LTV and Blaming Workers

John R. Ernst ernst at
Mon Nov 6 17:50:32 MST 1995


I have reproduced your remarks concerning the
LTV in your "Religion" post.  Let me be less
cryptic than usual.   I'll simply agree that
labor creates all value.  Now let's consider
the following "economy" in which a typical
commodity is produced in the following fashion.

9 units + 150 labor hours  ---->   15 units

Typically, if we assume that workers receive 3
units of the surplus of 15 units as a wage, we
could represent production in the following

9 units + 3 units + 3 units   =  15 units

or since the net product of 6 units is produced
in 150 labor hours, we could express our
last expression in terms of labor hours.

225 hours + 75 hours + 75 hours  = 375 hours
  c       +  v       +  s        =   w

Note that no matter how we compute the rate of
profit s/(c+v),  we get the same thing rate of
profit whether we use material terms or the
labor hour expression. It is 25%.   This is
the essence of Steedman's criticism of Marx in
his MARX AFTER SRAFFA. (He does the same thing
with a multi-commodity system and shows that
he gets the same relative prices whether he
starts from values or materials.)  I think and
have argued to Keen that Steedman is wrong and
can be shown to be wrong if we consider the
manner in which Marx deals with accumulation.
Hence, to me, agreement about value at this
level is less than crucial.  The critics of
Marx, often less honest than Keen, will sit
there and agree with you, knowing that using
the above example it's no simple matter to
show a falling rate of profit if you hold the
real wage constant. (the Okishio Theorem)

Of course, you could show a falling rate of profit
with a rising real wage.  But for those of us who
wish to think that rising wages are not the cause
of a falling rate of profit -- this method is
problematic.   Thus, in my last post to Keen,
I tried to show a falling rate of profit in a
different fashion.

Let's be clear.  I could have demanded that he agree
with the LTV from the start.   He knew full well
that I'd hit a brick wall when it comes to accumulation.
Thus, our point of departure concerned the valuation of
constant capital.  He initially wanted to assign some
of the value creating power in production to the machine.
To date, I'm unclear about where this takes him.  I'd like
to see how it works as capital accumulates.  As for me,
I'll take Marx's LTV without the usual trap.  Again, that's
what I said in my last post in the Keen/Ernst discussion.
If you want to beat him over the head on "value creation",
that's fine with me.  You should know that he and others
schooled in the nuances of the LTV simply see you heading
toward a theory that blames crisis via the falling rate
of profit on the working class itself.  At this point, it's
not clear to me whose theory is the most helpful to the
working class itself.


   I have asserted that the scientific integrity
of Marx's work hinges on the labor theory of value.
If the latter theory is incorrect, then Marx's
definitions of constant capital, variable capital
and surplus value are incorrect as well. You can
then follow this line of thinking along to the
conclusion that the perspective of socialism is
thereby deprived of any scientific basis.
   Some people are inclined to say that, o.k.,
we have some sort of "exploitation" going on in
capitalist society, but you don't need to account
for it by referring to Marx's theory. Reference
was made to Kalecki in this connection.
   But this argument appeals to those who feel that
we don't need Marx. They believe that we can get by
without him. I think this view reflects the desire
to avoid the necessity of absorbing a scientific
theory which goes to the root of social problems,
and escape to a world of surface appearances.
   It is not my job to "prove" the validity of
Marx's work on this list. (Nor can Mauro, Juan
Inigo and others do much more than I.) Marx's work
stands on its own merits, and should be studied.
I can't substitute my own posts for the study that
should be carried out by people who are developing
themselves as Marxists.
   Regarding Steve Keen's criticism of Marx, all
we, as Marxists, can do is to use what little time
we have available to show why we believe that he
has not succeeded in his task of refuting Marx.
This in itself cannot substitute for a genuine
appreciation of the scientific character of Marx's
ideas, but can only act as part of the living
legacy of Marxism as it seeks to defend the space
it has conquered in the world.
   I cannot agree with John Ernst's view that we
can just hold in abeyance the debate over the labor
theory of value, and go on to discuss the tendency
of the rate of profit to fall. We can only discuss
the tendency of the rate of profit to fall if we
first have a common definition of terms. And this
hinges on the correct definitions of value, constant
capital, variable capital and surplus value.
   What this means is that I can have a discussion
with Sweezy on the tendency of the rate of profit
to fall, because he accepts the definitions of
the basic categories as Marx laid them out. But
then he goes on to disagree with Marx's conception
of the rate of profit to fall. So we can profitably
discuss the area of disagreement because we share
a common lexicon for the more basic categories.
   But it's just not possible to have such a
discussion with Steve Keen. For him, there cannot
be any such process as a tendency of the rate of
profit to fall, simply because the categories Marx
used to explain this tendency are themselves
inherently defective. Thus, if we're going to talk
to Steve, we have to go to a more basic level, to
the level of the labor theory of value.
   Look at it this way: Suppose one person believes
all elephants are white. Another believes all
elephants are black. They initiate a discussion on
how elephants can avoid being killed by hunters who
hunt in the night. The one who believes elephants
are black says, "they must stand perfectly still."
And the one who believes elephants are white says,
"no, they have to hide behind a large rock."
   They won't be able to resolve this problem as
long as they retain their respective beliefs about
the elephants' color. What they need to do is go
to the root of their respective assumptions about
the color of elephants, and discuss what color
elephants are. Only in this way can they really

Jim Miller

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John R. Ernst

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