Shaikh at Greenwich

Professor Anwar Shaikh, author of the new book, Capitalism: competition, conflict, crises, addressed an audience of students and lecturers and some outsiders (including me) at the University of Greenwich, London earlier this week.

This was a great and rare opportunity in the UK to hear Shaikh talk about his magnum opus and answer questions.  And it was very instructive and stimulating.  I have previously reviewed Shaikh’s lifetime work on this blog in a relatively short post and I have just published a much longer and more comprehensive review.  But Shaikh’s Greenwich address is worth reporting because it confirmed in my mind the great merits of the book – and my doubts about aspects of it.

Shaikh first forcefully made the point that to understand the motions of the capitalist economy, we need to analyse real behaviour and not dream up the fictions of neoclassical ‘marginalist’ models.  Indeed, Shaikh reminded us that he was first trained in microeconomics back in the early 1960s by a leading neoclassical economist Gary Becker. 

Becker actually developed a model (that he later dropped) which explains supply and demand in a market economy without marginalist pre-conceptions or models of so-called rational expectations of ‘representative agents’, as neoclassical micro now insists on.  If you start at the level of the aggregate, all the different possible individual motivations and irrational behaviour are averaged out and a pattern of consumption or production ‘emerges’ for an economy.  “The aggregate is transformational”, so we do not need models of individual behaviour.  I quote from my own blog in 2010 along the same lines: More important, the power of the aggregate and history is completely ignored.  The aggregate irons out the irrational or the unexpected (even if some wrinkles remain) and history, namely empirical data and evidence, provides a degree of confidence for any theory (the goodness of fit).  With the neoclassical EFM, neither part of scientific method is applied.”

Second, Shaikh emphasised that any proper analysis of capitalism must start with the evident point that the driving force of the capitalist mode of production is profit – not output, not income, not technology, but profit.  Yes, capitalism has expanded the productive forces to previously unprecedented levels (and Shaikh showed this with various graphs that are in his book); but the other side of the capitalist coin was rising inequality and recurrent destruction of capital, both in means of production (bankruptcy and closures) and labour (unemployment and loss of wages).  Unemployment is permanent and cannot be removed under a capitalist system.

The main task of his book was to show how profit is created and operates through what Shaikh calls “real competition” in a turbulent and conflicting process. “It’s a war, not a ballet” – a conflicting struggle between capital and labour and between capitals, not some delicate dance of change.

Shaikh showed with a series of graphs from his book how capitalism lurches forward with regular crises, sometimes turning into deep depressions.  Shaikh reminded us that it was mainstream empirical analysis that confirms this.  And the Russian economist Kondratiev revealed the longer waves of capitalist boom and depression.  It was this analysis that led Shaikh to predict back in 2003 that a major slump was coming.  He reckons that another is also due soon.

This is all compelling.  But there are other less compelling aspects to Shaikh’s book that I raised in my review and were confirmed in my mind again after his Greenwich address.

The foundation of my doubts rests with Shaikh’s attempt to reconcile the Marxist ‘critique of political economy’ (as Marx sub-titled Capital) with ‘political economy’ itself – in other words submerging Marx into the ‘classical tradition’ of Smith, Ricardo, Mill etc.  Yes, Marx was very appreciative of Smith and Ricardo’s objective insights into the nature of industrial capitalism.  But he had profound disagreements and criticisms of their labour theory of value, which failed to recognise the dual nature of commodity production – combining use value (output of things and services) and exchange value (pricing in the capitalist market).  That dual nature reveals: first, that it is labour (power) that creates value; and second, that profit is the result of the exploitation of labour.

Moreover, ‘real competition’ means the equalisation of profit rates between sectors and industries as the result of capital flows searching for the highest profit.  So, as Marx explained, market prices move around (ever-changing) prices of production (measured as the cost of capital plus an average rate of profit) not around individual values of commodities measured by the labour time in them.  This was Ricardo’s omission or error in his labour theory of value.

Shaikh recognises this but is still determined to reconcile Marx with Ricardo by showing that the difference in prices when measured in labour value (times) and when measured in prices of production is a just a small percentage over a time series.  So Ricardo “was spot on” and Marx and Ricardo (nearly) agree.

Nearly but yet so far – a miss is as good as a mile.  The difference is crucial because Marx’s theory of value shows that it is the exploitation of labour as a commodity that is at heart of the capitalist mode of production and that the competitive struggle between capital for the share of the surplus value appropriated from labour power leads not only to a tendency to equalise profit rates BUT ALSO to a tendency for the average rate of profit to fall.  This is the result of capitalist competition and the drive to reduce the value of labour power in total value.

This is the fundamental contradiction in the capitalist mode of production and it is Marx’s concept, not Ricardo’s nor Smith’s.  Both the latter recognised that the rate of profit in an economy fell but neither Ricardo not Smith reckoned this was due to the exploitative role of capital over labour or the unintended result of the capitalist drive for more profit.  Their ‘dismal’ explanation for a falling rate of profit was either rising wage costs (Ricardo) or intense competition (Smith).  The Ricardian answer of rising input costs  was followed by the 20th century neo-Ricardians like Piero Sraffa or the post-Keynesians like Joan Robinson and Michal Kalecki – in opposition to Marx’s value theory and law of profitability.  Their positions cannot be reconciled with Marx – and more important, are not correct.

I have already explained in my recent long review some of these ambiguities that I find in Shaikh’s immense work and some of these were repeated in his lecture.  He tells us that profit has two sources: not only from production but also from the circuit of capital, following James Steuart, the classical economist who talked about two sources of profit: positive profit from production and relative profit from transfers of value from one capital to another.

As Bill Jefferies says in his recent review of Shaikh’s book, Shaikh blurs the picture further with a reinterpretation of Steuart’s discussion of positive and relative profit. Positive profit adds to the public good. Relative profit is an effect of ‘vibration’ of the existing stock of wealth. Positive profit is real value added, relative profit cannot exist in aggregate, as what is a gain for one is a loss to the other, of the same amount but in the opposite direction, and yet Shaikh says it can. Shaikh uses the strange example of a burglar stealing a TV (p209). What has this got to do with production? Presumably, if capital is no longer a social relationship, then labour need not be the source of all new value.”

Ironically, when you read what Marx says about Stueart’s classification, I don’t think you can agree with Shaikh that Stueart’s two sources of profit meant that Marx agreed that extra value is also created by trade and not just production. Marx says “Before the Physiocrats, surplus-value — that is, profit in the form of profit — was explained purely from exchange, the sale of the commodity above its value.  Sir James Steuart on the whole did not get beyond this restricted view; (but) he must rather be regarded as the man who reproduced it in scientific form.  I say “in scientific form”.  For Steuart does not share the illusion that the surplus-value which accrues to the individual capitalist from selling the commodity above its value is a creation of new wealth.”

And Marx goes on: “This profit upon alienation therefore arises from the price of the goods being greater than their real value, or from the goods being sold above their value.  Gain on the one side therefore always involves loss on the other.  No addition to the general stock is created.”  But “his theory of “vibration of the balance of wealth between parties”, however little it touches the nature and origin of surplus-value itself, remains important in considering the distribution of surplus-value among different classes and among different categories such as profit, interest and rent. (my emphasis).”

So there is no new profit from trade or transfer.  This relative profit is just that, relative.  Why does Shaikh, however, want to make much of this?  It would seem he wants to find new value from outside the exploitation of labour in production for two reasons: one to reconcile the “classical tradition” with Marx; and second, to explain how in the 20th century, finance capital can gain extra profit from outside production.  This extra profit comes from ‘revenue’ (i.e. profit circulating or hoarded and now outside production).  Just as a burglar can gain profit from stealing and selling on, so can a banker from extorting extra interest and fees from workers savings and mortgages.

Now finance capital can gain profit from slicing off a bit of workers’ wages in bank interest or from squeezing the profit of enterprise (non-financial capital). But this is not an extra source of profit but merely a redistribution of surplus value or a reduction of the value of labour power.  It does not mean that finance capital ‘creates’ a new source in the circulation of capital.  Shaikh says that profit is gained from ‘unequal exchange’, say with poor parts of the ‘non-capitalist’ world.  But taking hides and gold from the New World off indigenous tribes for little or nothing is not a new source of value; it is the (pre-capitalist) exploitation of the labour of those peoples.

As Joseph Choonara has pointed out: “exploitation in a Marxist sense has a quite specific meaning. It relates to the extraction of surplus value from workers even though the commodity they supply, their labour power, is obtained by the capitalist at its value. The surplus value generated is not a “swindle” as pre-Marxist socialists had argued but a result of the gap between the new value created by labour over a given period of time and the value required to reproduce that labour power (the wage). The mechanisms associated with financialisation do not generate surplus value .  As anyone with an overdraft can testify, it is undeniable that banks make profit out of personal finance.   To the extent that wages rise to account for this, it is a mechanism that shifts surplus value from capitalists concerned with production to those concerned with lending money, just as an arbitrary rise in the price of bread would (if wages rose correspondingly) shift surplus value to bread-producing capitalists. To the extent that wages are held down, it represents an increase in overall exploitation of workers, just as an arbitrary rise in food prices would under conditions of wage repression. And to the extent that workers default on their debts, whether credit cards or subprime mortgages, it represents a decline in a market in fictitious capital, with banks (and others) holding claims over future wage income, some of which turn out to be worthless. Whatever happens, the generation of surplus value within capitalist enterprises remains central to the system as a whole.”

So if the argument is that this an extra source of profit that must be added into economic accounts, then that breaks with Marxist theory or for that matter even with the ‘classical tradition’ as suggested by Stueart.  Shaikh’s assertion concedes to the ambiguities of the modern “financialisation” theories promoted prominently by Costas Lapavitsas or Jack Rasmus, namely that is finance that is now the exploiter, not capital.

I have discussed the theories of Costas Lapavitsas and Rasmus before and see Tony Norfield’s insightful critique of Lapavitsas’ approachSam Williams in his blog considers this attempt to identify sources of profit that are additional to surplus value in the exploitation of labour in production.  “What left-Keynesian economists, supported by the Keynesian-Marxists, really hope to achieve is to replace profits based on surplus value—that is, exploitation—with profits based on buying low and selling dear and on this basis reconcile the interests of the working class and the capitalist class.”

The University of Greenwich runs a political economy school which is clearly dominated by post-Keynesian analysis.  Shaikh is severe in his book about this strain of heterodox economics, because it accepts the neoclassical model of perfect and imperfect competition (Joan Robinson, Kalecki).  The source of exploitation then becomes monopoly power: the ‘mark-up’ over costs that monopolies obtain.  In his book, Shaikh demolishes this view (p234-5), also repeated by the Monthly Review school.

But at the lecture, he seemed to argue that Keynes and Kalecki’s view of profitability could be reconciled with Marx’s – namely that Marx’s law of the tendency of the rate of profit and Keynes’ ‘marginal efficiency of capital’ were equivalent (p577). Shaikh was a pupil of the radical Keynesian economist, the late Wynn Godley, who like Kalecki had a macroeconomic showing that investment and profits moved together.  But the Kalecki-Godley view is back to front.  For them, investment leads or even ‘creates’ profit.  For Marx, and surely for Shaikh (see pp544-545), profit leads or creates investment, not vice versa.  And this is crucial because it shows that profit and profitability is not only key to capitalist production but also the heart of any understanding of crises under capitalism.

For me, Keynesian and post-Keynesian economics are not to be reconciled with Marxist economics.  Shaikh critiques post-Keynesianism on the one hand and on the other tells us that Keynes and Kalecki have the same view of the role of profit as Marx – while Ricardo ‘nearly’ has the same view of the source of profit as Marx.  Can that be right?

I think not.  On this blog and in my new book, The Long Depression, I have argued that that are fundamental differences between Marx’s view of the capitalist process and that of Keynes.  It is not just theory; it is also Keynes’ clear support of the capitalist system and antagonism to socialism.  It is also that Keynesian policies do not work for labour or can even ‘save capitalism’.  Shaikh says that they can ‘dampen’ the effect of a slump for a while but cannot deliver sustained growth in incomes or employment.  I agree.

There is also no reconciliation possible between Marx’s value theory and that of Ricardo and Sraffa.  There is also no unification between Marx’s law of profitability as the underlying cause of recurrent crises and slumps and the post Keynesian/Kalecki view of a ‘profit-wage share’ economy.  And there is no meeting between Marx’s view of profitability and credit in modern capitalism and those who hold that finance creates value and that ‘financial speculation’ lies at the centre of capitalist crises.  Shaikh stands for Marx on most of these issues but seems want to build a bridge to other side too.  But that is not necessary.

56 Responses to “Shaikh at Greenwich”

  1. Tam Tam Says:

    Thank you…hope i were there too.

  2. Boffy Says:

    “But he had profound disagreements and criticisms of their labour theory of value, which failed to recognise the dual nature of commodity production – combining use value (output of things and services) and exchange value (pricing in the capitalist market). That dual nature reveals: first, that it is labour (power) that creates value; and second, that profit is the result of the exploitation of labour.”

    Actually, in Theories of Surplus Value, Marx’s analysis is pretty much the opposite of what you say here. Firstly, Marx recognised that Smith took the Physiocrats groundbreaking discovery that surplus value is created in production rather than exchange, but went beyond the limitations of the Physiocrats definition of value as use value, and defined value as labour, and its measure as labour-time.

    Marx’s critique of Smith and Ricardo is not that they failed to recognise a distinction between use value and exchange value – in fact Ricardo’s Theory of Differential Rent is pretty impossible without such a recognition, but that Smith at times falls back into Physiocracy, that he falls into at times a cost of production/historic cost concept of value, and that he fails to understand the difference between labour and labour-power, a misunderstanding, which you seem to echo above.

    Smith’s problem was that having established a labour theory of value, he falls into a cost of production/historic cost theory of value, because in failing to distinguish between labour and labour-power, as you have also done above, he has to then determine the value of commodities by the value of “labour (power)” required for their production. But, the value of “labour (power)”, Marx shows, and Smith had already accepted, is itself determined by the value of commodities required for its own production.

    But, in that case, surplus value, becomes impossible, as marx sets out, because if the value of commodities is determined by “labour (power)”, and the value of “labour (power)” is wages, all of the new value created by workers is then required to be paid as wages!

    As Marx describes it is not “labour(power)” that creates value, but labour. Labour-power, is the use value possessed by the labourer, a use value which under capitalism becomes a commodity, which is sold at its value, equal to wages, i.e. equal to the value of the commodities required for the reproduction of that labour-power, whilst, the labour undertaken by the labourer is what creates new value. It is precisely because the new value that is created by this act of labour can exceed the value of “labour (power)” that a surplus value can be created.

    As Marx describes in his analysis of the Physiocrats and the Tableau Economique, they had first uncovered this reality, because they recognised that in agriculture, a certain quantity of use values are required to reproduce the labourer, and his “labour (power)”, but the effect of the labourers activity, their labour, was to create a larger quantity of use values. The only deficiency in this Marx says, was the fact that the Physiocrats could only see this reality in terms of the production of a surplus product. But, within it is revealed the basis of surplus value.

    It is also wrong to say that “profit is the result of the exploitation of labour.” That is again to repeat the mistakes of Smith and Ricardo, who marx says failed to analyse surplus value as a concept, but only analysed its different component parts profit, rent, interest. Marx makes clear that “profit”, no more than capitalist rent or interest on money-capital is the result of exploitation of labour.”

    The result of the exploitation of labour is surplus value. Profit is only one form in which that surplus value may be manifest. But, more significantly, as Marx sets out in Capital III, under Capitalism, profit is not the result of the exploitation of labour, but is the result of the investment of capital. That is so, because profit, in a regime of prices of production, is a return to the whole capital advanced, and not just to the variable capital.

    Under such a regime, as Marx describes, profit is obtained by capitals in proportion to their share of the total social capital, not in relation to their exploitation of labour. A capital that is employed in a business that is totally automated, and employs no labour-power, by definition exploits no labour-power, and yet, Marx says, it will still demand the average rate of profit on the capital it advances.

    Its true that without capital exploiting labour at the level of the total social capital, and producing surplus value, that surplus value cannot be divided via the process of determining prices of production to average out the rate of profit, but that would mean missing out the most important aspects of Marx’s Theory, and his distinction of profit as against surplus value etc.

    • Virgens Kamikazes Says:

      The last part of your post (“It is also wrong to say that “profit is the result of the exploitation of labour.””) is completely absurd. Marx literally stated in Capital III that profit is surplus labour accounted in another way (i.e. in relation to total capital advanced, instead of in relation to variable capital advanced). Profit is literally surplus labour, by another name.

      • Virgens Kamikazes Says:

        correction: surplus value instead of surplus labour.

      • Boffy Says:

        Viglen,

        If it was absurd, Marx would not have spent so much time, in his progressus through from Volume I of Capital to Volume III, setting out the specificity of, and providing the analysis of these different terms, and their historical and logical development. He would not have insisted on that clarity of understanding between the difference between surplus value and profit, rent, and interest and their derivation, without which any analysis is back at the stage of Smith and Ricardo. Indeed, if you read Theories of Surplus Value Part 2, where Marx is dealing with Ricardo’s rejection of the existence of Absolute Rent, you will see that Marx says that the reason that Ricardo falls into error is precisely for this reason that he fails to distinguish between surplus value which is related to the variable capital, as opposed to profit which is related to the total capital both variable and constant.

        It was precisely this failure to make the distinction on Ricardo’s part, Marx says, which prevents him from understanding the difference between prices of production and exchange values (relative values in Ricardo’s terminology) and prices of production, as being the “natural price” around which market prices rotate. It was this same failure that led Ricardo to discount the possibility of Absolute Rent.

        No Marxist doubts that profit (other than Steuart’s profit on alienation) cannot exist without surplus value. But, simply to assert that, and to ignore everything else that Marx writes in his analysis of the specific phenomenal forms that the surplus value assumes, is rather to miss the whole point of Marx’s work, which was not to remain at the level of abstraction of the production of surplus value, but was to demonstrate how that appears under competition in the real world. And, the fact is as Marx demonstrates in Capital III, that in the phenomenal form of profit, it does not arise in its specificity as the result of the exploitation of labour, i.e. solely related to variable capital, but as a result of the advance of capital itself, because capital itself now becomes entitled to obtain the average rate of profit, via prices of production, and the average rate of profit, irrespective of whether or to what extent that specific capital exploits labour.

        But, more than that. Let us take Marx’s analysis of surplus value in pre-capitalist societies. Take a peasant producer, or petty commodity producer. Assume that an hour’s labour produces £1 of value. The peasant producer must undertake 4 hours of labour to reproduce their labour-power. That is the value of their labour-power is £4. They actually work for 8 hours, thereby producing £8 of new value, and so producing a surplus value of £4, embodied within a surplus product. But, the peasant also has to spend time sending this surplus product to market, to be sold, and thereby to realise the money equivalent of this surplus value. Let us say it takes 2 hours for the peasant to take the commodity to market and sell it.

        That means that the peasant has a cost of £2 in marketing the commodity, time that is taken up not in production, but in the circulation of the capital. In fact, the peasant has £2 tied up during this time that is not taking part in production, yet this £2 adds nothing to the value of the commodity. Marx demonstrates the basis of merchant capital, and of commercial profit, on precisely this basis. The profit of the merchant derives from the fact that they own money-capital, and because they can reduce the selling costs of the peasant producer.

        If the merchant buys the £8 of output of the peasant producer, for £7, i.e. below its value, but is able to sell this output in just half an hour, the merchant is able to make a profit. They sell the commodity at its value of £8, having paid only £7 for it, and having expended just half an hour £0.50 in selling it. Their realised profit is then equal to £0.50. But, this profit has not, as Marx sets out, been derived by exploiting the labour of the peasant producer. The specific difference, Marx sets out between the relation of the peasant producer to the merchant, and the wage worker to the industrial capitalist, is that in the first case, the producer owns their own means of production, and does not sell their labour-power to the merchant as a commodity, but rather sells the commodity, for example, linen, to the merchant. The wage worker does not own their means of production,a nd the only commodity they can sell to the industrial capitalist is their labour-power.

        But, moreover, the relation of the merchant to the petty commodity producer here is significant for another reason. Not only does the merchant’s profit not arise from exploiting the labour of the peasant producer, but the peasant producer themselves gains by this process, and so, indeed, does the society from the amount of realised profit, as opposed to produced surplus value. The peasant required 2 hours, equal to £2 to realise the value of their commodity, and the produced surplus value within it. In fact, the cost of realising the £4 of surplus value contained in their commodity was £2, so that the actual realised profit of the producer was only £2. By selling the commodity to the merchant for £7, and thereby foregoing £1 of the £4 of surplus value, they have, saved themselves £2 of costs in selling the commodity, and realising their profit. Their actual realised profit is then £3 rather than £2.

        In Capital III, in explaining the basis of commercial profit Marx sets out precisely this means by which commodity-capital is separated off from the circuit of industrial capital, to become a specific form of capital – Merchant Capital – which does not produce one iota of additional surplus value, but does increase the mass of realised profit. Not only does it do that, because as above, it frees up the time of the producer to be engaged in production, and thereby creating additional surplus value, it does so, because for industrial capital, it is not just the production time that is significant in the production of surplus value, and realisation of profit, but also the circulation time.

        As Marx sets out in Volume III, a single merchant capital can circulate the commodity-capital of several productive-capitals simultaneously, and in doing so it drastically reduces the circulation time for capital within the economy, and thereby raises the rate of turnover of capital. Because that rise in the rate of capital turnover frees capital to be able to engage in productive activity, it also thereby increases production of surplus value.

        As Marx puts it,

        “And both the restitution of the values advanced in production and, particularly, the surplus-value contained in the commodities seem not merely to be realised in the circulation, but actually to arise from it; an appearance which is especially reinforced by two circumstances: first, theprofit made in selling depends on cheating, deceit, inside knowledge, skill and a thousand favourable market opportunities; and then by the circumstance that added here to labour-time is a second determining element — time of circulation. This acts, in fact, only as a negative barrier against the formation of value and surplus-value, but it has the appearance of being as definite a basis as labour itself and of introducing a determining element that is independent of labour and resulting from the nature of capital.” (Capital III, Chapter 48, p 827-8)

        And, as Marx sets out, money-dealing capital, is also a form of such commercial capital, which acts to reduce the circulation time for capital, to free capital so that it can be engaged in production rather than circulation, and thereby to increase the production of surplus value, and realisation of profit. Without this objective basis, commercial capital could not exist, because their would be no reason that productive-capital would cede a part of its produced surplus value to such commercial capital. It is only because this commercial capital acts to reduce the costs of circulation, which thereby increases the mass of realised profits, and because it speeds up the time of circulation, which thereby frees capital to be engaged in production, thereby increasing the mass of produced surplus value that productive-capital is prepared to provide space for commercial capital to exist, and to obtain the average rate of profit, despite the fact that this commercial capital itself produces no surplus value.

        There are any number of other examples that Marx provides of such specificities of the difference between profit and surplus value, and its precisely on that basis that he insists on making the distinction rather than falling back on the blurring of these categories as occurs with Smith and Ricardo.

        But, finally if you do blur that distinction and simply equate surplus value with profit, then as Marx sets out you have to explain the economic basis of rent and interest, which of course, because they did not make this distinction, Smith and Ricardo had difficulty in achieving. If as you state profit is surplus value, then you have to tell us from what separate fund rent is paid, and from what separate fund interest is paid. You then end up with the Proudhonist position that these revenues are additions to the selling price of commodities.

    • sartesian Says:

      Boffy: “It is also wrong to say that “profit is the result of the exploitation of labour.” That is again to repeat the mistakes of Smith and Ricardo, who marx says failed to analyse surplus value as a concept, but only analysed its different component parts profit, rent, interest. Marx makes clear that “profit”, no more than capitalist rent or interest on money-capital is the result of exploitation of labour.”

      The result of the exploitation of labour is surplus value. Profit is only one form in which that surplus value may be manifest. But, more significantly, as Marx sets out in Capital III, under Capitalism, profit is not the result of the exploitation of labour, but is the result of the investment of capital. That is so, because profit, in a regime of prices of production, is a return to the whole capital advanced, and not just to the variable capital.”

      Nonsense. What Marx shows that under capitalism surplus-value is the origin of profit, interest, and rent, and no matter the tri-partite division, the surplus-value has its source in the social condition of labor, that is wage-labor under capitalism. Profit is a manifestation of the exploitation of wage-labor, and is not the result of investment in machinery. Marx makes the point that capitals of equal size, regardless of the differences in the composition of that capital, in the amount invested in machinery, will claim equal profits.

      And it is neither “labor” or “labor-power” that creates value– it is labor forced to present itself as wage-labor, as a commodity for exchange, for reproducing itself as wage-labor, that creates surplus value

  3. Mark Wain Says:

    Living labor created surplus value appropriated by capital becomes profit, rent, interest and tax payment. Investment for expanded reproduction uses up part of the profit for advanced variable capital and the dead labor surplus value contained in constant capital plus old or dead labor value (wage). Capital invested by an automated business or workerless business for production appropriates no new value, but it can still use up over time all the dead labor value or old surplus value imbedded in the constant capital it acquired to generate income, to pay rent, interest and tax. Surplus value is more fundamental than profit which is only a part of it. Another point is that commodity value refers to the value of labor (including both new and old or living and dead labor), i.e. surplus value only, as wage has already been advanced and labor power has already been spent. I remember that it was F. Engels who recommended replacing the term labor by labor power to make meaning clearer.

    Mark Wain

  4. Henry Says:

    Boffy is doing the opposite of what Marx did, Boffy is abstracting from the inner relations, the essence of capitalism and relying on the surface appearance. Instead of making the journey Marx made, i.e. via the scenic route, Boffy has gone straight to google maps and found the fastest way to get from A to B.

    This is why he can say,

    “profit is not the result of the exploitation of labor, but is the result of the investment of capital”

    Actually part of Marx’s motivation was to prove the opposite!

    This ‘truth’ only really reveals itself when you look at things in the aggregate, but you can only see this aggregate when you have traveled from the particularities. Capital volume 3 would not make any sense at all without capital volume 1. The mistake of bourgeois economics is to imagine you can have volume 3 without volume 1. And effectively Boffy is in the bourgeois camp.

    Bit I guess we all knew that, right?

    Boffy cannot use the aggregate as a kind of after thought, the whole purpose of Marx’s analysis was so that we could explain exactly what the aggregate meant. Marx didn’t want us to say, oh and by the way it is true that if looked at in the aggregate then the story is really this. No Marx wanted us to say, see what I have shown, in the aggregate the capitalist class exploits the working class and the working class should overthrow this dictatorship of the bourgeoisie.

  5. Apostolis Says:

    Burglar’s Bank shows that He has created New Value.

    The problem with Marx’s analysis that there is a transfer of surplus value from one capital to another is that this transfer is not accounted anywhere. The process is hidden and one can find empirical evidence of it after a great period of time and only when you look at aggregate data. Joseph Choonara’s examples show exactly that.

    So when a burglar steals a tv, he has created value for himself.
    The fact that another person has lost the use value of his tv is not registered anywhere. When that person though goes to buy a new tv, only then does his bank account become aware of the fact that he has lost an amount of money.

    Even then, the direct relation between the value created by the burglar and the loss of value by the victim is not evident, you do not know who took your tv, after all.

    What all this needs to teach us is that capitalism is a dynamic system, and thus any attempt to analyze it without taking into account that, is doomed to fail.

    We need to use the advances of the Science of 21th century and start creating good economic models, not rely on what Marx wrote 2 centuries ago.

    • Boffy Says:

      “So when a burglar steals a tv, he has created value for himself.
      The fact that another person has lost the use value of his tv is not registered anywhere. When that person though goes to buy a new tv, only then does his bank account become aware of the fact that he has lost an amount of money.”

      Except he has not created new value in aggregate. In depriving the other person of the TV, he also thereby deprived them of the value it represented. It is only a transfer of existing value from one set of hands to another.

    • Apostolis Says:

      Referencing myself:

      “The process is hidden and one can find empirical evidence of it after a great period of time and only when you look at aggregate data. Joseph Choonara’s examples show exactly that.”

  6. Publicstat (@Publicstat) Says:

    Reading KM Capital volume 3, chapter 50 it can be seen that a simple sraffian model is implied (prices, wage and profits interacting)

  7. jlowriej Says:

    Well, if Apostolis were actually to read “Capital” he would readily learn how good economic theories like those of Marx allow one to demolish bad ones, namely Apostolis’ own. The thief has not created any value for himself. He has misappropriated a use value. He may turn this into a sum of money by selling it, which would allow him to appropriate other’ labour in the form of commodities. But these commodities need to be REproduced ; as Boffy rightly observes the thief is merely transferring value created elsewhere, much it may be said like investment bankers. The difference is that since the capitalists create the laws of property, what the thief does is illegal, while what the bankers do is legal (in theory, anyway). One is reminded of the story of Alexander the Great and the pirate: accused of theft for plundering a ship, the thief replied, ”Ah, but when you plunder the whole world, it is called empire”, or rather nowadays globalisation.

    But let us not be too hard on Apostolis. Even those who do study ”Capital” can be just as absurd as Apostolis. I came across an article the other day in a publication called the “Weekly Worker” ( Boffy apparently is also a contributor) in which Hillel Tiktin, a former professor of “Marxism” ( as if this were not a contradiction in terms), argued that von Mises was right when he argued that under socialism economic calculation was impossible. This evidently brought Hillel( ipse dixit!) the written approval of the Von Mises Institute.

    Now in “Capital” we read ” Book-keeping… becomes ever more necessary the more the the process takes place on a social scale…it is thus more necessary in capitalist production than in the fragmented production of handicraftsmen…and more necessary in communal production than in capitalist.” (Vol 2, p212 ) ”Even after the capitalist mode of production is abolished… the determination of value remains….more essential than ever…. the keeping of accounts.” (Vol 3, p991)

    ”People will be able to walk into a distribution point and pick up what they need” according to Hillel. So communism will let alcoholics run amock in supermarkets? “To each according to their needs” means not individually identified needs but socially determined needs, which demands greater economic calculation than under capitalism, in order to distribute the socially necessary labour among the various departments of production. Truly as Marx said, ” De omnibus dubitandum”- Be doubtful of EVERYBODY ( usually mistranslated!)

    • Boffy Says:

      Yes I do, sometimes contribute to the WW, but I have to say that my opinions are usually contrary to those of Professor Ticktin on a range of issues, not least his theory of the class nature of the USSR. He is not alone in the absurd notion that value only exists under capitalism, which has absolutely no basis in Marx or Engels.

      I have cited the quote you provide from Marx many times to make the point you set out here. A few lines before it, Marx makes clear “Value is Labour”, before going on to illustrate it in the quote you have cited. Marx makes the same point in his Letter to Kugelmann setting out The Law of Value.

      Marx makes further such statements in The Critique of the Gotha Programme, and Engels in Anti-Duhring cites his own much earlier statements that under communism value remains, in this sense of the law of value in determining what available social labour-time enables to be produced, which would then have to be set against the determined set of use values that society desires.

      Even in talking about a communist society in which some kind of abundance exists, so that a situation of “From each according to their ability, to each according to their needs” prevailed, Marx makes clear that such abundance would only ever be in relation to an expanded set of human desires, and not to any and every conceivable use value that any individual might want.

      • jlowrie Says:

        Let me be quite clear that there was no intention to disparage Boffy. I find his contributions a salutary reminder of my own deficiencies in reading ”Capital”. Where somebody makes a blunder in a scientific spirit we can do no better than quote another Latin tag of Marx’s, ”de the fabula narratur”, which might roughly be translated as ”how about you?” But this is not the case with Ticktin: he is driven by an ideological anti- Stalinism into claiming that the Soviet economy was dysfunctional and produced mainly waste. Now those who did not inhabit Hillel’s trotskyist fantasy land, but had to face Stalinism on the harsh terrain of the battlefield, namely Hitler, Goering etc, were quite open about the Soviets having won the war because of their superior production. Hitler admitted that he would not have invaded had he imagined the Soviets could have fielded 30,000 battle tanks. But it gets worse. Another professor, this time of Japanese, John Crump, an anti-Leninist communist, agrees with Hillel. “People will be free to take whatever they choose from consumption outlets…without making payment”. And ”In the new society everyone will have the right to consume, irrespective of whether they are engaged in productive activity or not. Nevertheless, non-market socialists anticipate that people will volunteer to work, and will freely give their time and effort ..” ( Non-market Socialism 1987 p43-44)

        Where is the historical evidence for such assumptions? No wonder socialism is in the doldrums. Just try the validity of these claims out on your neighbours.

        Speaking of things Japanese, the greatest military defeat probably in history was the Soviet victory in 1945 over the Japanese Kwantung army

      • jlowrie Says:

        The Red Army swept away the Japanese army in 7 days. Why ? because it was so far better equipped. The Japanese just could not match Soviet fire power. It would have seemed incredible in 1950 that Japan would have so eclipsed the Soviet Union economically by 1980. Now the hirelings of the von Mises Institute will attribute this to the superior efficiencies of the ”Market”. But the Japanese economy was also planned. It makes no sense to argue with J.K. Galbraith that Soviet planning aimed to replace the market, while capitalist planning is to meet market demands. This is to posit in an a-historical, metaphysical manner ”the market” as antecedent to the economic exchanges that constitute the network of social relationships of which ”the market” is the conceptual expression. While there are other factors to take into account, I would suggest that a better line of investigation would be to determine to what extent Japanese planning was superior.Recall how Marx argues (Vol 3 p567-569) that with joint-stock companies capital receives the form of social capital, which ”is the abolition of capital as private property within the confines of the capitalist mode of production itself.” This clearly facilitates planning. It is no accident that the bourgeoisie talk of the market rather than of capitalism. But the leading Japanese companies until the 1980’s at any rate had lifetime employment ; there can hardly be any question of a labour market here. In any case, in the military-industrial complex many of the contracts seem to be awarded without any competitive tendering.

        I do really feel that Marxists economists need to complete Marx’s project and determine how the law of value is modified by the interactions of TNC’s operating at the level of the World Market, so as better to prepare the transition to a new form of society that is grounded in social reality and can address social needs rather than the fantastical ‘wants’ of an ecologically impossible communist cornucopia a la Ticktin/Crump.

        Yes, I know, I should have said ‘alcoholics running amok.’

      • Boffy Says:

        I didn’t take your comment as being disparaging. I am as big a critique of Stalinism as Ticktin, but I find his “non-class state” theory, which is really just a different version of the bureaucratic collectivist theory unsound. I also think that, there has been a tendency by some third-campists to throw the baby out with the bath-water in their eagerness to denigrate any of the achievements of the USSR, for fear of giving succour to Stalinism.

        In fact, I would argue that it is more a positive reflection of the underlying power of the developing economic relations that the USSR, as such a backward economy to begin with, and despite all of the lunacies of Stalinism still managed to achieve what it did achieve, in effectively defeating Nazi Germany single handed, when the capitalist democracies of Europe (including Britain) had essentially been defeated by 1941, and in its technological developments in being first on a whole host of counts in the space race after WWII, despite the unprecendented damage to its economy and population (30 million people killed for goodness sake, compared to around 300,000 Americans.

        But, I also agree about some of the liberal notions that have crept into socialist politics. The statements you have given are a reflection of it. In the Critique of the Gotha Programme, Marx comments about the kind of restrictions that a society in the first stage of Communism would face. His comments are in stark contrast to the liberal welfarism of much of the left today that wants one group of workers to hand over large amounts in taxes to pay out benefits of an increasing variety, to other groups of workers who are being failed by the capitalist system, and who are also encouraged by that very welfarism to make bad choices.

        Having set out that each worker would be able to take out from society’s store only goods representing a proportionate amount of labour-time to that which they had contributed,

        Marx writes,

        But one man is superior to another physically, or mentally, and supplies more labor in the same time, or can labor for a longer time; and labor, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal labor. It recognizes no class differences, because everyone is only a worker like everyone else; but it tacitly recognizes unequal individual endowment, and thus productive capacity, as a natural privilege. It is, therefore, a right of inequality, in its content, like every right. Right, by its very nature, can consist only in the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable only by an equal standard insofar as they are brought under an equal point of view, are taken from one definite side only — for instance, in the present case, are regarded only as workers and nothing more is seen in them, everything else being ignored. Further, one worker is married, another is not; one has more children than another, and so on and so forth. Thus, with an equal performance of labor, and hence an equal in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right, instead of being equal, would have to be unequal.

        But these defects are inevitable in the first phase of communist society as it is when it has just emerged after prolonged birth pangs from capitalist society. Right can never be higher than the economic structure of society and its cultural development conditioned thereby.”

        In other words, Marx sees no reason here why a socialist society should enable one worker to take more out of the society’s store to cover their larger set of needs, because they have chosen, for example, to have more children than other workers. What Marx would have thought of today’s grossly bloated and bureaucratic welfarist capitalist state, and all of its reduction of large numbers back to the levels of servitude dependent upon a paternalistic state god only knows, especially given the extent to which this bureaucratism only serves to transfer value from one set of hands to another, less productive set of hands. For example, into the hands of landlords via £9 billion of Housing Benefit each year.

        But, actually we do know, not only from marx’s comments in the Critique, and his comments in his Manifesto for the First International and his and Engels opposition to the introduction of such state capitalist welfarism and national insurance schemes; we also know from Capital I, in his discussion of the plight of the hand loom weavers.

        The hand loom weavers having been a highly affluent group of workers at one time, found themselves driven into destitution as a result of the introduction of the power-loom. They continued to scrape by in desperate conditions, earning a meagre living from their hand looms working in their cottages for years, however, because their income was supplemented out of Parish rates.

        Marx deplores the fact that such supplementation required the other workers in the parish to cover this supplementation from their own wages, whilst the supplement still kept the hand loom weavers in a desperate state for many years, without offering them any hope. It was a tragic waste of resources that could have been utilised for capital accumulation in some profitable sphere, that would have provided workers with productive employment.

    • sartesian Says:

      “”People will be able to walk into a distribution point and pick up what they need” according to Hillel. So communism will let alcoholics run amock in supermarkets?”

      Now there’s a deep, well-thought argument against the utopian aspects of Marxism, where abundance replaces scarcity, the community of producers organizes itself for the benefit of all thereby securing the benefit of each………….because alcoholics are going to run amok in supermarkets. Fucking brilliant. If only there had been supermarkets in Marx’s time, he might have spared us all that idealistic nonsense he produces, pretty consistently, from the Manuscripts of 1844 through the Grundrisse and beyond– Of course there were always alcoholics, so maybe somewhere in the MEGW, Heinrich or somebody will uncover a text where Marx deals with preventing alcoholics from running amok under communism. Clearly, there’s a need for alcohol police, or policing of some sort, no? And are we just going to let hungry people run amok in Burger King’s’ ?? Get the food police. Or better yet, ration books, and coupons…..so that then the coupons can be exchanged like currency, and can be counterfeited, and then we can get even more police.

      I’d criticize J for a lack of imagination, but I fear he has displayed an absolute surplus thereof– alcoholics running amok under communism.

      And then, to put the nail in the coffin, J tells us how the experience of WW2 refutes the notion that the fSU was dysfunctional as an economic formation because of all the weapons Soviet industry produced. That’s even more brilliant than our zombie hordes of alcoholics invading Piggly-Wiggly.

      After the Soviet Union spends almost 20 years demolishing international revolutions, both through ignorance and through deliberation; after the former Soviet Union spends allows the German bourgeoisie to establish armament sources within the fSU, after the 3rd Intl leads the German workers revolution into defeat for a third or 4th time, we have the consummate example of the economic functionality of the Soviet system– the ability of a war economy to produce implements of war. Priceless. That’s the apotheosis of value, isn’t it?

      All j left out was an homage to collectivization as improving productivity.

      Sure, Marx didn’t envision a future of supermarkets, but I suspect he had an inkling of future Boffy and future j– when he said “I am not a Marxist.”

      • jlowrie Says:

        I must promise myself never to do this again, namely make posts on Michael’s blog about the history of the communist movement, for normally rational people seem to take leave of their senses when confronted with this. I hope we might all agree to limit our posts here to the elucidation of Marx’s Capital and the analysis of capitalism in general. A case in point is Sartesian, whose frequent and insightful posts I always read with interest and indeed instruction, if not always pleasure.

        I was here attempting by my illustration of ”alcoholics running amok in supermarkets” ( an argumentum ad absurdum) the consequences that must necessarily follow from the absurd policy of asserting that under a communist system citizens will just simply avail themselves freely of whatever they might deem to be their ”needs” at consumption outlets. The consequences would be empty shelves in a week and the collapse of the economy in a month. ”Every child knows that”, Sartesian.

        But instead of attempting to analyse whatever might be the defects in my thesis Sartesian has recourse to empty bluster behind an impoverished rhetoric.( Fucking brilliant !) Let us turn then from alcoholic beverages (I trust i was not touching a soft spot there, Mr. S.?) to the examples of shoes or neckties. Does S. hold with the red professors Ticktin and Crump that the law of value does not operate under communism or does he agree ( what pleasure it gives me to ask this question) with Boffy that it does operate albeit in a modified form. Let us quote Marx: ”even after the capitalist mode of production is abolished…. the determination of value still prevails in the sense that the regulation of labour-time and the distribution of social labour among various production groups becomes MORE ESSENTIAL than EVER (Vol 3 p991) So how many pairs of shoes does S. envisage that a person will need (as opposed to ‘want’) and how will this need be determined and the amount of labour-time established to meet the production of these particular articles, if they are freely to be available. In fact it would be quite impossible. I recall that shortly after returning from a holiday in the Philippines the poor people of Manila stormed the presidential palace wherein they discovered a large room where the fist lady, Imelda, kept her 3000 pairs of shoes! So when my close comrade in arms sets about buying another pair of shoes, of which she has absolutely no need, I always warn her, ”Remember Imelda Marcos!” Now I am sure that the members of Mr.S’s family are very modest in their demands on the amount of labour-time to be applied to their being shod, but I am afraid mine are not, and this seems to be true of the common run of humanity.

        So, you bet! Ration books and coupons, or certificates as Marx calls them: ”The certificate of labour is merely evidence of the part taken by the individual in the common labour, and of his claim to a certain portion of the common product that has been set aside for consumption.”( Vol 1 p188-189). These no more circulate as currency than theatre tickets. We see the absurdities into which S. dives headlong that he, who has clearly studied ”Capital” in depth, would confuse the exchange of labour certificates as analogous to the circulation of some kind of labour money.

      • sartesian Says:

        The law of value, where commodities exchange in relation to the socially necessary labor time for their reproduction no longer operates with the abolition of capitalism because wage labor, i.e. labor expressed as a commodity, labor where the only value the labor power has for the laborers is its value in exchange for the means of subsistence, no longer exists.

        How a law of value, of exchanging values, of distributing labor time according to value can exist when wage labor is abolished, private property in production no longer exists, can govern socialism is something boffy and his acolytes need to explain.

        Marx says “in the sense that the regulation of labour-time and the distribution of social labour”… in the sense that means that the distribution is essential, but in fact is no longer determined by the production of value. Marx writes that all economy is the economy of TIME. That is correct. Marx shows that NOT all economy of time is the economy of VALUE.

        As for the rest of J’s nonsense– whether it be shoes or alcohol, all he is arguing is that commodity fetishism exists even after commodity production is abolished. Imelda’s collection of shoes was the expression of the law of value; the result of the expropriation of surplus value; value over need. It was not inherent, is not inherent in human beings.

        J’s argument that “shelves would be empty in a week”

        Accounting may be necessary, accounting based on VALUE is no longer necessary.

        J should take a little more time to actually consider what Marx is critiquing. Instead he comes down on the side of a “socialist” police force to regulate people’s needs; ration books and coupons– which have always and will always circulate as means of exchange– and he leads us nowhere else other than a repeat of the failed Soviet attempt at “rationalizing” the law of value– the perfect example being the “rational” production of armament, which he thinks proves how useful and productive the Soviet economy was.

      • sartesian Says:

        Lost a sentence: J’s argument that supermarket shelves would be empty in a week is nothing but the reiteration of the old capitalist myth of the commons– that unrestricted communal use of the commons, absent the “regulating” feature of private property, of the law of value, led to the destruction of the commons. That was absolute bullshit then, and J’s empty supermarkets, when the bourgeoisie have been defeated, capital abolished, and production for need has supplanted production of value, is bullshit now.

      • jlowrie Says:

        More bombastic bullshitting from Mr.S., this time with an ad hominem attack appended, ”Boffy and his acolytes.” Really! What, I ask myself, can be behind this arrogant, embittered posturing? Why can Sartesian not offer analysis backed up with concrete examples and authorities? For example in communism he argues, ”Accounting may be necessary, accounting based on VALUE is no longer necessary.” I am perfectly willing to be persuaded of this, but I need to see it analytically explicated and not merely asserted.

        Now I should like two concrete answers from Sartesian:

        1) Does he hold with Ticktin that ‘”People will be able to walk into a distribution point and pick up what they need”?
        2) Does he hold with Crump that ”In the new society everyone will have the right to consume, irrespective of whether they are engaged in productive activity or not ”, and that work will be voluntary?

        Assuming he agrees with 1) how does he envisage social need might be identified and met, seeing that there can be way of knowing how much will be consumed?

        ”J’s argument that supermarket shelves would be empty in a week is nothing but the reiteration of the old capitalist myth of the commons– that unrestricted communal use of the commons, absent the “regulating” feature of private property, of the law of value, led to the destruction of the commons. That was absolute bullshit then, and J’s empty supermarkets, when the bourgeoisie have been defeated, capital abolished, and production for need has supplanted production of value, is bullshit now.”

        Really? Well before you enter a Cuban supermarket you have to surrender your bag to a guard, shoplifting being rife. Yet the Cuban people live in relative abundance compared to the 19th Century English proletariat.

        The point is this: communism has to address socially determined need, not individually identified want. How is the necessary labour time to be distributed among the various departments of the economy in an efficient manner? This is the really difficult question. For example, in Cuba Fidel made a really major blunder at a time when he thought the Soviet aid would last for ever in enabling far too many people to move from the countryside to the cities and become lawyers and engineers etc., and over concentrating on the production of sugar. Consequently there now is a real lack of agricultural labour, and Cuba imports things like canned pineapple from the Dominican Republic. Young people have no desire at all to go into farming. How might this be rectified? The answer of the Cuban government has been to raise the incomes of farmers and thus the price of foodstuffs, and also cut certain subsidies. This means that there is at least meat in the shops, even while the citizens complain of its high price. But remember the old USSR, where at times there would be no meat at all!

      • sartesian Says:

        j provides all the concrete examples needed to refute his own position:

        “Really? Well before you enter a Cuban supermarket you have to surrender your bag to a guard, shoplifting being rife. Yet the Cuban people live in relative abundance compared to the 19th Century English proletariat.”

        I concretely point out that the Cuban revolution did not achieve socialism; that in fact no revolution isolated to a single country can achieve socialism.

        What j describes as socialism is rationed scarcity– there’s more than a slight difference.

        I think it’s fair to conclude from j’s own example that he has no idea what he is talking about.

        That there was a social revolution in Cuba is beyond dispute; that such a revolution, isolated, attacked, embargoed, where scarcity is enforced by the capitalism, is wracked with contradictions, limitations, conflicts, and decomposes the longer the revolution is isolated is also beyond dispute.

        Yes, I’ve spent some time in Cuba, spent some time working with and for the Cuban railroads, and the burdens imposed on the revolution are staggering– but for the reasons of capitalism ; by the force of the law of value that penetrates and erodes the revolution.

        So now we know what j’s examples of socialism and “rational economic production are”– supermarkets with armed guards and armament production.

        It’s not ad hominem to point out the ignorance behind arguments masquerading as insight, erudition, knowledge.

        So here’s the questions, in turn, to j and other supporters of the law of value being an eternal condition of human society. Have there been societies where the law of value did not regulate the social disposition of labor time?

        One might be: Did the law of value regulate labor time under feudalism? In the Roman and Greek eras? Incas? Mayan society? The Iroquois? 9th century China?

        Another would be: what is the origin of value as the regulating function of society?

        Another would be: How do we account for VALUE when wage-labor is abolished? Time? We’re going to apportion quantities of use values based on the time a person spends in production? Really? And the time a doctor trained and educated by ALL producers to perform surgery– is going to rewarded with access to more use values than those who work in other areas– those who work in food processing?

        The “solutions” j proposes, presumes, and creates, the condition where labor-time again is objectified in objects for exchange, in commodities. Labor-time remains a means for exchange, rather than the means for satisfaction and expansion of human needs.

        Our brilliant “law of value without end, Amen” chorus, doesn’t even get how stupid they sound when they use examples of ruling class accumulation and commodity fetishism as somehow arguments about the eternal greediness of human beings. Imelda Marcos? And you think I’m being unfair, “ad hominem”? Imelda Marcos’ shoes? That’s a “concrete example.” Maybe for the delusional. For the rest of us, its the product of class society, of value accumulation, of commodity fetishism.

        So j and others will recapitulate a “red” law of value, to go along with their “red” police, their “red” markets, their “red” stop and frisk laws, their “red” capitalism, with they themselves of course playing the role of “red” bourgeoisie. And that’s what they call “Marxism.”

        Marx knew what he was talking about when he said he wasn’t a Marxist.

        j doesn’t know what he’s talking about when he says he is.

      • sartesian Says:

        A final word on this: What is the “law of value.” It is an expression of the condition of labor, of social relations; It is not a law of the universe, like gravity, or the speed of light. The law has historical antecedents in the social condition of labor, and it achieve its expression as a law, as regulating social production, under capitalism. It’s not a law because somebody calls it a law, or because commodities were exchanged on a greater or lesser scale in the past, with a greater or lesser approximation of the time involved in their production.

        The law is a regulating principle only when and only because labor itself is organized AS A COMMODITY, as a VALUE, exchanged for the equivalent to the time necessary for its reproduction.

        Now exactly where and when does this law dominate social production prior to capitalism?

      • jlowrie Says:

        ”J should take a little more time to actually consider what Marx is critiquing. Instead he comes down on the side of a “socialist” police force to regulate people’s needs; ration books and coupons– which have always and will always circulate as means of exchange– and he leads us nowhere else other than a repeat of the failed Soviet attempt at “rationalizing” the law of value– the perfect example being the “rational” production of armament, which he thinks proves how useful and productive the Soviet economy was.”

        Can Sartesian explain how Certificates of Labour might circulate? What could I exchange the articles I drew from the common consumption fund for, except articles that others drew from the same consumption fund? For example I might exchange a concert ticket for a cinema ticket. This is the direct exchange of use-values, and has nothing to do with exchange value. If I give my neighbour some flowers from my garden and she gives me some vegetables from hers, these are articles of value, having had a certain amount of labour applied to their production, but the exchange is in no way regulated by the law of value.

        I used Soviet wartime armaments output as an example of a successful department of the Soviet economy. Take the T 54 tank. Does S assert this was not useful ? It was supremely useful. I know of no military historian who disputes this. It was not as good as the German Panther and Tiger tanks, but these were over engineered, easily broke down and unlike the T54 could not be readily repaired or mass produced. The US army tank by contrast was very poor and christened by the GI’s ”the Ronson”. Moreover, the Soviet war effort, as elsewhere, was also a gigantic effort in the production of transport, factories, steel , cement etc., and not only in heavy industry, but also in the provision of winter uniforms and felt boots. The German soldiers really envied these because they were provided with leather boots, truly RATIONAL and FUNCTIONAL in the Russian winter.

        Of course the production of other items was often very poor as you can read in Ticktin, who I recall gave the example of the production of shoes that nobody wanted!

        The problem is that Soviet factories had quantitive targets. I remember reading of a meeting of Stalin with his generals that went roughly as follows:

        S. When will you be ready for the next offensive campaign?

        Zhukov. When we receive the requisite new tanks.

        Stalin phones: ”Why have the tanks not been delivered yet?”

        Director. Because we are still waiting for the necessary ball-bearings.

        Stalin phones again: Why have you yet again failed to meet your target? I must tell you, comrade X, this is my very last warning!

        Now this is hardly the expression of free communistic relations, but to call it an illustration of ”the failed Soviet attempt at “rationalizing” the law of value” is, I make bold to say, ”bullshit”!

        The Soviets were aware of the irrationalities and inefficiencies in their system. Suslov, one of the main Soviet leaders, acknowledged in 1956, ”our architects, carried away by extravagances, gave little thought to what it would cost the people….and the collective farm personnel still very often do not figure out the cost of a ton of grain or meat…due to the fact that our economists have not elaborated the problem of exactly how the law of value operates in our economy.” (1979 Meek Studies in the Labour Theory of Value” p284). Stalin had already argued that the law of value ”extends to commodity circulation, to the exchange of commodities through purchase and sale, the exchange chiefly of articles of consumption. Here in this sphere the law of value preserves within certain limits of course the function of a regulator.” This was because the prices of commodities produced by state industry depended largely upon wage costs, which in turn depended largely upon the prices of wage-goods i.e. upon the the prices of commodities that came under the the operation of the law of value e.g. collective farm products. Stalin agrees under communism the law of value will cease to function. ( Ibid. p279-281)

        There is no doubt that this was the prevailing view: Engels in a letter of 1884 to Kautsky writes, ”you say that …..with the abolition of commodity production value too will be changed, that value as such will remain, and only its form will be changed. In actual fact however economic value is a category peculiar to commodity production and will disappear together with it.”

        In his Critique of The Gotha Programme Marx writes:

        “”Within the co-operative society based on common ownership of the means of production the producers do not exchange their products; just as little does the labour employed on the products appear as the value of these products, as a material quality possessed by them, since now in contrast to capitalist society, individual labour no longer exists in indirect fashion but directly as a component part of the total labour.”

        Well and good, but what exactly does this mean? And how does it square with ””even after the capitalist mode of production is abolished…. the determination of value still prevails in the sense that the regulation of labour-time and the distribution of social labour among various production groups becomes MORE ESSENTIAL than EVER (Vol 3 p991)

        Sartesian says, “Accounting may be necessary, accounting based on VALUE is no longer necessary.” So exactly what and how are we accounting?

        Perhaps Stalin is of some aid? After all, he admitted some horrendous mistakes in pricing goods in the Soviet Union. Of communism he argues, “In the second phase of communist society, the amount of labour expend on goods will be measured not in a roundabout way, through value and its forms, but directly and immediately by the amount of time, the number of hours,spent on the production of goods. As to the distribution of labour, its distribution among the branches of production will be regulated not by the the law of value…. but… by the requirements of society, and computation…will acquire paramount importance for the planning bodies.” (Meek,p201)

        So here we are back where we started. How will these requirements be identified and how will the computation of labour-time be done, so that horrendous mistakes are not repeated e.g. no obligation to work and the help yourself consumer goods outlets a la Ticktin/Crump?

      • sartesian Says:

        “Perhaps Stalin is of some aid?”

        Says it all:

        Alcoholics running amok; every woman an Imelda Marcos; armed guards in Cuban supermarkets– but not as far as j knows in the hard currency stores where those with access to dollars can stock up on Havana Club anejo, and “perhaps Stalin is of some aid?”

        Tankies’ lament.

      • jlowrie Says:

        I note s has failed to answer my 2 questions, which is not accidental.

        He says, ” That was absolute bullshit then, and J’s empty supermarkets, when the bourgeoisie have been defeated, capital abolished, and production for need has supplanted production of value, is bullshit now.”

        Well in Cuba the bourgeoisie were defeated, capital abolished and production for need introduced. According to s,” I concretely point out that the Cuban revolution did not achieve socialism; that in fact no revolution isolated to a single country can achieve socialism.”

        What j describes as socialism is rationed scarcity– there’s more than a slight difference.” I cannot in the world fathom what kind of society ”rationed scarcity” might be. Rationed scarcity strikes me as a concept borrowed from the most vulgar bourgeois economists, but since s has now excommunicated me from the ranks of genuine Marxists how would I know and I must bow before this example of his exceeding erudition. Is it not better to designate Cuba as a society in transition between capitalism and communism, and leave it at that? Though I fear the bourgeoisie may be winning.

        Anyway, let us go back to the points I am trying to make. Ticktin says we cannot have socialism without relative abundance. Relative to what? The needs of society? Which society? the U.S.? I suspect he is here influenced by Trotsky’s argument in “The Revolution Betrayed” that “Marxism…. constructs the communist program upon the dynamic of the productive forces. If you conceive that some cosmic catastrophes going to destroy our planet in the fairly near future, then you must of course reject the communist perspective…

        The material premise of communism should be so high a development of the economic powers of man that …the distribution of life’s goods, existing in continual abundance …will not demand any control except that of education, habit and social opinion.” and ”By the lowest stage of communism Marx meant a society which from the very beginning stands higher than the most advanced capitalism.” and ”The strength and stability of regimes are determined in the long run by the relative productivity of their labour.” Even if this thesis were ever true, which personally I think not, the cosmic catastrophe is upon us and we need to think immediately of ways to limit the production of goods, which capitalism has developed to an extent and variety far beyond what is humanly necessary or Marx and Engels could even have imagined. Does this make socialism impossible? Quite the contrary, it makes it even more necessary than ever, and I will argue we do not need ( and in fact it is ecologically and even geologically impossible) to attain Western standard of life to attain socialism.

        Let us take the example of the Chinese village of Upper Felicity as described by Jack Chen who ( a bit like our Mr s in Cuba -and well done to him- it is okay I will get back at him later!) went to live and WORK with the peasants for a year.

        He explains “Each person in the commune receives a basic allocation of food… arrived at in the following way.

        Out of the gross output of the work team the grain tax (tax in kind) is paid to the state.. which varies from year to year..As output increases the percentage paid as tax decreases.
        The net output after tax is divided after democratic into four unequal parts. One part, 20%, is set aside as the reserve fund. This includes the collective grain reserve.. the fund for investment and welfare, which was 1% of output in 1969 and gave embers care when sick or too old to work…

        The distribution fund into two fairly equal parts… the first half is divided by the total number.. and this gives the amount of cereal grain allocation for each person in the team (village).

        The other part of the distribution fund is used for the payment of work-points earned…every able -bodied adult member is rated at 10 work points a day, but more strenuous work was rated at 12 points and lighter work at 7. From each etc(1973 Chen, A Year in Upper Felicity p157-159).

        Here we see communism in operation, albeit at a low economic level. No value relations to be sure, but not quite communism, be cause where you find the Leninist party there cannot be real democracy.

        But it seems to me at any rate that in a more complex economy the distribution of labour-time and the system of remuneration to attain the appropriate distribution is not so apparent. I wish to try to address this next.

        Berki in a most absorbing book (1983: Insight and Vision: the problem of communism in Marx’s thought) concludes ”Marx’s thought is obstinately confronted by communism as its chief problem.” We should not ”identify Marx’s communism with an ideal picture of communist society.”

      • jlowrie Says:

        ”Perhaps Stalin is of some aid?” I was being ironical. If you are a materialist as you seem to claim, you have to examine real societies that took the socialist road, examine the problems they faced, what they got right and what wrong, and draw conclusions; not posit your communist society in some future, fantastic worldwide utopia which will never arrive and the earth’s ecology will never support. Rationed scarcity- absolutely!

      • sartesian Says:

        Nope, let’s not be utopian, let’s be malthusian; let’s argue that not all people can have shoes; the earth can’t support that. Let’s argue that in fact, the earth can’t afford proper medical for all children.

        Some children, sure can get the best. But not ALL children.

        “What? You want people running amok in hospitals demanding MRIs, CAT scans, PETA scans like drunks demanding gallon jugs of vodka as their birthright?”

        WTF? The hilarious, and pathetic part of this is that you are absolutely convinced that you are talking about socialism, when all you are doing is expressing, in near classic terms, the apologies for capitalism.

        Who’s going to administer this rational scarcity? And how? Let’s see, maybe Stalin can be of some assistance– was their privilege in Stalin’s Soviet Union? Did some get better medical care than others? Why? What’s the basis for the distinction in medical care?

        Do us a favor– you’re the one who claims to be a materialist, and yet you abstract the entire Soviet history from the material conditions of its organization with a low level of agricultural productivity, a level that was never raised to the level of advanced capitalist countries, and yet somehow that lower level of productivity supported “socialism.”

        You then compound the abstraction, ignoring the literal destruction of the revolution at the very hands of those who were administering what you think is a “socialist economy.”

        I’m only claim to agree with Marx when he said he wasn’t a Marxist.

        The law of value only functions as a law when labor itself is a commodity, exchanged for value equivalent to its reproduction.

        Right, I’m not going to answer your questions, because they’re loaded, but loaded with blanks. And because…the fundamental question is the meaning of the law of value. So the question you should be answering is– will wage-labor persist with “socialism,” and if not, how will value be determined so exchanges can be made in “proportion” and we won’t be overwhelmed by millions of Imelda’s demanding millions of Jimmy Choos?

        Armed guards? Your little red policemen? Really? How’s that worked out in history– in Russia, China, Cuba– good you think?

        Nope, whatever you do, don’t be utopian; be realistic like Stalin was, like Mao was– and look where it’s gotten socialism.

  8. murray cohen Says:

    As a layman entering among you jousting experts, I tremble to admit to believing that “the law of value” is oppressive and operates only under capitalism, in the sense that the relative difficulty (relative to labor time) of producing the social needs (production of basic needs is assumed) of the individuals in an egalitarian social order would be trumped by the social need for the product?–not, as under capitalism, which increasingly produces irrational products (and crises?) “rationally” (from the point of view of value creation and capital). A law of value will probably be required in egalitarian societies, something like Marx’s law (based on a critique of political economy), but its dialectic between use and exchange value (representing the interests of labor and capital) will operate in the opposite direction. As things stand in actually existing capitalism, isn’t Marx’s law better understood as the best tool for analyzing the capitalist system as such, and not some universal poverty of philosophy law. The point is to understand capitalism’s contradictions in order to replace it.

    • Boffy Says:

      Murray,

      Specifically talking about his theory of value, and the Law of Value, Marx writes this to Kugelmann.

      “Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish. And every child knows, too, that the amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society’s aggregate labour. It is self-evident that this necessity of the distribution of social labour in specific proportions is certainly not abolished by the specific form of social production; it can only change its form of manifestation. Natural laws cannot be abolished at all. The only thing that can change, under historically differing conditions, is the form in which those laws assert themselves. And the form in which this proportional distribution of labour asserts itself in a state of society in which the interconnection of social labour expresses itself as the private exchange of the individual products of labour, is precisely the exchange value of these products.”

      In Capital I, Marx describes this concept of value as Labour, and its measure as labour-time, in a whole series of different modes of production. In relation to one mode of production, that existing under peasant production within feudalism, he comes back to it in Volume III, and in Theories of Surplus Value, where he specifically states that under that mode of production surplus value takes the form of feudal rent, be it Labour Rent, Rent in Kind, or finally Money Rent. You cannot have surplus value, unless you have value! And, Marx goes on to say that what characterises each mode of production is the form by which this surplus value is pumped out of the producer, and the consequences of that for the social relations built upon it.

      But, going back to Capital I, in his definition of value in these different modes of production, Marx gives another example of what he means by value.

      He gives the example of Robinson Crusoe, alone on his island, and so unable to provide a concept of value as exchange value, let alone something that could only exist under a capitalist mode of production.

      “Moderate though he be, yet some few wants he has to satisfy, and must therefore do a little useful work of various sorts, such as making tools and furniture, taming goats, fishing and hunting… In spite of the variety of his work, he knows that his labour, whatever its form, is but the activity of one and the same Robinson, and consequently, that it consists of nothing but different modes of human labour. Necessity itself compels him to apportion his time accurately between his different kinds of work. Whether one kind occupies a greater space in his general activity than another, depends on the difficulties, greater or less as the case may be, to be overcome in attaining the useful effect aimed at. This our friend Robinson soon learns by experience, and having rescued a watch, ledger, and pen and ink from the wreck, commences, like a true-born Briton, to keep a set of books. His stock-book contains a list of the objects of utility that belong to him, of the operations necessary for their production; and lastly, of the labour time that definite quantities of those objects have, on an average, cost him. All the relations between Robinson and the objects that form this wealth of his own creation, are here so simple and clear as to be intelligible without exertion, even to Mr. Sedley Taylor. And yet those relations contain all that is essential to the determination of value.”

      In the Preface, Marx says that philosophers had sought the nature of value for more than 3,000 years. Why would he say that if the concept of value itself had only existed since the start of capitalist production?

      In fact, Engels in his Supplement to Volume III, talks about the “Marxian Law of Value” ceasing rather than starting to operate from the 15th century! But, he is using the term here to refer to it in a narrow sense of commodities exchanging at their respective values. The reason he says that, is that from the 15th century when capitalist production begins on a small scale, those industries that fall under capitalist production do not sell their commodities at their exchange value, but at their price of production, and because the output of these capitalist enterprises are simultaneously the inputs of non-capitalist businesses, that changes the cost of production of these non-capitalist enterprises whose commodities selling price is then also thereby modified, and so no longer sells at its exchange value, although it does not sell at a capitalist price of production either.

      In the Critique of the Gotha Programme, Marx writes, of the situation in the first stage of Communism,

      “Here, obviously, the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values. Content and form are changed, because under the altered circumstances no one can give anything except his labor, and because, on the other hand, nothing can pass to the ownership of individuals, except individual means of consumption. But as far as the distribution of the latter among the individual producers is concerned, the same principle prevails as in the exchange of commodity equivalents: a given amount of labor in one form is exchanged for an equal amount of labor in another form.”

      And besides the quote from Marx referred to earlier from Capital III, he also says this in Chapter 48,

      “Just as the savage must wrestle with Nature to satisfy his wants, to maintain and reproduce life, so must civilised man, and he must do so in all social formations and under all possible modes of production. With his development this realm of physical necessity expands as a result of his wants; but, at the same time, the forces of production which satisfy these wants also increase. Freedom in this field can only consist in socialised man, the associated producers, rationally regulating their interchange with Nature, bringing it under their common control, instead of being ruled by it as by the blind forces of Nature; and achieving this with the least expenditure of energy and under conditions most favourable to, and worthy of, their human nature. But it nonetheless still remains a realm of necessity. Beyond it begins that development of human energy which is an end in itself, the true realm of freedom, which, however, can blossom forth only with this realm of necessity as its basis. The shortening of the working-day is its basic prerequisite.” (p 820)

      As Trotsky put it, how much this necessity imposes on a socialist society depends upon how much capitalism has been able to develop the forces of production in preparation for it, the “Civilising Mission of Capital” as Marx describes it. That is one reason why all those vulgar Marxists who focus all their efforts on predicting (hoping for) the “next recession”, as coming to their rescue in persuading workers to join them, in a way that their own arguments, and presentation of the future socialist society has other wise failed to do, are not at all in the tradition of Marx, Engels, Lenin or Trotsky.

      As Marx also puts it in Capital III, Chapter 48,

      “It is one of the civilising aspects of capital that it enforces this surplus-labour in a manner and under conditions which are more advantageous to the development of the productive forces, social relations, and the creation of the elements for a new and higher form than under the preceding forms of slavery, serfdom, etc. Thus it gives rise to a stage, on the one hand, in which coercion and monopolisation of social development (including its material and intellectual advantages) by one portion of society at the expense of the other are eliminated; on the other hand, it creates the material means and embryonic conditions, making it possible in a higher form of society to combine this surplus-labour with a greater reduction of time devoted to material labour in general.” (p 819)

      Or as he says in “Value, price and profit” of the attitude that workers should take rather than spending too much of their time in industrial struggles,

      “They ought to understand that, with all the miseries it imposes upon them, the present system simultaneously engenders the material conditions and the social forms necessary for an economical reconstruction of society.”

  9. Charles A Says:

    Reformist socialists explain crises and what to do about them by Keynesian doctrine.
    Revolutionary socialists explain crises from an inherent contradiction in the accumulation of capital, but they concentrate on explaining why capitalism can no longer concede significant reforms.
    In-between socialists dwell overmuch on the explanation of crises.

    • Boffy Says:

      Except Marx himself explained crises on the basis of a whole series of factors and conditions. In fact, in Capital III, Chapter 15, Marx emphasises a major cause of crises being not in a contradiction arising from the accumulation of capital, but in the contradiction between the production of value and surplus value, and its realisation via consumption.

      “But this production of surplus-value completes but the first act of the capitalist process of production — the direct production process. Capital has absorbed so and so much unpaid labour. With the development of the process, which expresses itself in a drop in the rate of profit, the mass of surplus-value thus produced swells to immense dimensions. Now comes the second act of the process. The entire mass of commodities, i.e. , the total product, including the portion which replaces the constant and variable capital, and that representing surplus-value, must be sold. If this is not done, or done only in part, or only at prices below the prices of production, the labourer has been indeed exploited, but his exploitation is not realised as such for the capitalist, and this can be bound up with a total or partial failure to realise the surplus-value pressed out of him, indeed even with the partial or total loss of the capital. The conditions of direct exploitation, and those of realising it, are not identical. They diverge not only in place and time, but also logically. The first are only limited by the productive power of society, the latter by the proportional relation of the various branches of production and the consumer power of society. But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits.”

      Those who argue that the basis of crisis can only be found in some single factor such as the law of the tendency for the rate of profit to fall, are guilty of a form of Say’s Law, whereby they assume that just because a quantity of value has been produced by one section of producers, and an equal quantity of value has been produced by another section of producers, this production of value/supply necessarily results in an exchange of these equal values so that as say argued Supply creates its own demand, and if that doesn’t happen, the crisis must then be due to some other factor.

      But, marx showed this is nonsense. As he says in relation to Say’s Law,

      “At a given moment, the supply of all commodities can be greater than the demand for all commodities, since the demand for the general commodity, money, exchange-value, is greater than the demand for all particular commodities, in other words the motive to turn the commodity into money, to realise its exchange-value, prevails over the motive to transform the commodity again into use-value.” (TOSV2 p 505)

      This Marx says is due to the fact that in a money economy, rather than a barter economy, the act of production and consumption is separated, purchase and sale are separated by the mediation of money within the process.

      “No crisis can exist unless sale and purchase are separated from one another and come into conflict, or the contradictions contained in money as a means of payment actually come into play; crisis, therefore, cannot exist without manifesting itself at the same time in its simple form, as the contradiction between sale and purchase and the contradiction of money as a means-of payment.” (TOSV2 p 512)

      “The general possibility of crisis is given in the process of metamorphosis of capital itself, and in two ways: in so far as money functions as means of circulation, [the possibility of crisis lies in] the separation of purchase and sale; and in so far as money functions as means of payment, it has two different aspects, it acts as measure of value and as realisation of value.” (TOSV2 p 513-4)

      Moreover, one reason that such a situation can arise is not due to underconsumption, but over-consumption. As marx says, crises of overproduction usually break out during times of economic boom, when wages and consumption are high. Its at such times when the consumption needs of large numbers for a range of commodities are more or less satisfied that it becomes difficult to get them to buy more of the vastly increased output, even at lower prices. As he says,

      “The same value can be embodied in very different quantities [of commodities]. But the use-value—consumption—depends not on value, but on the quantity. It is quite unintelligible why I should buy six knives because I can get them for the same price that I previously paid for one.”

      In other words, Marx clearly understood the concept of marginal utility, and of the price elasticity of demand long before its development by the marginalists. Just because a quantity of value and surplus value is produced and is represented in a variegated mass of use values, does not mean that these commodities can be simply exchanged for each other at these respective values/prices of production, because as Marx’s comment from Chapter 15 indicated there is the rather important matter of consumers actually wanting to consume those commodities, and to consume them in quantities, and at prices that enable that mass of value and surplus value to actually be realised! The fact that commodity production and exchange in a money economy separates the act of buying and selling provides the basis for such a disparity to break out in a crisis.

      Marx gives a further example of that role of elasticity of demand.

      “Here a great confusion: (1) This identity of supply, so that it is a demand measured by its own amount, is true only to the extent that it is exchange value = to a certain amount of objectified labour. To that extent it is the measure of its own demand — as far as value is concerned. But, as such a value, it first has to be realized through the exchange for money, and as object of exchange for money it depends (2) on its use value,but as use value it depends on the mass of needs present for it, the demand for it. But as use value it is absolutely not measured by the labour time objectified in it, but rather a measuring rod is applied to it which lies outside its nature as exchange value.” (Grundrisse)

      And this applies also in relation to the exchanges between different capitals in relation to production and consumption.

      “By the way, in the various branches of industry in which the same accumulation of capital takes place (and this too is an unfortunate assumption that capital is accumulated at an equal rate in different spheres), the amount of products corresponding to the increased capital employed may vary greatly, since the productive forces in the different industries or the total use-values produced in relation to the labour employed differ considerably. The same value is produced in both cases, but the quantity of commodities in which it is represented is very different. It is quite incomprehensible, therefore, why industry A, because the value of its output has increased by 1 per cent while the mass of its products has grown by 20 per cent, must find a market in B where the value has likewise increased by 1 per cent, but the quantity of its output only by 5 per cent. Here, the author has failed to take into consideration the difference between use-value and exchange-value.

      (Theories of Surplus Value 3)

      In each of these instances cited by Marx, the crisis arises for reasons that have nothing to do with the accumulation of capital, or any contradiction arising from it. The value and surplus value has been produced accordingly in each case at the stage of production, and if all that was required was such production of value and surplus value, with the resultant use values being exchanged seamlessly then no crisis would arise. In each case, the crisis arises precisely because as Marx says in Capital III, Chapter 15, it is not just a matter of producing value and surplus value, but also of realising it in circulation, and that brings forth all sorts of complications.

  10. murray cohen Says:

    corrections: (1) no question mark after “product” in the first long sentence; (2) the last word in the last sentence should be “capitalism” not “it”.

  11. D smith Says:

    The use of any form of data processing , aggregate, averaging could be suspect as such use suggests a preconceived model. There are forms of filtration that can preserve real data effects without the harshness that aggregation brings.

  12. murray cohen Says:

    Boffy, thanks for the education. But you miss my point (I think), which was that the dialectic between use value and exchange value within a “social relation” (i.e capital) which is based on the private ownership of the means of production favors (by force) the production of exchange values. If private property is abolished and production is democratically organized, the dialectic between use and exchange value will favor (by democratic agreement) use value. Such a change in the direction of the dialectic will not abolish a labor theory of exchange value. It will make it more rationally applied in terms of the needs of the individual producers in an egalitarian community. Capitalism produces exchange values for the needs of capitalists, right now their off shored iPhones and associated imperial war needs.

    • Boffy Says:

      Murray,

      Exchange value is the form that value itself assumes when products come to be exchanged, and thereby become transformed into commodities. In other words, instead of a product being considered to have a value viewed in terms of the labour-time required for its production (initially an individual value that itself becomes transformed into a social value) that value becomes expressed as its equivalent form, as a quantity of some other use value, and ultimately in terms of the universal equivalent, i.e. money, as its price.

      This process of products becoming commodities, and value itself thereby becoming expressed as exchange-value, begins according to Engels at least 10,000 years ago. The production of these commodities was undertaken by tribes and primitive communities. The driving force for this is not private property, but the economic advantages that arise from trade, and the division of labour. In fact, as Engels describes in “The Origin” it is rather the other way around, whereby this growth of trade, of commodity production, creates the conditions whereby individual families are able to separate themselves and their means of production from the primitive commune, and thereby establish private property.

      The idea that it is force that creates the basis of the dominance of the production of exchange value over use values, it the concept of Eugene Duhring, and was comprehensively dismantled by Engels in “Anti-Duhring”, in his chapters on Duhring’s Force Theory.

      Moreover, Marx in Capital III, shows that by the second half of the 19th century, capital itself had developed to a stage whereby it had abolished capital as private property, and transformed productive-capital into socialised capital. Not all capital, of course, some small privately owned capital continued to exist, and small new capitals continued to be created, as private capital. But, as Engels put it in his Critique of the Erfurt Programme,

      “I am familiar with capitalist production as a social form, or an economic phase; capitalist private production being a phenomenon which in one form or another is encountered in that phase. What is capitalist private production? Production by separate entrepreneurs, which is increasingly becoming an exception. Capitalist production by joint-stock companies is no longer private production but production on behalf of many associated people. And when we pass on from joint-stock companies to trusts, which dominate and monopolise whole branches of industry, this puts an end not only to private production but also to planlessness.”

      But, as Engels also sets out in Anti-Duhring, the fact that capitalism develops to this stage of socialised capital, indeed to the stage of state capitalism, and where production is organised on the basis of some form of economic planning that does not stop that production being undertaken by capital, or what is produced being commodities. In fact, he states quite openly that such state capitalism is merely the most rational form, and that the planning is, at least initially to the benefit of capital and capitalists.

      In the Critique of the Gotha Programme, Marx again makes clear that for a long time the relations that exist continue to be essentially those of commodity production and exchange, and that is driven by the fact, as he states of necessity, of the fact that the Law of Value continues to operate, and that what society decides it wants – be that determined by a market, or by some form of democratic decision – is still constrained by what it can have, determined by its resources, state of technology, and available social labour-time.

      “Capitalism produces exchange values for the needs of capitalists, right now their off shored iPhones and associated imperial war needs.”

      But, that is wrong. Capitalist production is undertaken to produce surplus value, and thereby to accumulate additional capital. The way of maximising not just the production of surplus value, but its realisation as profit, a portion of which is then accumulated as capital, is to produce commodities that can be sold profitably. That has nothing to do with producing exchange values that capitalists want, but producing exchange values/commodities that consumers want.

      Marx’s point referred to in Chapter 15 above about the contradiction in the production of surplus value, and the realisation of that surplus value as profit, is precisely that you can theoretically maximise surplus value all you want as a producer, but if that surplus value is embodied in a commodity that nobody wants – for example, a Sinclair C-5, or which cannot be sold to anyone at a price which at least covers its cost of production, that theoretical surplus value that has been produced cannot be realised as profit.

      Marx’s point there is that the very conditions of capitalist production create a market in which this contradiction is heightened, because it also creates a gross distortion of revenues. So, for example, the owners of fictitious capital – shares, bonds, property – derive very large revenues from interest and rents, that means that they easily meet their needs for basic consumption, and then use the rest of their revenue for luxury consumption, for speculation in search of capital gains, and in undertaking additional loaning of their money-capital to increase future revenues.

      When, the prices of basic consumption goods fall, as a result of the constant growth of social productivity, these layers of society are unlikely to increase their consumption of these commodities (IIa in Marx’s reproduction schemas). They may increase their consumption of luxury goods, if their prices fall, but usually workers are still not in a position to buy most of these luxury goods from their wages. When interest rates fall to low levels the recipients of this interest and rent, are more likely to use their revenues to engage in luxury consumption or speculation.

      When during a boom more workers are taken on, wages rise, workers meet more of their basic consumption needs, and as Marx says in Capital II, they even begin to buy some of the luxury goods previously the preserve of the rich. The consequence under such conditions can be then that prices of basic consumption goods have to fall to very low levels to be able to clear the vast increased mass of such commodities that increased productivity and capital accumulation has brought about. Overproduction crises are more likely to arise in these spheres.

      But, although workers may buy some of the luxury goods previously the preserve of the rich, their ability to increase consumption of the goods is restricted.

      “Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of nonworkers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labor power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one. Vulgar socialism (and from it in turn a section of the democrats) has taken over from the bourgeois economists the consideration and treatment of distribution as independent of the mode of production and hence the presentation of socialism as turning principally on distribution.”

      As Marx and Engels described we have already gone past the stage of the private ownership of productive-capital. Productive-capital, means of production is dominated by massive socialised capital. The major form of privately owned capital today is not in means of production but of fictitious capital. That indeed is why, over the last ten years in particular, but starting from around the crash of 1987, conservative governments and central banks have been prepared to crater the real economy and real capital accumulation, in order to keep the prices of such fictitious capital inflated, whenever bubbles burst.

      In a sense you are right, that logically within this huge socialised industrial capital, the decisions on what and how to produce should be made democratically within the business itself, as happens with a worker owned co-operative. But, it is not surprising, as Marx and Engels suggested, that with the private ownership of capital moving from the ownership of productive-capital to the ownership of fictitious capital, the private capitalists would seek to protect their interests via the state, and particularly via conservative governments.

      That is why corporate governance laws give the owners of fictitious capital a right to exercise control over productive-capital, by placing their representatives on company boards, to appoint tiers of Directors above the day to managers and so on. Engels in “Anti-Duhring” said that he thought that workers would not tolerate for long the owners of this fictitious-capital being able to draw these huge revenues, given that it becomes increasingly obvious that they have no useful social role to play.

      However, that clearly has not happened. Partly, the reason is that the Left, including those who claim to be revolutionaries, have adopted the reformist programme of the Lassalleans and Fabians. Instead of decrying and exposing the nature of nationalisation and state capitalism they make it the centrepiece of the “socialist” programmes, with calls for the nationalisation of the banks, of the 200 top monopolies and so on.

      Meanwhile they have ignored the question of developing a real revolutionary programme based upon developing workers self-government and self determination in opposition to that state, of organising a political struggle against the existing corporate governance laws that give an unwarranted degree of control to the owners of fictitious capital and so on.

      But, having said all that it is still clear that even in a worker owned co-operative the workers have to produce commodities, i.e. exchange values, and that is likely to be the case, as Marx says in the Critique, and as Lenin and the Bolsheviks found in the early 1920’s, for a very long time.

  13. Marko Says:

    Murray,

    The law of value is the regulatory mechanism that asserts itself under conditions of stable, long-term commodity production, such as the generalized commodity production under capitalism (or market economies more broadly), which presupposes alienated labor (i.e., workers who do not own their own means of production or the products accruing therefrom). Wherever commodity production takes place, the law of value manifests itself.

    I think there is compelling evidence to support the conclusion that Marx believed the law of value would (and should) cease to govern productive relations under communism, where producers would no longer exchange their products but organize production under a common plan. Social labor would stop being “indirect” (i.e., regulated by the price mechanism governed by the law of value) and would instead become a direct component of total labor.

    You are in good company among Marxists if you believe that the law of value should be abolished as a regulator of production.

  14. matthewrusso9Matt Says:

    Criminy. Anyway, a couple of things leap out: The usages of Stewart’s concept of “profits upon alienation” or, better yet, transfer; and Kontratief’s cycles from the ISJ article.

    On the first, clearly this does not belong in Marx’s basic theory of capital as a “source of profit”, profit as an objective social phenomenon, and why a smart guy like Shaikh thinks otherwise cannot be fathomed. Categories such as profits upon transfer pertain to the analysis of historically real, concrete social formations such as those of early modern Atlantic mercantilism or, most importantly, to understanding what comprised the “American road” to capitalist development. It wasn’t the road that Lenin though it was, and profits upon transfer played a big role in that development, beginning with the “transfer” of useful land from the indigenous peoples.

    But by the same token neither does the theory of rent belong, which arises solely due to a factor external to the basic theory of capital: variation in the use values of nature, these also not the product of human labor power.

    Yet naturally occurring use value, being real, also gives rise to an additional profit that becomes rent when appropriated by a landlord. The landlord is a “parasite upon production” in the case of capitalist production, and an absolute parasite in the case of consumption, as with residential real estate.

    But profits upon transfer also can be divided into two cases of pure and relative parasitism. The relative case also involves an act of real capitalist production “in and for” the process of commodity-capital circulation in the form of transport industry, a branch of industrial production according to Marx in Vol II. Transport industry creates additional surplus value, whose appropriation by this industry forms its normal profit of enterprise. Commercial capital on the basis of uneven development between regions can engage in arbitrage either on the basis of different productivities of labor and resulting production price differences in “imperfectly” disjointed markets (always the real case), or, of more relevance to the contemporary case in the relation to the circulation of consumer commodity capital, can arbitrage differences in the value of labor power, particularly between developed and underdeveloped countries. The surplus profit realized by the commercial arbitrage is not “new” surplus value, nor is it realizable without the productive activity of transport industry in moving these commodities from one location to another. It is always but a transfer of surplus value as a surplus profit of commercial arbitrage, on the basis of uneven development, an unevenness – it must be pointed out – that itself arises immanent to the course of accumulation as described by the basic theory of capital (Marx). Capitalist production and accumulation itself creates the conditions for the parasitism of commercial arbitrage.

    The absolute case involves the union of landed property with commercial arbitrage in the housing land market. The commercial arbitrage of a fictitious commodity. I bring you as Exhibit 1: Donald Trump! Exhibit 2: The 2008 housing land bubble financial crash!

    Second comment is much shorter: isn’t Kontratief’s scheme a bit broken in the current K-cycle-4 iteration? Previous cycles averaged between 48-58 years, but this one is already 72 years fercrissakes! We are overdue for Spring liftoff anytime now – put on your blastoff helmets!

  15. SimonH Says:

    Oh oh matthew, you’ve done it now. Boffy is going to lecture you incessantly that we have been through Spring and are now in Summer. It started in 1999 because you can set your clock and calendar by long waves.

  16. Edgar Says:

    Boffy:

    “What Marx would have thought of today’s grossly bloated and bureaucratic welfarist capitalist state, and all of its reduction of large numbers back to the levels of servitude dependent upon a paternalistic state god only knows”

    I suspect he would have seen it as coming from a necessity created under existing capitalism, which poses the question, why wouldn’t it be a necessity in those early stages of socialism you talk about?!

    Given you think the new socialist state should take an interest in the reproduction activities of its subjects we could ask the question, what would Marx have thought of a bloated and bureaucratic non welfare socialist state dictating how many children each person should have and sowing divisions between people based on number of children?! In the real world people who have large families are an exception to the rule, and Boffy wants the new socialist society to deal with exceptions! This would be a diversion based on the sort of prejudice you get from the Daily Mail! And if those prejudices are so entrenched that the state has to pander to them then I don’t have much optimism in the success of this nascent socialist state!

    Maybe the new socialist state will also insist that people have children even when they don’t want them!

    Ultimately when we are at the stage of from each according to their ability to each according to their need then if someone has 5 children and someone doesn’t have any then distribution will be according to the need!

    I remember reading in Marx a comment that society would have to put aside resources for support for the disabled and elderly. But given Boffy’s anti welfarist view why shouldn’t the disabled or the elderly be just left to die or fend for themselves? Or put another way, why should the disabled and the elderly get welfare but no one else can!

    I also remember reading Engels saying you would think socialists would have some empathy and sympathy for prisoners. I suspect he would add alcoholics, drug addicts, the depressed etc when referring to Boffy!

  17. Boffy Says:

    “Given you think the new socialist state should take an interest in the reproduction activities of its subjects we could ask the question, what would Marx have thought of a bloated and bureaucratic non welfare socialist state dictating how many children each person should have and sowing divisions between people based on number of children?!”

    I said the exact opposite! I think Marx would have been as appalled at the Chinese Stalinists “one Child Policy” as he would have been at Stalin’s policy of encouraging Russian women to bear as many children as possible, and giving them medals to do so. I said the very opposite of the idea that a socialist society being involved in the reproduction of its subjects. I pointed out what Marx said, which was that such a society should have no role in subsidising those subjects that have more children, and nor should it have a role in penalising those of its subjects who decide not to have children!

    It is not the role of the state to intervene in encouraging its subjects to have more children, or to have no or fewer children, and it should therefore provide no subsidies or penalties for either action. If people decide to have more children, that is fine, and their decision. They just shouldn’t expect other workers to subsidise them for that decision.

    “Ultimately when we are at the stage of from each according to their ability to each according to their need then if someone has 5 children and someone doesn’t have any then distribution will be according to the need!”

    Absolutely, but Marx point that I was emphasising was that such a stage if its ever reached at all, is certainly not the situation that exists in the first stage of communism, and it certainly, therefore, is not the stage that is reached under capitalism.

    “I remember reading in Marx a comment that society would have to put aside resources for support for the disabled and elderly. But given Boffy’s anti welfarist view why shouldn’t the disabled or the elderly be just left to die or fend for themselves? Or put another way, why should the disabled and the elderly get welfare but no one else can.”

    Firstly, what Marx is talking about is “society” putting those resources to one side, and NOT a paternalistic capitalist state. Society certainly should put those resources to one side, but what marx and Engels refer to in that respect, under capitalism, is that workers do that via their own social insurance funds. They specifically opposed such funds for National Insurance established by Bismark, and proposed by some within the SDP.

    As Engels put it in his Critique of the Erfurt Programme,

    “Here I want to draw attention to the following: These points demand that the following should be taken over by the state: (1) the bar, (2) medical services, (3) pharmaceutics, dentistry, midwifery, nursing, etc., etc., and later the demand is advanced that workers’ insurance become a state concern. Can all this be entrusted to Mr. von Caprivi? And is it compatible with the rejection of all state socialism, as stated above?”

    As Marx sets out in relation to the value of labour-power it is based on what is required for the reproduction of labour-power, including the production of future generations, and of covering the average in terms of sickness, old age, and unemployment. In other words, a part of the value of labour-power, and so of the wages received by the working-class in its totality already comprises an element to cover the “workers’ insurance” that the workers develop as part of their self-activity and self-government developed in opposition to the capitalist state, and its attempts to take control over those aspects of life via welfarism.

    Secondly, if we are talking about a socialist society, then the objections fall away, because we are talking about a semi-state that acts in the interests of workers, and not of their class enemies! You are making the same mistake that the Mensheviks and reformists made in 1917, who also failed to make in relation to the class nature of the state, in that case in relation to the question of defencism, and revolutionary defeatism.

    In fact, it is the same argument that reformists have always put forward by which they present the working class’s main enemy, the capitalist state, as somehow being their friend, or some kind of neutral force for advancing the workers interests. Its not socialism its radical liberalism.

    As for the last paragraph, its not clear what it means. Of course, socialists have sympathy with all sorts of people, but that doesn’t mean we are in favour of people becoming criminals, alcoholics, and so on!

  18. Edgar Says:

    I am not talking about the here and now, I am talking about your perception of an early socialist state, which incidentally sounds a lot like a reformist idea to me!

    I inferred from your comment above that a socialist state would quickly move away from the idea of welfare and move to one that says, you are on your own folks, the able bodied and the mentally strong will not be putting up with your inferiority any longer. Time to toughen up or die.

    The idea that social wealth can be divorced from the realities of society is rather a unique approach to the problem I must say. You do not think society should factor children into the organisation of society? So no creches, no children’s hospitals etc.

    Under socialist society every individual will invest in their own personal services and sod the rest? So those people with no children do not in any way contribute to the fund for children? And what does more children even mean? Or does the state set the ideal level of children to have and if you go beyond that no subsidy? In that case isn’t this the state precisely telling people how many children they should have?

    My last paragraph can be put another way, shit happens and society has to deal with the shit that does happen. People do fall into depression , unplanned pregnancies can occur, alcohol abuse will happen in the future whether we favour it or not. The question is how does the socialist society deal with these outcomes, with sympathy or with a, you made this bed you lie in it!

    If that is a socialist society i would hate to see a barbaric one!

    I guess to get to the point, will a early socialist society put aside resources to deal with life’s dilemmas and will a socialist society accept that no matter how perfect society is shit will always happen! Will there be a social safety net under socialism? Yes or no?

    • Boffy Says:

      Edgar,

      You seem to have changed your tune, and line of argument. Welfarism refers to the social-democratic policy of trying to paper over the contradictions of class society via a welfare state!

      If we are talking about the first stage of a communist society then I have simply reiterated what Marx says in the Critique of the Gotha Programme. I said nothing about not providing schools and so on, which is part and parcel of the reproduction of labour-power. Exactly how that is funded would be up to workers themselves to decide upon, and would in large part depend upon the level of development that such a society inherited from capitalism.

      It could be that the cost of schooling was funded from the general social surplus, which would then reduce the amount that all workers could share in.

      “Before this is divided among the individuals, there has to be deducted again, from it: First, the general costs of administration not belonging to production. This part will, from the outset, be very considerably restricted in comparison with present-day society, and it diminishes in proportion as the new society develops. Second, that which is intended for the common satisfaction of needs, such as schools, health services, etc. From the outset, this part grows considerably in comparison with present-day society, and it grows in proportion as the new society develops. Third, funds for those unable to work, etc., in short, for what is included under so-called official poor relief today.”

      Of course, Marx’s own view, and hat of the First International was that such education would be accompanied by labour on the part of children also from a fairly early age, which itself would provide some of the value required to cover that cost.

      “We consider the tendency of modern industry to make children and juvenile persons of both sexes co-operate in the great work of social production, as a progressive, sound and legitimate tendency, although under capital it was distorted into an abomination. In a rational state of society every child whatever, from the age of 9 years, ought to become a productive labourer in the same way that no able-bodied adult person ought to be exempted from the general law of nature, viz.: to work in order to be able to eat, and work not only with the brain but with the hands too…

      A gradual and progressive course of mental, gymnastic, and technological training ought to correspond to the classification of the juvenile labourers. The costs of the technological schools ought to be partly met by the sale of their products.

      The combination of paid productive labour, mental education bodily exercise and polytechnic training, will raise the working class far above the level of the higher and middle classes.”

      (Instructions For Delegates to the Provisional General Council of the First International)

      “Or does the state set the ideal level of children to have and if you go beyond that no subsidy? In that case isn’t this the state precisely telling people how many children they should have?”

      Its not a matter of “more” children.

      My original point that you took issue with was that Marx saw no reason why in this initial stage of communist society those workers that chose to have children should be subsidised by those workers that did not. It is your position of supporting the state providing such subsidies – in fact not the state providing the subsidy, but the state penalising workers without children via taxation, in order to make that transfer – which involves the state becoming involved in the individual reproduction choices of citizens!

      The final point has already been dealt with. Of course a socialist society will deal with those who suffer problems with sympathy, and in the first instances it will be workers themselves at a local level that will be in a position to administer such sympathy, and help, and will for the same reason be able to judge what the best means of providing assistance can be given. But similarly, they will be in the best position to decide whether it is a question of people attempting to free ride on their better nature.

      Under such a socialist society, many of the causes of those problems will be removed. There will be no reason why all able bodied citizens will not be able to work, and on the same basis there will be a requirement for all able bodied citizens to work. To paraphrase Marx the principle is “He who does not work, neither shall he eat.”

      Moreover, the extent to which social provision can be provided will itself be conditioned by the economic condition of society.

      “These deductions from the “undiminished” proceeds of labor are an economic necessity, and their magnitude is to be determined according to available means and forces, and partly by computation of probabilities, but they are in no way calculable by equity…

      I have dealt more at length with the “undiminished” proceeds of labor, on the one hand, and with “equal right” and “fair distribution”, on the other, in order to show what a crime it is to attempt, on the one hand, to force on our Party again, as dogmas, ideas which in a certain period had some meaning but have now become obsolete verbal rubbish, while again perverting, on the other, the realistic outlook, which it cost so much effort to instill into the Party but which has now taken root in it, by means of ideological nonsense about right and other trash so common among the democrats and French socialists.”

      (Marx – Critique of the Gotha Programme)

  19. Boffy Says:

    Just for anyone who still thinks that value and the Law of Value only exists under capitalism – in which case we could also ask how they explain money and its description by Marx as “the universal equivalent form of value”, which has existed for thousands of years – here is just another statement by Marx that I came across today, amongst many, many more.

    Speaking about Ricardo, and his simple existence of surplus value, whilst only analysing it in terms of its specific forms of profit, interest and rent, Marx says,

    ““But he is behind Adam Smith in that he does not even suspect that this presents a problem, and therefore the specific development which the law of value undergoes with the formation of capital does not for a moment puzzle him or even attract his attention.” (p 88)”

    (Theories of Surplus Value Chapter 3)

    The Law of Value could hardly undergo a “specific development” with the formation of capital, unless that same Law of Value existed prior to the formation of capital!

  20. Edgar Says:

    I have not changed my line of argument; I want to know if the early socialist state can provide at least the same level of ‘welfare’ or social safety net as capitalism. If the early socialist state cannot even provide the meagre social safety net a capitalist state can provide then I can’t see the socialist state lasting too long.

    You say it will be the workers themselves who will decide upon this, fair enough but you must recognise that workers themselves will need a socialist consciousness to create a socialist state. Engels mentions this when he calls socialism a civilising influence on the working class, Engels claims that without this socialist education workers will descend into barbarity. So if we do get a revolution from below which isn’t socialist in character we all better watch out!

    “those workers that chose to have children should be subsidised by those workers that did not. It is your position of supporting the state providing such subsidies – in fact not the state providing the subsidy, but the state penalising workers without children via taxation, in order to make that transfer – which involves the state becoming involved in the individual reproduction choices of citizens!”

    If we take capitalist society first, the value of labour power includes the amount required to keep children. If you have no children you get the value of keeping a child without having a child. So in this respect you get an advantage over those people with children. So you have 2 workers with the same wage but one has children and the other doesn’t. Capitalism deals with this by transfers, for example taxation. But even then both workers are taxed so those without children still see the benefit!

    Under socialism are you saying that those with children will be paid more in direct wages than those without and this will deal with the problem? It is rather infantile to suggest this problem can simply be ignored. And if workers are to get paid based on their lifestyle choices then this would seem to be a radical departure from the law of value currently under operation!

    “He who does not work, neither shall he eat”

    This was Lenin not Marx and was said in the context of the conditions of Russia at the time. Even then I personally find the comment rather disturbing. In the context of the 21st century you might call this comment obsolete verbal rubbish, to paraphrase Marx!

  21. Boffy Says:

    “I have not changed my line of argument; I want to know if the early socialist state can provide at least the same level of ‘welfare’ or social safety net as capitalism. If the early socialist state cannot even provide the meagre social safety net a capitalist state can provide then I can’t see the socialist state lasting too long.”

    Why would a socialist society need to provide the same kind of social safety net as capitalism, when such a socialist society would remove the need for such a social safety net, by providing everyone with the possibility of work?

    “Under socialism are you saying that those with children will be paid more in direct wages than those without and this will deal with the problem? ”

    No I am saying the opposite. Firstly, under capitalist welfarism some workers get Child benefits and other subsidies, whilst others who do not have children do not, and rather they are taxed so as to provide the subsidies to the other workers who do have children. Incidentally, reflecting the idiocy and bureaucratism of this welfarism, the first set of workers, who get this subsidy for having children, often also themselves get taxed to provide a subsidy to someone else, for example to cover Housing Benefits paid to landlords. In both cases, these subsidies should not be required, because wages, as the value of labour-power, should be high enough to cover these expenses.

    And, that is the case in the first stage of communism as marx points out.

    “Accordingly, the individual producer receives back from society — after the deductions have been made — exactly what he gives to it. What he has given to it is his individual quantum of labor. For example, the social working day consists of the sum of the individual hours of work; the individual labor time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labor (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labor cost. The same amount of labor which he has given to society in one form, he receives back in another.”

    Note that Marx does not say here that this certificate gives to one worker with children a right to take more from society’s store than another worker without children. They both get a certificate proportionate to the labour they have provided, and the choices of how to use that certificate, what they choose to spend it on remains up to the worker.

    But, Marx recognises precisely that this means that some workers will effectively benefit from this. Some workers will be stronger and so be able to perform a given amount of labour with less effort than their neighbour, some will have children and require to take more out of the store and so on. That is precisely what marx states above, that until a situation of general abundance exists, such inequality will necessarily follow.

    “…one worker is married, another is not; one has more children than another, and so on and so forth. Thus, with an equal performance of labor, and hence an equal in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right, instead of being equal, would have to be unequal.”

    This is what Marx said,

    “… ought to become a productive labourer in the same way that no able-bodied adult person ought to be exempted from the general law of nature, viz.: to work in order to be able to eat, and work not only with the brain but with the hands too.”

    Only those who see socialism as a means of leaching off the working-class, of being free-riders will see anything disturbing in such a sound principle.

    • Edgar Says:

      “Why would a socialist society need to provide the same kind of social safety net as capitalism, when such a socialist society would remove the need for such a social safety net, by providing everyone with the possibility of work?”

      Because we are talking about an early socialist society and Rome wasn’t built in a day. Maybe as time goes by the social problems associated with capitalism will recede. Maybe new problems will surface. Who knows? We are talking about principle here.

      “No I am saying the opposite.”

      What that childless people will be paid more in direct wages than those with children?

      “Incidentally, reflecting the idiocy and bureaucratism of this welfarism…”

      This system pays for a whole set of public services, however unsatisfactory we think capitalism delivers these services the so called idiocy where workers and businesses are taxed is meant to pay for this. If you didn’t have these taxes, this diverting of resources to provide for this, or as Marx would say these deductions then we would have a system of complete arbitrary anarchy. A free market arrangement but within socialist society. I consider this an oxymoron. Your vision of socialism appears to me to be a complete free market fantasy.

      Marx said that he imagined under socialism more resources would be directed toward these social goods. I take this as meaning the free market would be abolished.

      “Note that Marx does not say here that this certificate gives to one worker with children a right to take more from society’s store than another worker without children. “

      But Marx does say right up front, “— after the deductions have been made —“. These deductions presumably being used for the upkeep of children, among other things.

      “and the choices of how to use that certificate, what they choose to spend it on remains up to the worker”

      This is pure idealistic fantasy. Robinson Crusoe. The important point to make is they get the choice only after the deductions have been made and within the relevant laws!

      When Marx says right will have to be unequal he is saying exactly that instead of someone becoming richer than another, receiving more than another society will have to ensure the rules bring about a level playing field. I.e. equality is achieved by treating unequal individuals equally. In other words he his saying the opposite of what you are saying.

      “Only those who see socialism as a means of leaching off the working-class, of being free-riders will see anything disturbing in such a sound principle.”

      This is a rather 19th century view of work if you ask me. There are times when people are unable to work for one reason or another, society should show empathy and sympathy in this regard. This is what I meant earlier, instead of saying those who can’t work will have to die we should take a more sympathetic view, as Engels said about socialists in relation to prisoners. Given the tremendous revolutions in technology and productivity you would think that dealing with the small minority who fall on hard times at one stage or another would not be too much to ask for a socialist society.

      I think the work or die concept is one of those slogans that belong firmly in the obsolete verbal rubbish category.

      • Edgar Says:

        Incidentally this is a quote from Marx in relation to his critique of Lassalle’s idea of “undiminished proceeds of labor”,

        “Before this is divided among the individuals, there has to be deducted again, from it: First, the general costs of administration not belonging to production. This part will, from the outset, be very considerably restricted in comparison with present-day society, and it diminishes in proportion as the new society develops. Second, that which is intended for the common satisfaction of needs, such as schools, health services, etc. From the outset, this part grows considerably in comparison with present-day society, and it grows in proportion as the new society develops. Third, funds for those unable to work, etc., in short, for what is included under so-called official poor relief today.”

        As Marx then says,

        “The “undiminished” proceeds of labor have already unnoticeably become converted into the “diminished” proceeds”

        And Marx concludes here with the socialist consciousness,

        “although what the producer is deprived of in his capacity as a private individual benefits him directly or indirectly in his capacity as a member of society.”

        Need we say more?

  22. murray cohen Says:

    Buffy, what you describe (as exemplifying “exchange value” creation arising from transactions between Engels’ hypothetical 10,000 year old communistic communities) reminds me of Adam Smith’s ahistorical view about human nature’s penchant to truck and bargain, upon which he bases his ideas regarding the ahistorical free market and its “invisible hand”. Similarly, you seem to abstract political economy’s labor theory of value (and even Marx’s historical/materialist critique of it) from the object of its application: capitalism’s “social relation” as reflected in its historically created mode of production (which Marx’s theory is able to engage and critique, rather than praise).

    The ahistorical application of Marx’s labor theory of value has led many ex-marxists directly to neoliberalism and a complacent defense of imperialism. Do you really believe that capitalism supplies consumers with what they want and need? Not in Bangladesh of course, but in imperial America? Maybe so: war and credit cards create most of the profit here, but apparently not enough. Slowly, working people are awakening to the processes of their immiseration, while the “left” sleeps.

    Having vented, I can also say that I don’t presume to know your intentions, but appreciate and admire the knowledge you offer to these discussions.

    • Boffy Says:

      Murray,

      I quoted Engels statement about The Law of Value only applying between 7,000 B.C and the 15th century, merely to contrast with those who believe that the concept of value and the Law of Value, only arises FROM the 15th Century when Capitalist production begins. In fact, I pointed out that Engels is using the term in a specific sense here to mean that commodities exchange according to their exchange values.

      The reason he made this argument was that he was arguing against people who wanted to insist that Marx needed to show that commodities exchanged at their values under Capitalism, but had failed to do so. The reason being that, of course, Marx and Engels state that the law of value takes different forms in different modes of production. Under petty commodity production and exchange – between 7,000 B.C. and the 15th century – it increasingly takes the form of the production of exchange values, and these commodities exchange at their values.

      Under capitalism, however, commodities do NOT exchange at their values. Marx shows that they only exchange at their values by accident. Under capitalism, commodities exchange at prices of production – cost of production plus average profit. That indeed, is why, as he says, not only do some capitals obtain more in realised profit than they produce in surplus value, whilst others obtain less in profit than they produce in surplus value, but some capitals are able to obtain the average profit, even though they produce no surplus value whatsoever! That is also why they crude equation of surplus value with profit, is ahistorical and non-specific, it completely misses out what Marx says is the difference between surplus value and profit, that the former is related to the arena of production, and the exploitation of labour, whilst the latter is related to the arena of circulation, and the specific forms of realisation of that surplus value related to the advanced capital – constant and variable.

      “Do you really believe that capitalism supplies consumers with what they want and need?”

      I believe as Marx did that it provides them with what they DEMAND. There is a big and important difference. As Marx points out, under Capitalism demand takes only the one form of a demand backed by the ability and willingness to pay. As Lenin says, I think in “The Development of Capitalism…”, but if not in one of his other early writings against Economic Romanticism, if capitals do not produce what those consumers demand, then they will go out of business.

      In Value, Price and Profit, Marx gives a lengthy response to Weston who argued that if wages rose it led to inflation. Marx’s response is if wages rise, profits fall. Workers spend their higher wages on more wage goods, the prices of which, and the profit on which rises, whilst the fall in profits causes capitalists to spend less on luxury goods etc, which causes the prices of those commodities to fall, and the profit on them likewise to fall. The further consequence then Marx says, is that capitalists move capital to the production of wage goods, where the profit is now higher. The increased supply of wage goods that follows, reduces their prices, and the profits on them. Similarly, capital leaves the production of luxury goods where profits are now lower. The supply of luxury goods falls, causing their prices to rise, and along with it the profit.

      The overall result Marx says is that there is no inflation, the prices of both sets of goods have returned to their former level, it is just that the changes in demand from workers and capitalists has caused a reallocation of capital to bring about a change production and supply of the respective commodities reflecting the demand from the two groups of consumers.

      That is the specific historical means by which the Law of Value operates under capitalism, via changes in the rate of profit in different spheres, to reallocate capital, and the production of commodities.

    • Boffy Says:

      Murray,

      This will have to be my last comment on this thread because I am busy getting my modern translation of Capital Volume II ready for publication. However, I did want to comment in relation to “Neo-Liberalism”.

      I have argued for at least the last decade that there is no such thing as Neo-Liberalism, and it should be called what it is, conservatism, i.e, an attempt to defend the rights and property of the financial and landed oligarchy, at the expense of real industrial capital. As Marx put it,

      “The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives to this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner — and this gang knows nothing about production and has nothing to do with it. The Acts of 1844 and 1845 are proof of the growing power of these bandits, who are augmented by financiers and stock-jobbers.”

      (Capital III, Chapter 33)

      It is why conservative regimes, in the UK and Europe have done all they could to prop up the prices of fictitious capital – shares, bonds and property. They have printed electronic money tokens and organised intervention in all these markets to prop up those prices, and encourage speculation, on an ever increasing scale whenever those bubbles have burst.

      At the same time that process has encouraged potential money-capital to go into that speculation, diverting it from real capital accumulation. Alongside that and to facilitate this diversion of potential money-capital into speculation, they have implemented policies of austerity that cratered aggregate demand in the economy. The reason for doing so was quite clear, had they not restricted the level of aggregate demand, the demand for money-capital would have risen causing market rates of interest to rise sharply – as indeed they had begun to do in 2007, which was one of the sparks for the outbreak of the credit crunch, and sub-prime crisis – any rise in market rates of interest, as Marx says we can forget about government bond yields which even in his day were manipulated by the central bank – would cause a crash in the capitalised value pf property and financial assets.

      It is also why we have seen those conservative regimes such as in the UK break away from the EU, and similar attempts are being pushed forward by conservatives in the rest of Europe. Imperialism is based upon large-scale industrial capital, and its need to create a globally structured, and rationally planned market within which real capital accumulation can take place. Its basis is the production of surplus value and realisation of industrial profit. Structures such as the EU are a rational expression of it.

      But, conservatism and the furtherance of the interests of that financial and landed oligarchy, depends instead on unequal exchange.

  23. SimonH Says:

    Again and again Boffy intervenes to become the one true interpreter of Marxism, socialism etc. In fact we should now develop a new version of Marxism, Maxist Boffyism. Or alternatively we should talk about Boffy Thought. Get to work with the posters showing Boffy’s profile next to the Marx and Engels!

  24. murray cohen Says:

    Thanks again Buffy. I haven’t read your addendum yet. But your explication of the difference between profit and value seems to support my point that exchange value differs in nature between different modes of production, e.g. between use value directed production and production for profit as under mature capitalism (like now). You seem also to support the idea production determined by exchange value and profit leads to irrational rationalities” like attributing the miseries of workers in Bangladesh to their demand that they remain impoverished, or that the financial and militarization of the US economy are best understood by American workers’ demand for defense against any rise in the demand for more and better goods by Bangladeshi garment workers, or that Greeks, Spaniards, Irish, etc…are demanding less and less in order to stay in the EU. There is some truth to this madness, truth which you explicate much better than I.

  25. Henry Says:

    “exchange value differs in nature between different modes of production, e.g. between use value directed production and production for profit as under mature capitalism (like now)”

    Well, yes/maybe but with more precision than Boffy provides.

    Objection 1: Primitive communism did not have exchange value because exchange did not exist – speaking here purely theoretically as it could be argued exchange always existed, at least to all intents and purposes.

    But as soon as we assume exchange, Marx says this initially takes place at the edge of tribal communities, we have to assume some basis upon which this exchange takes place.

    Objection 2: Now before capitalism intangible things like honour etc were not exchanged, as Marx points out only under capitalism does everything begin to assume an exchange value as such.

    Objection 3: In primitive communities cattle or even women could be exchanged to deepen alliances etc. In other words labor time was not the basis of exchange value here. This involved a long dialectical metamorphosis.

    I think to claim that exchange value has been around for 10,000 years is both an acceptance and failure of dialectics. It acknowledges that exchange value does not spring out of thin air but at the same time those making this claim (well Boffy anyway) fail to point out the dialectical development and at this point it just becomes dogmatic nonsense.

  26. murray cohen Says:

    Henry, we seem to be in agreement. But, I think you will agree that people will always exchange goods, and that the “value” of those exchanged goods must (sometimes) be related to effort. Need and community, however comes first in democratically organized production, not private accumulation and profit. Communism will not be as (irrationally) productive as full blown capitalism (if humanity survives it). But the products will be qualitatively better and distributed according to need. That’s what William Morris responded to in Marx. Boffy doesn’t make “the journey Marx made”–to which you refer in an earlier post–because he conflates past and present, use value and exchange value. Yes, capital and profit drive production and labor is seen as receiving its just value–but only under capitalism. Whatever Boffy’s intentions, he ends up with the educated bourgeoisie.

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