Practical political importance of LTV

Justin Schwartz jschwart at
Thu Nov 3 12:53:21 MST 1994

On Thu, 3 Nov 1994, Louis N Proyect wrote:

> On Thu, 3 Nov 1994, Justin Schwartz wrote:
> > I agree that the reality of exploitation--that most profit comes from
> > forced surplus (value) transfer--is the real message of the LTV. But that
> > reality had better not depend on the LTV, because the theory is a mess.
> >
> Louis Proyect:
> I've been reading anti-LTV posts to this list and to the PEN-List for what
> seems like an eternity. Would it be possible for Justin, Steve K. or any
> other anti-LTV'ers to put their views into something as concise and
> simple as this:
> "What is 'peculiar' about the worker's commodity, labour-power? It is
> peculiar in that, unlike any other commodity, it can create more value
> than it is itself worth. When the workman hires himself out, he sells
> his labor-power not merely for the time it takes to produce the value of his
> own wages, but for the length of the full working day. If the working day
> is ten hours, and the time necessary to produce the value of the
> laborer's wages equals six hours, then there will be four hours left
> during which time the labourer is working not for himself, but for his
> employer. The six hours Marx calls necessary labor-time, the four hours
> surplus labor-time. Of the value of the total product of the ten hour's
> labor, six-tenths will equal wages, and four-tenths will equal surplus
> value which is appropriated by the employer and forms his profits."
> (Man's Worldly Goods--Leo Huberman, p.229)
> Here's my challenge. Anybody can understand the passage above (apologies
> in advance for Huberman's gender-insensitive language, he wrote his book
> in 1936). Marx and Huberman wrote for a working-class audience. The
> Sraffaists seem to write for an academic audience and much of their
> argumentation is impenetrable to anybody lacking advanced training in
> mathematics and an economics doctorate.

At the risk of sounding snooty, I quote the author of a notoriously
difficult book of economic theory, who said, "There is no royal road to
science, and only those who do not dread the fatiguing climb of its steep
paths have a chance of gaining its luminous summits." (Marx, preface to
the French edition of Capital, vol. 1, 1872) I am not and never have been
a Sraffist, although I think there's a lot to be learned from Sraffa, but
I do think that anyone who makes claims about matters that have to be
assessed in the context of mathematical economics either has to do the
math or settle for the word of those who can. Popularization has its
place and you are justified in asking for a popular statement. But the
acceptability of the theory depends, alas, on technical and difficult
questions and techniques.

You must be kidding when you say that Marx wrote prose accessible to
ordinary workers, at least in Capital. This stuff baffles philosophers and
economists, and requires specialized knowledge of classical political
economics and Hegelian dialectics to start to grasp. It's no wonder that
even most Marxists, indeed most academic Marxists, have never worked
their way through Capital, but have relied on more popular presentations,
such as Marx's Wage Labor and Capital, or Huberman.

> So could anybody in the anti-LTV crowd put their ideas into simple terms
> that are understandable by a novice like myself. Please don't refer me to
> a file on an FTP site somewhere, and please try to use approximately the
> same number of words as Huberman. If Huberman could make the LTV theory as
> understandable as he does in as few words and with such a simple
> vocabulary, then anti-LTV'er should rise to the occasion. If it's
> impossible to get your ideas across in the same 'popular' fashion, then
> perhaps it might be fair to question whether Sraffaist economics will ever be
> embraced by the disenfranchised and exploited. Marx worked very hard to
> get his ideas across to the masses; shouldn't we expect the same from his
> detractors.

Huberman's statement is strictly not a version of the LTV but of the
theory of exploitation, which depends on the theory of surplus value. The
LTV in its technical form holds that aggregate commodity prices are
proportional to their values, i.e. to the labor time socially necessary
for their production. In the first pass at this Marx stipulates that
commodities exchange at value, i.e., that price equals value (C, vol. 1),
but he knows this isn't so and uses this model to make a different point,
that profits are possible even on this assumption as long as some
commodity can be "exploited"--he nominated labor power for the candidate
commodity, and this is Huberman's point. (Although it turns out that Marx
and Huberman are wrong that only labor power can be exploited. We can use
corn or oil or steel or any commodity as the value numeraire, and thus get
a corn, etc. theory of value. The choice of labor is indicated for several
reasons, but not strictly demanded.) But prices do not equal values, as
Marx knows, once we get branches of industry with varying capital
intensity and different rates of profit. Since mobile capital seeks a
higher rate of profit, capital tends to flee to where the rate is
highest--for Marx, where capital intensity is lowest (since he thinks
profits come only from exploitation of labor), and so profit rates tend to
equalize across branches with different degrees of capitalization. We get
what Marx calls prices of production, which are market-determined.

The so-called transformation problem is how to get values back into the
picture, how to show that these prices are proportional to values. It is
now known that Marx botched the argument because he lacked the requisite
math--sorry!--but a Pole named Ladislaus von Bortkiewicz showed in 1907
that the problem is soluble under certain restricted assumptions. Two
problems arise: one is whether these assumptions are realistic enough for
the solution be meaningful as an explanation of real-life economics, and
there is a great deal of doubt about this. The second problem, perhaps
deeper, is that as Bortkiweiz himself remarked, when the solution is
written out the value magnitudes are superfluous, far from being primary.
So you can calculate values from prices if you want to, but it isn't clear
why you'd want to. And you can only do it sometimes.

Now none of this has much in any obvious way to do with theory of
exploitation, which is what most Marxists who are not economists care
about. Here the idea we want to defend is profit for the most part derives
from the exploitation of labor rather than from capitalist smarts or
abstinence or good market luck. And here value talk makes sense in just
the terms that Huberman uses, setting aside the idea that "only" labor
power produces more value than using a certain quantity of it consumes.
What value talk does is to call attention to the fact that some people get
rich selling stuff made by labor of others. For that to be exploitation
something has to be wrong with their doing that, and value talk doesn't
help there. We need a theory of freedom or justice which condemns labor
under these conditions or the resulting distribution of wealth and
property. But the point of value talk is that the labor market
redistributes valuable things whose value is created OUTSIDE THE MARKET,
in production, from the producers to the owners of productive assets, the
employers of labor. (That is, their value is not a market artifact.) This
is a deep and necessary and absolutely true thesis. And it has nothing at
all to do with the "labor theory of value" as a price theory.

Well, that's not as good as Huberman. Does it help, though?

--Justin Schwartz


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