[OPE-L:5475] Re: On confusions due to consumption

Paul Cockshott (wpc@cs.strath.ac.uk)
Tue, 16 Sep 1997 06:46:19 -0700 (PDT)

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I think that there are features of the examples given
of failing crops that confuse issues.

1. Is is a one off event.
2. Dual use of the product.
3. Compensating price/value rises.

One off event
If the failure is a one off event, then there is no reason
to suppose that the law of value is relevant to price formation.
As a law, the law of value works as the average over time and
over transactions. If the event in question is totaly unexpected
there is no reason to expect that value will govern price. If
on the other hand, it is within the range of normal variation,
capitalist production handles the circumstance of individual
disasters by the holding of insurance funds for some kinds of
material disasters, the holding of buffer stocks for crops, and
international trade in agricultural products.

The effect of these protective measures is that prices even
in countries that have had crop failures, are, provided that
these countries are tied into world trade, driven by the law
of value. In these circumstances, although negative values for
products do not occur, negative surplus value and negative
profits do occur. The producers of the crops that have failed,
far from being able to sell their product at a price comensurate
with the labour embodied, are left with nothing to sell and are
totally impoverished.

Those who profit are the speculators and the producers of other
crops which have not failed. If the crop failure is really catastrophic,
then the result is famine conditions. If we look at a classical capitalist
famine, like that in Ireland and Scotland in the 1840s when the potato
crops failed, what actually happens?

Compensating price rises?
If your hypothesis were correct, you would expect potato prices to rise
to a level such that the gross product could be sold for a price equal to
the value of sown potatoes + the labour expended

Had this been the case there would have been no famine. The farmers
could have sold their much reduced potato crop for a price sufficient
to offset their investments in labour and means of production. From this
monetary revenue they could have purchased flour, oats etc to feed
themselves. What actually happened was that potato prices failed to
rise sufficiently to allow this. The farmers were ruined, and, destitute
they either starved, were forced to emigrate or survived on charity.

Dual use of product
The examples given by you and andrew are from agriculture which
is not really typical of capitalist production since the product
is both used as a consumer good and as a means of production. Barley
is used to produce barley and to produce whiskey. The item remains
in demand as a consumer good even if it is impractical to produce it
any more, allowing speculative price rises as with pre-phyloxia vintages
of French wine.

If we consider a pure producer good for example u233, which can in
be used as a fuel in a fission reactor. u233 does not occur naturally,
but can in principle be produced by irradiation of thorium with
neutrons from a reactor. With good neutron economy
one can construct reactor to breed u233 from
thorium, using the neutrons produced by u233 fission to produce more
u233. However, this depends crucially upon the efficiency of the
breeding process, if the breeding ratio is below unity the process
can never be viable. Under these circumstances the value of u233
obtained by input output analysis would be negative and no profitable
u233 breeding industry could be established.

> > There is confusion as to the range over which the value function
> > is defined. As the net product falls towards zero the value tends
> > to infinity. Once the net product becomes negative, value becomes
> > undefined, since no process producing a negative net product will
> > be employed in a capitalist economy.
> Note that in your "value function", value depends on a use-value
> category: net product. This, of course, could be a possible theory of
> value, but I think there is textual evidence enough to dispute that
> it is not Marx's theory. According to Marx, value doesnt depend on
> the amount of use-value produced, but on the socially necessary labor-
> time spent. In the case of a negative net product of barley, we have
> a couple of positive magnitudes, namely, social labor-time spent and
> total physical output. The quotient of these magnitudes is also a
> positive magnitude, neither a negative nor an undefined one, as
> arises from your (use-value) "value function" in the range over < or
> = 0.

> If value is not defined in function of use-value but in function of
> the social labor-time spent, it is positive even in the range in
> which net product is < or = 0. "Negative value" here is only a
> paradox arising from a definition of value that, I think, doesnt
> represent Marx's theory correctly although, of course, I agree that
> it is *another* possible theory of value. It is not clear to me,
> however, what is the advantage in supporting this use-value theory
> of value. Even less clear is why this should be a correct
> formalization of Marx's theory.
> But, moreover, when capitalists choose a productive process, they
> dont know, they *cannot* know, if net product will be negative. This
> is an ex-post result. Any probabilistic reasoning is only this:
> probabilistic. So, a technique will be employed conjecturing that it
> will yield a positive net product, but it might happen that, ex-
> post, it will not.
> Summing up: The problem Im considering is not if this or that
> activity can be profitable in the imaginary world of capitalist
> expectations. These are only a result of a *mental state* similar to
> that they have when betting on horse races. The problem is, rather,
> how is calculated value when there is a negative net product in
> *reality*, not in the imagination of capitalists.
> If a negative net product is a non-possibility in the *expectations*
> of capitalists (no-one will bet on a horse with 3 legs!), it is,
> however, a daily possibility in *reality* (a horse breaks a leg
> during the race!)
> Since a negative net product is a real possibility, I think you
> cannot exclude this range from your "value function" by arguing that
> it is not viable in the imaginary world of capitalists expectations.
> The issue here is that, since your value function states that value
> depends on use-value, it gives a negative number when there is a
> negative net product, something that is in strong contrast with any
> reasonable guessing on that situation.
> Alejandro R.