LONG LTV reply to Steve

Steve.Keen at unsw.EDU.AU Steve.Keen at unsw.EDU.AU
Tue Aug 9 06:12:35 MDT 1994

Dear Gene (and any other survivors of this debate -:>)

Perhaps the best place to begin is to refer you to the longer
pieces you requested:

"Use-value, exchange-value, and the demise of Marx's Labor
Theory of value", 1993, Journal of the History of Economic Thought
(JHET), Vol. 15 No. 1, pp. 107-121

"The misinterpretation of Marx's theory of value", 1993, JHET Vol.
15 No. 2, pp. 282-300

They are excerpted (and somewhat developed) from the thesis which
Jon has placed on the world listserver, and which also resides (in
both printable and computer readable forms) at the ftp site
csf.colorado.edu, subdirectory econ/authors/Keen.Steve/DemiseLTV.

The main reply I'd make to your posting is the refute your
observation that I reason "backwards", from rules that apply to
labor-power exclusively, to rules for all commodity inputs to
production (however, I confess that is a justifiable reading of what
I wrote!). [A couple of paragraphs of what follows are in the way
of footnotes, to try to avoid raising similar accidental "red
herrings" in this post. They are noted ## and begin "##Aside:"]

I argue that Marx developed the use-value/exchange-value
dialectic as a phenomenon which applies to all commodities under
capitalism. What this means is that under capitalism, the unity
"the commodity" has its exchangeable aspect brought to the fore,
while its useful aspect is thrust into the background.##

##Aside: This is the basis upon which Marx argues that the use-value
of a specific commodity has no role in determining the price of that
same commodity under capitalism, whereas it may have done so
in previous societies, as Hilferding and Marx both concede. But
under capitalism, "`the distinction becomes firmly established
between the utility of an object for the purposes of consumption,
and its utility for the purposes of exchange. Its use-value
becomes distinguished from its exchange value.'" (Hilferding's
critique of Bohm-Bawerk in Sweezy's _Karl Marx and the Close of
his system_, pp.126-27; quoting Marx Capital Vol I, p. 91) Use-value,
then, plays no role in determining exchange value.

For most commodities, and most acts of consumption, this simply
means that use-value is objective, qualitative, and incommensurable
to exchange-value: the use-value of a chair is that you can sit in
it--you don't pay a price based on the comfort you feel in the chair,
as neoclassicals and Austrians would argue you do. However, for
commodities which are consumed in production, use-value continues to be
objective and incommensurable to exchange-value, but it is no longer
qualitative: it is quantitative, and since both use-value (in
productive consumption) and exchange-value are quantitative, their
incommensurability will express itself as a quantitative difference.
This is precisely the analysis which Marx applies to explain the origin
of surplus-value in the first instance: he does not precede from the
peculiar characteristics of labor-power, but from its general properties
as a commodity in the peculiar circumstance of productive consumption.

This is most evident in the _Grundrisse_, where Marx first developed
the uv/ev analysis. This is one of many similar statements:

"What the capitalist acquires through exchange is
**labour capacity**; this is the exchange value which he pays
for. Living labour is the use-value which this exchange value has
for him, and out of this use-value springs the surplus value and
the suspension of exchange as such." (pp. 561-62.)

And not a word about necessary and surplus labor: Marx had found that
he could derive these concepts from the uv/ev analysis--they were
secondary expressions of a higher logic, and he used this higher
logic whenever he could.

On the productivity of a machine, Gene says that:

"You are right, I think, to say that strictly speaking in the
passages you quote, Marx means that it is exchange-value and not
use-value that is being transferred.  The use-value of a machine
is simply its ability to transform material; *that* ability is
not transferred to buyers in the products processed by the
machine; it lasts the life-time of the machine, and the vanishes
abruptly.  (To suggest that some abstract use-value is
transmitted by the machine to products and thence to the buyers
is, I agree, a kind of occultism.)

If the machine's use-value is not "transmitted" to the product,
then its exchange-value is..."

This is one of two ways## that Marx's uv/ev concepts can be
twisted to give the result that machines do not produce surplus-
value. Since this is the "method" Marx himself predominantly
used, it is discussed at length in the first paper above, and
(if you print it out) pp. 72-106 of the thesis stored at csf.

## Aside: the other method can be found in Desai's _Marxian
Economics_, 2nd Edition, Littlefield, 1979, where Desai argues
that in general, a purchaser buys a commodity by paying
its exchange-value, but that in the case of a capitalist
buying a machine or raw materials from another capitalist,
the purchaser pays the use-value of the item, not its
exchange-value. This is an explanation based on unequal
exchange, and I doubt that I need to remind anyone reading this
of Marx's judgment of explanations of the origin of surplus based
solely on unequal exchange. It also has the bizarre outcome that
it predicts that workers will pay less than capitalists for
commodities which are both consumer goods and inputs to production--
for example, in 19th century Europe, coal.

It means that in the case of labor-power in productive consumption,
and all other commodities in normal consumption, that the purchaser
of a commodity consumes its use-value and parts with its
exchange-value (as Marx puts it from the seller's viewpoint,
"The seller of labor power, like the seller of any other commodity,
realizes its exchange-value, and parts with its use-value. Capital
I p. 188). Yet in the case of a machine consumed in production, the
purchaser "parts with its exchange-value and consumes its
exchange-value". So, to get the result that machinery is not
productive of surplus, we need a special law of capitalism which
pertains solely to capital. I'm not normally one for deriding
arguments on the basis of fetishism (in fact, in the 2nd of the
papers above, I argue that Rubin's analysis of Marx was led astray
by his excessive use of the concept of commodity fetishism), but if
ever anything qualifies as a fetish, this does!

Marx makes that mistake because it's one of only two ways of making
the LTV and uv/ev analysis consonant. But at earlier stages, Marx
was not so in error. In Surplus Vol. 1, Marx states that:

"By exchanging hands they [products] have ceased to be
exchange-value." (p. 208.) Why then is the exchange-value of a
machine relevant to its productivity, after it has been
exchanged? Then only its use-value should be relevant. Marx says
as much in Capital Vol. III (which, as we all know, was composed
before Vol I): "So far as constant capital enters into the
production of commodities, it is not its exchange-value, but its
use-value alone, which matters... the assistance rendered by a
machine to, say, three labourers does not depend on its
value, but on its use-value as a machine." (p. 80)

The depreciation argument is another one that I explore at
length in the 1st of the papers noted above, and in the thesis.
On the point of identifying depreciation with value addition,
I would make only two comments here.

The first is that, on two occasions, both Marx
and Engels saw past this: Marx where I cited in the previous
post, and Engels (in a roundabout way) in Anti-Durhing:

"After all, it is clear that what a labourer produees and what he
costs are just as much different things as what a machine
produces and what it costs. (Engels, 1894, Progress Press, Moscow,
1975, p. 221)

Secondly, Marx's uv/ev analysis deserves accollades for lifting
the veil which made it impossible for Marx's predecessors to
come to grips with the value productivity of machinery. Remember
that Marx's lineage runs effectively from the Physioc
--as "the sterile class")--
through the Classicals--who generally believed that labor
was the source of value (though the extent to which Smith in
particular held to this can be disputed). In effect, Marx's
uv/ev logic is the epitome of his arguments about the need for
science, because reality can differ from simple perceptions.

After the Marx of the 1850s, it is "easy" to see how surplus
value originates from labor-power, while machinery is still
treated as Ricardo treated it, as not productive of net value
(see Ricardo's _Principles..._, 3rd edition, Gonner, E.C.K.
(ed.), George Bell, London, 1891, pp. 17-19, 28, 258-59).

Post 1867, there is a means by which something which is not
at all obvious at the level of appearances--that machinery
can produce surplus-value--is obvious at the level of logic,
using the uv/ev analysis. What it does at a practical level
is break the association which had been made by Ricardo
(and Marx initially) between the depreciation of a
machine and its value creation.## To get the result that they
are the same involves, as I have argued above (and argue
at much greater length in my published papers), the
distortion of this logic, not its application.

##Aside: This emphatically does not mean that the capitalist
is therefore entitled to the surplus value attributable to the
machine, any more than he is to that attributable to labor-
power##. The simplicity of the LTV--that ALL surplus comes
from living labor, and thus the entire basis of profit is
unpaid labor--has a great ideological appeal. The position
I'm putting is not as straightforward, but all it adds is the
need to delineate between capitalist and capital. The fact
that a machine is productive does not in any way say that
its owner is productive. Machines are in general the product
of workers (i.e., there are few Edisons and many research
scientists), so that the fact that a capitalist appropriates
the surplus generated by a machine is an additional reason to
criticise capitalism, not an apologia for it.

##Aside 2: It is of course impossible to physically apportion
productivity between machinery and labor-power inputs.

You may feel, Gene, that I've omitted consideration of some of
your critiques; if I have, it's because I have addressed similar
interpretations, particularly in the thesis
(where I consider, amongst others, Bowles & Gintis' circa
1981/85, Desai as mentioned above, Aglietta, Roemer and Wolff's
arguments, and of course, Sweezy, Meek and Dobb). So if you'd
like to pursue this debate, perhaps it's best to "take a
breather" from the email and look at those papers first.

Steve Keen


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