On 7/27/06, Walt Byars <[EMAIL PROTECTED]> wrote:
Having read through the volumes of Capital and a number of books by others
on the basics of Marxian economic theory, I've developed a few opinions on
the Law of Value.
good! that's quite an achievement. most people stop at volume I
(except chapters 1-3) and a couple of chapters of volume III. (I found
that the best way to read CAPITAL is with a study group. I learned a
lot from the others.)
First, I think it (and the theory of surplus value) is the most successful
of all economic theories in explaining the facts of capitalism. Secondly,
I'm not very convinced by the theoretical derivations of this law by Marx
or by other writers I've read on the subject.
you have to compare it to the alternatives. The NCers, for example,
have a "theory of value" which is really nothing but a "theory of
price," i.e., supply and demand. (Somehow the third part of the
three-part stool -- i.e., institutions -- is forgotten.) There's
nothing reallly behind it but a bunch of tautological or bogus
theories (utility maximization, smooth production functions, etc.)
More importantly, they are chained at the ankles to methodological
individualism, instrumentalism, and obsession with equilibrium (see
the Arnsperger and Varoufakis article I posted to pen-l).
BTW, I see the NC "theory of price" (supply & demand) as pretty good
first approximation for how things work on the micro level. The
problem is that NC economics forgets the context.
However, I believe that Marx was able to arrive at a correct theory of
value without a good theoretical derivation because he understood that it
was the best explanation of the observed facts of capitalism. As he said
in the letter to Kugelmann "even if there were no chapter on 'value' at
all in my book, the analysis I give of the real relations would contain
the proof and demonstration of the real value relation."
it depends, of course, on what's meant by a "correct" theory of value.
I don't see Marx's theory as as being primarily a theory of prices, by
the way. I think that for Marx, both the connection between prices and
values and the disconnection between them were important.
one of the big questions that almost always is ignored is "what is a
theory of value?" or better, what is the _purpose_ of a theory of
value. In one article, I posit the following list:
1. What are the basic principles of commodity production, that is,
the nature of value, use-value, and exchange-value.
2. Where do profits come from under capitalism?
3. How are prices determined? Why do they deviate from values under capitalism?
4. Why and how are profits distributed among capitalists?
5. How are prices connected to values, and individual profits
connected to aggregate surplus value, _despite_ the price-value
deviations?
6. What are the laws of motion of capitalism?<
(from "The Law of Value and Marxian Political Ecology", in Jesse
Vorst, Ross Dobson, and Ron Fletcher, eds., _Green on Red: Evolving
Ecological Socialism_ (Society for Socialist Studies/Fernwood, 1993).
http://myweb.lmu.edu/jdevine/JD-1993-PoliticalEcology.pdf )
However, this doesn't mean that there is no good theoretical explanation
of why the law of value operates. From my reading of Marx and Marxist
writers, I have gathered implicit support for the following derivation of
the law of value:
In order to compare different commodities, one needs a common standard.
This is implicitly (sometimes explicitly) conceded by those who say that
the standard is "abstract utility." However, the discussion of commodity
fetishism shows that "beneath the surface" commodities are social
relations between producers, and exchange relations are a surface
reflection of these underlying social relations between producers. Thus,
the thing commodities have in common which makes them exchangeable must be
found in the realm of production, ruling out utility (which is in the
realm of consumption). What commodities have in common which is part of
the realm of production, then, is that they can be reduced to simple
labor.
I think this is right. Marx envisioned capitalism (and other modes of
production) as first and foremost social systems of production, or
communities. It's the fact that we all work as part of a system that
is the "social essence" or shared characteristic of each commodity (in
a commodity-producing system). That is its value.
Under capitalism, the community of workers is latent or hidden, since
we live in an alienated society, suffering from the fetishism of
commodities. Values do not correspond directly to prices. (See my
paper at http://myweb.lmu.edu/jdevine/JD-1990-UtilityofValue.pdf .)
This is not meant to be a "proof" of the LoV, but merely suggestive of a
reason why it MIGHT operate (and whether or not it operates is to be
determined by empirical observation). What does everyone think?
I don't think that the LoV can be "proved," since true "proof" is only
appropriate to the abstract realm of deductive logic. Instead, in
CAPITAL Marx is engaged in what's primarily an _empirical_ or
inductive investigation and presentation, guided by dialectical
heuristics and presented in dialectical language. He starts out with
the very abstract world of commodities, which focuses only on the
shared characteristics of those commodities and deliberately abstracts
from differences among them. But then he introduces differences one by
one, as with his introduction of money in chapter 1.
In many ways, I think that Marx's way of looking at things has more in
common with accounting than with modern NC economics, except that his
framework is society as a whole rather than an individual unit (as
with accounting). That's why, perhaps, he's often seen as one of the
people who made major contributions to National Income and Product
Accounts (GDP and all that). (The now-wingnut David Horrorwitz's
edited book MARX AND MODERN ECONOMICS has some of this material.)
Now, I am pretty convinced that labor determines the value of a commodity.
But, in what particular way does it determine it? The Marxian answer is
that its the socially necessary amount of labor to reproduce the
commodity. Now, this is what I am unsure of the reason for. I will readily
accept that the relevant labor is that which REproduces the commodity.
Thus, there is no single amount of labor you can automatically refer to
(which there would be if you were looking at the actual labor which did
produce the specific unit of the commodity) and you have to look at all
the labors which could potentially produce it in the future.
I think this is right, though it's a matter of definition. value
represents the contribution of one labor process to the (latent,
hidden) community of workers. This typically does not correspond to
what that labor process receives from the community (the price).
But why the *average* of these labors? Why not some randomly determined
point within the range of them?
It's the average because the average represents the social standards
(or norms) at any specific time. (The alternative, by the way, would
be not some random point but rather the marginal labor.)
In his excellent annotations, I think Hans Ehrbar presents a flawed
argument about this process. He dismissed an arithmetical mean as the
basis of average necessary labor, because mathematical multiplication and
division can't be applied to concretely different labors. Rather, by
"Average intensity and skill" he uses the intensity and skill which
predominates ("most labor powers are average"), same with the technical
conditions of production. But how could "most" labors be of the exact same
skill, intensity etc... Also, if all capitalist labor can be reduced to
simple labor (which I think David Harvey demonstrates), then couldn't you
find an arithmetical mean?
I think that the idea of reducing skilled to simple labor in Marx is
pretty much the same as that of deriving abstract labor. It's not an
average of concrete labors (producing use-values) and much as an
average of labors producing value (average times). Anyway, you may be
interested in my article at:
http://myweb.lmu.edu/jdevine/JD-1989-SkilledLab.pdf
Now, as for why I think Marxian economic theory explains the facts better
other theories (mainly neoclassical):
In neoclassical economics, there ARE situations in which the capitalist
has an incentive to increase the intensity and length of labor AND it is
in the worker's interest to resist this. But, whether or not this
condition holds depends on the level of competition within the demand and
supply sides of the labor market (among other things). So, the conditions
under which this situation holds are somewhat limited "(not as likely to
apply in highly competitive markets) and even when it does apply, there
will be limits to how much the capitalist wants to push the laborer, and
limits to how much the laborer wants to resist. In Marxian economics, I
think that the conditions under which this holds are more broad, and there
is less of a limit to how much the capitalist wants to increase the
intensity of labor, and less of a limit to how much the laborer wants to
decrease it. In my reading of labor history and the history of class
struggle, it seems the Marxian contention is borne out better.
On this relatively empirical level, there may be a theoretical
convergence of NC and Marxian economics. That is, it's possible to
develop a vision of NC economics with all sorts of imperfections and
rents so that bargaining power plays a role. The difference is that
the NC economists start out with the vision of perfection in their
minds and then turn to studying empirical reality. Marx, like most of
the classical school started out on the empirical plane and tried to
understand it, rather than falling for the trap of deductive logic.
(He did, unfortunately, fall for the trap of using Hegelian language,
making it harder for readers.)
I also enjoyed books by Ben Fine and Howard Botwinick which argued from
different perspectives about how Marxian economics explains observed
patterns of labor market segmentation better than neoclassical.
a lot of the Gordon, Reich, Edwards stuff is pretty good on this
subject, though perhaps too descriptive as opposed to theoretical.
Of course, I'm sure Gil will disagree with me on most of this....
yup.
--
Jim Devine / "An economist is a surgeon with an excellent scalpel and
a rough-edged lancet, who operates beautifully on the dead and
tortures the living." -- Nicholas Chamfort (1741 - 1794)
