[OPE-L:2000] Re: A possible paradox in the theory of value

From: Steve Keen (s.keen@uws.edu.au)
Date: Sat Jan 01 2000 - 16:37:23 EST

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I think you're double-counting the 500K hours for the production of the
means of subsistence of the operators. If I'm paid a wage of $1,000, and
then spend it all on commodities, then it counts just as $1,000.

However you've got a point on the skilled labor input, and I believe this
is a paradox for the standard interpretation. Harvey flagged this in 1985
ROPE paper. If you'll forgive me quoting extensively from my notes on the
paper (I'll also note at the outset that Harvey wrongly attributed what he
calls the "cost of production" approach to the value of skilled labor to
Hilferding; as I commented in my 1995 JHET paper, Hilferding in fact used
Marx's use-value/exchange-value dialectic to argue that the value-creating
power of skilled labor was totally independent of its cost of production.
But Harvey's characterisation was an accurate description of how most
Marxists, and especially Sweezy, Meek and Dobb, approached the subject):


He focuses solely on the omission of unpaid labour from Marx's accounting
of the value of skilled labour, rather than any divergence between exchange
value and use-value. For example, when discussing the value of
labour-power, he says that if a worker needs 2,000 hours of labour-time to
be produced, with that time divided equally between paid and unpaid (e.g.,
commodities versus household labour), then the true labour-value of the
labour-power is 2,000 hours, whereas Marx's system puts it at only 1,000
hours. He continues the argument with

"let us suppose that it takes an *additional* 2000 hours of simple labour
spent on and by a worker for that worker to acquire a special skill. Let us
further assume that this labour, too, is evenly divided between that
provided `free' by the worker him or herself, and that embodied in the
purchase of goods and services constituting the `costs' or `expenses' of
special training.

According to a genuine labour theory of the value of labour-power, the
lifetime value of this type of skilled
labour-power would be equal the value equivalent of 4000 hours of simple
labour (the total labour-time required to produce the worker's simple
labour-power plus the additional labour-time required to produce the
worker's special skill). According to the cost of production theory which
Marx actually used, however, the
value of this type of skilled labour-power is equated to the value
equivalent of only 2,000 hours of simple labour (the value of the means of
subsistence required for the production of the worker's simple labour-power
plus the value of both the means of subsistence consumed by the worker
during the special training period and the value equivalent of the expenses
incurred for special educational goods and services)." (p. 86.)

Harvey is on the right track in what is in fact a critique of the
Sweezy/Meek approach when he says that "what is involved is essentially the
same as what is involved in tracing the preservation of value embodied in
means of production." (p. 87.)

"Is is really accurate then to say that the Hilferding approach attributes
an increased value-creating capacity to skilled labour? I think not. It
would be more correct to say that it attributes a value-preserving capacity
to skilled labour such as means of production possess." (p. 87)

He sums up with three points: "the procedure does not really attribute any
extra value-creating capacity to skill. It merely assigns to skill a
value-preserving capacity such as means of production possess. Second, any
extra surplus value which the Hilferding approach credits to an exercise of
skill is actually the product of `unpaid' labour which has been embodied in
the skill. Third, the variability in the rate of surplus value across skill
levels which is a corollary of the Hilferding approach is a necessary
product of the way in which the Hilferding approach interacts with Marx's
theory of the value of labour-power. The Hilferding approach equates the
extra value-creating capacity of skilled labour to the extra labour-time
required to produce the
skill, whereas Marx attrributes the extra value of skilled labour-power to
the additional incurred cost of acquiring the skill. As these two
quantities bear no determinate relation to one another, neither will the
rate of surplus value of skilled labo bear any determinate relationship to
the rate of surplus value of simple labour." (p. 88)

He restates one paragraph of Hilferding (which does correspond to the
Sweezy approach), substituting simple labour for skilled labour, to reach
the conclusion that simple labour simply adds a value equivalent to the
value of the labour which went into creating it. "Could this proposition be
accepted as proper in the context of Marxian value theory? I think not.
Marx himself would obviously have rejected it as contradicting his
fundamental claim that living labour is capable of producing *more* value
than could all of the labours required to produce the commodity
labour-power. If Hilferding's formulation cannot be applied to
simple labour, though, what justifies its application to skilled labour? If
a given expenditure of labour spent producing simple labour-power results
in a value-creating capacity greater than the value equivalent of that
labour expenditure, then why should the very same expenditure of labour
spent producing skilled
labour-power result in a value-creating capacity exactly equal to the value
equivalent of that labour expenditure?" (p. 89)

"The Hilferding approach conceives of the extra value-creating capacity of
skilled labour as entirely
*dependent* upon the amount of labour required for the production of
skilled labour-power, while the value-creating capacity of simple labour is
conceived as entirely *independent* of the amount of labour required to
produce simple labour-power." (p. 89)

He develops the theme that this approach contradicts reality. After saying
that there is no reason to assume that the value-creating capacity of
labour-power is equivalent to its value, he comments

"Is not the same thing true of a special skill? Is there any reason to
suppose that the augmented physical productivity attributable to an
acquired skill will tend to equal that of the training labour spent
producing the skill? I can think of none, yet that is what the Hilferding
approach implicitly assumes. This, I believe, is a fundamental flaw in the
approach. A skill is an ability which does more than simply store labour.
It *saves* labour. An accounting procedure which categorically rejects this
possibility strikes me as simply
wrong." (p. 90)

Using Hilferding's actual method (and not the method of Sweezy/Meek/Dobb,
which Harvey erroneously attributes to Hilferding), the training inputs
will determine the wage paid to skilled labor, but the additional
productivity of the skilled laborer--the use-value of the education
imparted--is independent of the cost of education, and the "value-creating
power" of education can only be determined ex-post. Skilled labor can
therefore add much more value than the education cost--which as Hilferding
points out means that education can be a source of additional surplus
value. In contrast, as Harvey observes, the Sweezy/Meek characterization of
education echoes Marx's portrayal of machinery as "unproductive" in that it
simply preserves value, rather than increasing it (Harvey 1985, p. 87).


So I believe there is a paradox!


At 10:33 1999-12-30 GMT, you wrote:
>I have thought of a possible paradox in value theory.
>Let us assume
>1. That the value of a product is the aliquot share of the
> total social labour time required to reproduce it.
>2. That labour power requires inputs to reproduce it.
>3. That the inputs required to reproduce different concrete
> labours differ.
>Thus to produce 10,000 hip replacement operations over a year would require
>the labour time of operating staffs plus the labour time allocated to
>reproducing these people as surgical teams. The reproduction of the surgical
>team would include obviously their food and clothing plus the time that
>society has to allocate to training sufficient nurses and doctors to
>replace those who retire or leave the profession over the year.
>Suppose that each operation requires 100hours of direct labour, and
>that a total national staff of 1000 people work for 1 million hours directly
>on these operations. They consume goods worth 500K hours, and
>society has to allocate a further 400K hours to keep up the training
>levels of the teams. Assume that the materials used up amount to 100K hours.
>Thus to reproduce 10,000 hip operations per year requires
>2million hours of labour, and the value of each operation is
>thus 200hours.
>The paradox here is that the share of the social labour required
>to produce the 10,000 hip operations is 2 million hours, whereas the
>standard method of calculation used by Marx would make it 1.1 million
>hours ( the million hours of direct labour plus the 100k of indirect
>labour in the titanium hip joints.)
>The implication is that if we define the value of a product to be
>the share of total social labour required to reproduce it, then we
>have to include the wage as labour time that is passed on in just the
>same way as marx treats raw material inputs. This is a paradox
>given the standard interpretation.
>In this scheme of accounting all direct labour constitutes the surplus
>value, wages are no longer accounted for as being paid out of current
>direct labour.
>In this accounting scheme there is no problem of defining skilled
>labour multipliers, all direct labour counts as simple labour. One
>can obviously model it for an economy of n products and m concrete
>labours by a (n+m) square matrix of technical reproduction coeficeints
>for both labour and products. There would be the usual L vector of
>direct labour inputs, but the first (n) elments of the L vector would
>be null.
>Can fellow list members see an error in this paradox.
>Paul Cockshott (clyder@gn.apc.org)
Dr. Steve Keen
Senior Lecturer
Economics & Finance
University of Western Sydney Macarthur
Building 11 Room 30,
Goldsmith Avenue, Campbelltown
PO Box 555 Campbelltown NSW 2560
s.keen@uws.edu.au 61 2 4620-3016 Fax 61 2 4626-6683
Home 02 9558-8018 Mobile 0409 716 088
Home Page: http://bus.macarthur.uws.edu.au/steve-keen/
Workshop on Economic Dynamcs: http://bus.macarthur.uws.edu.au/WED

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