>>Michael Perelman wrote:
>>>Jim also mentioned that wages are falling relative to labor
>>>productivity. I associate this trend with intellectual property as
>>>well. Labor productivity increases with the ability to mark goods up --
>>>Nike shoes are an excellent example, but the same holds for Microsoft software.
Doug writes:
>>Any sense of how representative these sorts of goods are? I'd guess that
>>gains from IP are merely redistributions of SV - it can't explain an
>>increase in the profit rate in the macroecomy. Nike's gain is some other
>>capitalist's loss, no?
Brad quotes that well-known expert on political economy, the unnamed robot
from "Lost in Space":
>Danger Will Robinson! Danger!
and goes on:
>Discourse stream corrupted by labor theory of value! Danger!
>
>The LTV is not true: average market prices are *not* labor values, and the
>deviations of the average prices of particular commodities from their
>labor values are *not* simple redistributions of "surplus value" from boss
>to boss. IP protections can create value; IP protections can destroy
>value; they can raise the profit rate; they can raise or lower the real wage...
It's hard to say that Marx's "law of value" is "not true" if one doesn't
understand it, just as it's hard to say that it's "true" if one doesn't
understand it. In fact, I think there's a lot of questions about what "it"
is. One thing is that the "LTV" does _not_ assert is that "average market
prices" equal "labor values." Quite the contrary: deviations of prices from
values are just as important as their connection with each other. Marx was
quite conscious before he started CAPITAL that values and prices deviated
from each other. BTW, Duncan Foley's article in the most recent issue of
the REVIEW OF RADICAL POLITICAL ECONOMICS is quite good on this subject.
Marx's "law of value" is first and foremost NOT a theory of prices.
Economists have typically approached CAPITAL _assuming_ that it's about
prices and pricing, but that seems more a symptom of commodity fetishism
than a product of a serious reading. That assumption gets in the way of a
serious understanding. (Hey, I've been there. I assumed that CAPITAL and
the "LTV" was about pricing, too. Then I read the book. The section on
comm. fet. and the end of volume III are especially revealing of what
Marx's purposes were, as is the first page of volume III.) If Marx had
wanted to study pricing, he would have started with supply and demand or a
Ricardian general equilibrium system (or a Sraffian input-output
parable). Rather, the "labor theory of value" is a theory of social
relations between people. (I know that this makes him look like a mere worm
in the eyes of economists, but Marx was a sociologist. He saw the economy
as part of society.) He sees prices as _obscuring_ these social relations
(that's his theory of commodity fetishism in a nutshell), so he uses values
instead. If prices actually equaled values, then much of the social
relations of capitalism would be more obvious to the casual observer within
the system and to the economist. But they don't so, Marx needed the "acid
of abstraction" to cut through surface appearances. That's what the law of
value is for.
Whereas NC economists start their analysis with the isolated individual
person coping with scarcity (the Robinson Crusoe story, ignoring all the
social relations aspects of the original book, including colonialism, as
Steve Hymer pointed out years ago in MONTHLY REVIEW) and then move on to
trying to understand the common-sense but superficial world of markets.
Marx, on the other hand, starts with _society_, the society that limits,
shapes, and sets the context for the operations of individuals and markets.
(I wish he had written like a modern academic, explaining what he was
talking about and the progress of his presentation better. The first page
of vol. III is a notable exception.)
As many observers have observed, Marx starts with the abstract and moves to
the concrete. In volume I, he starts with an abstract commodity-producing
society, one without labor-power, capital, or exploitation. Under these
weird conditions, on average, prices equal values, because of the zero
degree of exploitation. Even then, there are lots of deviations due to the
constant fluctuations of supply and demand. This analysis also provides
some insights into commodity exchange _in general_ and sort of a moral
yardstick (from the capitalists' own point of view) for judging capitalism,
i.e., equal exchange under which prices equal value.
It turns out that capitalism fails according to its own moral yardstick,
since capitals are able to exploit labor despite equal exchange -- and in
the end equal exchange does not prevail. That's the subject of CAPITAL
volume I after chapter 3: he deals with capitalism, bringing in
labor-power, capital, and exploitation (while showing that profits cannot
be created simply via buying and selling but must be _produced_ by labor).
However, it's a very abstract capitalism, since he abstracts from the
differences amongst the various capitals. So we can talk about volume I
describing a "representative capital" -- or alternatively, about a
"societal factory" in which capital in general faces labor-power in general
in an abstract class conflict. (He doesn't deal seriously with labor's side
of the conflict, as Mike Lebowitz stresses in his BEYOND CAPITAL, so that
it's mostly a story of capital rampaging over labor. I guess Marx hoped
that it would arouse labor to resist and fight for something better.) In
this story of abstract capital, one of the key differences between capitals
that's abstracted from is differences in the "organic composition of
capital." Nor are there any scarcity rents. So, just as in the first three
chapters, values = prices. It's much more intelligent that the common NC
assumption that an aggregate production function exists (or worse, an
aggregate Cobb-Douglas production exists), since Marx is talking about the
_shared characteristics_ of diverse capitals, i.e., the exploitation of
labor and the accumulation of capital. But it's an aggregate theory, a
macrofoundation for the microeconomics of volumes II and III. Here, he's
developed the central conservation principle that I think defines the
"labor theory of value" more than anything else except the theory of
commodity fetishism: the total of all surplus-value produced in the
exploitation process of capitalism as a whole equals the total of all
property income (profits, interest, rent, some of taxes) in that society.
(It's more complicated if we bring in the articulation with other modes of
production or the family, but Marx doesn't do so.)
It's only in volume II that Marx gets to microeconomics of the sort that
economists talk about. He talks about the role of time -- metamorphoses of
capital over time, the circuits of capital, turnover time, introducing the
differences amongst capitals. He turns to discussions of the relations
between different types of industries (in the famous but
often-misinterpreted reproduction schemes) while being very explicit that
he is _assuming_ that values = prices. In volume III, he not only brings up
the differences among capitals but looks at how they interact with each
other. At this point what was obvious all along to Marx comes out: prices
_don't_ equal value, while individual profits don't equal the surplus-value
that each individual capitalist organized the production of (since in
reality, organic compositions aren't equal between industries). In fact,
someone can earn revenues and profits without actually contributing to
total value or total surplus-value, as with those unproductive folks in the
FIRE sector who simply redistribute surplus-value. They receive revenues
and profits because people within the system find that they have little
choice but to deal with financiers, insurance companies, and real estate
agents. "Supply and demand" redistribute surplus-value to that sector. And
a redistribution it is, since the conservation principle referred to above
applies. The FIRE sector is able to capture a piece of the aggregate
surplus-value pie even though they don't contribute to it. (They do
contribute in the sense that Doug Henwood can write interesting books about
them, though.)
I could go on (and many would say I've gone on too long), but I've got
other things to deal with. This is my last missive for the day. But I'll
summarize: Marx's "LTV" is a societal theory (seeing the "economy" as
implicitly embedded in society), emphasizing the way in which commodity
fetishism -- volume III's illusions created by competition -- obscures the
reality of capitalist society, using values as a conceptual tool for prying
out that reality, while seeing that society as a unified totality involving
the exploitation of labor, so that those who receive profits, interest, or
land-rent benefit from exploitation even if they don't exploit labor
themselves.
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~JDevine/AS
