comments on Keen's article

Steve.Keen at unsw.EDU.AU Steve.Keen at unsw.EDU.AU
Fri Sep 23 19:44:19 MDT 1994

Fred Moseley has written an interesting comment on my view, based
on having read my 2 papers.

Early on, you say that I have quoted Marx in "an inaccurate and
misleading way" by omitting a sentence at the end of the statement
where Marx says that "the change originates in the use-value, as
such, of the commodity, i.e. its consumption.

You allege that I broke a sentence without attribution:

>The last sentence of this passage does not end as indicated above,
>but Keen does not indicate the incomplete sentence with the customary "..."

THAT IS NOT SO. In the Progress Publishers edition, the sentence DOES
end where I terminated it. The subsequent sentence contains the statement
you cite afterwards. Please be careful in such criticisms.

What I DID do in the journal paper was omit the next two complete
sentences, and there were two reasons for so doing:

(1) Space. A journal article is written to a length, as you are well
aware. I had 2 requests from the editor to shorten the submitted piece,
and since I had "blown" my attempt to publish it in HOPE (History of
Political Economy, the premier journal of the history of economic
thought, for those not acquainted with the area) by submitting far
too long a piece, I cut my argument to its bone.

However, in my thesis, after that same quote comes the paragraph:

>Immediately after this sentence comes the one which Meek cited when
>discussing Marx's proof that labour power is the unique commodity
>"`whose use-value possesses the peculiar property of being a source
>of value'", in the only acknowledgement made by the traditional
>interpreters of the use of the concept by Marx.** As Marx was
>"forced to the conclusion" that the source of surplus must be found
>in the use-value of a commodity, so interpreters of Marx should have
>been forced to the conclusion that use-value does play a crucial
>role in Marx's economics, though one which differs substantially
>from its role in what he termed "vulgar economics".

with the footnote:

>** The quote continues "In order to be able to extract value from the
>consumption of a commodity, our friend, Moneybags, must be so lucky
>as to find, within the sphere of circulation, in the market, a
>commodity, whose use-value possesses the peculiar property of being a
>source of value , whose actual consumption, therefore, is itself an
>embodiment of labour, and consequently, a creation of value. The
>possessor of money does find on the market such a special commodity
>in capacity for labour or labour power." Ibid, p. 164. Emphases added.
>Meek cites this in Meek, op. cit., p. 183, citing p. 145 of his
>edition of Capital.

So, Fred, I did not attempt to "hide" a sentence which conflicted with
my interpretation. I should add that I am particularly sensitive to
such (misplaced) criticisms, since: Rosdolsky and I both argue (see the
second paper, which I hope you have read by now) that there was a
tradition since Hilferding of omitting with no acknowledgement
whatsoever a crucial sentence from the _Contribution_ on the role of
use-value in Marx's economics; Paul Sweezy is quite definitely
guilty of true misquoting (also established in my second paper).

(2) Second reason--interpretation

In my analysis of Marx, I tried to separate what I saw as impeccable
logic--the use-value/exchange-value dialectic--from its faulty
application--the maintenance of the classical notion that labor is
the only source of profit. The sentence I quoted was a statement of
the logic; the arguments in the successive sentences that labor is
the sole commodity to which the logic points were examples, in
my opinion, of the faulty application of that logic--or rather the
continuance of views which Marx had before he devised the logic,
which were defensible before it, but indefensible after.

You then continue:

>These words by Keen show clearly that Marx's arguement is based on
>the labor theory of value.  The use-value of the special commodity
>labor-power is a source of surplus-value because the use-value of
>labor-power is labor itself which produces additional value.  The
>consumption of labor-power is "an objectification of LABOR, HENCE a
>creation of VALUE."  This passage does not say that use-value in a
>general sense and meaning possibly something other than labor is the
>source of surplus-value, but rather that labor is the source of
>surplus-value and labor is the use-value of the specific commodity
>labor-power.  Labor is the use-value of no other commodity, and hence
>the use-value of no other commodity can be the source of surplus-

(I presume you mean "omitted by Keen" in the above)

With respect, these word do not show that "Marx's arguement is based on
the labor theory of value". The question is, what is the basis? Prior
to Capital--prior to p. 267 of the Grundrisse--I would agree that
"Marx's arguement is based on the labor theory of value". But from that
point on Marx believed he had a "meta-logic" from which the labor theory
itself could be derived. To draw a hypothetical "mind-map" of Marx,
I see the sequence as he perceived it to be:

Dialectics -->use-value/exchange-value dialectic-->Labor theory of value.

What I attempt to show is that the proper logical sequence is

Dialectics -->use-value/exchange-value dialectic-->contradiction of
the Labor theory of value.

As for your comment:

>On further reflection, it would be very odd indeed if Marx suddenly
>concluded in Chapter 6 that use-value is the source of surplus-value,
>after explicitly denying that use-value is the source of value in
>Chapter 1.  Instead, as is well known, Marx argued in Chapter 1 that
>abstract labor is the source of value.  This labor theory of value
>then becomes the fundamental premise for the rest of the three volumes
>of Capital, including especially the above argument that only the
>commodity labor-power possesses the potential to produce surplus-value
>(because only its consumption involves additional labor).  It is very
>significant that Keen does not mention Chapter 1 and its role in the
>overall logic of Capital.  What would be the point of Chapter 1 if
>Marx soon abandoned this premise and looked for other sources of value
>and surplus-value, as Keen suggests?

Again, my journal papers suffer for limitations of space. In my thesis,
I spend some time considering not just the first chapter of _Capital_,
but parts of the _Contribution_ as well, which as you are aware Marx
sometimes referred to as the "first edition of Capital" (See his
comments on Wagner)

Secondly, you again propose that "This labor theory of value
then becomes the fundamental premise for the rest of the three volumes
of Capital". Again I argue that Marx believed he had DERIVED the LTV
from his uv/ev dialectics. I have cited the following paragraph
several times already on this list, but here we go again: the
paragraph where Marx first reveals the source of surplus value would,
on your analysis, be based on the "fundamental premise" of the
labor theory of value. What then are all the references to use-
value, "eternal laws of consumption", etc., doing there??:

>The past labour that is embodied in the labour-power, and
>the living labour that it can call into action; the daily cost of
>maintaining it, and its daily expenditure in work, are two
>totally different things. The former determines the exchange
>value of the labour-power, the latter is its use value. The fact
>that half a [working] day's labour is necessary to keep the
>labourer alive during 24 hours, does not in any way prevent him
>from working a whole day. Therefore, the value of labour-power,
>and the value which that labour-power creates in the labour
>process, are two entirely different magnitudes; and this
>difference of the two values was what the capitalist had in view,
>when he was purchasing the labour-power. The useful properties
>that labor-power possesses, and by virtue of which it makes yarn
>or boots, were to him nothing more than a conditio sine qua non;
>for in order to create value, labour must be expended in a useful
>manner. What really influencedific use-v
>which this commodity possesses of being a source not only of
>value, but of more value than it has itself. This is the special
>service that the capitalist expects from labour-power, and in
>this transaction he acts in accordance with the 'eternal laws' of
>the exchange of commodities. The seller of labour-power, like
>the seller of any other commodity, realises its exchange-value,
>and parts with its use-value. He cannot take the one without
>giving the other. The use-value of labour-power, or in other
>words, labour, belongs just as little to the seller, as the
>use-value of oil after it has been sold belongs to the dealer who
>has sold it. The owner of the money has paid the value of a day's
>labour; his, therefore, is the use of it for a day; a day's
>labour belongs to him. The circumstance, that on the one hand the
>daily sustenance of labour-power costs only half a day's labour,
>while on the other hand the very same labour-power can work
>during a whole day, that consequently the value which its use
>during one day creates, is double what he pays for that use, this
>circumstance is, without doubt, a piece of good luck for the
>buyer, but by no means an injury to the seller." (p. 188)

(there was a small computer glitch in the above para,on the
short line:
>manner. What really influenced him was the specific use-value
>which this commodity possesses of being a source not only of

The two arguments--the LTV and the use-value/exchange-value
dialectic--coexist in that and other paragraphs (including the
first one you cited in your post) because Marx believed they
were consonant. I had attempted to show that they were not.


The essence of that logic was the general rule of the
incommensurability of use-value and exchange-value. Normally
this incommensurability is a non sequitur--use-value is
qualitative, and exchange-value quantitative. However, in production
they are both quantitative, and Marx makes this the basis of his
proof, as above, that labor power is _a_ source of surplus. In my
reading of his arguments with respect to the means of production,
he struggles to use the same logic--the uv/ev dialectic--to reach
the conclusion that machinery is not a source of surplus. What I
attempted to point out in my papers was that this involves a
contradition with his basic logic, since it in effect asserts that
in the case of machinery, their use-value equals their exchange-
value. You summarise this case pretty well in the paragraph

>According to Keen, Marx's argument ...

However, you then state that

>Keen's textual evidence for the key point that the value transferred
>from the means of production is determined by their exchange-value
>consists of three relatively obscure passages.

Fred, this is going to sound like a cracked record (I wonder what
the expression is going to become in the days of the CD??), but
space was the problem. You want more quotes? I've got 'em--but
not in a journal article.

You then argue that I mistake the creation of additional use-values
with the creation of surplus-value:

>Keen's interpretation of the quoted passage confuses the production of
>USE-VALUES and the production of VALUE (this confusion is of course
>fundamental to Keen's entire approach; Juan Inigo has made a similar
>criticism of Keen's intepretation of other passages)...

I make no such confusion. My argument is that Marx developed a form
of dialectical logic with the following propositions:

* The production of commodities is the essence of capitalism
* A commodity is the unity of exchange-value and use-value
* The accumulation of exchange-value is the object of capitalism
* Since the exchange-value of a commodity is brought to the fore under
capitalism, its use-value is pushed into the background, so that the
use-value of a commodity plays no role in determining its exchange-
value: the two are incommensurable
* A purchaser of any commodity parts with its exchange-value to buy
it, and exploits its use-value
* When production is considered, the "consumer" is the capitalist,
and the use-value of a commodity is its ability (in conjunction with
others) to produce other commodities for sale at a profit
* This raises the dialectical--as opposed to logical--contradiction
that, since the use-value and exchange-value of a commodity are
unrelated, and since in production both are in essence quantitative,
there will (in all likelihood) be a quantitative difference between
the two.

Marx clearly and cogently applied the above logic to labor-power,
and reached the conclusion which was already produced by his
earlier and simpler labor/labor-power, abstract/concrete labor
arguments, that labor-power is a source of surplus value.

I argue that he tried to apply the same logic to machinery, tried
to get the same result as presumed by his earlier analysis (and
by Ricardo and Smith) that machinery does not produce new value,
but failed. However, rather than expressing this failure in a
new theory which transcended the labor theory of value, he
reached it by contradicting his own logic, and thus preserving
the labor theory of value--when it should have died a "humane"
death at Marx's hands in the 19th century, when it was not yet
a complete absurdity (as I believe it is seen as now, to most that
are first exposed to it, in the late 20th century).

Grundrisse passage

I am pleased that you find the passage from the Grundrisse troubling:

>It also has to be postulated (which was not done before) that
>the use-value of the machine significantly greater than its
>value; i.e. that its devaluation in the service of production is
>not proportional to its increasing effect on production.

You continue:

>I must admit that I find Marx's sentence somewhat puzzling and I am
>not sure what it means.  But I am convinced that it does not mean that
>the value transferred from the means of production is determined by
>their use-value, primarily because Marx had just finished an extended
>discussion of the value transferred from the means of production in
>which it is developed and emphasized that this value transferred is
>determined by the labor-time required to produce them (pp. 354-65).

You continue: >when Marx says that "the use-value of a machine
>is greater than its exchange-value", this could be a clumsy restate-
>ment of the point that the increase of productivity resulting from the
>introduction of a machine (the "use-value" of the machine) is
>proportionally greater than the resulting increase of surplus-value
>(the "exchange-value" of the machine).

Of course, I believe that it the only comfortable application of Marx's
newly-devised dialectical analysis to the means of production, and one
which probably scared him into the logical and verbal nightmare that
the pages in Capital on the value productivity of machinery truly are.
Simply at the level of eridution, I would ask you to compare the
triumphant statements in Capital I where Marx reveals that labor power
is _the_ source of surplus value, with the awkward and halting sections
where he "proves" that machinery is not a source.

>Nonetheless, I am less certain of the meaning of this sentence than I
>am of the other points I have made above.  But I would still argue
>that this sentence does not mean what Keen suggests, for the reasons
>given above.  And even if Keen's interpretation is accepted, this one
>sentence in an early work is an extremely slim basis for an entirely
>new interpretation of Marx's theory of value, especially since it runs
>counter to abundant evidence to the contrary throughout Marx's works.

Again, the cracked record syndrome. There were many more such references,
strewn liberally through the Grundrisse, Capital I-III, and TSV I-III,
many (but by no means all) of which I cited in my thesis, but which
the reproduction of in an initial submission to HOPE generated an
paper of 67 pages.


You state:

>I appreciate Keen's emphasis on Marx's logic, but I would appreciate
>even more a more sympathetic reading, which does not attempt to place
>Marx in the same camp as Sarffa and neo-classical economics, with
>their emphasis on the determination of value by use-value.

Thank you for the opening statement--it makes a welcome change from
the invective Inigo has become adept at generating. However, I think
you are making the following opposed groupings on the role of use-value
in economics:

(Ricardo Smith) Marx ||| Neoclassicals, Sraffians, Keen

(I'm guessing at the inclusion of R&S in the same camp as Marx)

My perception is

Ricardo, Smith ||| Sweezy/Meek/Dobb marxists ||| Marx, Hilferding,
Rosdolsky, Groll, Keen (Sraffa, post-keynesians) ||| neoclassicals

On this point, I suggest you read Marx's comments on Wagner, where
he distinguishes his treatment of use-value both from vulgar
economics, and from his classical predecessors:

"On the other hand, the obscurantist has overlooked that my
analysis of the commodity does not stop at the dual mode in which
the commodity is presented, [but] presses forward [so] that in
the dual nature of the commodity there is presented the twofold
_character_ of _labour_, whose product it is:
_useful_ labour, i.e., the concrete modes of labour, which
create use values, and abstract _labour, labour as the
expenditure of labour-power_,... that _surplus value_
itself is derived from a `specific' _use-value of
labour-power_ which belongs to it exclusively etc etc., that
hence with me use value plays an important role completely
different than [it did]] in previous [political] economy, but
that, _nota bene_, it only comes into the picture where such
consideration [of value, use value, etc.] springs from the
analysis of given economic forms, not from helter-skelter
quibbling over the concepts or words `use-value' and
`value'.(Carver, _KM: texts on method_, p. 200.)

It is also worth looking at some sections of Carver's comments
on Marx's correspondence with Engels--while others have seen in
them support for the abstract/concrete labor line, there is
also there, support for the ev/uv logic I promote:

"The best things in my book [Capital] are 1. (on which
_all_ understanding of the facts is based) the _twofold
character of labour_, emphasised in the very _first_
the treatment of _surplus value independent of its
particular_ forms, like profit, interest, ground rent,
etc." (p. 168, citing Marx to Engels, 24 August 1867,
MEW xxxi. 326. my emphasis in capitals)

Steve Keen


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