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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