From: OPE-L Administrator (ope-admin@ricardo.ecn.wfu.edu)
Date: Fri Apr 16 2004 - 15:17:11 EDT
----- Original Message ----- From: "Jur Bendien" <bendien88@lycos.com> To: <Glevy@pratt.edu> Cc: <Gerald_A_Levy@MSN.COM> Sent: Friday, April 16, 2004 5:00 PM Subject: (No Subject) Hi Paul, > ...the issue of what is 'materiality' in Marx, a serious stumbling > block for those who don't understand the concept of value. Well, I have been accused of not understanding Marx's concept of value in my choice of girlfriends, and I spoke also once to a chap who thought I meant "Ma tear I all". But economics is one thing, human affections are another. Sometimes the best way to understand something is by starting off understanding nothing about it at all. As regards "materiality", we discussed this before with Prof. Williams. Marx refers to this primarily to distinguish between social forms created by institutionalised rules governing interactions and transactions between economic agents, and the tangible physical substratum for these, consisting of products and labor-services owned/controlled and exchanged. But his use of the expression is, philologically, often very loose, suggesting variously a contrast between (1) "material and ideal", (2) "physical and mental", (3) "physical and social", (4) "material and spiritual", (5) "mind-independently objective" and "subjective or intersubjective" The relevance of these distinctions is not really so much ontological or philosophical, but rather practical. That is, in defining the commodity form, what matters is the practical ability to privately appropriate an asset through an effective transfer of ownership of the asset from one private owner to another private owner. That is, it must be possible to "alienate" the asset from one context or owner, and transfer it to another. If you cannot privately appropriate an asset, or you cannot guarantee private ownership of it, then it is not possible to transform the asset into a saleable commodity because exchange cannot happen, only thieving or robbing perhaps. But this impossibility does not necessarily inhere in the intrinsic nature of the asset itself, but rather it is contingent on technological and social developments. Something which was not alienable may become so, and vice versa, something which was alienable may no longer be alienable lateron. The reasons could be technical, or they could be social, inasmuch as legislation is adopted which prohibits the sale or purchase of an asset. The term "material" is not really necessary to use, but insofar as it is useful to express a distinction, why not ? The real problems are with the use of the term "materialism" when what is really meant is "realism" in the sense of the mind-independent existence of the external world, which validates a distinction between what exists objectively and subjectively. What is interesting about intellectual property rights applied to information and communications, is the problem-fraught nature of the attempt to transform information into private property of a secure kind, and to transform communications themselves into commercial transactions. Because to accomplish this, requires a massive change in individual behaviour of human beings themselves, who, if they e.g. "leak" information, or if they fail to adhere to commercial communication rules, may cause the total value of "information commodities" and "communication services" to disappear in an instant, showing them to have been a sort of "fictitious capital value" which just depended on people not being "in the know" yet. That is one reason why the rule of capital over humanity has been weakened, prompting a search for extra-economic means to maintain bourgeois class power. The general tendency for the capitalist mode of production is (1) to create communication and information products and services which are physically tangible (even if only a bit of paper which you must buy or possess privately) and which are mass reproducible in a way which is consistent with the commodity form, (2) to elaborate new kinds of access rights to information and (3) to exert more control over the ability of people to communicate in all sorts of areas, blocking them here, and encouraging them there. My favourite example is pop music: first you have live concerts, then you have sound recordings, and finally you have video's, mobile phone jingles and broadcasts. This discussion has important consequences for the discussion of productive labour. Marxists often try to find categorical distinctions of "materiality" and "productiveness", but in reality, these are to an important extent historically contingent and changeable. The real significance of "productive labour" (labour from which a surplus product can be appropriated privately) is rather its continual modification, in step with the development of the social and technical division of labour. I have discussed this previously on PEN-L with Prof. James Devine. If socialism is in good part about the transformation of the division of labour to conform better to real human needs, then obviously this issue is also important for socialist political economy. Marx thought socialism was desirable not just because the exploitation of people could be drastically reduced, but also because a much greater economic certainty and social certainty could be achieved about all the basic preconditions for a civilised human life (shelter, food & drink, clothing, work, love & sex, play). I think Marx is to blame himself to a certain extent for the controversy about his theory of value, because of four main reasons: (1) he used the term value to refer to different kinds of "economic value" and value aggregates, making different assumptions; (2) in arranging his presentation, he tried to develop his definitions dialectically, with what Rosa Luxemburg called an unfuriatingly obscure "Hegelian rococo", aiming to get his readers to think critically and even "set traps for them"; (3) some of his crucial manuscripts (such as Capital Volume 3) were never prepared for publication by himself; (4) he never systematically, explicitly and separately analysed the concept of "price" and what price aggregation actually involves in an epistemic, psychological and ontological sense - making appropriate distinctions between potential prices, hypothetical prices, theoretical prices, actual selling prices and final selling prices on the one hand, and subjectively, intersubjectively and objectively existing entities on the other hand. As regards (3), here is an example for you: in chapter 49 of Cap. Vol. 3, on the analysis of the production process, Marx starts off by saying "For the analysis now following we can ignore the distinction between value and price of production, since this disappears whenever we are concerned with the value of labour's total annual product, i.e. the value of the product of the total social capital" (Pelican edition, p. 971). This passage seems to be consistent with the postulate that total prices = total values which Marx adopts in examining the capitalist mode of production in its "ideal average" (he says a little earlier on in the same book, specifically, that Das Kapital he is "only out to present the internal organisation of the capitalist mode of production, its ideal average, as it were" - p. 970). However, on the very next page, Marx admits that "In actual fact the surplus-value is not completely realized [in the price of commodities], for since the amounts of socially necessary labour required for the production of a given commodity are constantly changing owing to the constant changes in the productivity of labour, one section of commodities are always produced under abnormal conditions, and must therefore be sold below their individual value." (p. 972). This second passage implies, that the postulate of total prices=total values does not in reality hold, and is only an assumption which Marx makes in a theoretical model. This interpretation is supported, by the fact that Marx goes on to say cavalierly "for our present purpose the realized surplus-value can be equated with the total surplus-value" and that "for all practical purposes" this assumption is legitimate to make (ibid.). Now this is obviously a conceptual imprecision, an inconsistency, if not a downright sloppiness given its theoretical importance, and due to the fact that Marx just didn't prepare his draft up to publication standard. The consequence is that millions of people have subsequently tried to render Marx more precise, but cannot all agree in their textual interpretations. But in truth, the primary foundational reasons for the necessary distinction between value and price are precisely (1) the temporal discrepancy between the valorisation process in production and the realisation process in exchange. If, through credit and insurance mechanisms it becomes possible to achieve realisation prior to valorisation at some future date, this basic reality about the sequence of events is obscured, since financial claims can be made to an output which does not exist yet. Marx referred to market-competition inverting the temporal order in the heads of businessmen, and an excellent illustration of this is provided by George Soros who writes: "Every market participant is faced with the task to estimate the value in the present of a future development of events, but that development is co-determined by the value which all market participants together attribute to it in the present. That is why market participants are forced to be led partly by their subjective judgement. Characteristic of that bias is that it is not purely passive: it has influence on the course of events which it should represent. This active aspect is lacking in the concept of equilibrium such as is used in economic theory. Fortunately there exists a measure in the external world which gives an indication - but not a measurement - of the bias of the participant, namely the factual course of events. Although there exists no reality independently from the thought of the participant, there does exist a reality which is dependent on it. In other words, what is involved is a sequence of events which actually happen, and this sequence embodies the interest of the bias of the participant." (translated from the Dutch edition of "The Crisis of Global Capitalism", p. 83-84). (2) the fact that the only way to connect relative price movements with human productive efforts is by means of a concept of economic value. Marx was quite clear that this holds true also for socialist economy: "...even after the capitalist mode of production is abolished, though social production remains, the determination [Bestimmung] of value still prevails in the sense that the regulation of labour-time and the distribution of social labour among various production groups becomes more essential than ever, as well as the keeping of accounts on this." (p. 991). Of course it is possible to create a theory of capitalist civilisation exclusively in terms of prices (Hayek), in terms of Culture (Habermas) or sexual potency (Marcuse) but what matters in evaluating these alternative theories is their internal coherence and their power to explain empirical human experience. And here I think Marx still tops the bill with his conceptualisation. The deviation between produced surplus-value and realised surplus-value does not however present any serious epistemic or ontological problem however, because surplus-value is always observable either as labour-hours or as prices. The existence of a "futures economy" and a "hyper-real economy" does not cancel out Marx's law of value by any means whatever. In my draft reply to Paul Cockshott on Marxmail List, I have tried to explain that the law of value in the capitalist economy must be understood as creating a dynamic, whereby enterprises competing for market-shares of effective consumer demand in respect of a certain product, given an already established production price (through previous price competition and effective demand growth), try to produce output "below value", meaning very specifically that they try achieve a labour expenditure per product unit, which is below the sectoral average, in order to maximise the difference between input prices and output prices. That is the driving force of capitalist development, and we cannot logically express this fact other than by distinguishing, explicitly or implicitly, between value and price. What this sectoral average is, however, cannot be known in advance or even contemporaneously, because even if we know labour-hours expended, we do not know in advance how the market will valuate those labour-hours and thus how labour effort relates to prices realised. Of course, this lack of exact knowledge is neither required to economise labour resources, and exploit them to the maximum - and Marx's point is that this economising and exploitation will occur, regardless of what price fluctuations occur, except where exchange as such breaks down, through extreme disproportions between supply and demand. Because the whole capitalist economic system is based on maximising private gain, as theorised by neoclassical economics. This "new solution" of the transformation problem I have devised (really not so new or novel !) implies: (A) the imperative or compulsion of capitalist enterprises for trying to maximise productivity, in the sense of maximising output per production period, and maximising the quantity of surplus-labour, given a system of private property and competition between juridically defined private interests. Given market uncertainty created by competing private enterprises, and the lack of control over (1) the cost-structure of production and (2) market-prices for output in response to a changing effective demand, this imperative will moreover exist regardless of specific market fluctuations, a very important point. Since, for that reason, the productivity of labour stands in inverse ratio to the value of commodities in the defined sense, the rate of profit will fall, unless it is offset by market expansion and/or reduced input costs ( we are no longer talking about a "tendency" here, we are talking about the socially imposed necessity to offset that fall). But because of (1) the uneven development of capitalist enterprises themselves in space and time under competitive conditions, (2) the uneven growth pattern of supply and demand under competitive conditions given unequal bargaining positions of enterprises, social classes and individuals, and (3) an historic increase in the proportion of constant capital (fixed equipment, raw materials and ancillary physical operating costs) advanced, the rate of profit must eventually fall. This interpretation of the necessary connection between LoV and the TPRF is however a minority viewpoint, in the sense that most Marx interpreters do not agree with it. As regards (3), the empirical proof is that there is almost no branch of production anywhere in which wage-costs as a component of total capital expenditure have increased proportionally, and in almost all branches, wage-costs have decreased as a proportion of total capital expenditure in the last two-hundred years. This is quite easy to demonstrate with the statistical information and business data we have available. (B) that new surplus-values produced as a component of new output are themselves never "transferred" between producing enterprises, as the often-used "pooling metaphor" suggests (see e.g. Mandel's false description of this), because (1) those surplus-values exist only as expenditures of living labour which are stored in actual output at a specific point in time, (2) the realisation of more surplus-value or less surplus-value as a component of gross enterprise income is due to (i) individual enterprises producing below value or above value - the "value" here being a sectoral average, or (ii) the income receipt or added cost of a surplus-profit, obtained through blocking competitors for a given market demand (Mandel is quite correct in saying that in reality the quest for surplus-profits becomes the dominant mode of competition in modern capitalism). Instead, the "transfers of surplus-value" apply to unequal exchange and to commercial activities in the sphere of circulation (purely financial transactions concerning the transfer of ownership), which grows on the basis of capitalist production. This interpretation permits an analysis of the cost-structure of a unit product with a final consumer price, in terms of wage costs, producer profit, interest, rents, insurance profits, distributor costs and profits, wholesale profits and retail profits etc. Again, this is a minority viewpoint, in that most Marx interpreters do not agree with it. They are often trapped in official national accounting categories which are based on a specific concept of production and income distribution which includes items which Marx classifies as belonging to circulation, and excludes items which Marx classifies as income newly generated by production (I won't develop this point in detail here). The conceptual problem in estimating the new net social product for national accounts is, that we must distinguish for all transactions, within a complete system of transactor types, between (1) what is a cost to production, and what is a revenue from production, and on this basis (2) what is "gross" income & expenditure and what is "net" income and expenditure. To do this, you necessarily require a distinction between (1) new value created and value conserved, and (2) production and circulation, but what can be the basis for that distinction, if you only have price flows to work with, and no systematic categorisation of the social relations of production and exchange ? In reality, double-entry bookkeeping techniques, used for centuries to report aggregate financial transactions of private enterprises, are generalised by social accountants to the economy as a whole, according to institutional definitions, but this cannot be done in a completely consistent and socially objective manner, precisely because that bookkeeping is done from the point of view of the class of private enterprise-owners only. To understand this, consider that if profit simply equals sales less costs, then if in market exchange "one man's monetary gain is another man's monetary loss", then theoretically all the gains and losses should cancel each other out, and the aggregate profit of the whole economy should equal zero. The fact that it consistently doesn't equal zero, just means that the source of new value and profit has not been conceptualised adequately, and the result of that is an eclectic conception of profit which, in economic textbooks, is attributed to all kinds of sources (the reward of entrepreneurial risk or innovation, the cost of using capital, and all sorts). The whole point of Marx's "Theories of Surplus-value" and "Capital" was to get rid of these vulgar notions through a conceptually precise, historically established distinction between production and circulation, and between value and price. And it was in fact Marx's distinctions which inspired Kuznets and others in their statistical aggregation principles for national accounts - this was acknowledged even by JM Keynes. The primary problem of our epoch is that the increasing inversion of the realisation process of capital and the valorisation process of capital through the expansion of credit (with the slogan "live now, pay later, and if possible shift the costs to somebody else who's weaker than you are") has definite limits, beyond which key economic events could trigger a very large default of debt repayments and a breakdown of the market system. The fact that this problem exists at all, shows that Marx's sequential analysis of the transformation of values into prices of production is perfectly valid. But of course it is one thing to admit that, it is another thing to demonstrate how capitalists try to mediate this contradiction. After all, if capitalist development is a highly contradictory process, then the real path of capitalist development consists of the specific mediations of those contradictions; and it is here that the natural and cultural substratum of the market, to which Alvater refers, is particularly relevant, since, in the midst of political apathy among the masses, it provides the rationales for renegotiating terms of exchange and the bargaining power of competing private interests. Regards Jurriaan
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