jones/bhandari djones at
Sun Aug 27 15:12:31 MDT 1995

In a recent post, Louis commented upon scholaticism of the debates about
value theory and the falling rate  of profit in which many of us, to
varying degrees of competence and understanding, have been engaged.

I want to indicate why I think that these debates are important by
commenting  on a recent article by Wassily Leontief, "The Long Term Effects
of Technological Change" in the July-August issue of Challenge, pp. 57-59.

Repeating a theme familiar since Ben B Seligman's 1965, The Most Notorious
Victory: Man in the Age of Automation, Leontieff argues that "one can
expect accelerated replacement of even highly skilled human labor by
growing stocks of capital goods."

He then argues that output will increase in the long run.  However, not at
the same rates as before as before because of "the limitation of available
natural resources and the necessity of protecting the environment."  He
also argues that so long as the distribution of national income between
labor and capital continues to be determined by the operation of free
competitive markets, the drop in demand for labor will  eventually result
in the  "slow but steady fall in real wages."

And so he reaches this conclusion in the fetishistic language of bourgeois
economics:" The income of the owners of capital goods and of natural
resources will consequently tend to rise."

Leontieff then argues that government should play a redistributive role,
especially in the anti-interventionist US. Referring to the acquisition of
capital shares by pilots of airlines in the US, Leontief argues that wages
must be supplemented for the great majority by "interest and profits on
capital shares".  He concludes however that "there is no reason to believe
that such a radical institutional change will actually occur."

This is a profoundly pessismistic analysis, which Marxian value theory and
perhaps Marx's value theory alone allows us to critique.

If this value theory is correct, what automation brings forth in its full
explosive potential is what Grossmann was the first to recover analytically
from Marx's writings: the inverse movement between wealth and value. Of
course output can increase, but the rise of interest and rent are limited
by the surplus value extortable from fewer and fewer workers. Lower real
wages only 'countertendentially' raise the rate of exploitation on, in this
case, fewer and fewer productive workers.

If Leontief's pessissism regarding the possibility of institutional reform
comes from his assumption that rent and interest collectors will
increasingly become too economically powerful to challenge, then he may
well be overestimating the resiience of the owning class to exclude the
majority from the use of our immense productive apparatus towards human
needs, leisure and creativity.  And he has overestimated that power because
he has not broken with fetishistic appearances taken by the factors of

By the way,  I take Murray E.G. Smith's treatment of value theory to be
excellent: "A principal theme of this book is that Marx's theory of
labour-value remains the indispensable foundation for explaining economic
phenomena that non-marxist economic thought...has manifestly failed to
explain or even to anticipate.  Why has capitalism been unable to 'outgrow'
its tendencies toward severe economic crisis? Why is capitalism so capable
on the one hand of stimulating progress in science, technology, and
productivity and so incapable on the other of translating this progress
into enduring gains in living standards for the great majority of the
working population?  Why are positive rates of growth in industrial
producivity on a world scale accompanied by declining average rates of
profit for most capitalist countries? And why has capitalism as a world
system ceased to contribute to the development of the 'productive forces'
of humankind--most obviously by chronically underutilizing the talents and
energies of billions of people around the world." p. 7 of his Invisible
Leviathan: The Marxist of Market Despotism Beyond Postmodernism. University
of Toronoto Press, 1994


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