At the recent ASSA 2020 conference there was a session on whether Gross Domestic Product (GDP), the ubiquitous measure of national output, was adequate as a gauge of “well-being or social welfare”. Various proposals have been put forward for attempting to measure social welfare, including “dashboards” of economic and social indicators as well as approaches that are more explicitly tied to economic theory. The US Bureau of Economic Analysis (BEA) initiated a discussion at ASSA to consider the pros and cons of alternative approaches.
Gross domestic product (GDP) is the basic mainstream measure of a country’s level of output and even prosperity. It is a monetary measure of the market value of all the final goods and services produced in a specific time period. The measure goes back to the earliest of days of classical political economy, with William Petty developing the basic concept in the 17th century. The modern concept was first developed by Simon Kuznets in 1934 to measure the national output of the US.
There are three ways to measure GDP. The first is the production approach, which sums up the outputs of every enterprise. The second is the expenditure approach which sums up all the purchases made; and third is the income approach which sums up all the incomes received by producers.
These three different approaches broadly match the three main schools of economic thought. The production approach has an affinity with neoclassical school, which sees national output as the sum of all micro-agents’ production. The expenditure approach has been adopted by the Keynesian school, which looks at investment, consumption and saving at a ‘macro level’ to measure “effective demand”. The income approach has the closest connection with Marxist and classical political economy, because it distinguishes wages and profits as the main categories of national income and thus exposes the class divisions in the distribution of GDP; and the driving force for investment and production in capitalism ie profit.
Ever since the development of GDP, multiple observers have pointed out limitations of using GDP as the overarching measure of economic and social progress. GDP does not account for the distribution of income among the residents of a country, because GDP is merely an aggregate measure. Neither does it measure unpaid housework, the level of happiness or well-being. That is why there have been various attempts to replace GDP with other ‘broader’ measures.
One recent attack on GDP as a measure of national ‘wealth’ or well-being has come from Vint Cerf via this Wired article. Cerf makes the usual complaint that “the measure does not capture the level of pro bono work that pervades many societies, by homemakers whose unpaid labour is an integral part of most functional societies, and non-profit organisations whose work also contributes to the benefit of society.” He goes on “Moreover, GDP does not capture the many negative effects of some economic activities such as pollution, including carbon dioxide and other greenhouse gases. Their consequences should be factored into any measure of economic well-being if we are to accurately assess the state of the planet and its population.” And finally,“As an average measure, GDP also fails to capture wealth and income disparities within a society, often negatively correlated with the health of that society.”
All this is true. But is that the purpose of GDP as a measure? At the time of its launch, Kuznets specifically warned against considering GDP as a measure of ‘welfare’ in a society. Vint’s critique, echoed by others, fails to recognise that the value (or wealth) that modern economics wants to measure is the ‘market value’ of national output not the welfare of labour, women and children. Capitalism has no direct interest in measuring that. GDP has a specific purpose for capital not labour.
Household work provides a massive contribution to the welfare of communities. And it delivers unpaid labour to sustain labour power in work for capitalist enterprises. But because it is not a cost for capital, it does not need to be included in GDP. Similarly, the grotesque (and rising) inequalities of income and wealth that exist within most countries is not a relevant factor for capitalist investment and production and so again does not need to be included in GDP. Finally, the ‘externalities’ of capitalist production: eg, diseases, industrial accidents, pollution and climate change are not immediate costs to the profitability of capital (private ownership of production). Indeed, if these ingredients were included in a revised measure of national ‘value’ they would become confusing obstacles to measuring properly the ‘health’ of capitalist production in a country. And that is what matters in capitalism: having good measures of capitalist accumulation for policy decisions by capitalist enterprises and government and monetary authorities.
Of course, even within that paradigm, the GDP measure has its faults. Diane Coyle is one economist that has criticised strongly GDP as a sufficiently accurate measure of production and investment. She argues that GDP does not capture changes in investment that involve ‘intangibles’ and innovation. In other words, national output and productivity growth may be much higher than GDP exposes. However, even here, the argument that the failure to measure intangibles explains the productivity puzzle (low productivity growth) is not convincing.
Mariana Mazzucato got a lot of traction out of her recent book, The value of everything, where she complains that in GDP, finance is regarded as productive when it is really an ‘extractive’ sector and government investment is not given the ‘utility’ it deserves in GDP. But this is to misunderstand the law of value under capitalism. Under capitalism, production of commodities (things and services) are for sale to obtain profit. Commodities must have use value (be useful to someone), but they must also have exchange value (make a sale for profit). GDP is biased as a measure of value created in an economy for that good reason.
For Marxist analysis, there are many issues with using GDP. National output in Marxist terms is c+v+s. C is ‘constant capital’ (raw materials, intermediate products used up in production plus the depreciation of machinery etc). V is wages spent on the labour force + S (profits made on sales of the commodities produced). In theory, GDP data can be converted into these Marxist categories because in an economy total prices of all goods in aggregate must equal total values in labour time, even though that equality will not exist in sectors of the economy.
The practical complexities of turning GDP as measured by government statistics in national accounts into the Marxist formulae have been comprehensively explained in works like that of Shaikh and Tonak. But when it comes to the world economy and the transfer of value between countries and companies globally, GDP is inadequate and misleading. As John Smith has pointed out, “it is impossible to analyse the global economy without using data on GDP and trade, yet every time we uncritically cite this data we open the door to the core fallacies of neoclassical economics which these data project.” The key concept within GDP is ‘value added’ by ‘agents of production’, but that means GDP does not expose value that is transferred or redistributed between countries or companies as a result of competition in markets.
Just as more technologically advanced companies get a transfer of value from less advanced companies through competition on the market (Marx’s transformation of values into prices of production), so imperialist countries get a transfer of value from peripheral countries through the unequal exchange of value in international trade and through transfer pricing within companies. GDP does not capture that. However, recent Marxist research has made progress in measuring this transfer in the imperialist countries (see Carchedi and Roberts, Ricci and URPE_CHN_2019). These suggest that the GDP of the major capitalist economies is exaggerated by transfers of value through international trade and multi-national pricing equivalent to 3-5% of GDP every year.
Then there is the issue of productive and unproductive labour, something that Mazzucato took up but in a misleading way. Mazzucato argues that the government sector creates value, but that is because she considers only use-value and does not recognise the dual character of value under capitalism, where profit through exploitation is value. Marxist value theory maintains that many sectors and people are supposedly generating value-added but are really engaged in non-productive activities like finance and administration that produce no value at all. And for capital, that includes the government sector: it may be necessary, but it is not value-creating for capital.
As Marx put it: “Only the narrow-minded bourgeois, who regards the capitalist form of production as its absolute form, hence as the sole natural form of production, can confuse the question of what are productive labour and productive workers from the standpoint of capital with the question of what productive labour is in general, and can therefore be satisfied with the tautological answer that all that labour is productive which produces, which results in a product, or any kind of use value, which has any result at all.”
For the neoclassical theory, any labour whose outcome can secure remuneration in the market is considered productive and contributes to the creation of new value. Thus, not only activities in the sphere of commodity circulation, but also those aimed at maintaining and reproducing the social order, are considered to produce new values and increase the level of prosperity and wealth of an economy
In contrast, as Shaikh and Tonak explain: “Economists of the classical political economy tradition pay particular attention to the fact that the non-production sectors of trade and finance as well as government in order to perform their socially useful functions employ labour and other inputs while at the same time their capital stock depreciates; such expenses are drawn out from the surplus generated by the productive sectors of the economy.” (Shaikh and Tonak 1994, p61).
As Tsoulfidis and Tsaliki put it: “The main problem with orthodox national accounts is that they present many activities as ‘production’ while they should be portrayed as ‘social consumption’. As the ‘personal consumption’ sphere contributes to the reproduction of individuals in a capitalist society, the non-productive activities, such as trade, financial services or private security, in turn contribute to the reproduction and development of the capitalist system; however, their necessity does not negate the fact that as the total consumption (personal and social) increases, the part of surplus destined for the accumulation of capital is reduced and by extent the social wealth diminishes.”
So measuring the relative expansion of productive and unproductive activities is crucial to gauging the growth potential of capitalist economy, because only investment in productive sectors can sustain expansion under capitalism. Indeed, a rising share of unproductive activity will exert a downward effect on the profitability of capital over time.
Again, this is an area where Marxist research has made strides in measurement: (Moseley; Roberts; Paitaridis, Tsoulfidis and Tsaliki, Peter Jones and others). In this way, we can obtain the value in GDP.
Michael Roberts Blog 
How did they, Paitaridis & Tsoulfidis, calculate surplus value? And why, if surplus value is rising, net profits are declining?
Tks
Hi Lucas
P&T outline their method in their paper. http://gesd.free.fr/paitara12.pdf
In their method, net profits = surplus value left after deducting surplus value in unproductive sectors and so is the amount of profit available for productive investment.
«It is a monetary measure of the market value of all the final goods and services produced in a specific time period.»
This is a common and gross mistake, or a bit of right-wing propaganda pushed by “neoclassical” Economist, because actually Gross Domestic Product was defined and is a list of physical quantities: hours of teaching, miles of transport, tons of steel, barrels of oil, etc.
The political economy does not produce dollars, it produces physical quantities.
There are other monetary measures related to GDP, and they are a multitude of GDP-indices, obtained by multiplying GDP by some arbitrary vector of prices, and the GDI, that is Gross Domestic Income, the sum of all domestic value addeds gross of depreciation.
The myth that GDI or some arbitrary GDP index are useful comes straight from the neoclassical approach, where “the economy” is conceived as series of markets, and then GDI is the net of purchases (consumption plus savings) across all markets, and a GDP-index is the net of sales (consumption plus investment). Under the neoclassical approach then there is the fantasy of GDP modeled a “C-D production function” for “the economy” expressed in monetary terms.
Instead under the proper definition definition of GDP the political economy is conceived as a system of production (quite appropriately), as a complex plant/factory with many physical inputs.
The proper definition of GDP was originally used to measure the capacity of a political economy to sustain war production; in secondary role there was GDI to measure the ability to fund war production, but that is far less interesting, because wars are a rule funded by asset disposals more than current income.
GDP is far more useful than a GDP-index, or GDI, because by comparing the most important physical quantities of GDP at two different times one can see which production fell and which rose, and by how much each, which gives far more insight than an index with the noise added by price movements in arbitrary price indices, and polluted sometimes by arbitrary adjustments like “hedonics”.
BTW the USSR national accounts used for the reasons given above “Gross Material Product”, that is GDP minus services (which were also excluded in early measures of GDP). I think that exclusion was based on a mistaken interpretation of marxian political economy; because production of hours of teaching or of heart surgeries or of garbage collections is as physical as that of kilowatt-hours, or trucks, even if it is immaterial. As to this:
«non-productive activities like finance and administration that produce no value at all.»
But useful/essential finance and administration produce value: the output may be immaterial but inasmuch it is useful/essential to production the hours of labour spent on them contribute to the value of the final product.
In a car factory the hours spent on administration are an input to production as much as the hours spent on repairing machines or moving parts. In the absence of administration a complex car plant cannot sustainably work, just as in the absence of machine maintenance or moving of parts.
Of course most of contemporary finance is really unproductive, amounting to extracting rent or gambling, and so is some part of administration, but those activities when useful/essential do produce value.
‘BT ’BTW the USSR national accounts used for the reasons given above“ Gross Material Product ”, that is GDP minus services (which were also excluded in early measures of GDP)’.
Exact. The GDP of the “real” socialist countries did not contain the production of their service sectors. Western countries did count it. That means, in other things, that the annual growth of real socialism, on average 5, 5% per year and without services in the period 1945-1975, was significantly higher than the average western growth (less than 5% per year). Western growth that, in addition, was a mixture and sum of private economy and state economy (a mixed economy). That is, socialism grows more, much more, than capitalism. Up to 5 times more if we compare pure socialism with pure capitalism (only existing in the 19th century, with an average annual growth of 1.5% according to Agnus Maddison)
complete text in Englisch und German (without links)
here: https://marx-forum.de/Forum/index.php?thread/1002-m-roberts-wertsch%C3%B6pfung-und-bruttoinlandsprodukt/#post5411
Michael, you have been name dropped in a recent Michael Hudson interview by the interviewer as one of the Orthodox Marxists who disagrees with Hudson, who then follows up by answering her question by drawing two groups of Marxists: ‘his’ (which includes Harvey), and ‘the others’ who “didn’t read beyond Capital I.”
You can find the interview on Youtube under the title “Dr. Michael Hudson: Economic Lessons for 2020”. The segment is between the timecode of 19:50 and 31:50.
Having watched it, I think the interviewer misled Hudson by suggesting that ‘Roberts’ saw no role for debt in crises. Read my books!! I dont think Hudson has read a word of my stuff. He says people like me have only read Volume One – but the LTRPF is in Volume 3! This is just nonsense.
Hudson says that finance causes crises “outside of industrial capitalism”. That’s not Marx’s view. Debt/credit is integrally connected to the movement in the profitability of capital, but it is profit that drives investment. Read my books – as I am sure you have. I see that Hudson is with Harvey on this – and you can find my disagreements with DH on this blog.
Sorry to tell Hudson that I have read all volumes of Capital and Grundrisse etc. Hudson says only Marxists (like him) talk about crises from debt – rubbish. Many post-Keynesians and even mainstream economists claim that debt (household debt or government debt) causes crises. But none link this to profitability – which is the essence of Marx’s position in Volumes 1 and 3. No more
“Hudson says that finance causes crises “outside of industrial capitalism”. That’s not Marx’s view.”
Incorrect. Marx says that Ricardo never saw a capitalist crisis of overproduction, because he died before the first one occurred in 1825.
“Ricardo himself did not actually know anything of crises, of general crises of the world market, arising out of the production process itself. He could explain that the crises which occurred between 1800 and 1815, were caused by the rise in the price of corn due to poor harvests, by the devaluation of paper currency, the depreciation of colonial products etc., because, in consequence of the continental blockade, the market was forcibly contracted for political and not economic reasons. He was also able to explain the crises after 1815, partly by a bad year and a shortage of corn, and partly by the fall in corn prices, because those causes which, according to his own theory, had forced up the price of corn during the war when England was cut off from the continent, had ceased to operate; partly by the transition from war to peace which brought about “sudden changes in the channels of trade” [l.c., p. 307). (See Chapter XIX—“On Sudden Changes in the Channels of Trade”—of his Principles.)”
(TOSV, Ch. 17)
That coloured Ricardo’s view of crises, therefore, Marx says, because the only crises he saw were the kind of financial crises that occurred prior to the development of industrial capitalism.
Marx has in mind the various bank runs that occurred as well as things like the Tulipmania. These were quite clearly “crises “outside of industrial capitalism””, because they occur prior to industrial capitalism.
They are the kind of financial crisis that Marx describes in Capital I.
“The monetary crisis referred to in the text, being a phase of every crisis, must be clearly distinguished from that particular form of crisis, which also is called a monetary crisis, but which may be produced by itself as an independent phenomenon in such a way as to react only indirectly on industry and commerce. The pivot of these crises is to be found in moneyed capital, and their sphere of direct action is therefore the sphere of that capital, viz., banking, the stock exchange, and finance.”
(Chapter 3, Note 49)
The fact that such purely financial crises occur prior to industrial capitalism, therefore, means they can occur after industrial capital arises too, and Marx discusses such crises in TOSV.
“As regards the fall in the purely nominal capital, State bonds, shares etc.—in so far as it does not lead to the bankruptcy of the state or of the share company, or to the complete stoppage of reproduction through undermining the credit of the industrial capitalists who hold such securities—it amounts only to the transfer of wealth from one hand to another and will, on the whole, act favourably upon reproduction, since the parvenus into whose hands these stocks or shares fall cheaply, are mostly more enterprising than their former owners.”
(TOSV Ch. 17)
Hudson says Minsky was a Marxist. Maybe he was to start but not at the end. See my post on Minsky and socialism
I sympathise with Hudson that he found many academic Marxists as not Marxist at all and preferred to work in Wall Street where Marxism was appreciated as useful. On the whole, I think Hudson is in the right place on the side of labor even if I dont agree with him on the theory of crises.
I agree with you regarding Hudson–and I’d add Harvey–as being in the right place. Both need to be respected for their work. But early in his career Hudson had a romance with money as such. This lead to his working in financial institutions, not his acquaintance (if he had even this) with Marx. He, like Paul Craig Roberts (an former undersecretary of the Treasure under Regan, but a decent, conservative, man who worked with Alex Cockburn at the Wall Street Journal) have simply been shocked and shamed (like William Appleman Williams at an earlier stage in US imperialism) into an acquaintance with marxism by the blatant ignorance and nihilism of those representing the imperialist system.
“I sympathise with Hudson that he found many academic Marxists as not Marxist at all and preferred to work in Wall Street where Marxism was appreciated as useful.”
WTF, over? Are you putting me on– “preferring to work on Wall Street, where Marxism was appreciated as useful” … as what, an investment strategy? For advising how to mobilize against an Allende? For targeting the currency of a developing country, to make it expend its foreign exchange defending the currency, leaving it unable to service the debt on its foreign denominated debt, and then being able to buy the distressed debt for pennies on the dollar? For raising money for the Contras? For funneling campaign contributions to a Clinton, or Bush?
What are you talking about? You’re sympathetic to that? Show’s how removed you are from Marxism.
And Hudson? Never a Marxist, never has been, never will be. Just read, (or try to read as it is deadly dull and turgidly written) his “Super-imperialism” which purports to track the significance of US foreign aid and grants, and never once, not once draws any relation between those policies and the profitability of US corporations.
Something is desperately wrong when a so-called Marxist is sympathetic to someone advising the apex/lowlife capitalists of the apex/lowlife capitalist country.
Your “Marxism” such that it is, is the most purely academic exercise of the Marxism you denounce as academic: it takes no account of the reality of class struggle; of the cost of accumulation to human life.
And the one hand clapping for the “decent conservatives” like Paul Craig Roberts? Give us a break. What’s next, homage to Ronald Reagan for being a great communicator? There is no such thing as a “decent” conservative. We’re not concerned with personal qualities, as supposed non-academic Marxists. We’re concerned with class function.
Hudson is a man, the less charitable might say “clown,” whose goal in life is to become chairman of the president’s council of economic advisers for a President Dennis Kucinich.
Marxism appreciated as useful on Wall Street? Sure thing. And Marxists too appreciated as useful on Wall Street. Useful idiots that is.
And that’s a realistic assessment, not simply an insult.
It’s what Hudson said about Wall Street not me. And I agree I don’t think Hudson is a Marxist but apparently he does
“Gross domestic product (GDP) is the basic mainstream measure of a country’s level of output and even prosperity. It is a monetary measure of the market value of all the final goods and services produced in a specific time period.”
Except it isn’t. It is only a measure of value added during the year, i.e. of the new value created by labour during the year, which divides into (v + s), which then subdivides into the revenues wages, interest, profit of enterprise, rent and taxes. Its on that basis that GDP equals National Income.
In other words, it is what Marx describes in Capital II, III and TOSV as a continuation of Adam Smith’s “absurd dogma” that the value of commodities and so then of national output resolves entirely revenues. It is absurd as Marx demonstrates at great length because its impossible for the value of the commodity or national output to resolve into v + s, when it is actually comprised of c + v + s.
The value of c in this equation forms a revenue for no one, precisely because it represents the portion of current output value that is replaced directly out of current production. It is bought not by any revenue but directly out of capital. What is more, given that rising productivity results in the proportion of c rising relative to v + s, because that rising productivity causes a larger mass of raw material to be processed, and so forms a growing proportion of total output value (the basis of Marx’s LTRPF), the idea that GDP represents total output value today is even more absurd than in Smith’s time, or Marx’s.
National Income is the sum total of revenues, i.e. the new value created by labour during the year, and GDP is its equivalent in relation to expenditure/consumption. It does not include the value of constant capital bought out of capital rather than revenue. As Marx says, what the GDP figure actually represents is only the value of society’s consumption fund.
Smith tried to answer it by saying that c also resolves into v + s, which, as Marx replies is no answer. Those that claim that c is equal to “intermediate production” make the same error, therefore, as Smith and his followers, because as Marx shows if we assume simple reproduction, intermediate goods are only the equivalent of that element of revenue comprising Department I (v + s).
“The phrase: that which appears as revenue for one constitutes capital for another, relieves one of the necessity for any further reflection. But how, then, the old capital can be replaced when the value of the entire product is consumable in the form of revenue; and how the value of the product of each individual capital can be equal to the value sum of the three revenues plus C, constant capital, whereas the sum of the values of the products of all capitals is equal to the value sum of the three revenues plus 0 — this appears, of course, as an insoluble riddle and must be solved by declaring that the analysis is completely incapable of unravelling the simple elements of price, and must be content to go around in a vicious circle making a spurious advance ad infinitum. Thus, that which appears as constant capital may be resolved into wages, profit and rent, but the commodity-values in which wages, profit and rent appear, are determined in their turn by wages, profit and rent, and so forth ad infinitum.”
(Capital III, Chapter 49)
Marx sets out Smith’s error deriving from his absurd dogma.
“Adam Smith, however, has promulgated this astounding dogma, which is believed to this day, not only in the previously mentioned form, according to which the entire value of the social product resolves itself into revenue, into wages plus surplus-value, or, as he expresses it, into wages plus profit (interest) plus ground-rent, but also in the still more popular form, according to which the consumers must “ultimately” pay to the producers the entire value of the product. This is to this day one of the best-established commonplaces, or rather eternal truths, of the so-called science of political economy…
The phrase that the value of the entire annual product must ultimately be paid by the consumer would be correct only if consumer were taken to comprise two vastly different kinds: individual consumers and productive consumers. However that one portion of the product must be consumed productively means nothing but that it must function as capital and not be consumed as revenue…
The entire annual reproduction, the entire product of a year is the product of the useful labour of that year. But the value of this total product is greater than that portion of the value in which the annual labour, the labour-power expended during the current year, is incorporated. The value-product of this year, the value newly created during this period in the form of commodities, is smaller than the value of the product, the aggregate value of the mass of commodities fabricated during the entire year. The difference obtained by deducting from the total value of the annual product that value which was added to it by the labour of the current year, is not really reproduced value but only value re-appearing in a new form of existence. It is value transferred to the annual product from value existing prior to it, which may be of an earlier or later date, according to the durability of the components of the constant capital which have participated in that year’s social labour-process, a value which may originate from the value of means of production which came into the world the previous year or in a number of years even previous to that. It is by all means a value transferred from means of production of former years to the product of the current year.”
(Capital II, chapter 20)
GDP has only one purpose alluded to by Robert, it is to measure the wealth of nations by measuring the value of its production. It does not matter what form that production takes, whether it is material or immaterial, goods or services, provided that production is intended solely for sale and that sale has been concluded through the exchange of money. The System of National Accounts has its genesis in Volume 2 of Das Kapital which should stay the hand of those Marxists who continuously criticise the SNA, and the methodology was brought to the West by Kuznets and Leontiev. As long as the national accounts do not miss out sales, nor add in non-existent sales (imputed sales), nor substitute finals sales for intermediate sales, nor treat the mere exchange of money (prevalent in the household sector) as an actual sale, it is a true record of the value produced in the economy over the course of the industrial cycle. And yes that value is the one described by Marx.
As for the priceless material production that passed for planning in the USSR, the less said the better.
Michael you have written more interesting articles on the SNA than this one.
“The System of National Accounts has its genesis in Volume 2 of Das Kapital which should stay the hand of those Marxists who continuously criticise the SNA, and the methodology was brought to the West by Kuznets and Leontiev. As long as the national accounts do not miss out sales, nor add in non-existent sales (imputed sales), nor substitute finals sales for intermediate sales, nor treat the mere exchange of money (prevalent in the household sector) as an actual sale, it is a true record of the value produced in the economy over the course of the industrial cycle. And yes that value is the one described by Marx.”
Absolute nonsense.
GDP is only the new value added during the year, i.e. the new value added by labour. As such it equals total revenues (v + s) or wages, profit of enterprise, rent, interest and taxes. You can find the definition of GDP in any economics textbook, or on Wikipedia. Or for example, here,
“In principle, GDP, which measures the goods and services the economy produce, should be equal to national income, which measures the income generated in the production process. (Every cost to a buyer is income to someone.)”
CEPR.
It has to be defined that way, because orthodox economics as taught to every Economics students from the start accepts Adam Smith’s “absurd dogma” that the value of commodities resolves entirely into revenues (wages, profit of enterprise, rent, interest and taxes). It is precisely the point Marx refers to in the quote above,
““Adam Smith, however, has promulgated this astounding dogma, which is believed to this day, not only in the previously mentioned form, according to which the entire value of the social product resolves itself into revenue, into wages plus surplus-value, or, as he expresses it, into wages plus profit (interest) plus ground-rent, but also in the still more popular form, according to which the consumers must “ultimately” pay to the producers the entire value of the product.”
And Marx sets out precisely why this cannot be right, because the value of any commodity does NOT resolve entirely into revenues, i.e. (v + s), but into c + v + s. And, because GDP = National Income (aside from statistical anomalies, and the question of exports minus imports) then for the reasons Marx describes its quite clear that the total value of annual output cannot equal GDP, because that figure does not include the value of constant capital consumed in the production of constant capital. It does not do so so because that constant capital that component of national output value creates a revenue for no one, and is bought not out of revenue but out of capital.
That is precisely the point Marx makes as against Smith in Capital II, Chapter 20.
A look at Marx’s schemas of reproduction in Chapter 20 shows exactly why the value of GDP=National Income cannot be equal to the value of output, and why in fact, as Marx says, the value of GDP/National Income is only equal to the value of the consumption fund.
Department I
c 4000 + v 1000 + s 1000 = 6000
Department II
c 2000 + v 500 + s 500 = 3000
As Marx demonstrates, the value of National Income, here, is 3000. That is 2000 in Department I, and 1,000 in Department II. here National Income equals GDP, i.e. the value of the final output destined for consumption, or as Marx says, the consumption fund. Assuming simple reproduction all revenues are spent in buying the final product = 3000.
The 2000 of constant capital consumed by Department II, has the appearance of constant capital, but as Marx describes contains not one penny of value of constant capital. It consists entirely of the new value created by Department I labour = 2000. That labour produced 1000 of Department I wages, and 1000 of Department I profits. In physical terms, Department I workers exchange 1000 of their output for Department II consumption goods, and Department I capitalists do the same. As Marx sets out, although this intermediate production is presented as representing c, it is no such thing, because all of its value is new value created by labour, and so consisting entirely of v + s.
But, the total value of this economy’s output is not equal to 3000, as reflected in the GDP/National Income figure. In addition to the 1000 of new value created by Department II workers, and the 2000 of new value created by Department I workers, Department I also produced an additional 4000 of output, whose value is entirely comprised of the value of constant capital consumed in the production of Department I output. None of this 4000 of value is sold to Department II. Nor is it bought out of Department I revenues either, all of which have in any case been used to buy Department II consumer goods.
This 4000 of constant capital is not bought out of any revenue, but entirely out of capital, or put as Marx analyses it, it is simply reproduced on a like for like basis out of current production. It is like the situation described by Marx of the farmer. The farmer has 2000 kg of grain. They use 1000 kg as seed (constant capital), and 500 to pay wages during the year, with the other 500 kg to cover their own consumption. These latter amounts constitute revenue (wages and profit). Assuming productivity remains constant, in the year, the workers transform the 1000 kg used as seed into 2000 kg of output, thereby creating 1000kg in new value. Yet, the total value of their output is 2000 kg. 1000 kg. constitutes revenue once more (new value added, GDP, National Income, wages and profits available for consumption or accumulation, but 1000 of the total output provides a revenue for no one, because it must be set aside simply to replace the consumed constant capital.
The GDP figures are not based on Marx’s analysis but the absurd dogma of Adam Smith that all commodity values can be resolved entirely into revenues. It is the antithesis of Marx’s analysis.
Boffy I am willing to debate you on one condition, only if you are prepared to first read the primers on GDP preparation issued by the BEA. There you will see that Gross Output = c+v+s, Gross Value Added is equal to dc+v+s and net output is v+s (where dc stands for depreciation or capital consumption). In the case of gross output we have duplicated sales (which is why it is possible to derive circulating capital using it), while in the case of Gross Value Added we have the value of unduplicated sales which includes depreciation. (All Marx) Cutting and pasting does not cut it. I consider Leontief the greatest Marxist theoretician of the 20th Century despite him serving his capitalist masters so well. The CIA also thought so in the early 50s which is why they wanted to ban input-output tables because it originated from the USSR and they worried it was a trojan horse.
On a separate note a small correction to my earlier comment. I should have said that GDP is a record of the value realised in a specific economy not necessarily produced in it because of the transfer of value between nations especially that between imperial and exploited nations. Finally on the issue of productive and unproductive labour, this is not an issue in the SNA. The transfer of value from productive to unproductive areas in the economy, from the “make” to the “use” sectors, takes the form of intermediate sales. Take Facebook. Facebook does not produce value because it does not sell (monetise) the labour of its workers, as it is free to use. On this basis, because there is no second exchange, the sale, it has to be considered unproductive. 97% of it income is advertising revenue originating in the productive sphere where companies like Procter and Gamble, Ford, Intel, reside. That advertising revenue exists as an intermediate sale in the SNA. It is deducted from the productive sphere (the make table) and added to the unproductive sphere (the use table). This transfer of value increases the unproductive side and reduces the productive side which contras each other out. It therefore adds to total sales but not to GDP. The only point of interest here is that it allows the ignorant to overstate the size of the service sector in the economy because much of the “value added” there originates in the goods producing sector.
We really need to understand before we criticise. It is quite embarrassing to see some of the opinions. If we are to ever get a hearing, we have to go beyond telling these statisticians they have no idea what they are doing.
The issue here is quite simple. Do you agree that GDP equals National Income or not. If not then there is no point talking about BEA primers or anything else. If you do not accepot that GDP is a measure of value added, and is equal to National Income, there is no point continuing, because it means you are simply denying a basic reality that every economist understands.
If one the other hand, you do accept that basic reality you have to then accept Marx’s point that GDP cannot equal the value of national output, because GDP/National Income equals the new value added during the year (v + s), whereas the value of output for the year is equal to c + v + s.
As Marx points out, it could only be the case that these two statements are reconcilable if c = 0. But, in fact, we know that far from c = 0, it tends to increase proportionally over time.
If you want to talk about other measures of output value such as Gross Output rather than GDP fine, but don’t pretend that GDP and Gross Output are the same thing, because once again, as with previous discussions this simply amounts to you sliding from one argument to a different one, when your initial argument has been found to be bogus.
But, in terms of Gross Output, there are also a number of points. Firstly, depreciation is not equal to capital consumption, i.e. wear and tear, for the reason Marx sets out in TOSV, Chapter 23. Take a machine that is morally depreciated by 50% for example, because a new machine is introduced that replaces it. None of that depreciation enters into the value of the output produced by the machine. It is purely a capital loss.
On the question of the circulating constant capital not all of the circulating constant capital is bought or sold. That is the example of the farmer given by Marx who simply takes a portion of their grain output and sets it aside as seed to replace that consumed in production. The other example is that given by Marx of he coal producer, who takes a portion of their own production of coal, and uses it to replace the coal they have consumed in fuelling their steam engines to pump water from the mine, and drive machinery etc.
In neither case is any of this constant capital bought or sold there is no recording of any sale, and yet its quite clear that the value of the seed and the coal enters is a part of the output value of the farmer and the coal producer. The existence of actual sales between Department I producers only complicates the matter by creating the illusion that the value of constant capital is included, because not only does it not include these instances where the individual producer simply reproduces their own constant capital in kind from their own production, but it disguises the fact that this is also the reality where one Department producer reproduces their own constant capital out of the constant capital of another Department I producer.
That is why Marx cuts through that illusion, by saying imagine that all Department 1 producers constitute one big single producer. In that way, the netting off of these transactions between Department I producers, who mutually reproduce each others constant capital is exposed. As Marx sets out in TOSV, it really makes no difference, here, whether the coal producer’s only constant capital is coal, which they reproduce in kind from their own output, and the steel producers only constant capital is steel which they likewise reproduce in kind from their own output, or whether we recognise that the coal producer uses both coal and steel as constant capital, and so does the steel producer, and that both mutually replace their combined constant capital in kind out of heir joint production.
The reality is that when the coal producer sells coal to the steel producer, they effectively reproduce their own constant capital in coal, and vice versa. If the coal producer sells £1,000 of coal to the steel producer, and the steel producer in turn sells £1,000 of steel to the coal producer, these two amounts cancel out, in terms of a calculation of value added.
On the issue of service industries, I’ve demonstrated in previous discussions that your argument in that regard is false, and I have no interest in going over that discussion again.
Problems with Gross Output and Intermediate Production
Wikipedia says,
“Conceptually, the aggregate “intermediate consumption” is equal to the amount of the difference between Gross Output (roughly, the total sales value) and Net output (gross value added or GDP)…
Thus, intermediate consumption is an accounting flow which consists of the total monetary value of goods and services consumed or used up as inputs in production by enterprises, including raw materials, services and various other operating expenses.”
The problem with this in relation to Marx’s analysis is obvious. Take a series of transactions from a farmer through to a baker who produces the final consumable product.
The farmer has a capital comprising:
c 1000 + v 100 + s 100 = 1200.
Assume that the constant capital consists entirely of seeds, which the farmer withdraws from their production, and thereby replaces in kind from their output. They sell the remaining 200 of their output to a miller. We will assume the miller uses only grain as constant capital for simplicity.
Their capital consists of
c 200 + v 20 + s 20 = 240.
The miller sells their output to the baker, for whom it also comprises their only constant capital.
C 240 + v 24 + s 24 – 288.
The gross value added or GDP here is then 288, the value of the final consumable product. The value of Gross Output or total sales is 200 farmer to miller, 240 miller to baker + baker 288 = 728, giving intermediate production of 728 – 288 = 440, i.e. the value of sales of the miller and farmer.
But, the total value of output, here, is neither 288 (GDP), nor 728 (GO), but 1288. That is 1,000 of output value of the farmer, reproduced in kind from their output plus 200 of new value created by the farmer’s labour, 40 of new value created by the miller’s labour, and 48 of new value created by the bakers labour.
Comrade Michael, please concentrate your thoughts and write a proper blog post contra the Hudson interview!
thank you in advance
I think I have dealt with Hudson’s views before. https://thenextrecession.wordpress.com/2017/05/29/excessive-credit-rentier-capital-and-crises/
“He says people like me have only read Volume One – but the LTRPF is in Volume 3! This is just nonsense.”
You are completely right! Still, have you considered creating a youtube channel, like comrade Cockshott did?
It should be acknowledged that you, as an “orthodox” Marxist restrict yourself to a blog format, while others (Harvey, RDW, Hudson, Cockshott, etc.) are gathering viewers on a (however idiotic) platform, such as Youtube, which is much more visited by youngsters.
I see, that you “debunk” Mr. Hudson here, but when Mr. Hudson made that interview he “shat on you” on a completely different platform. In my opinion: since comrade Cockblast can make a youtube channel, you can too. It would allow you to reach another demographic.
Please consider this. Literally zero (0) people will read your counter-argument to Mr. Hudson’s accusations, since his was made on a much more accessible platform. I’m of the opinion that “Orthodox Marxists,” such as yourself could dominate Youtube as well.
Cheers!
Dear Hurr Ill see if I can get my act together on You Tube. I am on You Tube occasionally when hosts put me on.
I’d second that Mr Roberts. As a young person who follows these debates & is very interested in your views, I’d love to see you have more of a YouTube presence (a podcast would be fantastic!!)
I second that too. I know that Cockshott’s You Tube lectures have garnered a lot of interest. Incidentally he has a new book out ”How the World Works” (Monthly Review) in which he argues ”I have long been critical of the “value form” school of economists [Heinrich and Locascio, 2012] who, in my opinion [Cockshott, 2013a], unduly restrict the idea of value and abstract labor to modern capitalist society. I think that the idea of abstract labor is critical to the analysis of all forms of economy, not just to capitalism……Officially, the Soviets accepted that the “law of value” still applied to them. Despite the theoretical acceptance, political pressures were such as to make socialist governments act as if value relations could be simply ignored. The consequences were unfortunate. It would be an even worse misfortune were a future socialist government, influenced perhaps by value form theory, to repeat that mistake.”
Always the debates concern the category of ‘value’!
“So measuring the relative expansion of productive and unproductive activities is crucial to gauging the growth potential of capitalist economy, because only investment in productive sectors can sustain expansion under capitalism. Indeed, a rising share of unproductive activity will exert a downward effect on the profitability of capital over time.”
Unproductive activity such as government spending of wealth on public health, education and welfare?
This is key to understanding why conservatives wish to impose “austerity”. Using wealth this unproductive (of capital) way benefits the working class while draining wealth from the possession of the bourgeoisie. Whether bourgeois investors see a way to make more wealth by pouring their ill gotten capital gains into hiring workers to produce more commodities for sale with a view to profit or to shuttle that capital into tax shelters or buying to raise the price of corporate stock for later capital gains based on fictitious capital is all related to the declining rate of profit per commodity, which is driven by the ever increasing productivity of the working class which crystallises less value (socially necessary labour time) into goods and services for sale in the market.
“Unproductive activity such as government spending of wealth on public health, education and welfare?”
Government spending on health and education is not unproductive. Health and education are commodities essential to the reproduction of labour-power. They form a part of worker’s essential consumption, and so of the age fund. That the government produces and distributes these commodities rather than them being produced and sold by a private capitalist makes no difference to that. Indeed, the reason that capital established welfare states is precisely because the state by undertaking such production on a large, Fordist mass scale can do it more efficiently than smaller private capitals, and the state can force workers to pay for the provision of such commodities, so that labour-power is adequately reproduced, which is vital for capitalist profits.
That a state capital employs teachers, or doctors and nurses, as wage labourers, and thereby extracts surplus value from their labour makes no difference than were it to be done by private capital. The difference is that the state is better able to extract that surplus value.
Even welfare, to an extent falls into this category. The value of labour-power as set out by Marx is determined by its cost of reproduction over a worker’s lifetime. That lifetime includes large amounts of time when the worker is not working. That can be prior to working age, after retirement, during average periods of sickness or unemployment, as well as holidays, rest periods and so on. Welfare payments are a means of removing that cost directly from individual capitalists who would have to pay higher wages, so that workers could accumulate their own reserves to cover such periods, and instead to socialise that cost, simultaneously obtaining the benefit of averaging out the risk.
Boffy, I cannot follow your argument that education and health provision undertaken by the state assume the categories of commodities. They are surely exchanged against state revenues and not capital, and moreover are not sold but distributed free. Take the provision of sanitary products to young women here in Scotland at colleges and schools. The girls do not buy these but receive them free according to need, and the expense is a debit on the state budget raised from taxation. The situation seems quite different from a capitalist company producing such articles for a retailer to sell at a price, thus realising the surplus value embodied.
I’m sure you’ll tell me if I’m wrong, but as a public school teacher in the US, I think I was paid to provide a use value for free to my students. So, regarding the “unproductiveness” of public services, I agree with jlowrie and, I think, most other marxists.
True, the capitalist state (against the resistance of most teachers) provides education to produce socially necessary useful wage slaves for capital. Yet public education systems, like all public services, had to be won and were given grudgingly, even by the most enlightened personifications of capital, because such services were and are considered a drain on profits. The recent digital return to the days of Dickens (available now on Amazon cheaply thanks to sub-poverty labor) is normal, not exceptional for working people within capitalism’s social order.
Marx used his reproduction schema to investigate how it could be that an inherently anarchic, unstable, crises prone mode of production (which he correctly anticipated would grow only more unstable with deeper crises as it matured) was able to reproduce itself for years, if at all. For purposes of simplifying a complicated problem (he intended to take up later) he–consciously–conflated (as you do somewhat unconsciously) reproduction of the mode of production with reproduction of capitalism’s social order. These schema, as intended, serve to show that the capitalist mode of production is inherently unstable, increasingly unprofitable, and tending toward dissolution.
Marx died before taking up the complexities of the reproduction of the capitalist social order as a whole, but throughout his work, and particularly in Grundrissa, he makes it very clear that capitalism’s mode of production cannot profitably reproduce either itself or its own social order, without (according the Rosa Luxemberg’s view of Marx’s intention) resorting to externalities like war and plunder.
” but as a public school teacher in the US, I think I was paid to provide a use value for free to my students. So, regarding the “unproductiveness” of public services, ” Martha, while you are right to assert that you provided a use value for your students, I think you are wrong to put unproductiveness in inverted commas, for as Boffy rightly states below productive labour is that which exchanges against capital, unproductive against revenue. This is clear enough in the case of landowners who have a mine on their estate: the miners employed augment their capital, the servants employed in their mansions deplete their revenues. However this cannot be the end of the analysis, for as he rightly further states the state can more efficiently provide such use values as education and health provision than private capitalists. Therefore one might argue from a social point of view wage labourers in these fields are productive in that they produce wage labour that is capable of a greater production of surplus value. But even this cannot be the end of the analysis, for take the education delivered at the famous English public school, Wellington, one of the main educators of young people for the English army officer class, a stratum of unproductive and useless labourers if ever there was one.
I think we need to avoid regarding the designation ‘unproductive labour’ as embracing a moral element. Following William Morris, we should employ the categories of Useful Work versus Useless Toil.
Here is what I hope I am getting at: a clerk working in a steel company is undoubtedly a productive labourer; a clerk working in a betting company? I would argue that she is a productive labourer ( though the majority of Marxists I feel will disagree) from the point of view of capital, but from a socialist view she is undoubtedly engaged in useless toil.
I recently was recently involved in a debate in which I was bitterly attacked for suggesting that shop workers were productive workers, for I was told they were merely salespersons. I illustrated my argument with the case of a butcher: her labour prepares the meat in quality and quantity appropriate to the needs of the consumer. The actual act of selling does not of course add value, but as meat can be ordered online it is clear that the labour of the butcher still remains after her task of receiving payment has been eliminated.
J,
The thing is that these commodities are not provided free. The workers pay for them in payments made to the capitalist state. Those payments take the form of “taxes” that provide the state with revenue, but in reality, they do not constitute taxes as a properly defined. As Marx sets out, a tax is actually a revenue obtained by the state to cover the functioning/administration of the state itself. The provision of commodities such as health, social care, education and so on have nothing to do with the functioning of the state, any more than does a nationalised industry that produces coal, or steel or cars.
The payments made by workers in the “taxes” they pay, and in the more obvious form of National Insurance, are precisely that, they are a social insurance premium that covers the provision of these commodities, as an when required. So, for example, compare the situation with the repair you have done on your car, when you have had an accident. Is that repair a commodity? Yes, of course it is. Are the workers who carry out the work wage labourers, and do they produce surplus value, having exchanged their labour with capital? yes, and yes again. Do you pay to the garage the actual cost of the repair? No. And, why not? Because, the insurance company pays the cost of the repair, and does so, because you and others have collectively paid insurance premiums to cover such eventualities, and the insurance companies use actuarial tables to work out the likelihood they will have to pay out for such repairs, and on that basis calculate how much your and other drivers insurance premiums should be.
None of that particular form by which the commodity of repairing your car is undertaken and paid for changes the fact that it is a commodity, and that those that undertake the repair are productive wage labourers, who exchange their labour with capital, and produce surplus value. The same with education, healthcare, social care, unemployment benefit, pensions and so on. The fact that you pay for all these things indirectly having taken out social insurance with the state to cover their provision does not change the fact that you have paid for them, as part of a collective payment. They are commodities required for the reproduction of labour-power. They are commodities/services produced by wage labourers who exchange their labour with state capital, and who produce surplus value in the process of doing so.
In fact, Alan Freeman some time ago in Quantitative Marxism showed that in Britain, in every year since its creation, workers had paid more in taxes and national insurance than the value of the services and benefits they obtained from it. In other words, not only did the capitalist state exploit its own workers by extracting surplus value from them in production, but it also extracted a surplus from workers in general via unequal exchange, i.e. overcharging them.
Moreover, if you have any doubt, why do you think the government raised the retirement age when it found that workers were living a few years longer, why has it so determinedly opposed paying the WASPI women, why does it curtail education and health spending, when its requirements for labour-power change, or when it needs to boost its coffers by continuing to levy these charges for services, but then short-changing consumes on the services it then provides.
Can you imagine a private insurance company getting away with the changes in pensions the government has introduced, for example? If you insured your house for £200,000, and duly paid the premium, would you expect when the house burned to the ground, that the insurance company would turn around and say, sorry we changed the conditions of the contract yesterday, and we are only now paying out 75% of what we said we’d pay!
J,
“as he rightly further states the state can more efficiently provide such use values as education and health provision than private capitalists.”
I have to add, here, however, that that is not an eternal state of affairs. The capitalist state, in the past, has been able to provide these commodities more efficiently for real objective reasons. It was able to undertake this activity on the required mass scale that Fordist production necessitates. It was able to use the power of the state to compel workers to pay a minimum price via the taxation and National Insurance system for these commodities, so that workers were forced to, thereby pay to reproduce their labour-power in a form required by capital, rather than spending their wages on booze and sex etc.
But as the french Marxist Michel Aglietta wrote more than 20 years ago, the same transition to post-Fordist production in manufacturing that was taking place also applied to services. Flexible specialisation that new technologies and the cheapness of those technologies brings with it, means that in place of generalised Fordist education and healthcare, it becomes possible to have individually tailored health and education. In Singapore, the fact that everyne has at least 1 GBps, and many now 2Gbps broadband, not only means they can livestream 3-D TV, but that kids can be taught at home, by top teachers in each subject over the TV and Internet. Mass Online learning has massively reduced the cost of many university courses that can now be done in your home.
My next door neighbour where I used to live was a consultant plastic surgeon, specialising in treatment of burns, on Merseyside. He appeared on Newsnight last year setting out how new technology now meant that people could be provided with wearable tech to constantly monitor their body in the same way that microchips currently do with your car. It would mean that people could be prevented from getting ill in many cases to begin with, and that new technologies mean that for diagnosed conditions tailored remedies can be provided.
Because the cost of this has fallen dramatically, for example, the cost of decoding the genome has fallen from $3 billion to around $100, it means that it becomes more efficient, and cheaper for people to be able to buy these commodities themselves rather than via state insurance. Its only like when I was a kid my parents rented the TV from Rediffusion because TV’s were relatively expensive, and unreliable, thee rental was an insurance against it breaking down or becoming out of date. But, within 10-20 years of that, no one bothered renting.
“I would argue that she is a productive labourer ( though the majority of Marxists I feel will disagree) from the point of view of capital, but from a socialist view she is undoubtedly engaged in useless toil.”
Marx’s definition of productive makes clear it is defined in terms of political economy, and so of what applies under capitalism. If we choose a different framework for example what is productive for the moral and spiritual development of society, what is productive for the environmental health of the planet and so on, then we would arrive at very different conclusions.
On shop workers the answer is given by Marx in Capital III, Chapter 17. The solution comes down to the difference between surplus value and profit. Surplus value is produced in production, but before it can be realised as profit, other costs of distribution must be incurred. Those costs mean that the produced surplus value can never be fully realised as profit. That is why merchant capital arises in the first place, because the merchant capitalists by specialising in that function reduce the costs of circulation, and so increase the realised profit compared to what it would otherwise have been. They also increase the rate of turnover of capital, so that a) the rate of profit is raised, and b) they release capital that can then be accumulated so that it increases the mass of surplus value and profit.
It can only do this by itself employing wage labourers. Those wage labourers do not themselves produce surplus value, but they do enable additional capital to be accumulated so that more surplus value is produced, and they do ensure that more profit is realised. In short they do not produce additional surplus value, but they do produce additional realised profit. As Marx puts it,
“The commercial worker produces no surplus-value directly. But the price of his labour is determined by the value of his labour-power, hence by its costs of production, while the application of this labour-power, its exertion, expenditure of energy, and wear and tear, is as in the ease of every other wage-labourer by no means limited by its value. His wage, therefore, is not necessarily proportionate to the mass of profit which he helps the capitalist to realise. What he costs the capitalist and what he brings in for him, are two different things. He creates no direct surplus-value, but adds to the capitalist’s income by helping him to reduce the cost of realising surplus-value, inasmuch as he performs partly unpaid labour…
To industrial capital the costs of circulation appear as unproductive expenses, and so they are. To the merchant they appear as a source of his profit, proportional, given the general rate of profit, to their size. The outlay to be made for these circulation costs is, therefore, a productive investment for mercantile capital. And for this reason, the commercial labour which it buys is likewise immediately productive for it.”
(Capital III, Chapter 17)
Correction:
“In fact, Alan Freeman some time ago in Quantitative Marxism showed that in Britain, in every year since its creation, workers had paid more in taxes and national insurance than the value of the services and benefits they obtained from it.”
The “it” referred to here, is the welfare state.
Boffy, I did post a reply, but it seems to have got lost, so I shall have another go.
”The thing is that these commodities are not provided free. ” Of course you are absolutely right. I should have said free at the point of use. Such goods have a cost but not a price, and the user does not purchase them. I think your distinction between Taxation and National Insurance is a sound one and one we must propagate. However I feel your comparison with car insurance is invalid. Of course a car repair is a commodity, but so is the Insurance policy I purchase to cover this. It is my individual decision. It is quite different with National Insurance, which is a social obligation on all workers. The distribution of its funds is decided by so-called elected ‘representatives’ who decide where the monies will be spent. Citizens do not buy their health or education. It is allocated to them. When I receive my medicine ‘free’ here in Scotland the doctor decides what I receive according to my need and his budget. Further, while workers in education may be wage workers, I cannot see how they create surplus value. How would such be identified and measured? Schools receive a budget, which is depleted as the year advances. I do not see that this is capital advanced to produce a profit. It is quite different with private schools. Take Fettes College, the alma mater of the multi-millionaire Tony Blair. The fees are £29,000 a year and invested. If such schools do not produce a profit, they go bankrupt.
I may say it is the protection of such social provision that has given rise to the SNP here and not the so-called petty-bourgeois nationalism by which various leftists designate it. Also citizens here for the most part oppose Brexit as they fear the consequences of an economic embrace by Trump i.e. they vote according to their perceived class interests. Nor is there the same xenophobia as with English nationalism.
Incidentally, your highlighting of the real nature of National Insurance suggests a possible anomaly. Since all employees pay National insurance, including for example the chief executive of, say, Tesco, can they not argue that in fact part of the surplus value they produce is taken in this tax. A few years back Paul Cockshott calculated the amount of surplus value produced in the UK. His conclusions, if I recall rightly, were that those who earn up to £50,000 are exploited, those between £50 and £70,000 are not exploited, while this who earn above 70,000 are exploiters, having a portion of surplus value reallocated to them from other workers’ surplus labour. The problem is of course that not all those even in the lowest group actually produce surplus value.
Anyway, however we finally resolve these questions, the real matter in my opinion is how we identify the mode of distribution of goods under socialism. As with the illustration of sanitary products I give above this can be economically done free at the point of use, since the demand is readily calculated. However the same procedure cannot be used for girls’ shoes. If these were to be distributed freely there would be no end to it. Marx affirms that under communism workers receive work tokens that enable them to draw means of consumption according to their work contribution. I have argued that under communism while some goods may be distributed freely, others will require the most stringent rationing. This is why I feel so depressed by the article of Peter Hudris I quote above in a comment on Michael’s latest post. Hudris is advocating in his critique of Stalinism that the law of value can play no part in a communist society; but this is just where the Soviets went wrong. The vast expenditure of useless toil that such did and would entail is, given the problems of Global Warming etc.,unsustainable. We need to identify very precisely the needs of society and then clarify the more difficult task of determining how to allocate labour to the tasks that Rob Wallace outlines i.e. socially necessary labour. How this might be calculated dispensing with the law of value I have no idea. As Marx says, ”the categories of bourgeois economy are valid for all other social formations” albeit with a grain of salt (”Towards a Critique” P211).
J,
Which insurance company you insure your car with may be your personal decision, but not the requirement to purchase such insurance, because its as much a legal requirement as is the payment of NI. If we make the same assumptions about the determination of market prices that Marx does, i.e. competition forces a single market value, then the apparent availability of choice disappears, because each must charge the same market determined premium.
But, the point remains that the payment for the repair, like the payment for your hip replacement is not paid directly by you, but out of a collective insurance fund. You may end up paying a higher car insurance premium if you are a higher risk, but don’t rule out the possibility of that being applied to state provision of healthcare etc. either. Already if you are out of the country for more than three months you lose your right to free NHS healthcare on your return, and the proposals to introduce a contributory element into the right to benefits, i.e. you have to have paid in for a minimum period before you can get anything out, is a move down that road.
In fact, again compare that with the situation with private insurance. Imagine if you took out hose or car insurance, and the private insurer said, you have to pay premiums for five years, before you have any entitlement to make a claim!
The fact that you are forced to pay “taxes” insurance by the state simply reflects the fact that it has monopoly power. I have compared it to the Truck System of the 19th century, whereby employers force workers to take their wages in Truck tokens only redeemable in the company stores. The Welfare State is a Truck System on a mammoth scale whereby the Truck, or Social Wage is only redeemable in the state capitalist company stores.
I am quite shocked that you say,
“The distribution of its funds is decided by so-called elected ‘representatives’ who decide where the monies will be spent. Citizens do not buy their health or education. It is allocated to them.”
Because the implication of that is that the capitalist state that actually makes these allocations is in fact not a capitalist state, but some kind of “people’s state”, or even workers state! It quite clearly is not. The allocations made by that state are allocations based upon the needs of capital not the needs of workers, hence the implementation of austerity, the increase in retirement age, refusal to pay the WASPI women, and so on.
But, let’s assume that some radical government was elected that sought to allocate healthcare and education more generously, how do you imagine this would be paid for, other than by workers themselves having to pay more in taxes and national insurance to cover this additional cost. Marx’s whole analysis of the objective basis upon which the wage fund is based, as against the fund for surplus value, shows that it can only come from that source, so long as capitalism exists. Incidentally, I think the conclusions you cite from Cockshott are bollocks, but that’s a different discussion I don’t have time for at the moment.
“Further, while workers in education may be wage workers, I cannot see how they create surplus value. How would such be identified and measured?”
In the same way that the surplus value of any other worker is calculated. Its essentially the same as the situation that Marx describes in relation to the commercial worker, i.e. a certain amount of value is created by the labour, and this value is greater than the value of their labour-power. The only difference here is that the commercial worker creates no new additional value, whereas the teacher, nurse or doctor does. The fact that its not manifest in some market price is irrelevant.
If we take teaching labour, for example, we can calculate how much new value a teacher creates per hour. Given that we do have private schools that charge fees, this calculation is made even easier. So, having calculated how much new value the teacher produces, we deduct their wage and arrive at the surplus value. But, the reason I say it is in any case irrelevant is that the same situation arises with all labour, under capitalism. Its impossible to make the calculation on the basis of even the labour employed in a given industry, let alone enterprise, and certainly not per individual worker. That is because no commodities sell at their exchange-value, and so the component of surplus value for any commodity is no longer determinable. We only have a global figure for total surplus value produced in the economy.
That is because commodities sell not at exchange-value but at prices of production – cost price plus average profit. So each industry, each type of commodity, appropriates the average profit, whether or not it produces any surplus value or not. Indeed, that’s why commercial capital, which produces no surplus value, is able to appropriate the average rate of profit.
Or take another more obvious example. When British Steel, and the NCB existed, did they produce commodities? Yes, of course they did. How much surplus value did the workers in those industries produce? Based on the prices charged its impossible to say, because both sold their output to private capitals at prices that provided a subsidy to their customers, and thereby transferred surplus value directly from the state industry to private capital.
The situation with health and education is merely that principle applied to its extreme. The beneficiaries of free health and education are the private companies who do not have to pay the higher wages that would be required if workers had to take on the risk of providing individually for their own healthcare and education of their children themselves. Its one reason that large corporations in the US that had negotiated very expensive deals with unions to provide for healthcare and pensions for their workers complained about the disadvantage they faced compared to say European car makers, which did not have to bear such costs, because their workers had socialised healthcare and pensions provided by the state.
J,
Incidentally, you can’t have it both ways, and claim that car insurance is a commodity, because you can choose which provider to use, but say healthcare isn’t because its allocated on the basis of need, and the scale of allocation is decided by representatives elected by the people.
If the latter were to be a valid claim, which for the reasons described it isn’t, then it would only mean that the allocative decisions of those representatives were merely a collective choice of consumers or potential consumers of the allocated commodity.
As Engels put it,
“The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers — proletarians. The capitalist relation is not done away with. It is rather brought to a head. But, brought to a head, it topples over. State ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.”
(Anti-Duhring, p 360)
“In the trusts, free competition changes into monopoly and the planless production of capitalist society capitulates before the planned production of the invading socialist society. Of course, this is initially still to the benefit of the Capitalists.
But, the exploitation becomes so palpable here that it must break down. No nation would put up with production directed by trusts, with such a barefaced exploitation of the community by a small band of coupon-clippers.”
(Anti-Duhring p 358)
and,
“Many of these means of production and of communication are, from the outset, so colossal that, like the railways, they exclude all other forms of capitalistic exploitation. At a certain stage of development this form, too, no longer suffices: [the large-scale producers in one and the same branch of industry in a country unite in a “trust”, an association for the purpose of regulating production.”
(Engels, Anti-Duhring, p 358)
“All the social functions of the capitalist are now performed by salaried employees. The capitalist no longer has any social activity save the pocketing of revenues, the clipping of coupons, and gambling on the Stock Exchange, where the different capitalists fleece each other of their capital. Just as at first the capitalist mode of production displaced the workers, so now it is displacing the capitalists, relegating them, just as it did the workers, to the superfluous population, although not immediately to the industrial reserve army.”
(ibid, p 359-60)
Boffy, I again posted a reply that has disappeared. I shall try again later, and will be interested to hear your criticisms if you have time, but I first want to reply to Anti-capital. I have posted some criticism of you on the Coronavirus article. Did not want Anti-capital to accuse us of always singing from the same hymn sheet . Theoretical dispute is the very stuff of science. p
J,
I had promised myself I wasn’t going to get embroiled in any more of these discussions because I have way too much stuff to do, and not enough time to do it. The Law of Value imposes itself once again! I’ve just sent my 21st century translation of TOSV Part One for publication, and made the mistake of seeing a brief interlude as an opportunity to engage.
I’ll try to respond if I have time. Why you bother what the troll Anti-Capital and his sock puppets think I really don’t know. I realised long ago that he understands nothing about Marxist concepts and just comes out with a load of vague mumbo jumbo presented to look like some deep understanding of hidden Marxist truths and meanings, but really is just to cover his lack of understanding, and open the door to interminable meaningless flame wars. I gave up reading anything he says years ago, when he was writing as Sartesian.
Theoretical dispute is indeed the stuff of science, but it requires that parties to the dispute are honest and debate in good faith, not that they only engage in the debate for the purpose of entertainment, and the provocation of flame wars. It also requires that the parties to the dispute actually have a grasp of the theory being discussed, and only insist on the validity of a point if they are assured in their knowledge. That doesn’t mean that their interpretation or conclusion is correct, but without it rational discussion is impossible. Too often I come across people who insist on a point vehemently with all of the authority of an “expert”, whilst in reality, its quite clear from what they say that they haven’t actually read or or understood any of theory they issue forth upon. Such people are not necessarily trolls, its possible to have a calm debate with them, but its rather futile and time consuming all the same, because its necessary to correct all of the basic errors in their understanding.
Its a problem of the Internet, because often such people engage in the debate on the basis of partial knowledge, and having got drawn into debate feel obliged to defend their position by looking up something that might lend itself to their argument. They would, in reality, have been better to have spent the time reading to improve their basic knowledge to begin with. Its a bit like we used to find with martial arts. I studied Kung Fu for 20 years. One of the instructors told me that on average, they had around 300 people join with each new intake. After 6 months, that was down to less than a hundred who were still attending, after a year less than fifty. After 5 years, only about 4-5 people of the original 300 were still taking part. They tended to stay, and like me gradually progressed to higher grades. Yet, as he said, some of those who joined in that first intake of 300, having learned essentially nothing in the first six months, would then complain if they found themselves in a physical confrontation and got a pasting. Some even took up other styles clearly having failed to understand that the problem rested with them, and their lack of diligence to training.
Such is the world of instant gratification, and in which a little knowledge is a dangerous thing.
J,
I’ve also posted some comments that still seem to be sitting in the moderation queue.
” Did not want Anti-capital to accuse us of always singing from the same hymn sheet . ”
I don’t recall every accusing you, J, or anyone, as always singing from the same sheet as Boffy. Might have criticized what you have argued based on what you argued, but don’t think I ever criticized it simply because it agreed with Boffy’s hymns to the power of positive thinking.
I certainly am willing to be corrected if there is evidence to the contrary.
”I don’t recall every accusing you, J, or anyone, as always singing from the same sheet as Boffy. ” Anti-capital, I suspect you have left your sense of humour behind.
You simply can’t use a monetary unit to describe growth. Consider the case where inflation is zero, but the cost/price of aluminium production is greatly reduced, and the volume of production remains the same.
If we used monetary units, we would have degrowth. If we used kilos, we would have a stable production.
“National output in Marxist terms is c+v+s”? This is confusing at best or double-counting of production at outputs that enter as inputs.
In classical-Marxian terms, rather, the GDP corresponds to V+S, there cannot be C.
GDP does indeed correspond to only v + s. The point is that GDP does not equate to total output value, precisely because total output value includes the value of c, which GDP does not.
The significance is that those that claim to be determining a rate of profit figure by using GDP data are doing no such thing, because they are not including the value of c. All they calculate, therefore, is a rate of surplus value, not a rate of profit. Similarly, when they talk about rises or falls in the rate of profit all they are really describing is rises and falls in the rate of surplus value. Its the same error that Ricardo and his disciples fell into.
“Unproductive activity such as government spending of wealth on public health, education and welfare?”
Government spending on health and education is not unproductive. Health and education are commodities essential to the reproduction of labour-power. They form a part of worker’s essential consumption, and so of the age fund. That the government produces and distributes these commodities rather than them being produced and sold by a private capitalist makes no difference to that. Indeed, the reason that capital established welfare states is precisely because the state by undertaking such production on a large, Fordist mass scale can do it more efficiently than smaller private capitals, and the state can force workers to pay for the provision of such commodities, so that labour-power is adequately reproduced, which is vital for capitalist profits.
That a state capital employs teachers, or doctors and nurses, as wage labourers, and thereby extracts surplus value from their labour makes no difference than were it to be done by private capital. The difference is that the state is better able to extract that surplus value.
Even welfare, to an extent falls into this category. The value of labour-power as set out by Marx is determined by its cost of reproduction over a worker’s lifetime. That lifetime includes large amounts of time when the worker is not working. That can be prior to working age, after retirement, during average periods of sickness or unemployment, as well as holidays, rest periods and so on. Welfare payments are a means of removing that cost directly from individual capitalists who would have to pay higher wages, so that workers could accumulate their own reserves to cover such periods, and instead to socialise that cost, simultaneously obtaining the benefit of averaging out the risk.
I must confess I am slightly perplexed as to how we may distinguish between productive and unproductive activity. I understand that ‘productive’ means that new value is produced, whereas ‘unproductive’ means that existing value is consumed or captured. But how can we tell?
Let’s take security for example, mentioned in the OP as a type of non-productive, though necessary, activity. There is a market for security services in which private security firms compete. A firm like G4S has money capital which it uses to buy things like buildings, uniforms and vans, ie constant capital. It also uses this money to hire the labour power of security guards, drivers etc. Do these people produce no surplus value? Are they not exploited? If not, why and how? Does their labour power not yield more value than its own value? Again why?
Let me put this another way. In Vol 1 of Capital, Marx uses the example of private education to explain the production of commodities in what we would today call the service sector. How is a private school different to a private security firm?
Thanks
“I must confess I am slightly perplexed as to how we may distinguish between productive and unproductive activity. I understand that ‘productive’ means that new value is produced, whereas ‘unproductive’ means that existing value is consumed or captured. But how can we tell?”
That is not Marx’s definition of productive. Marx’s definition of productive is productive of surplus value, which involves labour that exchanges with capital rather than revenue. It doesn’t matter whether that capital is private capital or socialised capital or state capital. If it employs wage labour that produces surplus value then its productive.
This is what I meant. You only end up with a net gain in value because of the surplus value produced, because labour power yields a product more valuable than itself
Except new value can be created without surplus value being created. If I paint my house, I have created new value. In this instance I have created new individual value that is inseparable from the use value produced. I have not produced any surplus value. Nor indeed I have i produced an exchange value, because I paint the house only to create the use value that results for my own consumption. It would only take the form of exchange-value if I sold the house, i.e. in the form of the enhanced price obtained for it.
Similarly, a peasant producer creates new value by their labour. If the new value they create is greater than required to reproduce their labour-power – and all peasants tend to do this in order to be able to enhance their means of production, provide savings for protection against accidents and so on – then again they produce a surplus value, but its not productive labour in the sense that Marx defines. The peasant does not exchange their labour with capital, but only with nature. The new value they create is again inseparable from the use value they produce for their own consumption, and indeed the surplus value takes the form of a surplus product. Moreover, the surplus value they produce is not like that appropriated by the capitalist the surplus value/product that the peasant producer obtains does not come to them for free, as it does to the capitalist, but comes to them only as a consequence of thir own surplus labour.
The same is true where the peasant producer produces commodities for the market, rather than their own direct consumption. If the peasant needs only labour for 5 hours to reproduce their labour-power, but actually works for 8 hours, they produce 8 hours of new value, 3 hours of which are surplus value, which is embodied in the value of their commodity product. But, the peasant’s labour is still not productive, because it does not exchange with capital. It does not produce or reproduce capital, it only produces and reproduces the peasant’s own labour-power and means of production.
It is my understanding that in Marxist political economy, the term value is used to denote exchange value, rather than use value. This is generally the way the term is used in capital, after Marx has explained the distinction in the first (I think) chapter of vol 1. In any case, I think my question is fairly clear so I am reiterating it and, to be clear, addressing it to Michael Roberts.
“It is my understanding that in Marxist political economy, the term value is used to denote exchange value, rather than use value.”
But, value and exchange-value are two distinct concepts, as Marx sets out in Capital I, and in TOSV. Both are distinct from use value.
Value as Marx describes is measured directly in terms of abstract labour-time, i.e. the value of, say, 1 metre of linen is, say, 10 hours of labour-time. Exchange-value, by contrast, can only be measured indirectly, as a quantity of some other use value. For example, the exchange value of 1 metre of linen is, say, 1 litre of wine.
But, as Marx sets out in TOSV, it is impossible to derive the indirect measure of value – exchange-value – unless first the direct measure of value exists. In other words, just as products must exist prior to the existence of commodities, so too value must exist prior to exchange-value.
I can only derive the exchange-value of 1 metre of linen as being 1 litre of wine, if it is also the case that the value of 1 litre of wine is equal to 10 hours of labour-time. It is this equivalence of value, of equal amounts of abstract labour that enables exchange value to be derived. Without value there is no exchange value, because there is no objective basis for equivalence.
”It is my understanding that in Marxist political economy, the term value is used to denote exchange value, rather than use value.” You are correct that the concept of value is sometimes used when exchange value is meant. I think Marx employs the category value under three aspects: value, use value and exchange value. In fact I recall his asserting that value comes before exchange value, though for the moment I cannot place the reference. At any rate in his discussion of Bailey Marx remarks, ”The only thing that Ricardo can be accused of is that …., in elaborating the the concept of value he does not clearly distinguish between the various aspects, between the exchange value of the commodity…and the existence of the commodity as value as distinct from its existence as an object, product, use value” (TSV part 3 P125). This is why I hold that the category of value still applies under communism. Marx himself remarks, ”although it is true that the categories of bourgeois economy are valid for all other formations, this has to be taken with a grain of salt, for they may contain them in an advanced, stunted, caricatured etc. form that is, always with substantial differences ( Towards A Critique P 211).
What disappears with capitalism is the dominance of exchange value. Some Marxists however deny that the law of value still functions under communism. The debate is an old one e.g. between Bogdanov and Bukharin, with the latter arguing that value etc. were all categories of a capitalist economy (J.D.White, “Bogdanov” 2019 Pp435 ff). The debate is still with us!
Exchange value is the expression, the phenomenological manifestation of essential content which is value, which is at base the relation between labor and the conditions of labor. The distinction is worthwhile to make, as Marx does, in order to drill beneath the appearance, but making the distinction does not mean that value itself, as that specific social relation, can appear separate, apart from, independent of, exchange value.
We make this relationship more clear if we regard exchange value as the market, but value as the production relation. Now is it possible for the production relation to exist outside the market, outside the realm of exchange? It’s nonsensical to put the issue this way, as the purpose of value production is to realize the appropriated surplus value and that can only be accomplished through exchange.
And it is nonsensical to the law of value itself that asserts that commodities will exchange in proportion to the socially necessary labor time necessary for their reproduction. Their is no under capitalism of assessing this socially necessary labor time for reproduction outside the parameters of exchange.
So the attempt to counter pose “value” to “exchange value” has been a misapplication of the Marx’s work, and has led to a number of purely scholastic misunderstandings and superficial criticisms, not the least of which is the so-called “transformation problem.” “Everybody” thinks the transformation problem arises in Volume 3 with the discussion of prices of production and the average or general rate of profit. In fact, Marx has already resolved the “problem” in Volume 1 with introduction of socially necessary labor time, and the distribution of surplus value through pricing divergences.
Yes there is a distinction; no, the distinction could not exist if it were not intrinsic to the relation between labor and the condition of labor, if it were not inherent to the value relation itself.
A number of communist do deny that the law of value will continue to function beyond capitalism, and Marx himself pointed out that the “law” did not exist as a law apart from capitalism, in any number of pre-capitalist societies. It’s difficult to understand how the law of value can persist once labor is emancipated from the constraints of being itself a value to be exchanged, which after all is what Marx was all about.
I think Anti-capital has posted a succinct account of the position that many Marxists will hold. There can be no doubt but that this is the correct outline, ”the law of value itself that asserts that commodities will exchange in proportion to the socially necessary labor time necessary for their reproduction. Their is no way under capitalism of assessing this socially necessary labor time for reproduction outside the parameters of exchange.”
But is this all that has to be surveyed. Consider the situation if my neighbour and I were providing fruit, vegetables and flowers to our local cornershop, which after a time is no longer able to continue in competition with a supermarket. We however continue to exchange our products, he on the left providing me with flowers, she on the right with veg. and I fruit. Do we exchange 1 kilo of flowers against 1 kilo of fruit against 1 kilo of potatoes? Of course not; our exchange is regulated by the value of the products i.e. how much labour time each good requires on our respective plots. There is no market exchange here. Only if the supermarket agrees to sell our products, does the market price determine the value of our goods, and then the veg may not be able to compete, while the flowers might, the value of the veg being above the market value.
My neighbour is a car mechanic and I a painter, and we agree to exchange our mutual labours so maintaining or indeed enhancing the value of our house and car, of our use values. No market exchange has taken place and our labours are not expressed in any price. That new value has been produced will be manifest if we come to sell these goods, as their market prices will be higher than those whose owners have failed to apply similar labour.
‘Marx himself pointed out that the “law” did not exist as a law apart from capitalism, in any number of pre-capitalist societies’
Why then ”if we go back to the great investigator who was the first to analyse the value form, I mean Aristotle ( Capital Vol.1 P 151)?
J,
“”the law of value itself that asserts that commodities will exchange in proportion to the socially necessary labor time necessary for their reproduction. Their is no way under capitalism of assessing this socially necessary labor time for reproduction outside the parameters of exchange.”
Except of course this is palpably not true. Its Ricardianism not marxism. Its what led, as Marx says to the dissolution of the Ricardian School, precisely because its obvious that, under capitalism, i.e. from the fifteenth century onwards, commodities do not exchange at exchange-values (proportionate to the socially necessary labour-time of each) but at prices of production! The only time that commodities exchanged at exchange-values, i.e. proportionate to the socially necessary labour-time required for their reproduction was during the period of commodity production and exchange prior to capitalist production. As Engels states,
“In a word: the Marxian law of value holds generally, as far as economic laws are valid at all, for the whole period of simple commodity production — that is, up to the time when the latter suffers a modification through the appearance of the capitalist form of production. Up to that time, prices gravitate towards the values fixed according to the Marxian law and oscillate around those values, so that the more fully simple commodity production develops, the more the average prices over long periods uninterrupted by external violent disturbances coincide with values within a negligible margin. Thus, the Marxian law of value has general economic validity for a period lasting from the beginning of exchange, which transforms products into commodities, down to the 15th century of the present era. But the exchange of commodities dates from a time before all written history — which in Egypt goes back to at least 2500 B.C., and perhaps 5000 B.C., and in Babylon to 4000 B.C., perhaps to 6000 B.C.; thus, the law of value has prevailed during a period of from five to seven thousand years.”
(Capital III, Supplement)
And. Marx and Engels writings on Value as distinct from exchange value are numerous. In the Supplement, Engels basing himself on his own studies contained in the origin of the Family, and on Marx’s writing in Capital III, Chapter 10 discusses the evolution of the value of products into the exchange-value of commodities as a result of rising trade, for example. He describes the way in which the value of various products was known, because the direct producers knew how much labour-time was required for their production, and how this then forms the basis for establishing proportionate exchange relations.
Marx in the letter to Kugelmann describing the Law of Value states clearly that it applies to all modes of production, but that only the form in which it is manifest is different. Marx’s description of the allocation of labour-time by Robinson Crusoe as telling us all we need to know about the law of value is a further example, as is his example of how the peasant family allocates its own available labour-time to maximise its production of use values.
And, that too is described by Engels in Anti-Duhring.
“The useful effects of the various articles of consumption, compared with one another and with the quantities of labour required for their production, will in the end determine the plan.”
“As long ago as 1844 I stated that the above-mentioned balancing of useful effects and expenditure of labour on making decisions concerning production was all that would be left, in a communist society, of the politico-economic concept of value. (Deutsch-Französische Jahrbücher, p. 95) The scientific justification for this statement, however, as can be seen, was made possible only by Marx’s Capital.”
(Anti-Duhring, Chapter 26)
And Marx,
in The Critique of the Gotha Programme,
“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 labour, 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 labour in one form is exchanged for an equal amount of labour in another form.”
And he makes the same point in Capital III, Chapter 49.
“…after the abolition of the capitalist mode of production, but still retaining social production, the determination of value continues to prevail in the sense that the regulation of labour-time and the distribution of social labour among the various production groups, ultimately the book-keeping encompassing all this, become more essential than ever.”
Well, we’re back at it– the “supra-historical” law of value, regulating the economies of ancient Egypt, Babylon, and why not? Eden.
Except that is not Marx’s view. For the law of value to be the law regulating economies, for it to become dominant, it must be the expression of the mode of production– that is the fundamental, the a, b, c, of Marx’s critical method that Boffy ignores, and Engels neglects in his attempt to enshrine the law as the determinant of all history.
Exchange was not dominant in these pre-capitalist modes as production for exchange was not the mode of production. Pre-capitalist societies were more often dominated by subsistence production, or subsistence + surplus production, were surplus was extorted from slavery, was aggrandized through feudal-type (not necessarily feudal) arrangements of obligation and service. Marx is very clear about this, and about the limits of the law of value, in his studies of pre-capitalist economic formations, pre-British India, and pre-Columbian America, specifically using the example of Incan society.
For someone who quotes walls of text by Marx, El Bofferino misses more than few critical remarks– like this from Capital Volume 1:
” Objects in themselves are external to man, and consequently alienable by him. In order that this alienation may be reciprocal, it is only necessary for men, by a tacit understanding, to treat each other as private owners of those alienable objects, and by implication as independent individuals. But such a state of reciprocal independence has no existence in a primitive society based on property in common, whether such a society takes the form of a patriarchal family, an ancient Indian community, or a Peruvian Inca State. The exchange of commodities, therefore, first begins on the boundaries of such communities, at their points of contact with other similar communities, or with members of the latter. So soon, however, as products once become commodities in the external relations of a community, they also, by reaction, become so in its internal intercourse. ”
The exchange of commodities begins on the boundaries… correct. But the “so soon” part is not so correct. It takes much longer than “soon” IF we’re talking about the power of exchange, to effect the “commodification” of the internal mechanism of production. HENCE, the forcible dispossession and destruction of the producers, and the mode of production where property is held in common, or where the individual producers produce for their own subsistence. That is the critical moment. The presence of exchange itself is slow to “corrode” the property held in common BECAUSE the exchange is not determined not by exchange value, but by use value of the objects.
Marx makes a further distinction about exchange in Volume 2 and criticizes those utilizing the exchange rather production as the distinguishing characteristic of societies.
First, Marx writes:
“One of the most obvious peculiarities of the movement in circuits of industrial capital, and therefore also of capitalist production, is the fact that on one hand the component elements of productive capital are derived from the commodity-market and must be continually renewed out of it, bought as commodities; and that on the other hand the product of the labour-process emerges from it as a commodity and must be continually sold anew as a commodity. Compare for instance a modern farmer of the Scotch lowlands with an old-fashioned small peasant on the Continent. The former sells his entire product and has therefore to replace all its elements, even his seed, in the market; the latter consumes the greater part of his product directly, buys and sells as little as possible, fashions tools, makes clothing, etc., so far as possible himself.”
Certainly, it’s clear whose production is governed by the law of value, whose production is not YET so governed.
And Marx finds another opportunity to refer to the Incas:
“In the second place, since it is not the economy, i.e., the process of production itself that is emphasised as the distinguishing mark of the two categories, money-economy and credit-economy, but rather the mode of exchange — corresponding to that economy — between the various agents of production, or producers, the same should apply to the first category. Hence exchange economy instead of natural economy. A completely isolated natural economy, such as the Inca state of Peru, would not come under any of these categories.”
Unfortunately, those who hold to the once, now, future and eternal rule of the law of value, including dear Engels are making exactly this error– substituting exchange for the mode of production.
And then Marx continues:
“In the third place the money-economy is common to all commodity production and the product appears as a commodity in the most varied organisms of social production. Consequently what characterises capitalist production would then be only the extent to which the product is created as an article of commerce, as a commodity, and hence the extent also to which its own constituent elements must enter again as articles of commerce, as commodities, into the economy from which it emerges.
As a matter of fact capitalist production is commodity production as the general form of production. But it is so and becomes so more and more in the course of its development only because labour itself appears here as a commodity, because the labourer sells his labour, that is, the function of his labour-power, and our assumption is that he sells it at its value, determined by its cost of reproduction. To the extent that labour becomes wage-labour, the producer becomes an industrial capitalist. For this reason capitalist production (and hence also commodity production) does not reach its full scope until the direct agricultural producer becomes a wage-labourer. In the relation of capitalist and wage-labourer, the money-relation, the relation between the buyer and the seller, becomes a relation inherent in production. But this relation has its foundation in the social character of production, not in the mode of exchange. The latter conversely emanates from the former. It is, however, quite in keeping with the bourgeois horizon, everyone being engrossed in the transaction of shady business, not to see in the character of the mode of production the basis of the mode of exchange corresponding to it, but vice versa.”
Marx is always clear that capitalism, and its laws, are laws of production, of the social relation of labor to the conditions of labor, and therefore historically specific to capitalism and not some sort of teleological, purpose-driven, goal of history. Marx is not Hegel, and whatever his facility with dialectic, he begins his own work with the critique of such teleology (see his Critique of Hegel’s Philosophy of Right)
Now we’ve had this argument before– you can look back in the responses I think in 2016 or 2017 for all the nits and grits if you like, but each time the discussion arises Bofferino trots out the Letter to Kugelmann and….Robinson Crusoe, much like University College London rolls out the remains of Jeremy Bentham at meetings.
Except what does the message to K. actually say? It says:
“Every child knows a nation which ceased to work, I will not say for a year, but even for a few weeks, would perish. Every child knows, too, that the masses of products corresponding to the different needs required different and quantitatively determined masses of the total labor of society. That this necessity of the distribution of social labor in definite proportions cannot possibly be done away with by a particular form of social production but can only change the mode of its appearance , is self-evident. No natural laws can be done away with. What can change in historically different circumstances is only the form in which these laws assert themselves. And the form in which this proportional distribution of labor asserts itself, in the state of society where the interconnection of social labor is manifested in the private exchange of the individual products of labor, is precisely the exchange value of these products.”
What can change in historically different circumstances is the form in which the laws assert themselves. The LAW is that there must be social production and a distribution of social labor for society to reproduce itself. The form that law takes is the variable, dependent upon the specific social relations, on the mode of production, on property and its antagonists. The law of value is a historically specific expression of the overall LAW, corresponding to the specific mode of production.
Marx never says in the letter that the law of value applies to all past and future modes of production.
As for Robinson Crusoe’s activities– Crusoe is preparing himself for subsistence production, for the production of use value, with the consequent ordering of his own time. He is not being governed by a law of value, in that a) his mode of production is not social b) it appropriates no surplus from the labor of others c) the value to him, that determines the expenditure of his time, is the use-value. For the capitalist, the essential condition is that for both the producer and the capitalist, the commodities have no use other than their value in exchange. The laborer has no use for his/her own labor, other than as a value to be exchange for a value representing means of subsistence. For the capitalist, the commodity’s use value is literally immaterial, he or she appropriates the commodity for its surplus value, for its value in exchange.
Bofferific also gives us this, and leave it to Bofferific to jump from the frying pan into the fire– proving that the law of value exists by exactly the means that so many love to prove Marx was wrong, was self-contradictory.
“Except of course this is palpably not true. Its Ricardianism not marxism. Its what led, as Marx says to the dissolution of the Ricardian School, precisely because its obvious that, under capitalism, i.e. from the fifteenth century onwards, commodities do not exchange at exchange-values (proportionate to the socially necessary labour-time of each) but at prices of production! The only time that commodities exchanged at exchange-values, i.e. proportionate to the socially necessary labour-time required for their reproduction was during the period of commodity production and exchange prior to capitalist production.”
Well, Bofferowski has gotten us right back to the transformation problem– exactly how does the violation of the law of value by the law of production prices evolve? They would say, and Boffy needs to answer: “Marx has an apparent insoluble contradiction. He starts with the position, indeed the proof, that value is not produced in exchange, that commodities exchange proportionately to their actual labor-time. Then he comes to the problem of a single general rate of profit. From nowhere, seemingly, he comes up with this price of production that says, commodities DO NOT exchange at their values but in proportion to other quantities that mysteriously account for an average rate of profit even prior to the establishment of that average rate. Explain how that transformation occurs.”
Now either exchange values are derived from value production, representing the socially necessary labor time of reproduction, and therefore account for production prices, which are the capitalist calculus of the rate of profit-BUT these production prices are further modified by the exchange itself which produces MARKET Prices and thus distributes surplus value in proportion to the socially necessary time of reproduction (and the size and efficiency of capitals) OR we have a transformation problem which Boffy has so far ignored
As for simple commodity production– that’s a phrase and a concept Marx never employs in his historical analyses of early capitalism. Did simple commodity production exist under feudalism? In slave societies? Exactly where do we have simple commodity production with labor-time being regulated by the exchange of commodities at their values– prior to the 15th century?
As for what Marx writes in Volume 3:
“…after the abolition of the capitalist mode of production, but still retaining social production, the determination of value continues to prevail in the sense that the regulation of labour-time and the distribution of social labour among the various production groups, ultimately the book-keeping encompassing all this, become more essential than ever.”
Marx says, continues to prevail in the sense that the regulation OF labor-time, not regulation BY labor time. It show just how superficial and shallow Bofferinski’s understanding is that he thinks that surplus value will be continued to be extracted, which of course means that wage-labor is preserved under “socialism.”
Always happy to read Anti-capital’s informative contributions, though I do wish he would not disfigure them with pointless and bitter ad hominem invective. Of course we cannot attribute papal infallibility to Marx, much less to Boffy or even ourselves!
”Pre-capitalist societies were more often dominated by subsistence production, or subsistence + surplus production,”
This depends on which pre-capitalist societies we are talking of. It is quite mistaken to conflate ancient Athens or Rome with Inca society or Pharaonic Egypt. Plato idealised Egypt because it demonstrated no social change over thousands of years, whereas he felt the Athenian landed aristocracy threatened by the rise of a monetary economy that disintegrated ancient social bonds and gave rise to stasis, which embraces the idea of class struggle.
”Athens established the Piraeus as a market in the centre of Greece, a market of such abundance that articles…from the rest of the world, all these are easy to get in Athens” (Isocrates, Panegyricus 42).
Marx’s assertion that the peasants were driven from their land to become ‘scrap’ as plebeians in Rome living on ‘bread and circuses’ is nonsense. Here the great man has allowed himself to be deceived by aristocratic propaganda. The plebeians laboured.
For the extent of commodity production:
”Here is brought from every land and sea all the crops of the seasons and the produce of each land…here an abundance all that grows and is manufactured among each people…so many cargoes from India and even from Arabia….clothing from Babylon….the arrival and departure of ships never stop..So everything comes here, trade, seafaring, farming, the scouring of mines, all the crafts that exist…all that is produced.” (Aristeides, To Rome 11-13). Sounds quite like accounts I have read of foreign visitors to Oxford Street at the beginning of the 19th century. So I think Engels got it right, at least in part.
Note that slaves were also engaged in commodity production.
”Cato would lend money to any of his slaves…They used these sums to buy young slaves, and after training them and teaching them a trade ….would sell them again” (Plutarch, ”Life Of Cato”).
”Marx says, continues to prevail in the sense that the regulation OF labor-time, not regulation BY labor time.”
You may have a point, but you need to explicate your meaning, for me at any rate, for I cannot comprehend this distinction without a more detailed analysis.
J,
Anti-Capitals comments are not “disfigured” by “bitter ad hominem invective”. It is that “bitter ad hominem invective” that is the true nature and only purpose of his ignorant comments. They are not intended as honest debate but only to provoke a response and a pointless flame war.
“”Pre-capitalist societies were more often dominated by subsistence production, or subsistence + surplus production,”
This depends on which pre-capitalist societies we are talking of.”
Quite true, but Marx’s analysis in Theories of Surplus Value demonstrates that even under systems of direct production, this does not actually mean that all of the production is solely of use values for direct consumption. This as Marx sets out in Theories of Surplus Value, Chapter 17 is the problem with the underlying assumptions made by Mill, Ricardo, and Say contained in Say’s Law. That is they assumed, even under pre-capitalist commodity production that what was involved was simply a production of products some of which are exchanged.
The basis of the value of those products is the labour consumed in their production. In other words, it is an individual value, based on embodied labour. As Marx says, at this stage the value cannot be separated from the use value. As Marx later sets out as against Mill, it is only when the product takes the form of a commodity that the value is separated from the use value, and takes on a life of its own, as exchange value. In the process itself, the value is transformed from being individual value, based upon embodied labour, to becoming a social value, or market value, based upon socially necessary labour-time.
The basis of the value of the product is the Law of Value, as Marx describes in Capital I, and in his letter to Kugelmann. As Marx sets out there, the Law of Value applies to all modes of production, and simply assumes different forms according to the particular mode of production. It is the job of science to uncover these different forms. Marx describes clearly what he mens by the law of Value.
“As for the Zentralblatt, the man is making the greatest possible concession in admitting, that, if one means anything at all by value, the conclusions I draw must be accepted. The unfortunate fellow does not see that, even if there were no chapter on “value” in my book, the analysis of the real relationships which I give, would contain the proof and demonstration of the real value relation. The nonsense about the necessity of proving the concept of value arises from complete ignorance both of the subject dealt with and of the method science. 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 science consists precisely in working out how, the law of value operates.”
Marx emphasises the point further.
““The fact, that in the particular form of production with which we are dealing, viz., the production of commodities, the specific social character of private labour carried on independently, consists in the equality of every kind of that labour, by virtue of its being human labour, which character, therefore, assumes in the product the form of value – this fact appears to the producers, notwithstanding the discovery above referred to, to be just as real and final, as the fact, that, after the discovery by science of the component gases of air, the atmosphere itself remained unaltered… The character of having value, when once impressed upon products, obtains fixity only by reason of their acting and re-acting upon each other as quantities of value. These quantities vary continually, independently of the will, foresight and action of the producers.”
(Capital I, Chapter 1)”
In other words the category value exists for the product, and must exist in the product prior to the development of the commodity, in order for the category exchange-value to exist.
“There is, in actual fact, a very significant difference (which Bailey does not notice) between “measure” (in the sense of money) and “cause of value”. The “cause” of value transforms use-values into value. The external measure of value already presupposes the existence of value. For example, gold can only measure the value of cotton if gold and cotton—as values—possess a common factor which is different from both. The “cause” of value is the substance of value and hence also its immanent measure.”
(Theories of Surplus Value)
Further,
“Therefore, the common substance that manifests itself in the exchange value of commodities, whenever they are exchanged, is their value. The progress of our investigation will show that exchange value is the only form in which the value of commodities can manifest itself or be expressed. For the present, however, we have to consider the nature of value independently of this, its form.”
(Capital I, Chapter1)
Responding to Wagner, Marx notes in relation to Rodbertus.
““He would have found, then, that the “value” of the commodity expresses itself only in a historically developed form, which also exists in all other historical forms of society, albeit in a different form, namely, the social character of labour, insofar as it Expenditure of “social” labour exists. If “the value” of the commodity is only a certain historical form of something that exists in all forms of society, so also is the “social utility value” as it characterizes the “use value” of the commodity.”
The labour that is the basis of value, itself is not any specific social form of labour, for example, wage labour, but labour sui generis, i.e. free labour as it exists in all modes of prouction.
“… and the specific social conditions, under which this labour-power is sold, have nothing to do with labour as a general agent in production… And, in general, when we establish labour as value-creating, we do not consider it in its concrete form as a condition of production, but in its social delimitation which differs from that of wage-labour.”
(Capital III, Chapter 48)
In other words, value exists in all products, because products are the product of labour. This value assumes different forms depending upon the mode of production. Under commodity production and exchange, it takes the form of exchange-value as an historically specific form.
“He (Rodbertus) grasps the “value” (the economic, in contrast to the utility value of the commodity) only in its manifestation, the exchange value and since this occurs only where at least some of the working products, the commodities, function as “commodities,” but this does not happen from the beginning, but only in a certain period of social development, that is, at a certain stage of historical development, then Exchange value a “historical” term.”
(Marx – Notes on Wagner)
As Marx describes, early civilisations quickly begin to engage in trade between communities/tribes, and it is this increasing trade that converts products into commodities, and results in the value of those products assuming the form of their exchange value against other use values. This is also the value form analysis he sets out in Capital I, Chapter 3.
When the primitive commune breaks down, and is replaced by the family and private property, in the form of the peasant family, an increasing proportion of the families production is of commodities, but these commodities are produced and exchanged not for the purpose of obtaining exchange-value, but of obtaining other use values required for direct consumption. That is apparent under systems of barter, but initially, money simply enables this exchange to occur more easily over a wider range of commodities. The problem with Say’s Law, as Marx describes is that, long before the development of capitalism, this intervention of money into the process of exchange means that it is no longer necessary for the seller of a commodity to hen use the money obtained to obtain other commodities. And, so as Marx points out, Say’s law, and the conclusion that overproduction cannot occur not only implies a situation preceding capitalism, but also preceding all money economy!
Moreover, we simply know from anthropological studies that societies across the globe calculated the value of their products by labour-time, as I have set out previously. In medieval Europe tables of values, and what could be charged for different types of commodities were even set out on that basis!
Nothing a bit bitter about it; I’m having a rollicking good time. I try to seed my criticisms of Boffy’s distortion of Marx with as much humor as the ether will accept. Anyway, apparently calling people “trolls” etc. is not bitter ad hominem, and not offensive to the internet sensibilities of the digital audience,so I’ll just place the word “troll” in front of Boffy’s name, and then we’ll all be happy, or happier.
In any case, no one denies that value precedes capitalism, just as commodity production precedes capitalism. The questions are: (1) if that value production take the form of a “law”– dominates production and distribution, and is in fact THE mode of production prior to capitalism. The answer to that is no. Wage labor exists prior to capitalism, in isolated areas and times, but is it the dominant mode prior to capitalism? (2) does the law a value dominate pre-capitalist formations where property is held in common? Marx is clear that the answer is no. Does the law of value dominate feudal production? Marx is clear there too. It does not. Does it dominate slave production. No, not until and unless capitalism is already on the scene. (3) will the law of value necessarily dominate a post-capitalist socialist formation established by an international workers revolution? For the law of value to dominate, labor itself must be organized as a commodity– as a use value and an exchange value– in short, a proletariat that is separated from, and opposed to, the forces of production must be maintained. A property not organized, directed in common by the producers must be created. I don’t think that qualifies as Marx’s vision of socialism.
The law of value, as described and utilized by Marx is not an eternal ahistoric principle, but a specific product of the relation of labor to the forces of production. We can say Marx was wrong, and then go ahead and prove him wrong, but we can’t see he argued what he did not argue.
Yes all economy is the economy of time– that is the “eternal” law. No, not all economies of time are economies of value.
More to come, I’m sure, as we go round and round about this. The careful reader will note that troll Boffy has provided no answer to the transformation conundrum he has established for himself.
T.Boffy makes much out of Marx’s letter to K. in 1868. In my view, t.Boffy has distorted the major point of the letter– which is that the law of value is the specific expression of the eternal law– social labor requires the distribution of social labor time.
So perhaps it will prove useful to parse a major section of the letter:
“That this necessity of the distribution of social labor in definite proportions cannot possibly be done away with by a particular form of social production but can only change the mode of its appearance , is self-evident.”
[ NOTE: the distribution of social labor cannot be done away with, not the distribution of social labor according to the law of value]
“No natural laws can be done away with.”
[NOTE: the natural law is the distribution of social labor in definite proportions]
“What can change in historically different circumstances is only the form in which these laws assert themselves.”
[ The form changes; value being one such form]
“And the form in which this proportional distribution of labor asserts itself, in the state of society where the interconnection of social labor is manifested in the private exchange of the individual products of labor, is precisely the exchange value of these products.”
[NOTE: This is so clear to the most casual observer that it shouldn’t need repeating: Where social labor is manifested in private exchange of the products of labor, THAT FORM is the value form]
“Science consists precisely in demonstrating how the law of value asserts itself.”
[NOTE: This is the basis for Marx’s critique of capital. It does not form the basis for his analyses of pre-capitalist formations, as he makes clear in those studies. The science consists in demonstrating how the law of value exerts its power in modes of production dominated by the value form]
“So that if one wanted at the very beginning to “explain” all the phenomenon which seemingly contradict that law, one would have to present science before science. It is precisely Ricardo’s mistake that in his first chapter on value [ On the Principles of Political Economy, and Taxation , Page 479] he takes as given all possible and still to be developed categories in order to prove their conformity with the law of value.
On the other hand, as you correctly assumed, the history of the theory certainly shows that the concept of the value relation has always been the same — more or less clear, hedged more or less with illusions or scientifically more or less definite.”
[NOTE: “The history of the theory” is the history of the theory of the law of value, which Marx did not “discover,” but which had been posited by Smith, Ricardo, and others. The science Marx produced in his critique was the explanation as to how labor was expressed as value-producing, and surplus-value producing, and the limitations that the law of value imposed on capital accumulation itself]
“Since the thought process itself grows out of conditions, is itself a natural process, thinking that really comprehends must always be the same, and can vary only gradually, according to maturity of development, including the development of the organ by which the thinking is done. Everything else is drivel.”
[Everything else is drivel. Enough said. Cue up the drivel about Robinson Crusoe]
And there’s even more fun to be had if we examine Marx’s work “Pre-capitalist Economic Formations.” Says the Moor:
” …This means above all that the workers must be separated from the land, which functions as his natural laboratory. This means the dissolution both of free petty landownership and of communal landed property, based on the oriental commune.
In both these forms, the relationship of the worker to the objective conditions of his labor is one of ownership: this is the natural unity of labor with its material prerequisites. Hence, the worker has an objective existence independent of his labor. The individual is related to himself as a proprietor, as master of the conditions of his reality. The same relation holds between one individual and the rest. Where this prerequisite derives from the community, the others are his co-owners, who are so many incarnations of the common property. Where it derives from the individual families which jointly constitute the community, they are independent owners co-existing with him, independent private proprietors. The common property which formerly absorbed everything and embraced them all, then subsists as a special ager publicus [common land] separate from the numerous private owners.
In both cases, individuals behave not as laborers but as owners — and as members of a community who also labor. The purpose of this labor IS NOT THE CREATION OF VALUE although they may perform surplus labor in order to exchange it for foreign labor — i.e., for surplus products. Its purpose is the maintenance of the owner and his family as well as of the communal body as a whole. The establishment of the individual as a worker, stripped of all qualities except this one, is itself a product of history.”
I recommend taking the time to read the whole essay, not as an exercise in historical materialism, but as an expression of Marx’s recognizing the specific conditions required for value production to achieve dominance, to become “the law.”
”The purpose of this labor IS NOT THE CREATION OF VALUE although they may perform surplus labor in order to exchange it for foreign labor — i.e., for surplus products.” The context suggests that by value Marx here means exchange value, as on occasion.
However that may be, Cockshott has produced a new book “How the World Works” which may throw further illumination on the debate, especially on the problems of The Soviet economy with its disproportions and subsequent bottlenecks, which he attributes in part to ignoring the law of value.
Consider also Cockshott and Cottrell’s arguments in ”Towards a New Socialism.” There is of course a school of Marxism that believes that under communism citizens will enter product outlets and take what they need. But as I have argued before ”to each according to his needs” can only mean socially determined needs not individually identified wants. Were this not the case a planned economy would be impossible. Marx himself states that workers receive labour tokens by which they may draw articles of consumption according to their contribution i.e. labour in one form in exchange for labour in another.
Cockshott and Cottrell in this day and age substitute a credit account into which is credited the number of hours one has worked and which is debited as one withdraws articles of consumption. Now let us consider a products store. Even with the best possible planning a store administration will order too many of one good and too few of another. What to do? Goods are marked in labour minutes and hours. The administration raises the time value on goods that are in short supply, because from the point of few of the local community too little labour time has been spent on their production, while on those goods that are superfluous the time value will be lowered because unnecessary labour time has been spent on their production. Now is this not the operation of the law of value? Of course if one is of the school that believes that under communism one just helps oneself to whatever one imagines one ‘needs’, then in a few days the store will make the old Soviet stores look like palaces of cornucopian abundance!
Incidentally the reason Russian stores are now abundant with goods is because people cannot afford to buy them. Prices have to express the costs of production.
More on the “eternal principle,” the law of value:
From the Grundrisse, the chapter on Capital:
“Therefore, when the economic form, exchange, posits the all-sided equality of its subjects, then the content, the individual as well as the objective material which drives towards the exchange, is freedom. Equality and freedom are thus not only respected in exchange based on exchange values but, also, the exchange of exchange values is the productive, real basis of all equality and freedom. As pure ideas they are merely the idealized expressions of this basis; as developed in juridical, political, social relations, they are merely this basis to a higher power. And so it has been in history. Equality and freedom as developed to this extent are exactly the opposite of the freedom and equality in the world of antiquity, where developed exchange value was not their basis, but where, rather, the development of that basis destroyed them. Equality and freedom presuppose relations of production as yet unrealized in the ancient world and in the Middle Ages. Direct forced labour is the foundation of the ancient world; the community rests on this as its foundation; labour itself as a ‘privilege’, as still particularized, not yet generally producing exchange values, is the basis of the world of the Middle Ages. Labour is neither forced labour; nor, as in the second case, does it take place with respect to a common, higher unit (the guild).
Questions, not exclusively to t.Boffy: Marx says:
” Direct forced labour is the foundation of the ancient world; the community rests on this as its foundation; labour itself as a ‘privilege’, as still particularized, not yet generally producing exchange values, is the basis of the world of the Middle Ages. Labour is neither forced labour; nor, as in the second case, does it take place with respect to a common, higher unit (the guild).”
1) how can this be reconciled with the notion that the “law of value” dominates ancient modes of production?
2) how can this be reconciled with the notion that the “law of value dominated production in the Middle Ages– which was “not generally producing exchange values”?
Clearly Marx did not regard the “law of value” as applicable to all modes of production, and certainly not to socialism.
Even more from the Grundrisse on value and pre-capitalist formations, and a hint about the future: (from the chapter on money)
The past:
“In antiquity, exchange value was not the nexus rerum; it appears as such only among the mercantile peoples, who had, however, no more than a carrying trade and did not, themselves, produce. At least this was the case with the Phoenicians, Carthaginians, etc. But this is a peripheral matter. They could live just as well in the interstices of the ancient world, as the Jews in Poland or in the Middle Ages. Rather, this world itself was the precondition for such trading peoples. That is why they fall apart every time they come into serious conflict with the ancient communities. Only with the Romans, Greeks etc. does money appear unhampered in both of its first two functions, as measure and as medium of circulation, and not very far developed in either. But as soon as either their trade etc. develops, or, as in the case of the Romans, conquest brings them money in vast quantities – in short, suddenly, and at a certain stage of their economic development, money necessarily appears in its third role, and the further it develops in that role, the more the decay of their community advances. In order to function productively, money in its third role, as we have seen, must be not only the precondition but equally the result of circulation, and, as its precondition, also a moment of it, something posited by it. Among the Romans, who amassed money by stealing it from the whole world, this was not the case. It is inherent in the simple character of money itself that it can exist as a developed moment of production only where and when wage labour exists; ”
Wow.
And what is this “third role” for money? Marx writes in the paragraphs preceding this one:
“(3) as itself an instrument of production, since circulation no longer appears in its primitive simplicity, as quantitative exchange, but as a process of production, as a real metabolism. And thus money is itself stamped as a particular moment of this process of production. Production is not only concerned with simple determination of prices, i.e. with translation of the exchange values of commodities into a common unit, but with the creation of exchange values, hence also with the creation of the particularity of prices. Not merely with positing the form, but also the content. Therefore, while in simple circulation, money appears generally as productive, since circulation in general is itself a moment of the system of production, nevertheless this quality still only exists for us, and is not yet posited in money. (4) As capital, money thus also appears posited as a relation to itself mediated by circulation – in the relation of interest and capital. But here we are not as yet concerned with these aspects; rather, we have to look simply at money in the third role, in the form in which it emerged as something independent from circulation, more properly, from both its earlier aspects”
So… if money in this “third role”–as itself an instrument of production, functions to undermine the existing relations of the modes of production in antiquity, if it compels the decay of those relations, how can we, or t.Boffy, or anyone claim that such societies were in fact governed by the law of value– by the distribution of social labor according to the needs of exchange value production? Once again, we can argue that Marx was wrong. We cannot argue that he argued for something– the supra-historicity of the law of value–which in fact he did not.
An eye to the future:
‘Strike out money, and one would thereby either be thrown back to a lower stage of production (corresponding to that of auxiliary barter), or one would proceed to a higher stage, in which exchange value would no longer be the principal aspect of the commodity, because social labour, whose representative it is, would no longer appear merely as socially mediated private labour.’
One would proceed to a higher stage in which exchange value would no longer be the principal aspect of the commodity, because social labour, whose representative it is, would no longer appear merely as socially mediate private labor–
Wow again. Seems to me Marx is saying at the “higher stage” where social labor has become labour of and for itself simultaneously as being labor of and for all others, exchange value disappears.
Does anyone think the law of value functions when exchange value is displaced from its function as the “goal” of the mode of production?
As some might have suspected, the meetings relating to my work were cancelled today, so I have a bit of free time on my hands.
Anyway–here’s what Marx has to say about t.Boffy’s Robinson Crusoe-ism:
“Production by an isolated individual outside society – a rare exception which may well occur when a civilized person in whom the social forces are already dynamically present is cast by accident into the wilderness – is as much of an absurdity as is the development of language without individuals living together and talking to each other. There is no point in dwelling on this any longer. The point could go entirely unmentioned if this twaddle, which had sense and reason for the eighteenth-century characters, had not been earnestly pulled back into the centre of the most modern economics by Bastiat, [4] Carey, [5] Proudhon etc”
It’s a shame Marx muddied his own clear running waters by introducing Robinson Crusoe, where the production of the isolated individual could be so easily confused with the production of value, a social relation. Twaddle, drivel, Marx doesn’t pull punches.
”Direct forced labour is the foundation of the ancient world; the community rests on this as its foundation; ” Yes, but what is meant by ‘foundation’?
”“In antiquity, exchange value was not the nexus rerum; it appears as such only among the mercantile peoples, who had, however, no more than a carrying trade and did not, themselves, produce. At least this was the case with the Phoenicians, Carthaginians, etc” Difficult to know what Marx means. Athens was a centre of the carrying trade. Most of these merchants were foreigners, but foreign Greeks. Delos was a transit port and a notorious slave market. Slaves are bought and sold. They are a commodity. What determines their price? There was a huge trade in grain and wheat. There was also a considerable trade in textiles. All commodities selling at a price. What determines these prices if not the law of value.
”A commodity’s simple form of value is contained in its value-relation with another commodity of a different kind i.e its exchange relation with the latter….. the value of a commodity is indepently expressed through its presentation as ‘exchange value”’ ( Capital Vol1 p152).
I think all that Marx was getting at by his Crusoe reference is that all societies are obliged to apportion their labour time appropriately to their needs. What is intriguing is the difference that capitalism introduces; it is surely insufficient to state that it is where wage labour predominates. Wage labour was common enough in the ancient world, mostly day labourers, as for example with dockers at the grain ports during the sailing season, with their unloading and reloading on to barges. Must have numbered thousands?
What seems clear at any rate is that in no ancient society is there any concept of productivity (as opposed to ‘business’) and no immanent drive towards anything resembling relative surplus value.
I do not think that anyone holds that exchange value prevails under communism.
J,
“”A commodity’s simple form of value is contained in its value-relation with another commodity of a different kind i.e its exchange relation with the latter….. the value of a commodity is indepently expressed through its presentation as ‘exchange value”’ ( Capital Vol1 p152).”
Exactly, as Marx sets out in TOSV, in opposition to Bailey, Value exists prior to, and separate from exchange-value. It exists first as individual value, embodied labour, in the product, inseparable from it, where there is only direct production of products. It becomes transformed into social value when each primitive community’s products are brought together in the market with those of other producers. This market value, as an average value, becomes the basis upon which the exchange relation of this type of commodity is established with other types of commodity, i.e. its exchange value. As Exchange-value, value itself becomes separated from the use value. That is particularly apparent in the shape of money, exchange-value incarnate. Its only use value is to act as the equivalent of all other commodities.
“I think all that Marx was getting at by his Crusoe reference is that all societies are obliged to apportion their labour time appropriately to their needs.”
Exactly, but that is precisely what Marx defines in his Letter to Kugelmann as constituting the Law of Value.
“As for the Zentralblatt, the man is making the greatest possible concession in admitting, that, if one means anything at all by value, the conclusions I draw must be accepted. The unfortunate fellow does not see that, even if there were no chapter on “value” in my book, the analysis of the real relationships which I give, would contain the proof and demonstration of the real value relation. The nonsense about the necessity of proving the concept of value arises from complete ignorance both of the subject dealt with and of the method science. 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.”
And, that is not just what he sets out in relation to Crusoe, but also to the individual peasant household. It clearly cannot be talking about “exchange-value”, because exchange-value can only exist in a social context. It is a description of the determination of value itself, i.e. its intrinsic measurement based upon labour-time, not its indirect measurement, its relative measurement based upon its exchange relation to other commodities.
“Wage labour was common enough in the ancient world, mostly day labourers, as for example with dockers at the grain ports during the sailing season, with their unloading and reloading on to barges. Must have numbered thousands?”
The question is whether this wage-labour represented the sale of labour-power, or the sale of the product of labour. In other words, as Marx sets out in TOSV, Chapter 4, does it exchange with capital or revenue. Does it produce surplus value? In other words, is the “wage” paid to the worker equal to the value of their labour-power, or is it really a payment equal to the new value created by their labour.
If the sailors etc. are paid an amount equal to the new value they create then they are not selling their labour-power as a commodity, and it is not bought by capital. They are selling the product of their labour, or a labour service, and getting paid the value of it in money form. There is nothing unusual in this. If I am a farmer, I might agree to help my neighbour gather in their harvest, being paid to do so. I will not sell my labour-power to my neighbour, I will only sell him a labour service, and be paid the full value for it. There is no reason I will charge him less than that for helping him.
In Capital I, Marx describes the situation that for a long time, because, even in England, labourers were not totally separated from the land, and so could produce their own food, might still produce their own clothes etc., capitalist producers could not employ them as wage labourers at wages that produced surplus value. the labourer would work a couple of days a week to obtain money required to pay taxes, or meet other bills, and then stop, because they didn’t need to work any more to obtain more money.
Its not the existence of wage labour that is decisive – feudal retainers were also paid wages – but the sale of labour-power as a commodity, the exchange of labour with capital rather than with revenue.
”’The question is whether this wage-labour represented the sale of labour-power, or the sale of the product of labour. In other words, as Marx sets out in TOSV, Chapter 4, does it exchange with capital or revenue. Does it produce surplus value? In other words, is the “wage” paid to the worker equal to the value of their labour-power, or is it really a payment equal to the new value created by their labour.” That is just what has been puzzling me, and why we need to have these debates. This concept of selling a labour service is a category I had not thought about in this context, though it is clear enough when I hire someone to paint my house ( or even in the case of fruit-pickers who are paid by the basket).Here is what I think about the ancient dockers. These were hired as day labourers by what are sometimes mistakenly called ‘guilds’, the number of which seem to have been relatively few and the members of which to have been moderately wealthy. I think they must have been akin to gang masters who were awarded the appropriate contracts. So the analysis you adduce from Marx might well clarify the matter. How then about the dock workers of 1890’s London? Must they not then fall under the same category?
”Its not the existence of wage labour that is decisive – feudal retainers were also paid wages – but the sale of labour-power as a commodity, the exchange of labour with capital rather than with revenue.” Absolutely, because there is no evidence of any drive for relative surplus value. In any case, ”the extremely primitive nature of ancient accounting, which was incapable of distinguishing properly between what is nowadays kept apart as ‘capital’ and ‘income’ let alone enabling a merchant or even a landowner to arrive at a concept of ‘net profit”’ (de Ste. Croix, ”The Class Struggle in the Ancient World” P114).
J,
“This concept of selling a labour service is a category I had not thought about in this context, though it is clear enough when I hire someone to paint my house ( or even in the case of fruit-pickers who are paid by the basket).”
Is it though? The whole point comes down to the analysis of each set of relations as historically determined. Its why means of production in one set of historical conditions are means of production and in another are capital, in one set of conditions are communally owned means of production, in another feudal means of production, and so on. You can read this in Capital III, Chapter 48.
What is the determining factor here? It is that a particular set of historical conditions exist in which 1) the means of production have been separated from the labourers, and the labourers cannot get them back, 2) there exists a large market for the particular set of commodities that the labourer is to be employed to produce, 3) that technology has developed to a stage where machine production can be employed to give a specific competitive advantage to those that employ it, 4) that a small class of capitalists exist who have the money-capital to be able to buy up the means of production and convert it into capital, and to buy labour-power as a commodity, 5) that the wage labourers, divorced from the means of production must now sell labour-power as a commodity rather than selling the product of their labour, or their labour service.
Marx describes these various conditions in different historical settings. Following the dissolution of the gens, individual peasant households can go bankrupt for various reasons. Its the story told in the Bible about Joseph and the Pharaoh. The various peasant producers go bust, and become debt slaves to the Pharaoh, selling off their daughters, wives, sons, land and then themselves. But, as Marx points out, under these conditions, the divorce of the means of production from the producer does not result in them becoming wage labourers, and selling their labour-power. It results instead in them becoming slaves. That is because, under these conditions there is no large market for a wide range of commodities that the producers can only buy in the market, and the level of technology is not such that capitalist producers can gain an advantage from acquiring machines rather than employing slaves.
In Medieval times, individual peasants also went bust. Merchants or money-lending capitalists again turned them into debt slaves, not wage workers. They do not sell their labour-power as a commodity, but sell themselves as a commodity, the definition of a slave or serf, as set out by Marx as opposed to a free labourer.
The dockers and sailors in Antiquity are paid a wage, but the question is, is this wage a payment equal to the value of their labour-power, or equal to the value created by their labour? Often sailors in addition to wages, also got paid a proportion of the value of the cargo. In the days of Drake and Raleigh, the crew also got a share in the plunder. This suggests more than just a payment equal to the value of labour-power. My understanding is that the sailors and dockers chose to undertake that work rather than some other, such as tending their own fields and so on, which may still have been done by their wives and children etc. This connection of soldiers, sailors and so on to the land, where their family, often an extended family continued to work is common, and according to Marx and Engels continues in many places until quite recent times. Its why Marx says, in much of Europe the development of wages as a pure price of labour-power is never pure, never takes its fully mature form, because the workers retain a connection to the land, continue to be able to produce some of their subsistence for themselves. Recently, in Spain, even, during the debt crisis, many recently arrived urban workers, went back to their families in the countryside, where they could at least produce their own food.
Marx’s history of the Highland Clearances is instructive. See his account of the Duchess of Sutherland. She appropriated clan land, and drove the peasants off the land. When they congregated on the coast, and began to make a living from harvesting kelp, fishing etc., she again acted to undermine their independent existence. Now, this brings me to the more significant point. It concerns the Scottish pebble collectors.
They were independent self employed labourers. They collected pebbles, and sold them to stone masons. They are paid for the pebbles, and so by appearance, they sell the product of their labour, pebbles, not their labour-power. However, Marx points out that, because the pebble collectors had been deprived of all other means of production, there were a great number of them forced into this activity. The consequence was that the price they could obtain for the pebbles from the stone masons, of whom there were far fewer, and who employed machines and tools capitalistically, was actually below their value. The price the pebble collectors could obtain was only equal to the value of their labour-power, and so despite the superficial appearance, what they were really selling was their labour-power, and being paid a wage for it. The stone masons extracted a surplus value from their labour. The same situation exists today with say Uber drivers, formally self-employed, independent workers, but, in reality, so many of them, selling their services that they can be paid a price only equal to the value of their labour-power.
Hence also the situation with the dockers under capitalism. Its not the form, but the historical condition that is here determinate. It is the fact that the labourer is deprived of ownership of means of production, and cannot get it back that means they are forced to sell their labour-power, not the product of their labour, or a labour service.
Marx’s comments about workers in North America are also instructive. Marx describes the reason that wages in the US were much higher than in Europe. Firstly, labour was in short supply. This is one reason that the US introduces machinery and technology to replace labour at a more rapid pace. But, also, although the workers as they emigrated to the US had no means of production of their own, as soon as they could become established – which their higher wages assisted them in doing – they used their savings to acquire their own piece of land, as he continent is opened up, and turned themselves back into independent producers. It is the inability to do the latter that becomes a determining factor also. This is the distinction that Marx makes between the formal subordination of labour and the real subordination of labour.
At the point of the Putting Out System, where merchants provide means of production to some labourers, as capital, not only are many other labourers, still independent, but labour is only formally subordinated. The labourer continue to work with the same means of production they have always done. Its only because the individual labourer has been dispossessed due to debt etc. that leads them to have to rely on the merchant for their provision. Theoretically, if they could get themselves out of this debt, they could become an independent producer once more.
The same applies with the manufactory, in which these dispossessed labourers, simply are brought together under one roof. They continue to use the same tools they have always done. They often initially continue to work inside the manufactory as individual producers. They continue on the face of it to sell their output to the factory owner. This is why there are so many economic analysis based upon this assumption about why the labourer does not get the full value of their labour.
Again, theoretically, there is no reason why such a worker who produces say wheels cannot become an independent producer of wheels once more, and some did. However, the division of labour inside the factory, as Marx sets out goes through a number stages, until such time as the new relations of production make that impossible. If I am a skilled wheel maker, I can in theory always set up my own wheel making business, but when the division of labour reduces me to only someone with the skill to produce spokes, or to fit metal rims, and even more, when machines are introduced that take over these skilled jobs, and I am reduced to merely an operator of a machine, all such potential disappears. My labour is no longer formally subordinated to capital but now really subordinated.
My labour is no longer that of a wheelwright, but that of a machine minder. And, as this job of machine minding itself becomes more homogeneous, so my labour becomes merely that of homogeneous factory labour. And, because such factory labour can only be employed in a factory, and can only be employed minding what are now increasingly expensive machines that process multiple times the amount of material that the handicraft worker previous processed, so the capital/money that I must have in my possession to be able to escape from this factory labour, and become an independent producer once more, becomes impossible to achieve.
This is what Marx means in the Grundrisse by impoverishment, even as he workers become more affluent. Their wages and standard of living rises, but their ability to become independent producers, by the individual ownership of means of production becomes increasingly removed from them. In terms of wealth, and particularly wealth in the form of capital, they become poorer, even as hey become ever more affluent. It is only because capital itself via the process of accumulated and concentration and centralisation abolished capital as private property, and creates socialised capital, that this situation itself is turned upside down, so that now the workers become the owners of this socialised capital, not now individually, but collectively.
As Marx puts it in pre-capitalist modes of production the role of the merchant and usurer is to convert the free labourer into a slave or serf, when the specific historical conditions arise that make capital accumulation possible, in the towns, these same forces convert the free labourer into the wage labourer, forced to sell their labour-power to capital.
I shall attempt to highlight what I think are some of the theoretical questions occasioned by Michael’s last couple of posts. The first is that we cannot conflate juridical status with real economic relationships. Thus not all slaves belong to the same class. The slaves that the Elder Cato kept in underground barracks would have worked on his latifundia; those slaves to whom he lent money, presumably educated Greeks, to buy their own slaves to train up and sell at a profit are slave dealers, and belong to a different economic category, even when their legal status is that of slaves. I suspect some Roman slaves would economically have been indistinguishable from free men. So too with wage workers. Marx never managed to write the volume on wage labour that he intended. Again we should not conflate all wage earners. Boffy has usefully pointed out the distinction between selling labour power and a labour service. This distinction is further modified by the historical conditions in which such wage labour takes place. Thus Boffy in my understanding seems to suggest that the dock workers of Ancient Rome were paid a wage equal to the value created by their labour, while modern dockers are paid a wage equal to their labour power. He further refines this distinction by recalling Marx’s analysis of the Scottish pebble collectors. Even if there are no accounting statistics that would enable us to determine this for the ancient world, it seems a plausible thesis.
The distinguished ancient historian , Moses Finley, has written:
”The Graeco-Roman world, with which I am concerned to the exclusion of the pre-Greek Near East, was a world of cities. Even the agrarian population, always a majority, most often lived in communities of some kind, hamlets, villages, towns, not in isolated farm homesteads. It is a reasonable and defensible guess that, for the better part of a thousand years, more and more of the inhabitants of Europe, northern Africa and western Asia lived in towns, in a proportion that was not matched in the United States, for example, until the Civil War.”
I think that recent archaeological research suggests isolated farm homesteads would have been more common than Finley asserts. Nevertheless, there is no question that commodity production was widespread and Marxists who deny this leave themselves open to ridicule, while they are correct to deny the capitalist mode of production prevails in the Ancient World ( Teminn ”The Roman Market Economy” 2013).
Therefore the law of value regulates these commodity exchanges. Nevertheless this does not establish the thesis that the law of value still applies to communism, which is what really concerns us. The article I referred to above by Hudris,
who asserts, ”Marx … envisions a planned distribution of labour time by individuals who are no longer subjected to socially necessary labour time. Abstract labour is abolished, since actual labour time—not socially necessary labour time—serves as a measure of social relations. Distributing the elements of production on the basis of actual labour time represents a radical break from capitalism, since it signals the abolition of its peculiar form of labour: abstract labour. ” This is just too facile.
I had a colleague who worked in East Germany for a couple of years. On going to a restaurant frequently one would be greeted with ‘we are closed for stocktaking.’ The workers were playing the system: a case of unnecessary labour time! Let us go back to Robinson on his island, though this time shipwrecked with his crew. If the labour force is divided into two categories, one to construct means of shelter and the other to hunt or fish for food, is it difficult to comprehend that if too much i.e unnecessary labour time is devoted to the comforts of ‘home’ and too little to the provisioning of means of sustenance, given the primitive state of their tools for the production of food, the whole crew might starve? We need to address the economic organisation of society facing global warming. It seems to me that as Marx says, ”“…after the abolition of the capitalist mode of production, but still retaining social production, the determination of value continues to prevail in the sense that the regulation of labour-time and the distribution of social labour among the various production groups, ultimately the book-keeping encompassing all this, become more essential than ever, ” i.e. in a society threatened by global warming we need to consider even more than Marx envisaged the strictest rationing of labour time. Consequently those areas of production whose actual labour time proves to be socially unnecessary need to be shut down and the labour employed elsewhere.
On the question of the law of value the matter is quite simple, as set out by Marx in his letter to Kugelmann, his statement in regard to Robinson, and of the situation of the individual peasant household, as well as by Engels in A-D.
Value is labour. Value itself is not a fixed category, any more than any other category for Marx. It undergoes evolution. Value is initially individual value, embodied labour, and so concrete labour, inseparable from the use value/product in which it is embodied. Does the “Law of Value”, therefore, apply to the primitive commune, in which value assumes the form of this individual value, inseparable from the product? Yes, of course, it does, for the reason that Marx and Engels describe.
That is, if we take such a commune, then in just the same way as for Robinson or for an individual peasant household, as described by Marx in Capital I, it has a definite quantity of labour-time available to it. That labour-time, itself comprises some congealed labour, in the form of products of past production, as well as current living labour-time. The concrete labour-time of the commune, just as with the peasant household, or Robinson is at one and the same time, abstract labour, because there is no other labour to which it is being compared. It is by definition aggregated average labour of this closed community.
So, each of these communities, be it a primitive commune, a peasant household or Robinson is necessarily constrained by the Law of Value. It has a given amount of value/labour-time, and wishes to secure a given set of use values from it, and seeks to maximise its welfare, i.e. it seeks to obtain the maximum amount of use value for the least expenditure of value/labour-time. In fact, you don’t have to examine human society’s to see that in operation. Cows in a field go to where the lushest grass ism and graze it first, so as to obtain the greatest use value for the least expenditure of effort. Such is the nature of natural laws, as Marx says.
When we come to commodity production the same law applies, but in different form. The aim is still to maximise use value, but with the least expenditure of value/labour-time. Its on this basis that comparative advantage as an explanation of trade arises. But, as Marx points out, even prior to trade, it leads to the division of labour within the primitive commune. Those more adept at particular tasks come to specialise in them, so that more use values are produced with a less expenditure of value/labour-time.
The primitive commune does not have to understand value, for the law of value to operate. All it needs to understand is that with a limited amount of labour-time it can only produce a given range and combination of use values. The available combinations are not accidental or subjectively determinable, but are a consequence of the values of each type of product. Indeed, its that objective relationship of these corresponding values, that forms the basis of the exchange value of commodities as they come to be exchanged. The primitive commune knows that if it wants to produce more potatoes it must produce fewer carrots, for example, and the relative proportions of each are not determined willy-nilly, but are a consequence of the value of potatoes compared to the value of potatoes.
That the primitive commune understands this relation without understanding the concept of value, does not change anything Marx says, any more than the fact that oxygen existed at a time when science thought that burning was attributable to phlogiston. When science eventually discovers the existence of oxygen, gives it a name, and analyses its properties and functions it makes not one jot of difference to the actual composition of the atmosphere, and the chemical properties of oxygen. the fact that science only in the last 2,000 years discovers value, and gives it a name, does not at all change the fact that it has always existed, and nor does acknowledging its existence and giving it a name, change the nature of value itself.
The primitive commune recognises that by specialisation and a division of labour, it can increase the quantity of use values produced for a given amount of labour-time/value expended. It subsequently recognises that via trade with other communes it can obtain products it cannot produce itself, or else cannot produce effectively itself. It can obtain a comparative advantage. Now, this brings about a change in the nature of value and labour itself. Community A takes wine to trade with community D, for linen. But, community B and C also take wine to trade. The value of wine can no longer bet determined as an individual value, determined by the concrete labour embodied in the production of wine. Community A, B and C now compete in trying to exchange with D, and so the value of wine becomes determined as a social or market value, as a consequence of this competition. But, D also has competition from linen producers E, and F, so the same applies to the value of linen. Value is transformed from individual value based upon embodied labour to market value, determined by socially necessary average labour.
But, the same law of value continues to operate behind these exchanges. The aim is still to maximise the amount of use value for any given expenditure of value/labour-time. It is now simply mediated via the market. In TOSV, Chapter 17, Marx sets this out in terms of the exchanges of commodity producers even during the era of direct production. What determines this direct production, Marx describes, is not that the producer produces 100%, or even 90% of their own subsistence, in terms of a physical product, but that they produce for the specific purpose of meeting their own consumption requirements, be it for personal consumption or productive consumption. A direct producer may, in fact spend 50% or more of their time producing commodities, but they produce those commodities to take them to market to exchange either via barter or to sell solely in order to obtain other use values required for their own consumption. In other words C – C, or else C – M – C.
A peasant producer, who has some advantage in producing potatoes will use their labour-time to produce potatoes, and take them to market to obtain carrots, turnips and so on, that other producers will have specialised in producing, just as this social division of labour occurred within the primitive commune. Once again, this is an example of the law of value exerting itself, because each producer is led to allocate their labour-time so as to maximise their production of use values, for any given expenditure of labour. It is this fact, as Marx sets out which means that once this commodity production gets underway it leads inexorably, although over a long period of time towards generalised commodity production, which in turn leads to money being hoarded, which can then be tuned into money-capital, which can make capitalist production possible,
The law of value operates here in regulating production and society just as much as it does within the primitive commune, because the aim is to maximise the production of use values with the least expenditure of value/labour-time. It merely assumes a different form. Commodity production and exchange raises it to a new level, because it enables a much greater social division of labour, and introduces whole new ranges of use values, as Marx describes in The Grundrisse.
In these pre-capitalist forms of commodity production and exchange, the law of value, which determines what can be produced, and in what proportions, which exerts itself directly in the primitive commune, now exerts itself in the form of exchange value. Previously, the primitive commune could produce 1 ton of carrots, or 2 tons of potatoes, and made this decision directly on the basis of a direct allocation of labour-time to one or the other, or to both in the corresponding proportions. Now in commodity production and exchange, this same relation appears as the exchange value of potatoes measured in carrots, and vice versa. If the actual exchange relation in the market gets out of whack with this objective basis of exchange, then resources will be reallocated, until the objective relationship is restored determined by the relative values of potatoes and carrots,
This manifestation of the law of value disappears under capitalism, for the reason that Marx sets out in Capital III, Chapter 10, and Engels elaborates in his Supplement. Under capitalism, the Law of Value only operates at the level of society as a whole, where the total of prices of production equals the total of exchange values. The law of value still operates to regulate society on this basis, because it dictates what can be produced, and in what proportions, on a global basis. But, the law of value no longer operates to determine what proportion of each type of commodity will be produced, or its exchange relation to other commodities, because this exchange relation is no longer based upon exchange-value, which itself is merely a representation of underlying values, each relative to another, but is based upon prices of production. The determining factor for the allocation of capital, then becomes the rate of profit. Sectors with a high rate of profit due to a low organic composition of capital, or high rate of turnover of capital, see capital accumulate faster, which raises supply of those commodities, and reduces their prices until they reach the price of production, and vice versa.
And, for the same reason, the law of value operates under the first stage of communism too, because its only when society has raised productivity to such a level that it no longer has to concern itself with the allocation of resources to one sphere causing a reduction in available supply in some other sphere that the law of value cease to operate. And, whilst society can move closer and closer to such a condition, as technology improves, and as resources are allocated more effectively to meet human needs, and as human needs themselves may become modified, as Lenin says, Marx himself never stated that such a condition could ever fully be realised. And, that is what would be expected from Marx who never made predictions about the future, but whose statements were always based upon what already existed.
“i.e. in a society threatened by global warming we need to consider even more than Marx envisaged the strictest rationing of labour time. Consequently those areas of production whose actual labour time proves to be socially unnecessary need to be shut down and the labour employed elsewhere.”
There are several issue here: first “Consequently those areas of production whose actual labour time proves to be socially unnecessary need to be shut down and the labour employed elsewhere.”
That’s not the law of value as Marx described it, as it functions to dominate production and exchange. What you have done is create a law of use-value, where social necessity is determined by the producers themselves. That is not social labor being apportioned by value production. Value cannot “apply” or be “realized” when production is directly social, not based on private property; upon the alienation of labor, the products of labor, and the time of labor.
That’s the good news.
Now the bad news is this: “we need to consider even more than Marx envisaged the strictest rationing of labour time. ”
What you accomplish with “strictest rationing of labour time,” is the strictest rationing of the products of labor time; and in a society where production is for use and need, you have restricted the products that satisfy use and need to a minimum, and suppressed, quite clearly, the emancipatory qualities of social labor itself. We have enforced communal scarcity, and there’s no way to impose that scarcity without a) creating the basis for the reemergence of exchange value through hoarding, privilege, theft, pilferage etc. b)creating a mammoth bureaucracy, including a police force, that will command a significant portion of surplus for its own, rather than social, needs.
In short, you are incubating the impulse to capitalist restoration.
Hit the”post” button too soon.
This is indeed the most difficult problem in establishing not only a transition to socialism, but the expansion of socialism; how do we move from the realm of necessity, or subsistence, to freedom. The answer for Marx was the general movement for the emancipation of social labor from it subjugation to exchange and to its satisfaction and creation of needs. Fine theory. Hard to do in practice– or let’s say hard for any individual or collection of individuals to imagine, much less realize as a practice.
Still the emancipatory elements of Marx critique reside in the emancipation of labor’s surplus producing qualities from scarcity, both natural and “enforced”– value is an enforcement of scarcity.
Now radically reducing, for example, fossil fuel production does not necessarily mean reducing the amount of energy, for example, electricity available to all, including those who have suffered from capitalist enforced “underdevelopment.” Kind of the upside to uneven and combined development, no? Solar, wind, geothermal, and safe nuclear– or safer nuclear (yes, such technologies exist and can be enhanced), can meet the demand– except (so far) in transportation.
That, transportation, is where the “nut” really is. How do we maintain the transfer of products, and movement of people, across the globe, without destroying the atmosphere and the oceans?
High speed trains? Yeah, well, maybe, but a study done of the proposed California High Speed Rail indicates that the carbon savings re highway traffic, or better yet, air traffic over X number of years (forget the exact number) are offset by the carbon expenditures in the construction of the rail lines between SF, Sacramento, and LA.
I don’t think we are really keeping with Marx’s vision if we restrict people from traveling across large bodies of land and water in a short period of time. Better savings to be had elsewhere. Like for example, the biggest consumer of petroleum products in the world is……the US Navy. Better the abolition of the military globally than rationing electricity to society. Talk about abolishing unnecessary labor– the military is the acme of unnecessary production.
Of course, none of this accounts for the destruction, and the attempt to recover from the destruction, that will accompany the civil war when the bourgeoisie realize they are being threatened by something other than Corbyn or Sanders.
One hardly knows where to begin with t.Boffy’s latest distortion of Marx, but let’s give it a best effort and see what happens.
“Value is labour. Value itself is not a fixed category, any more than any other category for Marx. It undergoes evolution. Value is initially individual value, embodied labour, and so concrete labour, inseparable from the use value/product in which it is embodied. Does the “Law of Value”, therefore, apply to the primitive commune, in which value assumes the form of this individual value, inseparable from the product? Yes, of course, it does, for the reason that Marx and Engels describe.”
You’d be hard-pressed to put a worse foot forward than this. Value is not labor, not to Marx, not throughout history, not even under capitalism.
Value is a specific social expression of the power, the capacity of laboring. Labor is an activity, an apprehension of the physical world with the intent of satisfying human needs. It is a fundamentally social process for the appropriation of nature, and the social organization, in turn, expresses this process, this activity, this power, in forms appropriate to the organization of social property.
Value is the product of labor-time, a specific expression of labor-time that is alienated, in the commercial sense of the word from the producers, the laborers.
As the passages from the Grundrisse, including the Pre-Capitalist Economic Formations, Marx did not think that the “primitive commune” produced according to the law of value; it did not produce for purposes of exchange. Did it produce use-values? Of course, but use-value is not identical, or synonymous with value. Exchange value on the other hand is a direct expression of value, and the attempt to counterpose value to exchange value is plainly not part of Marx’s critique as he makes painfully clear when he talks about value-relations first forming at the boundaries of communities where goods are exchanged. It is the process of exchange that expresses the detachment of value from use-value, and makes abstract labor, which is labor measured by time, the aqua regia that dissolves all the distinctions of products and makes them “equal.”
Value never has an existence as individual labor. It is always a social product. Talking about the value of individual labor outside the social relations is an oxymoron; it is the drivel Marx specifically rejects when he compares it to the “absurdity” of language developing outside society.
“The law of value operates here in regulating production and society just as much as it does within the primitive commune, because the aim is to maximise the production of use values with the least expenditure of value/labour-time.”
A. Where does Marx say this? and B. this, maximizing the production of use values with the least expenditure of labor-time is NOT the law of value. It’s not even close to the law of value. The law of value quite simply derives from labor itself being compelled to present itself as a commodity, having a use-value to its “owner” or “holder” SOLELY as a means of exchange for a value equivalent to the cost of reproducing the laborer as a source of labor power. That’s it. Top to bottom, beginning to end. Everything else is derived from that. The reproduction of value, the reproduction of capital is the reproduction of that social relationship. That commodities will exchange in proportion to the social labor time necessary for their reproduction is derived from the condition of labor itself. When labor is not constituted as a commodity, as a value, that is is not alienated, is not a commodity to be exchanged for the value of the means of subsistence– there can be no law of value.
“A peasant producer, who has some advantage in producing potatoes will use their labour-time to produce potatoes, and take them to market to obtain carrots, turnips and so on, that other producers will have specialised in producing, just as this social division of labour occurred within the primitive commune. Once again, this is an example of the law of value exerting itself, because each producer is led to allocate their labour-time so as to maximise their production of use values, for any given expenditure of labour.”
Of course, this pleasant little story has absolutely nothing to do with the real course of development of capitalism in agriculture, especially in England, which after all represents the paradigm case for capitalist development according to Marx himself– and where in his studies he recognizes the emergence of capitalist relations not in the “comparative” or “natural” advantage of the carrot producer vs. the potato producer, but rather the social relations that caused agricultural producers to differentiate along class lines, and with all those different classes relating to each other through EXCHANGE relations, the process of exchange values. Exchange dependency does not accommodate the carrot producer and the potato producer, allowing them to exchange product for product, use for use, in a fantasy world of simple isolated petty producers. Exchange relations require that FARMERS bring ALL their product to market to obtain the materials to reproduce themselves for the next year. Exchange relations dictate that some of the farmers, and all of the peasants including those producing in common, using common lands and tools, will be dispossessed in each cycle of reproduction, thus creating a supply of “free labor” that must exchange itself with private property to survive.
Marx does not state that the law of value dominates production in pre-capitalist economic formations. In fact he states quite clearly that in specific pre-capitalist formations production is not for, of, or by purposes of value reproduction.
J,
I don’t have any more time to continue this discussion, but I would point you to a series of blog posts I began last year on this topic, which I hope to complete when I have time this year.
I would emphasise the points made by Marx in Capital III, Chapter 48 and 49. For example, in Chapter 48, Marx notes that,
“Value is labour. Therefore surplus-value cannot be earth.”
Indeed, in TOSV, notes that the greatest advance made by Adam Smith over the Physiocrats was this discovery that value is labour, and the measurement of value is labour-time. In Chapter 48, Marx also makes clear that in speaking of labour here, he means generic free labour, as it exists in all modes of production.
He says,
“… and the specific social conditions, under which this labour-power is sold, have nothing to do with labour as a general agent in production… And, in general, when we establish labour as value-creating, we do not consider it in its concrete form as a condition of production, but in its social delimitation which differs from that of wage-labour.”
In fact, Marx makes this abundantly clear by specifically stating that in its specific form as wage-labour, it is NOT value creating.
“In so far as it has the specifically social character of wage-labour, it is not value-creating.”
It is not any specific social form of labour that is value creating but labour sui generis, i.e. the process of labour as it occurs in every labour process in every mode of production, as it is undertaken by free labour.
t. Boffy quotes Marx ““Value is labour. Therefore surplus-value cannot be earth.” t.Boffy fails to tell us that this statement is from Marx’s skewering of the political economists beloved “trinity formula” — where, according to Marx, “If we now look more closely at this three in one [ the three in one being three couplets, capital-profit (or interest), land-ground rent, labor-wages] we find firstly that the ostensible sources of wealth annually available belong to completely disparate spheres and have not the slightest analogy with one another. ..
…Capital is not the sum of the material and produced means of production… It is the means of production monopolized by a particular section of society, the products and conditions of labour-power, which are rendered autonomous vis a vis this living labour power and are personified in capital through this antithesis. It is not only the workers’ products which are transformed into independent power, the products as masters and buyer of their producers, but the social powers and interconnecting form of this labour also confront them as properties of their product. Here we therefore have one factor of a historically produced social production process in a definite social form, and at first sight a very mysterious one.”
Context isn’t everything, but it sure is more than half of everything. Here Marx has reproduced a critique of the specific condition of labor, its social expression that stands in opposition, in antithesis to living labor-power that is as profound as his analysis of commodity fetishism. What is this social condition? What is the form that products take in opposition to living labor? It is the form of value. Value is the specific condition that is derived from the workers own labor-POWER that now exercises command over living labor.
How this form is supposed to survive a revolution that destroys the monopolization of the means of production by the class appropriating that living labor as value is…..a problem, I would suggest, for those who thing value is the once and future arbiter of living labor.
Then Marx moves to the second couplet land-grand rent, and writes, “Value is labor. So surplus value cannot be earth.” Value is labor is not Marx’s formulation, but that of political economy, of the political economists who made such a great improvement on the physiocrats….. that they fail to be able to explain, how in an economy of ‘equal exchange,’ surplus value arises…while some vulgar political economists insist that land creates value.
Marx drives this point even deeper in the next paragraph when he writes: ” Lastly, as the third in the league, a mere spectre, labour, which is nothing but an abstraction and taken by itself cannot exist at all.”
So much for “value is labor.”
Marx continues: …But this [labor] is not only divested of any social form and specific character…. it is lifted right out of society altogether…”
The entire chapter is a dismantling of the pretensions of the trinity formula– including its presentation of specific social forms as natural eternal laws.
Marx continues to contrast his analysis with that of political economy in the paragraphs of this chapter. He proposes what is the “eternal” “constant” essential content that gets expressed, in the distorted expression that capital confines it:
“We also saw that capital, in the social production process appropriate to it……pumps out a certain specific quantum from the direct producers or workers, surplus labour that it receives without an equivalent and which by its very nature always remains forced labour however much it might appear as the result of free contractual agreement. This surplus labour is expressed in a surplus-value, and this surplus value exists in a surplus product. SURPLUS LABOUR IN SOME FORM MUST ALWAYS REMAIN, AS LABOUR BEYOND THE EXTENT OF GIVEN NEEDS. [caps added, of course]. It is just that in the capitalist, as in the slave system etc., it has an antagonistic form and its obverse side is pure idleness on the part of one section of society.”
Surplus labor remains. Surplus labor is the enduring quality. The actual substance of human social development. Surplus value is a particular, and necessarily antagonistic expression.
To those who think that somehow we can abolish capitalism, but maintain value production, and use that value production to ensure a rough equality, and an expansion of wealth… Marx responds: “The real wealth of society and the possibility of a constant expansion of its reproduction process does not depend on the length of surplus labour but rather on its productivity and on the more or less plentiful conditions of production in which it is performed. The realm of freedom really begins only where labour determined by necessity and external expediency ends.”
I strongly recommend the entire passage (page 959 in the Penguin Classics edition) to everyone. I’ll think you’ll see that here Marx rejects the notion of “rationing our way to socialism” and indeed– the passage makes notions of labor-tokens as means of exchange highly problematic.
I did post a reply that again disappeared. I suggested we had to conclude here as we are in danger of usurping Michael’s blog.
I shall try to sum up the issues we need to address.
First as to the concept of value. I hold that value expresses itself under three aspects: value, use value and exchange value. Thus Marx writes in his discussion of Bailey, ”The only thing that Ricardo can be accused of is that …., in elaborating the the concept of value he does not clearly distinguish between the various aspects, between the exchange value of the commodity…and the existence of the commodity as value as distinct from its existence as an object, product, use value” (TSV part 3 P125). Note that Marx says ‘various’ not ‘two’ or ‘both’. I cannot comprehend how ‘various’ might apply to fewer than three.
”Cato would lend money to any of his slaves…They used these sums to buy young slaves, and after training them and teaching them a trade ….would sell them again” (Plutarch, ”Life Of Cato”). These slave dealers, presumably educated Greeks, buy young slaves whose value is low, because as with other commodities like pigs, so far little labour has gone into their production. After a number of years they are sold at a profit. How come? because now their value has increased.
Nobody argues that the Ancient Mode of production was dominated by exchange value, only that the widespread production of commodities was regulated by the law of value. If one were to argue that slaves, being unfree, do not produce value, then I counter that with these slave dealers their juridical status may be that of unfree but their economic condition is no different from that of free citizens from whom they would have been economically indistinguishable. Anyway, too much should not be made of the argument from extra-economic coercion. The free labourer is certainly subject to extra economic coercion when necessary., as with the miners and cotton workers of early 19th century England, as recorded by the Hammonds in their ”The Skilled Labourer” (1919).
Capitalist production is production for the sake of production (Marx, Capital 1 P 1037), as ‘an end in itself.’ Much of what is produced is useless, as Morris was already arguing in the 1890’s. Socialism is production to meet social need. Such needs are socially determined needs, not individually identified wants. Unless the law of value applies how is social planning to take place?
‘ I’ll think you’ll see that here Marx rejects the notion of “rationing our way to socialism” and indeed– the passage makes notions of labor-tokens as means of exchange highly problematic.’ All modes of production ration ; only the manner of rationing differs. To counterpose abundance to shortage is to fall into empty abstractions. Such evaluations are themselves socially determined. Thus Cuba operates the rationing of a few goods at a low price.( Of course one might argue that such shortages in Cuba are due to ‘the petite-bourgeois nature of the Castro regime, ‘ which saves one coming up with an alternative of how ‘abundance’ might be effected!) The problem of labour tokens you must lay at the door of Marx himself, for the idea comes from the Critique of the Gotha Programme of 1875 where he explains workers receive labour tokens that enable them to draw means of consumption to the value of their labour contribution i.e. exchange labour in one form for labour in another.
Cockshott elaborates: ”The assumption is that people would have electronic credit cards whose credits would be cancelled out, not circulated. You could not pay into somebody else’s account….eliminates the possibility of a black market.
It is absolutely essential that the distribution labour values of goods be realistic. A socialist government must resist the temptation to undervalue necessities..If they are undervalued there will be excess purchasing power in terms of labor credits..such undervaluation we know from bitter experience just leads to queues and apparent shortages” ( How the World Works” Pp263-264). Can communism function at a low level of consumption? As Internationalists it is useful to consider the experience of those societies that tried the socialist road. For example Jack Chen went to live and work with the peasants of the village of Upper Felicity.He explains that out of the gross output the grain tax in kind 3% was paid to the state. After this one part 205 was set aside for emergencies, burials, investment fund, welfare. The distribution fund was divide into 2two equal parts The first half was divided equally among all members as a grain allocation The other half was distributed according to work points, each adult being valued at 10 work points daily, but those doing heavy work like coal hauling at 12, those light work at 7. Now this might not be your vision of communism but I fear that Upper Felicity may offer some insight into our not too distant future should capitalism continue much longer, though we may want to designate it ”Lower Misery!”
Sure, we can button this up, confident that it will arise again and again, certain that there are those who believe value will still dictate what is produced, how it is produced, and how it is exchanged after socialism, and why not, communism.
And surely again some will raise the distinction in exchange value and value, as if one could exist without the other, could be a “law” governing social production without the other.
Marx himself was a bit more precise in these matters. In 1881 he still writing about the specificity of value, and its intimate, inseparable linkage to exchange values:
“Nowhere do I speak of “the common social substance of exchange-value”; I rather say that exchange-values (exchange-value, without at least two of them, does not exist) represent something common to them, which “is quite independent of their use-values” //i.e. here their natural form//, namely “value.” This is what I write: “Therefore, the common substance that manifests itself in the exchange-relation of exchange-value of commodities, is their value. The progress of our investigation will lead us back to exchange-value as the necessary mode of expression or form of appearance of value. For the present, however, we have to consider the nature of value independently of this, its form” (p. 13).”Notes on Adolph Wagner’s “Lehrbuch der politischen Ökonomie” (Second Edition), Volume I, 1879
Bears repeating doesn’t it? ” The progress of our investigation will lead us back to exchange-value as the necessary mode of expression or form of appearance of value. For the present, however, we have to consider the nature of value independently of this, its form.”
I recommend the entire “Notes…” to readers in Marx’s view on value, which he maintained to the end of his life.
It is not that I particularly desire to terminate this debate, but it should continue elsewhere. I shall conclude therefore with some remarks from Cockshott’s recent publication ”How the World Works” e.g. Ch 6 Section 6.8 ”Why the law of value Applies in Socialist Economies” Here he give an outline of the defects of the Soviet Economy and gives a closely argued and detailed analysis of a better model. He affirms to ignore the law of value is ‘politically disastrous.’ Now you might not agree, but it is incumbent on you then to come up with an alternative. I know Cockshott is looking for comrades willing and able to do a critique. Why do you not volunteer? He might even offer you a copy of the book!
I fear in my reference. above to Upper Felicity I have been too optimistic. As Robert Hunziker remarks in today’s Counterpuch about Bolsonaro’s coming all-out assault on The Amazon,
”In all, it’s obvious where the Amazonian affair is headed, especially giving consideration to “civilization ceasing to exist beyond scattered tribes, here and there.”
Fortuitously, the infrastructure is already in place for that new world order. There are 305 Brazilian tribes, population 900,000, already in place to teach civilized society how to act and behave and live within natural ecosystems that fundamentally support the planet with vital life-giving resources… for free!”
I would caution about attributing the failures or successes of the former Soviet Union to its lack or adherence to the law of value. I think that’s exactly the wrong lesson to draw. That then makes “ideology” or what human being thinks as the “prime mover” of social development and its failure, rather than the actual material circumstances.
What material circumstances? Like the fact that agricultural productivity in pre and post revolutionary Russia/Soviet Union was so impaired; that capitalist relations had not, Lenin to the contrary not withstanding, penetrated and transformed relations of land and labor, landed labor, in Russia; that the destruction of the civil war set Russia back 20-30 years in development; that it’s impossible for a proletarian revolution to resolve the legacy, the limits, the restrictions of uneven and combined development within the framework of the nation state; like the devastation of WW2 where 50-60% of all casualties occurred in the former Soviet Union— or to put into one statement without bells and whistles— the lesson to be learned is the impossibility of socialism in one country.
Likewise what Cuba has accomplished, or not, is not because of its recognition or lack of recognition of the law of value, but rather because of the material relations in which it is embedded internationally.
I’ll reread Cockshott, if I can overcome at this age, my accelerating laziness and preference to revise railroad operating procedures which allows me to work just when I want to and spend more time with my grandchildren. All economy is the economy of time. All wealth is the mastery over time. That’s the law of my value.
Let me recall Hudris’ remarks from MR online : ”Marx … envisions a planned distribution of labour time by individuals who are no longer subjected to socially necessary labour time. Abstract labour is abolished, since actual labour time—not socially necessary labour time—serves as a measure of social relations.” And such thinking is supposed to rectify the failures of the Soviet economy? I personally hold that the failure of all previously existing ‘socialist’ societies has been their failure to adopt democracy as it was originally conceived, which may be learned from Aristotle’s “Politics”. I also personally hold that communism is only possible on a world scale because otherwise the state cannot be abolished. Nevertheless, we have to address the question of how a socialist economy will be organised.
”I would caution about attributing the failures or successes of the former Soviet Union to its lack or adherence to the law of value. I think that’s exactly the wrong lesson to draw. That then makes “ideology” or what human being thinks as the “prime mover” of social development and its failure, rather than the actual material circumstances.” But human beings do make their own development though they cannot do so just as they will, since they are born into material circumstances that determine the limits of what they can achieve; but in thinking of these material circumstances they both create and change them.
”Likewise what Cuba has accomplished, or not, is not because of its recognition or lack of recognition of the law of value, but rather because of the material relations in which it is embedded internationally.”
But ” the material relations in which Cuba is embedded internationally” are in part determined by the worldwide law of value .
How a planned economy might work that does not observe the law of value I cannot conceive. On page 262 of his book Cockshott suggests that socialist factories be charged for the total value in labour hours for goods received, which abolishes the distinction between labour and labour power. We can see here that the law of value would still function, but manifest itself in a different form. If following Hudris, an economy were to ignore abstract labour and socially necessary labour time, it is difficult to conceive how they could possibly regulate anything other than the most simple tasks.
There is a surprising error in the assessment of GDP in underdeveloped countries, the lack of calculation of unpaid or paid activities outside the economic circuit. I will give you an example that I think is as important as domestic work, the self-construction of houses made in underdeveloped countries.
If we consider in the economies of island countries that are fully monetized, an apartment of 20 or 30 square meters was counted in GDP by its selling price, in other countries where self-construction is adopted as the norm by a huge part of the population, a house with 100 or 150 square meters built on a self-construction or even collective effort basis (solidarity construction between neighbors) is not counted either at the time of its construction (the inputs are cement, but the final product is not) or as “wealth” accumulated of the nation.
As a civil engineer, I can say that approximately 30% to 40% of the houses built in Brazil (which is not a little industrialized economy) or another typical Brazilian expression “puchadinho”, that is, the increase in the surface of the house done informally , are ignored in terms of quality of life, that is, they are not even included in the GDP calculation.
It could add the direct negotiation of food products, from producers to other producers or to consumers connected to them.
In addition to the errors in English made a terrible mistake in Portuguese (Puxadinho and not Puchadinho)
Just to give an order of magnitude of the so-called irregular buildings, in the city of São Paulo the city government estimates 700,000 houses built outside of “legality”. Herein are not included irregular increases in homes (puxadinhos).
«It is my understanding that in Marxist political economy, the term value is used to denote exchange value, rather than use value.»
I have quite a different reading, that I tried to illustrate to “Boffy” once in a comment on his blog, but he was outraged in general 🙂
There are two different issues here: the terminology that K Marx uses, and that is not very interesting, because in part he seems to sometimes not use it consistently, and in any case that which matter is the one in german, and I don’t know german to fully appreciate the intensions he uses.
But then there is the issue of concepts, and here I think that overall K Marx has there very distinct concepts:
* “value” is simply *by definition* the labour content of a product. It does not mean value in the ordinary sense, of something with a worth of some sort. It is simply the cost in hours of labour of making something.
* “use value” is the worth of the product in terms of what its user perceives, and is fairly close to what is called “utility” or “ofelimity”, with all the complex questions it carries of whether it is cardinal or ordinal, transitive or not, or even (partially) ordered.
* “exchange value” arises only when a product becomes a “commodity”, that is it is used to acquire another commodity, and it is the ratio of between the two commodities.
Now the interesting question is why ever “value” should be *defined* to be labour content, why not weight, or density, or size, or beauty, or any other aspect of the product. Which definition to use I think depends on which is more fruitful for studying which aspect of the political economy.
The two most plausible answers to that for me are that since labour is needed to turn something into a product, it is in some sense the most important aspect of worth, from a cost-accounting perspective, or that since what matters is to investigate the distribution of income, among classes or within classes, it is the most important metric to measure it.
My guess is that the “classicals” defined “value” as labour content for the first reasons and K Markx for the second reason, and this is implied by his mere statement that by definition the labour of an animal or a slave generates no value, because they are “capital”, but the very same labour by a free man or a proletarian (“employee”) generates value.
That clearly indicates to me that his intent is to study the distribution of “value” among classes (and within).
But if we look at “value” like the classicals (and JM Keynes in Chapter 4 of “The General Theory”), then we can generalize its notion of worth: labour content is in effect an alias for “energy content”, in the special case where the power expended to make a product is muscle power (whether of animals, slaves, free men or proletarians).
Some political economists e.g. recently Steve Keen have adopted that point of view, which is an essence to adopt a point of view of the political economy as a mechanism, as a giant and complex factory; conversely K Marx is interested in the point of the political economy as a social organization, in which what matters is to gain insight in the distribution of “surplus” products among principals (capitalists and proletarians in particular).
This is all very interesting and I am sure there are interesting discussions to be had on the concept of value from a politecon, historical, philological and philosophical perspective. It does not however answer my question. What make services like security unproductive and what does this mean for the production process in these sectors? In any case, I shall wait for MR’s response, lest this subthread is hijacked again.
I still have a comment from January 31, 2020 at 1:06 pm stuck in the moderation queue.
I can’t keep up with all your comments posted. So it’s easy to miss one. I’ll find it so you have a complete set for posterity
Thank you, Michael. I think! LOL