Keen/Ernst Discussion

John R. Ernst ernst at
Tue Oct 17 01:24:33 MDT 1995

Let me see if I can deal with some of the concerns, 
questions, and criticisms you have raised in your 
last two posts. (one responding to me, the other 
to Andrew Kliman). 
Steve says: 
I'm not sure whether what you wrote conveys what you meant 
at the end of your post: 
|Thus, it would seem that for Marx to it right we 
|need to 
|1. Assume that the use-value of labor-power, labor, 
|   is transferred to the output like that of a 
|   machine. 
|2. That the wearing out of the instruments of 
|   production and the role that that process plays 
|   in the analysis is tantamount to ignoring 
|   the role of use-value. 
|3. That the comparison Marx makes between the 
|   increase in productivity and the increases in 
|   devaluation or depreciation as capital grows 
|   somehow shows that machines create value. 
but if it did, that is close to what I am arguing. 
John says: 
You are right. The sentence that introduces the 
3 points should have read: 
Thus, it would seem that for Marx to BE right we 
need to 
Enough of corrections, now let's see where I think 
we have some agreement.   
   That the comparison Marx makes between the 
   increase in productivity and the increases in 
   devaluation or depreciation as capital grows 
   somehow shows that machines create value. 
1. For now I'll say that I do, of course,  
disagree with the notion that machines create  
value.  Indeed, there is more to the  
passage in the GRUNDRISSE that you cited  
than I thought. The comparison that Marx makes  
between with two processes does, by example,  
contradict much of modern Marxist thought. Note 
that one machine has twice the value of the other   
The workers, using the more valued machine, 
produce three times as much output.  Generally,  
this is not the picture painted of Marx's notion  
of accumulation.  That is, Marx is  
generally seen as holding fast to the 
notion that the growth in machinery outstrips the 
growth in output.  This allows for a falling rate 
of profit under the condition that  
    output price = input price 
or what I call simultaneous valuation.  That you see 
this as machines creating value seems secondary 
to me if we are in agreement that the Marxian 
framework allows for the growth of outputs to be 
greater than that of inputs. I assume you have no 
problem with this since such a model would, indeed, 
give rise to problems of effective demand. With  
historic valuation, however, credence  
to Marx's falling rate of profit even in the case where 
the growth of inputs is less than that of outputs. 
This, in turn, allows me to see what I regard as 
a further elaboration of the contradiction between 
use value and exchange value.  That is, as we observe 
a falling rate of profit using historic valuation,  
we see the possibility of a rising rate of profit  
using constant prices.  The trick or, I should say, 
the problem is to describe how this contradiction is  
resolved.  It may well be that a great deal of 
significance needs to be assigned to the role of 
effective demand in solving the problem.  Who knows? 
No one has done it as the significance of historic 
valuation has been noted relatively recently. 
Now on to other matters. 
2. I agree with you that the use value of labor-power 
is labor.   Labor is an activity.  For Marx, that 
means value creation and not as you say the TRANSFER 
of value.  At first, our disagreement on this  
point may, to others, seem merely a matter of words. 
But you and I know that your next step is to equate 
the next step you want to make.  Since Marx says 
the value of machinery is transferred in the  
production process, machines like labor CREATE 
3. It would be all to easy to dismiss your notion 
that machines, like labor, create value. Or, if  
want, we could say that both machines and labor  
transfer value to the output.  Obviously, one could 
simply turn to Marx and think you are quite mistaken. 
A battle of quotes would go on and, as you put it, 
we, at best, would agree to disagree.  But I think  
there is more to it than that.  However, I do think 
that your position is not foreign to Marx.  That is, 
viewed from the capitalist perspective there is no 
difference between the value creating power of labor 
power and the value creating power of a machine.  To 
the capitalist, it makes no difference.  Why  
then do we would-be followers of Marx react all too  
often with such sound and fury as you attribute  
the power of value creation to machinery? 
Here, three different reasons come to mind. 
a. Religious belief.  The notion that labor creates  
   value has not taken Marxists far in any analysis 
   of capitalism.  Indeed, with simultaneous valuation, 
   it has taken us nowhere as my old friend in Boston, 
   Ira Gerstein, can attest.  We are confronted with 
   an Okishio theorem which presents itself as a brick 
   wall when we speak of a falling rate of profit.  The 
   most popular way around that involves blaming the  
   working class itself for crisis.  Yet, often not knowing 
   the pitfalls, we cling to the notion that labor and 
   only labor creates value.  At this level, it seems to 
   me that the notion that labor is the sole creator of  
   value is more than a little like a religious belief. 
b. The Trinity Formula.  If we grant Marx the assumption 
   that labor is the creator of value, then those 
   who come forth and see value creating powers in things 
   seem like strange beings from another planet.  Why make 
   the assumption?  Given that labor does have a social  
   aspect and can be aggregated, then the by seeing price 
   as an expression of value, one can begin to see the  
   manner in which social labor is distributed.  But the 
   distribution per se, while interesting, is not the  
   point in Marx's work.    
c. That Economic Law of Motion.  Here I repeat a bit  
   of what was said above.   By using the notions 
   individual value and social value as we find them in 
   CAPITAL, we can try to express what Marx called  
   "the economic law of motion of modern society." 
   That is, as the individual value becomes the social  
   value or the social the individual, we see the  
   possibility of the resolving the contradiction 
   between use value and exchange value.  Again, as 
   I stated above, the idea that capital inputs grow 
   faster than outputs when measured one way and, the 
   contrary when measured another is a notion that begs 
   for further analysis.  This type of growth is possible  
   and often present in my own work, Freeman's, and  
   Kliman's when we drop the assumption of simultaneous 
   valuation. We, of course, have a problem or two to  
   solve as we attempt to develop the contradiction 
   and show its resolution.  My own hypothesis is that 
   Marx's clue about relating turnover time to the  
   periodicity of crisis may play no small role in this 
   effort.  At any rate, we'll see. 
  By attributing value creating properties to things, it 
  seems to me that you remain within the realm of statics. 
  That is, I'm not sure how you capture the movement from 
  one period of production to the next. (Here my own  
  ignorance of your work may play no small role.)  How does 
  revaluation take place as techniques change?  What is the 
  role of "moral depreciation"?   
Clearly, we should not resolve our differences simply  
citing Marx.  Rather I would suggest that correct 
path is the one that can best be logically developed to  
express that ever elusive law of motion. 
Your turn, 
John R. Ernst 

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