value, price and profit...

Justin Schwartz jschwart at
Sun Apr 30 21:28:46 MDT 1995

On Sun, 30 Apr 1995, Scott Marshall wrote:

> To me the main point of understanding use value and exchange value etc is in
> being able to understand and explain to workers surplus value and the
> rip-off there of....
> Is there a serious challenge here to the notion that labor creates all
> wealth? If not labor then what or whom.....?

"Labor is _not the source_ of all wealth. _Nature_ is as much the source
of use values (and it is surely of such that material wealth consists!) as
labor, which is itself only the manifestation of a force of nature, namely
human labor power. The above phrase [Labor is the source of all
wealth....] is to be found in all children's primers and is correct
insofar as it is _implied_ that labor is performed with the appurtenant
subjects and instruments. But a socialist program cannot allow such
bourgeois phrases to pass over in silence the _conditions_ that alone give
them meaning...."

Marx, Critique of the Gotha Program

As to the idea that the point of talk of surplus value is to expose a
"rip-off": if the idea is supposed to be that Marxists should maintain a
theory of justice which holds that workers are entitled to all wealth
because they created it, Marx is equally savage with this (Lockean) labor
theory of property, noting in CGP that even those who do not create
wealth--the infirm, the aged, children (whom he doesn't mention) must be
provided for. Moreover Marx goers further and rejects talk of "Recht" or
justice at all, but let that pass.

There is a point to S-value talk. It's to show the origin of the class
structure of capitalist society, and the command of capital over labor, in
exploitation. But merely to say that in exploitation surplus (value) is
transferred from producers to nonproducers doesn't explain what is wrong
with that state of affairs--since in childcare and welfare such transfer
also occurs. We may need a theory of justice to say that capitalist
exploitation is wringt because the capitalist are not entitked to s-value,
but a labvor theory of property (talk of a rip-off) is a bad way to go.

Better to argue that capitalism involves unjust inequalities because,
e.g., these do not benefit everyone, or the least well off, or result from
a lack of reciprocity--the capitalists return bad for good, or something
like that. Or we might take Marx's route and say that what is wrong with
exploitation is that it involves coercion, domination, and alienation
(rather than injustice). See my forthcoming paper, "What's Wrong With
Exploitation?" Nous, Spring 1995, for more details than you want. For a
version of a Marxist theory of justice, see R.G. Peffer, Marxism, Morality
and Social Justice (Princeton 1990).

> Isn't the complexity of the relation of value to prices, profits, currency
> and etc due in large measure to state monopoly intervention and controls on
> the economy - made even more distorted by transnationals and new forms of
> global exploitation...? Also compounded by gross amounts investments and
> expenditures on military and other destructive junk world wide but
> especially by US imperialism...?

Well, maybe. But even leavinbg aside modern challenges to the utility of
value theory as a theory of price--for a good, nontechnical summary, see
M.C. Howard and J.C. King, The Political Economy of Marx, 2nd ed. (NYU
Press 1985), ch. 6-10, especially ch. 8--there is Marx's own argument,
which I believe is sound, that where the organix composition of capital
varies across departments values will not correspond to prices. (See
Capital, vol. 3, pts 1-2). The argument turns on the fact that competition
will equalize rates of profit across high-value (labor intensive)
industries and low-value (capital-intensive) industries. If capital is
mobile, it will go to where the RoP is highest, and values will fail to
correspond to prices.

As Marx recognized, this creates a transformation problem, how to
establish a determinate relation betweenn prices and values. Marx botched
the solution because he didn't have the mathematical tools, but the Polish
Economist Borkiwecz showed in 1907 that a solution is possible under
special conditions. The significance of this theorem is questioned for a
number of reasons. For one, the assumptions that you need to get it right
are desperately unrealistic in ways that make its generalizability and
explanatory power doubtful. For another, Sraffa has shown that values can
be treated as a fifth whhel--prices can be derived directly from wage data
and the technical conditions of production, as can values; but then it's
unclear that values explain prices. There are problems with Sraffa's
account too and I'm not endorsing it.

But Marxists should know that value theory is quite problematic as a
quantitative theory of price. As a qualitative theory of exploitation,
which is Scott's main claim to its utility, though, it's very useful,
although its power is weakened by its failings on the quantitative side.
Steve can tell us much more than I can. (Steve and I were on the same side
of a debate about value theory last fall, as I recall.)

> As to alternate forms of ownership under socialism, any syndicalist notion
> for running a complex industrial and technological system seems to me silly
> beyond repair on its face.

What do you mean by syndalicalism? There exist plausible models of
labor-managed market socialist economies--see, e.g. David Schweickart's
Against Capitalism. Indeed, such an economy exists in embryo in the
Mondragon cooperative network in Spain, which runs a multi-billion dollar
iindustrial and financial enterprise with great success. More details if

--Justin Schwartz

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