From: Paul Cockshott (wpc@dcs.gla.ac.uk)
Date: Tue Dec 03 2002 - 09:05:20 EST
Michael wrote I presume that "labour values" are something resembling a monetary price? If so, then it is hard to see what such an empirical study has to do with the so-called labour theory of value. It is stuck in the vicious circularity which Marx discusses in the first chapter of Kapital (?value [of a commodity product of the most complicated labour] equalizes it [the commodity] with the product of simple labour? (Eine Ware mag das Produkt der kompliziertesten Arbeit sein, ihr Wert setzt sie dem Produkt einfacher Arbeit gleich und stellt daher selbst nur ein bestimmtes Quantum einfacher Arbeit dar. MEW23:59). Marx asserts that _time_ (under a certain qualification) measures the magnitude of value. What is being done here is measuring labour _through_ the value-form. ----------------------------------- Not necessarily so there are two methods one can use to work back to labour values from the i/o tables. One is to invert the table to objtain vertically integrated labour coefficients, this then expresses sectoral outputs in terms of the direct and indirect wages that went into their production eliminating profit and rent. This can be criticised for taking wages as a surrogate for labour itself. An alternative procedure converts the wage bill of each industry to a quantity of hours by dividing through by the average hourly wage in that industry. One then obtains a row in the i/o matrix that is in terms of hours. One can then apply the recursive adding up method that Marx uses in Capital to get the labour content in hours of the outputs of all industries, this gives us a value vector in hours which you can compare with the vector of final selling prices. The R^2 that one obtains from the latter method for the UK is about 0.95 as against about 0.97 for the former method. The former method is equivalent to making an implicit assumption that the ratio between different wage rates is the same as the ratio between their value creating powers - i.e., with complex labour having both a higher value creating power and a higher wage rate. > I think this is unfair on the empirical researchers. Until Shaik did his > investigations I don't think anyone expected to get such a close fit > between values and prices. His results certainly did not fit in with > anyones initial preconceptions. They are so counter to the preconceptions > of economists that their implications are only gradually being realised. > It took considerable courage on his part to question the preconceptions > that abounded about the labour theory of value being empirically > invalid and ask : lets see if it really is invalid? Michael asks How does one compare "values and prices"? -------------------------------------------------------------------- Paul replies There are a number of different metrics used by researchers, one can correlate the two vectors, one can measure the angle between them, one can compute their normalised inner product. The important thing to recognise is that one has a vector of prices and a vector of values for the same set of commodities, one can then apply any of a number of well known techniques to compare the similiarity of these vectors. ---------------------------------------------------------- To take just a minor point: How does one take into account factors such as fertility of the soil (for agricultural products) or the differences between monetary currencies in different economies? ------------------------------------------------------------- Paul This is a good question. Remember that we are dealing with the aggregate national product of whole industries. Differences of fertility thus do not affect the figures directly but there is an indirect effect insofar as the profits of some industries incorporate a significant portion of rent. In the UK case this is most significant for the crude oil industry. One finds that its market price is significantly higher than would be expected on the basis of its embodied labour content. The same applies to the petroleum refining industry. In these cases the deviation of prices from embodied labour content is in line with what one would expect from the Ricardian theory of differential rent. The differences in currencies between different economies are dealt with as follows. There is a row vector in the table indicating the exports of each industry, and a column vector indicating the imports. Were trade in balance one could simply take the total domestic labour content of the exports and divide it pro rata among the imports used by each industry - since according to Smith, domestic labour is the real cost of imports to a country. Since trade is not typically in balance one evaluates the mean domestic labour content per Pound Sterling exported in the UK case for British exports, and then imputes this to each Pound Sterling spent by each industry on its imports. > It is my experience of doing empirical investigations that they almost > always teach you something new that would not have occured to you had > you not gone to the trouble of doing them. My objection is that the preconceptions (i.e. one's concepts) determine in advance what is to be empirically measured. ----------------------------------------------------------------------- This is obviously the case, in that if one had no concepts one would not know what one wants to measure. But ones preconceptions do not determine the results of what you measure. In the 70s I did a long term study of the organic composition of capital in the UK. My marxian preconceptions were what made me chose to measure it, but they did not determine the results which revealed some periods when organic composition was rising and other long periods when it was falling. When one gets a result like that which one has not expected you are prompted to ask new questions about what has happened and is currently happening. ----------------------------------------------------------------------- > > The phenomenon and experience of exchange -- and thus also its concept -- is > > richer than you think. > > I am sure that this is true, but unless you investigate actual price data > you are left speculating about the properties of prices. That is assuming already that the value theory is a theory of prices. The LTV asserts some sort of proportionality between quantities of labour measured in time and money prices of commodities produced by that labour. These quanitities of labour are said to be "socially necessary" and it is admitted (see Marx-quote above) that there are differences between simple and complicated labour with regard to their value-creating potential. What is the empirical access to a phenomenon such as "socially necessary"? How does one distinguish between simple and complicated labour without passing through the monetary dimension? ------------------------------------------------------------- In principle and given access to the reasearch resources one can compute labour budgets like Strumlin in the USSR, but for western economies today one has to use the I/O tables to compute what is necessary - this accurately reflects what is necessary on average for an industry. One is not here trying to assess the necessity of an individuals labour and whether one individual is spending more time than necessary on a task. To judge that one must have recourse to work study methods. --------------------------------------------------------------------------- This is what I meant by the reference to Galileo and his preconceptions. Galileo writes in his Discorsi of 1638: "Mobile super planum horizontale projectum mente concipio omni seculso impedimento, jam constat ex his, quae fusius alibi dicat sunt, illius motum aequabilem et perpetuum super ipso plano futurum esse, si planum in infinitum extendatur." "I conceive in my mind a body thrown onto a horizontal plane and every impediment excluded; it follows from what is said elsewhere cumbersomely that the motion of the body over this plane would be uniform and perpetual if the plane extended into infinity." This is what I mean by Galileo's "preconceptions" -- he conceives his experiment of balls rolling down an inclined plane and up another plane on the basis of what he conceives roughly as Newton's first law of motion. The preconception dictates the experiment. The experiment works only within the preconceptions of what a physical body is and how motion is to be conceived. This preconception can be called the mathematical casting of the physical world, a metaphysical casting of beings in their being prior to any possible experiment. With regard to the so-called labour theory of value, which asserts a proportionality between quantities of "socially necessary labour time" and quantitative prices, the great difficulty lies in determining the _social_ dimension. For, the only _sociation_ of labours (i.e. their social being) in a commodity-producing economy takes place through the market, i.e. through the monetary dimension itself. This results in the circularity which you yourself seem to confirm. --------------------------------------------------------------------------- I dont agree with this. The I/O table was an invention deriving from the method of material balances adopted by Gosplan. This in turn derived from the real need that any socialist economy has to determine the socially necessary labour time required for projects. The i/o tables prepared by western states are deficient in that they contain limited data on disagregated labour types used, but they already encapsulate the aspect of social necessity by considering the labour of the entire society at once, much as Engels hypothesised would be done in a socialist economy. Michael
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