Forwarded from Jurriaan (reply to Mine)

Louis Proyect lnp3 at
Sat Mar 3 15:21:13 MST 2001


I had a read of Mongiovi's paper tonight, but I think it is rather shallow.
Mongiovi argues that "As with Ricardo, [Marx's] laborvalue analysis is a
technical device designed to isolate an objective relationship, between
wages and the profit rate...". This is an extremely poor description of
Marx's endeavour. Marx's "labour-value analysis" aims to uncover the social
relations in a community of producers where production and distribution
occur through a universal market. Marx seeks to explain the origin, the
development, and the conditions for the supersession of relations of
exchange and trade, as well as what regulates them. To reduce Marx's
analysis of value to a technical device for identifying a wages-profit
ratio is just ridiculous (see Isaac Rubin, Marx's Theory of Value, Detroit:
Black & Red, 1972).
Marx does indeed assume that the total mass of profits coincides with the
total mass of surplus-value in his calculations, but there are good reasons
for thinking this is not true in the real world, for instance because of
phenomena such as "profit upon alienation", waste & destruction, and
unequal exchange. That is to say, money-prices almost never perfectly
reflect actual labour expenditures. Nevertheless there seems to be a
reasonably good fit between them, as research by Shaikh, Ochoa and
Cockshott suggests. Mongiovi says " The assertion that neoclassical
economics pays no attention to trade cycles, unemployment or monetary and
financial dysfunctions is obviously untrue and requires no comment". This
misses the point, which is HOW neoclassical economics deals with these
phenomena. And the way it deals with these phenomena is as caused by
exogenous or extra-economic factors, assuming that if the market was left
to itself, it would spontaneously tend towards equilibrium. Marx does not
locate the source of equilibrium primarily in "supply matching demand" but
in the stability or relative rigidity of a set of social relations of
production, i.e. an institutional framework. Marx says disequilibrium is
produced by the very nature of capitalist growth itself, i.e. it is
system-immanent, and not created by factors impinging on the market from
the outside. The "dialectical" aspect resides in the fact that each phase
of capitalist growth creates the conditions of the next phase of recession
or depression. Mongiovi argues "The schema described by Kliman and McGlone
conceives variable capital simply as the wage bill.  Since this sum need
not be equivalent to the amount of labor, reckoned in money, contained in
workers' wage goods, we have no criterion for decomposing the workweek into
necessary labor and surplus labor". I don't see that this follows at all.
If we know the wages paid, the other production costs, details about the
turnover and profits realised, we can establish reasonably accurately the
rate of surplus-value in money terms, and by examining the hours worked, we
can work out approximately the ratio of surplus-labour to necessary labour.
In fact, this is exactly what Marx does in Capital Volume 1, for a single
firm, based on empirical data supplied to him by Engels. (Of course we do
not know how much surplus-value was redistributed, therefore surplus-value
may deviate somewhat from realised profits). Mongiovi's central claim is
that "The Temporal Single System "vindication" of Marx is obtained by
labeling price magnitudes "values", calling the arbitrary and illdefined
ratio S*/K* the "profit rate", and then laying out the accounting relations
that follow from this idiosyncratic terminology". I think this is unfair to
the TSS approach because the ratio S/K is very precisely defined (see also
the paper by Ramos which I referred to before). What TSS argues is that the
difference between values and prices is quantitative, and not qualitative.
That is, money and price is the form in which value exists. The substance
of value is labour-time.
Labour expenditures are continually being adjusted by looking at what the
market is doing, and what the market is doing is the aggregate (combined)
result of previous adjustments.
Interestingly Mongiovi admits that Marx's "demonstration that prices
deviate from labor-values in a systematic fashion, depending upon whether
the organic composition of capital in any given sector is higher or lower
than the average composition, is an impressive analytical achievement.
Modern analytics have shown that these results are, in the main, correct,
notwithstanding the blunt and imperfect character of the device  the
laborvalue theory  by which Marx arrived at them". The point to note here
is that this discovery is precisely a very big advance of Marx over
Ricardo, with the aid of a far more sophisticated and perfected labour
theory of value. Marx's theory is not "blunt" and "imperfect" at all, this
is just swearing by Mongiovi. If anything, Ricardo's theory is "blunt"
compared to Marx's. Mongiovi says "Sraffa's work shows that [Marx's] rich
account of capitalist production relations can be given robust
foundations  without the laborvalue analysis, and at no cost to his
materialist framework." This is not really true, because the foundations
aren't robust (read Ernest Mandel & Alan Freeman (ed), Marx, Ricardo,
Sraffa. Verso Press, 1984).  What is true is that the labour theory of
value is logically independent from historical materialism (see Johann
Witt-Hansen, Historical Materialism, and Gerald Cohen, Karl Marx's theory
of history).



Louis Proyect
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