Positive side to anti-LTV case

Paul W. Cockshott cockshpw at wfu.edu
Sun Sep 18 18:52:36 MDT 1994

On Sat, 17 Sep 1994 Steve.Keen at unsw.EDU.AU wrote:

> In general--in all exchanges of non-unique objects--the exchange-
> value of the object determines its price.

This is confused. Price is exchange value in terms of money, it
is not therefore possible for price to be determined by exchange
value, since this merely says that price determines price.

> Use-value in this analysis
> is an objective thing, not a subjective valuation--the use-value of
> a chair is the fact that you can sit in it, not the comfort it
> provides the sitter. That means that in general, exchange-value and
> use-value are incommensurable under capitalism; whereas the
> neoclassical analysis makes them commensurable through the device of
> subjective utility.
Is there any set of social relations that would make use value
and exchange value commensureable?

> The next problem is to explain how things can be bought and sold at
> their exchange-values, and yet result in a profit for their capitalist
> producers.

In any statistical ensemble of purchases or sales, commodities must
be purchased at their exchange value, since this is merely the
statistical average of their prices. Marx tried to answer a
harder question. How is it that equivalent exchanges in terms of
labour value can give rise to profit.

> This is where conventional marxism brings in the labor exchange, and
> the distinction between abstract and concrete labor.

The difference between abstract an concrete labour is not relevant
at this point, what is relevant is the distinction between labour and
labour power.

> It is where I
> bring in the ev/uv dialectic. Those of you who reject my analysis are
> going to find the next bit the most objectionable part of my argument.
> The capitalist buys inputs to production at their exchange-value; their
> objective use-value is irrelevant to the price he pays for them. In
> production, he exploits a commodity's objective use-value--which is
> its ability to produce new commodities. Whereas in normal consumption,
> use-value is qualitative, in the case of productive consumption,
> use-value is quantitative. Since the exchange-value of a commodity
> and its use-value are unrelated under capitalism, there will be a
> difference between the two, and this difference is the source of
> surplus value.
> The easiest example to give is the labor-power exchange, where the
> gap between the hours it takes to produce the subsistence commodities
> needed to sustain a worker can be compared to the hours that a worker
> will be required to work once he/she has sold labor-power. But in
> general, the distinction can be drawn between the productive
> capacity of an input to production, and its depreciation.
> The theory of value I put forward reaches the conclusion
> that all inputs to production can be sources of surplus value
> to the capitalist.

Steve has put forward an alternative theory of value, which says
in effect that there is nothing special about labour, any input
to production is a source of value.

This is certainly a legitimate scientific theory, assuming that
it produces some testable predictions.

I would ask him what empirical evidence there is to back it up.
More generally, what would he take to be a satisfactory test that
would show his theory to be right and the labour theory of
value to be wrong.
> With respect to the TRPF, again since all inputs can be a source
> of surplus value, whether there is or is not a secular trend
> to increasing ratios of non-labor to labor inputs (yep, I'm
> being colloquial here) carries no implication for the overall
> societal rate of surplus. Questions of achieved surplus have
> more to do with cyclical issues than secular ones, and with
> the realisation of surplus, rather than the generation of it
> in the first instance.
This is wrong, all that is required to deduce a declining rate of
profit is the much weaker assumption of the conservation of value
over time in association with a rise in the capital/output ratio.

> While it has been conventional Marxist practice to use the non-
> commodity aspects of labor-power to explain the origin of
> surplus (the abstract/concrete labor case, the Bowles and Gintis
> analysis circa 1980, Wolff's analysis, etc.), I use it to
> argue that, in general, the payment to workers will _exceed_ the
> value of the commodity they sell. In other words, the value of
> labor-power (the subsistence bundle of commodities) determines
> the _minimum_ wage. Again, I can provide numerous instance of
> Marx characterising the value of labor-power as "the minimum
> of wages".
Do you reject Marx's argument about the value of labour power being
historically and culturally determined, or do you just regard it
as sophistry?

> Since my analysis argues that the system of production in general
> generates a surplus, the class struggle is thus a struggle over the
> apportionment of the surplus between the capitalist and working
> class, and there is no upper limit--short of the entire surplus--
> to the level that workers can claim.
> However, the share of surplus that workers manage to achieve will
> affect the actions of capitalists, both negatively--reducing their
> profits and also their desires to invest--and positively--by
> shaping the distribution of income and hence the pattern of
> demand. This is another foundation for cyclical analysis.
> Also, the fact that a major input into production will normally be
> "priced" above its value means that there is a problem in
> transforming values into prices. Unlike its "technocratic"
> namesake of the last century, this is a real problem, which
> will manifest itself in the rate of investment, the rate of
> growth, and the rate of inflation.
What would be special about a minimum subsistence wage that it
would not generate these problems?
You seem in danger of providing an argument for even worse wage cuts
than we have seen in recent years.

> C.3 The dialectic of money
> Commodity money can be priced at its cost of production--an issue
> which Marx spent quite some time discussing, in the context of
> a gold standard of exchange. But paper and credit money is something
> else again. The cost of production of fiat money is negligible: less
> than 1% of its cost of production. Clearly, fiat money can't be
> sold for its "cost of production" exchange-value: instead, money is
> the one commodity whose use-value is its exchange-value: the cost of
> a $100 note is $100.
> By itself, this dialectic would be passe`. The point which Marx only
> partly developed, however, is that the observations which apply to
> money also apply to some degree to capital assets. To repeat the
> quote I made recently in reply to a posting by Juan Inigo, this
> insight exists in the following comment by Marx on Ricardo in TSV
> Part II:
> >"The compensation _given_ for the mine or quarry, is
> >paid for the _value_ of the coal or stone which can be removed
> >from them, and has no connection with the _original_ and
> >indestructible _powers_ of the land.
> >No! But there is a very significant connection with the
> >"_original_" and destructible _productions_ of the soil.
> >The word "_value_" here is just as ugly as the phrase
> >"_repaid_ himself with a profit" was above.
> >Ricardo never uses the word _value_ for utility or usefulness
> >or "value in use". Does he therefore mean to say that the
> >"compensation" is paid to the owner of the quarries and coalmines
> >for the "_value_" the coal and stone have before they are
> >removed from the quarry and the mine--in their original state?
> >Then he invalidates his entire doctrine of value. Or does
> >_value_ mean here, as it must do, the _possible_ use-value and
> >hence the _prospective exchange_-value of coal or stone? (p. 249.)"

It is not made clear by you that what Marx is quoting, is Ricardo
quoting Smith. The original is:
"but in the case stated by Adam Smith, the compensation was paid for
the liberty of removing and selling the timber, and not for the
liberty of growing it. He speaks also of the rent of coal mines
and of stone quarries to which the same observation applies - that the
compensation given for the mine or quarry is paid for the value of
the coal or stone which can be removed from them, and has no connection
with the original or indistructible powers of the land."

Ricardo limits his theory of rent to the indistructible powers of the
soil, but one can construct a similar theory that relates to mineral
extraction, in which the rent goes as a consequence of the lower
cost of production on non marginal mines.


More information about the Marxism mailing list