law of value

John R. Ernst ernst at
Wed Nov 29 19:27:19 MST 1995

Given your reading, I am puzzled at your initial questions 
of the example I gave.  Maybe it's a good idea to use the 
terms social and individual value in a more rigorous fashion. 
Note that in the example which you questioned, I started 
from an initial condition, after the change in technique looked 
at the REAL or social value without a price change, refigured 
the example with a slight price change so that there were 
super-profits, and then assumed that the social value fell 
to the individual value.   As I said, Juan and I had been talking 
in these terms for many of our recent exchanges, so yes I  
follow what you are saying. 
On Wed, 29 Nov 1995 James Miller <jamiller at> said: 
>   I appreciate John's effort to get back to me and 
>defend his interpretation of Marx's law of value. 
>   In his latest post John quoted from _Capital_, 
>Vol. I, Chap. 12, on the effect of the changing 
>productivity of labor on the value of the product. 
>   To summarize briefly, Marx argued that when the 
>productiveness of labor doubles, and nothing else 
>changes in the conditions of production, the new 
>value added per hour by a given number of workers 
>is the same as before, only this value is now 
>spread over twice as many products. So that, as 
>far as the new value is concerned, each product 
>of labor has one-half of the former amount. In the 
>example quoted from Chap. 12, the new value added 
>per unit of product was reduced from 6p. to 3p. 
>when productivity doubled. 
>   Given that not all firms within a sphere of 
>industry can introduce the labor-saving technology 
>at the same time, the capitalist who innovates first 
>will be able to undersell his competitors, because 
>the individual value of his products will be lower 
>than the social average product value, which is 
>determined by the productive technology which still 
>prevails within the sphere. 
>   For the innovator within a sphere, it is possible 
>to sell products below their social value, yet above 
>their individual value, and make more profit than the 
>average prevailing in the sphere. 
>Initial condition: 
>6 c + 3 v + 3 s = 12 product value 
>Following innovation: 
>6 c + 1.5 v + 1.5 s = 9 product value 
>However, twice as many products per day are produced 
>Initial condition: 
>12 products per day at 12 value each = 144 daily value 
>                                       (social value) 
>Following innovation: 
>24 products per day at 9 value each = 216 daily value 
>                                      (individual value) 
>   The innovating capitalist pays the same daily wages 
>as the others, but the wage per product is only half as 
>much as for the others. Thus the innovating capitalist 
>may sell the product for any amount above the individual 
>value but below the social value. Let us say he sells 
>for 10 per product, when the individual value is 9 and 
>the social value is 12. In this case the daily output 
>of 24 products will sell for 10 each, for a daily total 
>of 240. 
>   In the case of the innovating capitalist selling the 
>product for 10, while the social value is still 12, he 
>will make a superprofit. While the other capitalists are 
>still making 12 products per day at 3 profit per product, 
>their daily surplus value is 36. The innovator, selling 
>24 products per day at 10 each still has to pay 1.5 wages 
>per product, plus 6 constant value, so is able to reap a 
>profit of 2.5 each on the products, for a daily total of 
>60 in surplus value. Of course, if he sold at the individual 
>value of 9, he would only reap 24 X 1.5 s = 36 surplus 
>value per day, the same as the other capitalists. 
>   But why would he sell at 9 and gain no superprofit? 
>True, he would undersell the other capitalists much more 
>drastically, but he wouldn't be able to profit by it. On 
>the other hand, he could sell at 12 and make an even bigger 
>superprofit, but would not be able to undersell his 
>competitors, and would not gain market share. So he sells 
>at 10 or 11. If he sold at 11, his daily surplus value 
>would be 11 - 6 c - 1.5 v = 3.5 profit each X 24 products 
>= 84 daily surplus value. 
>   To summarize the basic points: 
>1. New technology is labor-saving, i.e. it means that more 
>products can be produced with a given amount of labor time. 
>2. When new technology is introduced, the individual products 
>have less labor time represented in them than formerly, so 
>that they have a lower value per product than formerly. 
>3. The social value of products within a sphere is determined 
>by the prevailing level of the productivity of labor within 
>that sphere. 
>4. When one capitalist within a sphere innovates, and improves 
>labor productivity, the individual value of the product made 
>in his factory will be lower than the prevailing social value 
>in the sphere. 
>5. The innovating capitalist can sell his products at a price 
>lower than the social value, but above the individual value, 
>and thus reap a superprofit. 
>   Are you still with me John? Let me know. 
>Jim Miller 
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