[OPE-L] SV: [OPE-L] what is irrational in the functioning of capitalism?

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Wed Nov 29 2006 - 01:14:06 EST

Please let us remember that Marx did not derive the labor theory of
value from his explanation of
surplus value, defined as M'-M. In that sense surplus value was
recognized long before Marx; the question of course is whether it was
buried by neoclassical economics as Joan Robinson complained often
and vociferously.

  Marx's explanation of the persistence of the surplus value value
presupposes the labor theory of value, for on that basis--as well as
Gil's favorite assumption of price value equivalence--Marx reasons
that capital considered here as a perfect aliquot of the whole cannot
have paid for labor time actually expended.

What did it then purchase--the worker's ability to perform labor...We
all know the story...If the labor theory of value is true, then that
ability must have a lesser value than the value added by expenditure
of labor. And indeed input output analysis confirms that as true--as
even the critic Meghnad Desai himself underlines. Of course that does
not resolve the question of exploitation because the wage could
represent full payment for labor performed,  discounted in terms of
labor's present time preference.  The problem here is a fetishization
of time which is of course better than its elimination.

But all this leaves hanging the question of how did Marx then ground
the labor theory of value?

  Did he not bother do exactly this because he assumed it obvious and
unquestionable on the authority of the political economists? Did he
only see his task as one of reconciling the contradiction between
observable phenomena and the labor theory of value which he also
clarified with the concept of socially necessary abstract labor time?
This is, I think, the standard story. Marx as a minor or creative

Minor in that he is only clarifying and thinking through the
implications of the giant on whose shoulders he stands and creative
in the sense of the mediations he offers to solve the remaining
puzzles regarding profit and wages, rent and of course money.

And we all know the response of  Rubin and Grossman to this interpretation.

Let me try to lay out Marx's argument as I understand it.

The real debate begins with the analysis of the implications of the
first premise below. And in my estimation the most important locus
for this debate is Erik Olin Wright's response to the Rubin
interpretation in the Value Controversy, ed Steedman. More on this

But let me begin simply.

1. The Ontological Primacy of Social Labor Activity

Inherently limited, the available social labor time must be
distributed both quantitatively and qualitatively to allow for the
use of the  otherwise inactive factors of production (land, means of
production, draught animals) and the reproduction of society thereby.

2. The Premises of Reification

2.a.Assume that  people relate to each other only through commodities

2.b. The social labor time which is to be distributed to an activity must
manifest itself (from 1)and can only manifest itself in the expression of
one commodity in  another commodity (from 2a).

2.c. This mode of expression distorts within strict limits the value of a
commodity (chaotic price movements still gravitate around values, and the
double divergence of profit from counterfactually imputed surplus
value embodied in an individual commodity and the cost  price of the
used up means of production from their value creates only a small
divergence between the price and value of a commodity). But this
distortion, though strictly
limited, is the most important reason that the price form appears as a
hieroglyph, yet price must remain a function of value (this simply
follows from 1, 2a and 2b).

3. The Nature of Surplus Value
Moreover, the redistribution of value effected by the distorting price
form does not affect the conclusion that the only source of new value
in the system as a whole
is the exploitation of labor, i.e. the 'labor fund' which the capitalist
class apportions to the working class for its reproduction is less
than the new value the
defacto enslaved workers have created and the capitalist class
'rightfully' appropriated.

4. Capital as living contradiction
Capitalist production works at cross purposes: it strives to lower unit
values yet it does just that by raising the organic composition of capital
and thereby depressing the general profit rate and putting out the flames of
expanded reproduction.

5. The transience of value

Once the nature of value is understood, all belief in the necessity of the
bourgeois mode of production vanishes.

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