This is a reply to Paul C's (2610) on whether Marx's theory of surplus-value
is independent of a theory of relative prices.
1. I had argued:
My interpretation of Marx's theory of surplus-value does not depend on a
theory of prices of production. There is of course a theory of prices of
production in Marx's theory, but this theory is in vol. 3 is subsequent to
Marx's theory of suruplus-value in Vol. 1. Therefore, Marx's theory of
prices of production depends on his prior theory of surplus-value, not the
other way around
Paul responded:
You may think this, but my original case was that to establish that firms
can make profits from the employment of labour one needs
1. a theory of relative prices,
2. one in which prices are closely correlated with labour content.
You said no, and produced an example using prices of production in
which firms still earned profits. This is not a counter argument since
a. This uses a theory of relative prices
b. The theory it uses predicts prices closely correlated with
labour values
You have yet to come up with a demonstration that shows firms earning
profits from the employment of labour, and rising with respect to the
absolute surplus value extracted, without making any assumptions about
relative prices.
My response:
I agree that to explain why SPECIFIC FIRMS earn profits, one needs a theory
of relative prices. But one can still explain why ALL FIRMS together in the
capitalist economy as a whole earn profit (i.e. one can explain the total
amount of surplus-value) without making an assumption about relative prices,
as I and other have demonstrated. The theory of prices of production that I
presented in earlier posts to explain why only a few firms suffer loses, is
presented by Marx in Vol. 3, after his theory of surplus-value in Vol. 1.
Prices of production are necessary to explain the distribution of
surplus-value among individual capitalists, but they are not necessary to
explain the determination of the total amount of surplus-value for the
economy as a whole.
2. Paul argued further:
If we assume that it is an account of the representative capitalist, then
the mechanisms which induce the firm to carry out exploitation are clear.
If instead, one assumes it refers to the aggregate capital then the
mechanisms of absolute surplus value and relative surplus value lack
an effective causal mechanism at the level of individual firms. One
is in the position of group selectionists in evolutionary theory, proposing
an outcome but being unable to come up with an effective causal mechanism
that would produce this outcome.
Here we come to what appears to be Paul's main argument: that an aggregate
theory of surplus-value cannot explain why INDIVIDUAL CAPITALISTS ACT to
lengthen the working-day (absolute surplus-value) or to increase the
productivity of labor (relative surplus-value).
My response:
First of all, it is not clear to me how a labor theory of relative prices
can explain why capitalists attempt lengthen the working-day or increase the
productivity of labor. Does not this implicitly assume that individual
capitalists are aware that surplus labor is the source of profit?
Otherwise, a labor theory of relative prices and profit would not explain
these actions of capitalists.
On the other hand, I argue that Marx's derivation of absolute surplus-value
and relative surplus-value is not based on the actions of individual
capitalists, but is instead based on the objective nature of capital in
general as self-expanding money, or, as Duncan put it recently in (2631), is
based on the "structural tendencies" of capitalist production. According to
Marx's theory, the increase of money as capital depends on command over the
surplus labor of workers. Therefore, the capitalist mode of production will
have a structual tendency to attempt to increase the surplus labor of
workers to a maximum. There are two main ways to increase the surplus labor
of workers: increase the length of the working-day (absolute surplus-value)
and reduce the necessary labor by technological change (relative
surplus-value). Therefore, the capitalist mode of production will have
these structual tendencies. This theory is not derived from or based on the
actions of individual capitalists.
Therefore, the disagreement between Paul and me raises a very big and
important methodological issue - whether Marx's theory is based on:
(1) "methodolgical individualism," or, one could say, subjective
individualism, in which conclusions are derived from the actions of
individuals ( i.e. the logical method of neoclassical economics), or
(2) "methodological holism,", or objective holism, in which conclusions are
derived from the objective characteristics of the capitalist economy as a
whole. I will not attempt in this post to provide a full discussion of my
"objective holism" interpretation of Marx's theory, but I would argue that
there is much textual evidence to support this interpretation, and I know of
no textual evidence to support the subjective individualism interpretation.
At the very least, the objective holistic interpretation should be
recognised as an acceptable interpretation of Marx's theory. From which it
follows that Marx's theory of surplus-value in vol. 1 is an aggregate
theory, and that this aggregate theory does not depend in any way on a
theory of relative prices, or the actions of individual capitalists.
Furthermore, although Marx's theory of surplus-value in Volume 1 is an
aggregate theory, Marx's theory nonetheless does explain why individual
capitalists attempt to increase the working-day and to increase the
productivity of labor. Marx's explanation is COMPETITION. According to
Marx's theory, competition forces individual capitalists to act in
accordance with the laws of capital in general, or in accordance with the
structural tendencies of capitalism. Marx discussed this role of
competition - of "enforcing" the laws of capital in general upon individual
capitalists - in many places throughout his various drafts of Capital.
One important specific reference to this "enforcing" role of competition is
in Chapter 12 of Volume 1 where Marx derived the inherent tendency toward
technological change (relative surplus-value) in capitalist economies.
After deriving inherent technological change as a "general and necessary
tendency of capital," Marx had this to say about the actions of individual
capitalists:
While it is not our intention here to consider the way in which the
immanent laws of capitalist production manfest themselves in the external
movement of the individual capitals, assert themselves as the coecive laws
of competition, and therefore enter into the consciousness of the
individual capitalist as the motives which drive him forward, this much is
clear: a scientific analysis of competition is possible only if we can
grasp the inner nature of capital ... (C.I. 433)
Therefore, it is not correct to say that Marx's aggregate theory of
surplus-value cannot explain what causes individual capitalists to attempt
to increase the length of the working-day and to introduce technological
change. The causal mechanism is competition.
However, Marx's explanation of these actions of individual capitalists comes
after his determination of the total amount of surplus-value and his
derivation of absolute surplus-value and relative surplus-value as
structural tendencies of capitalism. The derivation of these structural
tendencies is independent of the actions of individual capitalists.
Comradely,
Fred