From: glevy@PRATT.EDU
Date: Fri Jul 23 2004 - 12:07:10 EDT
---------------------------- Original Message ---------------------------- Subject: Measurement of abstract labor From: "Jurriaan Bendien" <andromeda246@hetnet.nl> Date: Thu, July 22, 2004 12:00 pm To: glevy@pratt.edu -------------------------------------------------------------------------- In reply to Claus Germer: I cannot discuss monetary now, too much other stuff going on and I haven't settled my final position on it, but, basically, I regard Marx's theory as the best foundation for an adequate theory of money, since it is solidly based on the real history of economic exchange. But modern monetary theory must come to grips with the economic effects of massive credit-creation and fiduciary money, and the abandonment of the gold-dollar standard. Fiduciary currency already existed in China in the 11th century and in the 15th century in Europe, it's nothing new, what is new is the very large and growing magnitude of it these days. Modern thinking seems to be, that what matters now is not the convertibility of currency into gold specifically, but the demand for currency and the convertibility of currency into tangible property of any kind that has value (this reflects the reality of dollar-imperialism and the growth of the service economy). So long as people are forced to use a currency, in a highly developed market where everything is monetised, no gold-standard is necessary. That is the basic idea. I do not think that you can credibly postulate theoretically a one-to-one mapping of currency units to abstract labor-time, as a sort of "accounting theorem", although this might be useful for some analytical purposes to understand the relationship between money-units and working hours. Marx himself rejected any idea of labor-tokens. In a real economy, it is not just net output that has value, and in fact the majority of products and assets which have value are actually not being traded at any time (they have ideal prices only). All assets and products produced in previous cycles of production obviously also have value. But the Marxian argument is, that it is as a rule the CURRENT average replacement cost of products that sets the value (not market price) of both old products and new products, and only in this sense is "socially necessary labor-time" the substance of value. If you wanted to understand the value-structure of assets, you would look at the evolution of current replacement costs. Valuations of labor-time by money may fluctuate markedly, but Marx's argument is that exchange relations, mediated by money, must ultimately adjust to the real allocation of labour-time achieved, however much they may episodically diverge from that allocation. And economic relations in the last instance determine political and military relations, the "bargaining position" in capitalist competition. The foundation of that is the labor-productivity of workers and peasants. Sometimes it is helpful to think of Marx's "value" as an "ideal price", as many economists do, but that is clearly not Marx's argument. Value explains price, and value for Marx exists as an attribute of products because of a double relationship - between people, and between people and the products of their labor. Hence, for Marx, societal equilibrium has nothing to do with supply-demand equations but with private property relations. Equilibrium equations apply only to the supply and demand for specific outputs, but to say that they can explain societal equilibrium is an economistic error. It would be more correct to say value as such = abstract labor-time, a social characteristic of products of human labor which exists objectively only by virtue of the socio-economic relationship between people and their products, and between people who are engaging in negotiations and exchanges. Marx's concept of value, as distinct from exchange-value, says that value pre-exists commodity exchange, because the attribution of value to products does not require exchange, but only requires that those products take labour-time to make or replace. Thus, products of human labor have value, regardless of whether they are exchanged or not. I think this insight, which is denied by many Marxists, is essential to understanding how the capitalist transformation of society imposes the value-form on labor, such that labor becomes a capital-value, an abstract "labor force" which exists as a quantity separate from any particular individual. That is to say, in my own interpretation of Marx, products are already related as labour-values prior to any exchange processes, and prior to the use of money. All that the market and the use of money accomplishes is that (1) the value of every product can be related to every other product using quantitative yardsticks enabling the relations to be more exactly and objectively known, and (2) an abstraction in thought is transformed into a real abstraction, in that the structure of value-relationships between products confronts people ever more objectively as a reality they have to deal with, independently from any negotiation or bargaining position. This view is radically different from the view of Mark Jones, who argued that with the abolition of capitalism, value goes out of existence. I think this is vulgar leftist rubbish. At most you could say, that value is no longer the main criterion for the allocation of labor in a post-capitalist society, because there are other criteria which can be applied - something which is possible, because of the high level of labor-productivity that has been achieved. Consequently, my theory of socialism is also radically different from that of Mark Jones. Many economists argue however that labour-values are no longer decisive to the allocation of resources in modern society. Just how ridiculous this is can be seen when you realise how concerned employers are with saving every little bit of labour time and labour-costs they can. The fact is, that faced with rising costs and falling sales, over which they have no control, this is the only thing they can economise on. And labor-time economising is precisely what drives the capitalist market, because enterprises generally aim to produce goods and services below their socially established value, in order to pocket as large a difference between their own costs and the ruling market price as they can. When Marx talks about the "law of value", he is essentially talking about the social and physical necessity for the regulation of exchange-processes by labor-time, in a market-dominated society which has no other mode for regulating and coordinating its economic reproduction. People can no more cease to produce than they can cease to consume, but to consume they must produce. All the theoretical "difficulties" stem only from the fact that exchange enables people to consume, what they haven't produced. But the market has no morality of its own, and consequently may different moral ideologies are possible to justify or criticise market outcomes. This is a human-centred approach to economics, in which the human subject is central, rather than a capital-centred approach. Certainly, labour-time performed adjusts to market demand, just as market-demand adjusts to labour-costs. But price relations are governed by value-relations, and these value relations are relations between people, and between people and their products, even although it seems as though they refer to relationships between products (= the reification of value which posits an "intrinsic value" of commodities by virtue of their physical nature, or because of their exchangeability for other products or money). It is only because these relationships exist, that value as an attribute of products can equal abstract labor-time. And that is almost exactly how Marx himself expresses it in a question: how does the value of the products people produce come to be represented by their labor-time ? The concept of value is not necessary to explain statics in economic behaviour, it is necessary to explain dynamics in economic behaviour, i.e. how trade relations will move, how relative prices will move, what the aggregate results of market activity must be. It aims to explain the market, instead of the market explaining the market, or prices explaining prices. Because value is an attribute of labour-products, it is easy to think of value as a "thing", but really it refers to a relation between people mediated by their products. Vulgar economics seizes on the mediation and forget what is being mediated. When the neoliberals argue we need "more market" because markets are more efficient, you have to ask "efficient in what sense" and "efficient for whom". If large numbers of people are in debt and unemployed, if resources are wasted and the environment is poisoned, how efficient is this ? In socialist political economy, the market is only an instrument for achieving a desired allocation of resources which reflects majority opinion. Thus the market is never an absolute good, dogmatically asserted, and questions about the distribution of wealth can never be separated from the production of that wealth. What Sraffian-type theory does, is separate the production of a surplus from its distribution, but that is precisely what Marx denies, because wealth is appropriated by virtue of private property relations, prior to its distribution. To say that the "value-form" dominates society, as Marxists very profoundly try to say, just means the Capital has command over Labor, rather than the other way round, i.e. that property-ownership gives power of people over other people. Once this is admitted, no economics is possible without reference to the power-relations between social classes. Jurriaan
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