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Rakesh, this is a very helpful post (viewed from whatever angle people have
on this discussion). You write:
>Gil, how's this way of looking at it:
>
> Competition is a market phenomenon. Suppose everything is marketized. Now
>according to bourgeois theory of which Marx is evidently attempting an
>immanent critique market competition should drive the market price of a
>productive "agent" to the point where it no longer yields a value surplus.
This characterization is not accurate. Bourgeois theory *does not* predict
that market competition will tend to eliminate surplus value, as Marx
defines the term. To the contrary, the standard textbook competitive
theory predicts that firm owners will earn at least a "normal" rate of
profit that (as it turns out) necessarily corresponds to a positive rate of
surplus value. Even more emphatically, as John Roemer has demonstrated, the
wealth disparities that Marx takes as a _sine qua non_ for the capitalist
mode of production ensure that capital suppliers will generically earn
rents, not just normal profits, even under competitive conditions, and once
again these correspond to a positive rate of surplus value.
> Why is not the price of slaves (or other 'fixed capital' like machines!)
>paid by the capitalist at the time he invests bid up by the competition of
>others eagerly seeking to capture the net surplus of rentals over cost--to
>the point where no such surplus remains?
Two possible answers, depending as above on what pattern of wealth
inequalities are assumed to hold "outside the market." Case one, if firm
owners have a positive "supply price" for their services due to risk
aversion or impatient time preferences, then even if they pay the
competitive price for machines and/or slaves, the competitive equilibrium
price for their products (whatever they might be) will still incorporate at
least a normal rate of profit, which corresponds to a positive rate of
surplus value. [The key here is that "surplus" means different things in
Marx-land and bourgeois-land; there is no inconsistency whatsoever between
"zero rent" and "positive surplus value."]
This is the standard neoclassical story, but it's not the only logically
consistent one. Case two takes seriously Marx's stipulation that systematic
class-based wealth inequalities are a necessary condition for the
capitalist mode of production. Add this stipulation (which nothing in the
logical structure of bourgeois market theory rules out), and it can be
shown, as Roemer has done, that suppliers of *relatively* scarce
assets--capitalists, to be specific--can earn rents even under competitive
conditions. Relevant picture: imagine a competitive market for something
called "capital services" with a reverse L-shaped supply curve, and imagine
an equilibrium in which the demand curve for these services crosses the
vertical portion of that supply curve, ensuring rents to even the marginal
capital supplier. As a footnote, this is *in effect* the condition that
Marx's V. I, Ch. 25 argument seeks to ensure will occur as a "steady state."
>Now we know in the case of labor power, workers cannot 'wait' until they
>are offered the net surplus over and above their costs of reproduction.
[And yet they can "wait" for the wages they're paid only *after* they've
labored, as you remark below?]
>Given their sharp present time preference, the present price of their input
>services must not only fall short of the value yielded in the future by
>their productivity; they must also agree to preserve gratis the 'fixed'
>and 'circulating' capital paid for the businessman at their respective full
>values, as determined by said forces of competition.
I certainly agree that class-based differences in time preferences
(particularly if driven by wealth inequalities rather than, say, genetic
differences) plays a potentially central role in the Marxian theory of
surplus value *understood as capitalist rents*. But two caveats: first,
this is necessary, but not sufficient: *even if* workers' time preferences
were as impatient as described above, capitalist rents would be driven to
zero if accumulation were excessive (i.e., in terms of the picture
described above, if the vertical portion of the supply curve were to shift
outward at a faster rate than did demand, until equilibrium were such that
demand crossed supply along its *horizontal* portion). Thus, something like
Marx's V. I, Ch. 25 story is *additionally* necessary in order to translate
worker impatience into persistent capitalist rents under competitive
conditions. And, as noted above, worker impatience to the degree described
isn't even a necessary condition for *normal* profits if capitalists also
have a positive supply price (explicit or implicit) for their "services,"
due say to risk aversion or impatient time preferences.
Second caveat: granting both that workers are severely present-oriented
and capital accumulation is not excessive does not imply that workers must
gain access to the means of production by selling their labor power as a
commodity; they could also borrow money to finance the purchase of means of
production, as in the case of usury capital, or else sell their labor
*services* (rather than merely their *capacity* to labor) as in the
putting-out form of merchant capital. Some *other* condition must be
invoked to explain why the process of capitalist exploitation involves the
purchase of labor power as a commodity and its subsumption under capitalist
production. This additional condition underlies the following---
>But of course it is even worse than that; the laborer actually has to
>advance his pay to the capitalist, for pay under capitalism is only a
>ratification of time already spent. That the capitalist appears to pay him
>is only the fetishism of wages, as my hero William J Blake underlines in
>his pithy, though 700 pp summary, of Marx's work.
Again, present-oriented time preferences are not sufficient to explain this
aspect of the capital-labor relationship. To take another literary
example, the Joads in _Grapes of Wrath_ were extremely hard-up for cash
before their westward migration, and yet they didn't have to wait to
receive the (low) payment for their household effects; they were paid
instantly. To the contrary, the theory of ideal market competition
suggests that those with *impatient* preferences would be paid sooner
rather than later, because otherwise competitive pressures would force the
payer to offer a premium for the cost of delay. So it must be that there
is some *departure* from ideal market conditions that induces capitalists
to require work first before paying; otherwise they would reduce their
profits by doing so. That departure, which we need not discuss now,
suggests the reason why capitalist exploitation is typically based on the
purchase and subsumption of labor power.
> The rentals of labor power is of course labor itself, and workers, who are
>doubly free in Marx's perverse sense, are in no position to demand that
>they capture the surplus value from their services.
*No one* is in a position to "demand" surplus value for their services
under competitive conditions, since the latter imply price-taking behavior.
The issue is rather how the distribution of rents is dictated by relative
supply and demand conditions in the market for capital or the market for
labor (Roemer's isomorphism theorem states that, under ideal market
conditions, we can refer to these interchangeably). Again, even "doubly
free" workers need not yield up capitalist rents if excessive capital
accumulation renders labor rather than capital services relatively scarce.
>It seems that the only other alternative is to ascribe the phenomena of
>interest in a market society to time or waiting in itself, to update Senior
>with Bohm Bawerk or Fetter or someone. But we already know that wage funds
>are not advanced against time. That's a myth. The worker advances his time
>to the capitalist and is paid off *after* the hours are given.
Both of these statements are unintentional red herrings. First, even if
capitalists had a positive supply price due to impatient time preferences
(though less impatient than workers', per the above), it would still be
true that the rate of return they receive under competitive conditions
corresponds to surplus value; the "fundamental Marxian theorem" ensures this.
So this isn't really an "alternative" to the surplus-value theory of
profit. Rather it's a possible counter-example to the stricter position
(which I favor, for what it's worth) that surplus value typically
corresponds to capitalist *rents.*
Second, the fact that workers advance their labor against wages doesn't
necessarily speak one way or the other to the time preference theory of
interest. First, this advance is more plausibly due to market
*incompleteness* (the departure from ideal market conditions referred to
above) rather than relative time preferences, for reasons given above;
second, the quantitative difference between waiting two weeks for a
paycheck and waiting two years for a return on investment could possibly be
*qualitatively* significant as well, meaning that the time preference
theory of interest can plausibly coexist with the fact that workers advance
their labor against wages.
>Just as with Ajit's attempt to cut Marx in two, I am at a loss to your
>continuing war against Marx's demonstration of why only workers, in
>possession of its commodified labor power, will contract at a price that
>will not allow them to claim the net surplus of rentals over costs.
This isn't what I'm "at war" against. Let me begin by reiterating some
key distinctions: first, being free in the double sense does not of itself
imply that workers must sell their labor *power* as a commodity; there are
at least two other possibilities. And in the latter cases, by the way,
targeted price-value disparities are not only not accidental, but
*required* for capitalists to accrue surplus value. Second, freedom in the
double sense *is* part of the explanation for persistent capitalist
*rents*, but in that case it is necessary, not sufficient. Third, the
Marxist and bourgeois notions of "surplus" are not identical, so that
surplus value could exist (in the sense of normal profits) even if workers
weren't free in the double sense, and conversely could fail to exist even
if they were.
With these distinctions in mind, let me say that what I'm "at war" with is
much more modest, and *ultimately* much more supportive of Marx's larger
analytical project, than Rakesh suggests. I'm criticizing Marx's Ch. 5
claim that price-value equivalence has any special relevance for explaining
the phenomenon of surplus value. It doesn't, and none of Marx's Ch. 5
arguments validly establishes otherwise.
Once one discards price-value equivalence as a relevant analytical case,
one loses Marx's explicit justification in V. I for focusing on the
purchase and subsumption of labor power as the basis for capitalist
exploitation. That's the main point. Once that is understood, there are
various options as to how to proceed, including entirely begging the
question concerning the relationship between capitalist production
relations and capitalist exploitation. [I wouldn't vote for that option,
but it *is* a possibility.] The option I favor involves bringing to the
for, and filling out, Marx's historically contingent and implicitly
strategic account concerning the relationship between capitalist production
relations and capitalist exploitation. So really what I'm after is
eliminating the chaff from Marx's theoretical wheat.
Gil
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