difficulties" stem only
from the fact that exchange enables people to consume, what they haven't
produced. But the market has no morality of its own, and consequently may
different moral ideologies are possible to justify or criticise market

This is a human-centred approach to economics, in which the human subject
is central, rather than a capital-centred approach.

Certainly, labour-time performed adjusts to market demand, just as
market-demand adjusts to labour-costs. But price relations are governed by
value-relations, and these value relations are relations between people,
and between people and their products, even although it seems as though
they refer to relationships between products (= the reification of value
which posits an "intrinsic value" of commodities by virtue of their
physical nature, or because of their exchangeability for other products or

It is only because these relationships exist, that value as an attribute
of products can equal abstract labor-time. And that is almost exactly how
Marx himself expresses it in a question: how does the value of the
products people produce come to be represented by their labor-time ?

The concept of value is not necessary to explain statics in economic
behaviour, it is necessary to explain dynamics in economic behaviour, i.e.
how trade relations will move, how relative prices will move, what the
aggregate results of market activity must be. It aims to explain the
market, instead of the market explaining the market, or prices explaining

Because value is an attribute of labour-products, it is easy to think of
value as a "thing", but really it refers to a relation between people
mediated by their products. Vulgar economics seizes on the mediation and
forget what is being mediated.

When the neoliberals argue we need "more market" because markets are more
efficient, you have to ask "efficient in what sense" and "efficient for
whom". If large numbers of people are in debt and unemployed, if resources
are wasted and the environment is poisoned, how efficient is this ?

In socialist political economy, the market is only an instrument for
achieving a desired allocation of resources which reflects majority
opinion. Thus the market is never an absolute good, dogmatically asserted,
and questions about the distribution of wealth can never be separated from
the production of that wealth.

What Sraffian-type theory does, is separate the production of a surplus
from its distribution, but that is precisely what Marx denies, because
wealth is appropriated by virtue of private property relations, prior to
its distribution. To say that the "value-form" dominates society, as
Marxists very profoundly try to say, just means the Capital has command
over Labor, rather than the other way round, i.e. that property-ownership
gives power of people over other people. Once this is admitted, no
economics is possible without reference to the power-relations between
social classes.


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