I have a new blog, here (without content at present).
Happy new year.
There’s a lot of ‘real life’ stuff that I need to urgently attend to, so I’m putting the blog into standby mode for a while – hopefully I’ll stick to it this time. Take care, all…
So here’s a fun parlour game. (NP is best at it :-P). Spot the many different ways in which philosophers attribute to Being the properties of capitalism, or of capital. Here’s a good one, from Heidegger’s A Dialogue on Language:
We say ‘correlation’ also when talking about the supply and demand of commodities. If man is in a hermeneutical relation, however, that means that he is precisely not a commodity. But the word ‘relation’ does want to say that man, in his very being, is in demand, is needed, that he, as the being he is, belongs within a needfulness which claims him.
Doesn’t this demand for man “as the being he is” (and the attentiveness to this demand required for an authentic relation to the two-fold of presence and presence of beings) sound a lot like the capital-labour relation?
“J: Man stands ‘in relation’ then says the same as: Man is really as man when needed and used by…
I: … what calls on man to preserve the two-fold.” [Those aren't my ellipses - they indicate great minds finishing each others' sentences.]
“[M]an who by nature stands in relation to, that is, is being used by, the two-fold.”
It is only when man is made into a use-value, when man is used (or used up ) in the relation to Being – that is, when man is used by capital in the relation to and production of capital (or, if you prefer, in the preservation of the two-fold) – it is only in this scenario that man truly is. That which uses man can only be preserved if man maintains his relation to it – capital depends on the capital-labour relation for its reproduction. Therefore it is our ethical duty, above all else, to attend to capital/Being’s demand.
It’s probably not a coincidence that this dialogue between “a Japanese and an Inquirer” also thematises what Heidegger calls “the complete Europeanization of the earth and of man”; the “modern technicalization and industrialisation of every continent.” I ought to say more about this – the way in which Heidegger’s romantic anti-capitalism reinscribes the production of the capital-labour relation within its (manifestly troubling) discourse of authenticity – but I think the parlour-game fragment will do for the moment…
Why is there a social imperative, in capitalism, towards valorisation, accumulation, expansion of markets and production? Here’s a passage from Capital Volume III. Marx is talking about interest rates, and the division of surplus value into interest on capital and profit of enterprise.
[T]his mutual ossification and autonomization of the two parts of the gross profit, as if they derived from two essentially separate sources, must now be fixed for the entire capitalist class and the total capital. Furthermore, this is true irrespective of whether the capital applied by the active capitalist is borrowed or not, or whether or not the money capitalist who owns the capital uses it himself. The profit on any capital, and thus also the average profit based on the equalization of capitals among themselves, breaks down or is divided into two qualitatively different, mutually autonomous and independent parts, interest and profit of enterprise, which are both determined by particular laws. The capitalist who works with his own capital, as well as the one working with borrowed capital, divides his gross profit into interest that accrues to him as owner, as lender of his own capital to himself, and profit of enterprise, which accrues to him as an active, functioning capitalist. It becomes a matter of indifference, as far as this division is concerned, whether the capitalist really does have to share with another or not. The person who applies the capital, even if he works with his own capital, breaks down into two persons, the mere owner of capital and its user
Money that is lent out must be returned to the lender with interest added on – this is the principle of lending. [Though see below.] Another way of saying that: money lent out must be valorised. Now – this doesn’t mean that money lent out will ‘really’ be valorised, through the production of ‘real’ additional value. It doesn’t (contra my macroeconomics textbook) mean that all money lent out must be lent out for investment purposes (still less for successful investment). But the additional value that’s returned to the lender as the price of borrowing has to come from somewhere. For the particular borrower, this additional money could come from, say, reduced consumption at the appropriate time. But just as the capitalist class as a whole can’t make money by individual capitalists thieving off each other, so for the system as a whole interest on borrowing can’t be repaid just by taking money from elsewhere. If the economic system as a whole necessarily involves lending (which it does), then, for the system as a whole, there are only two options (both of which can be (and are) operative at once, of course): 1) default; 2) growth. [Though this ignores changes in price levels, which is really important. Sorry :-(.] I hope I’m more or less right in saying this.
What’s particularly striking about the Volume III passage I quoted, is that here Marx suggests that the logic of lending applies even to capitals that are not in fact lent out – that even the capitalist who invests his own money obeys the capitalist logic of interest and (therefore) valorisation. This is turn suggests that it’s a mistake to give too much emphasis to private property, in our analysis of the capitalist system. One of the things that’s distinctive about capital as a movement of valorisation, Marx suggests, is not private property per se, but rather the interplay between private property and debt, and the entrance of the social logic of debt into some kinds of apparently clear-cut private property.
Writing to George Bernard Shaw, during the composition period of the General Theory, Keynes justified his dismissal of Marx by claiming that the Theory “will largely revolutionize – not at once but in the course of the next ten years – the way the world thinks about economic problems. There will be a great change, and, in particular, the Ricardian foundations of Marxism will be knocked away.”
At the moment I’m reading Keynes’s Essays in Biography. His discussion of Ricardo and Malthus’s corresondence is interesting – Keynes writes: “If only Malthus, rather than Ricardo, had been the parent stem from which nineteenth-century economics proceeded, what a much richer and wiser place the world would have been today!” That sentence follows several long passages from Malthus’s side of the correspondence, which Keynes sees as articulating ideas neglected by the subsequent tradition. For example:
We see in almost every part of the world vast powers of production which are not put into action, and I explain this phenomenon by saying that from a want of the proper distribution of the actual produce adequate motives are not furnished to continued production… [I]f it be true that an attempt to accumulate very rapidly will occasion such a division between labour and profits as almost to destroy both the motive and the power of future accumulation… must it not be acknowledged that such an attempt to accumulate… may be really prejudicial to a country.
Now here’s part of one of Keynes’s earlier footnotes:
Marx, criticising Malthus, had held that over-population was purely the product of a capitalist society and could not occur under Socialism. Marx’s reasons for holding this view are by no means without interest, being in fact closely akin to Malthus’s own theory that ‘effective demand’ may fail in a capitalist society to keep pace with output.
Quite so. It’s a large mistake to see the foundations of Marxism as ‘Ricardian’, in this sense, or to think that a knocking away of such foundations is also the invalidation of Marx. (I haven’t read Ricardo, I should add, or the modern neo-Ricardians, and Keynes may well be being unfair about Ricardo too.) Marx’s discussion of crises, of overproduction, of the economic imperatives that move capital from industry to industry (driven not by the pull of ‘equilibrium’, but constantly refreshed disequilibriums) – all this is much closer to the Malthus of ‘effective demand’ than to the caricatured ‘long termism’ Keynes attacks, in the General Theory and elsewhere.
Although, of course: central to Marx’s critique is the way in which the logic of capital subjects our lives to the imperatives of production, valorisation, accumulation. Whereas Malthus is clear about the final purpose of his economic theorising:
I expressly say that it is my object to show what are the causes which call forth the powers of production; and if I recommend a certain proportion of unproductive consumption, it is obviously and expressly with the sole view of furnishing the necessary motive to the greatest continued production… [A]n increase of unproductive consumption among landlords and capitalists may… sometimes be the proper remedy for a state of things in which the motives to production fail.
Okay – here’s the really controversial one [edited down substantially, since the original version - oh dear...].
In my opinion, the Labour Theory of Value is a fetishised form of thought – a theory that’s the product of, rather than say an expose or analysis of, fetishism, as fetishism is defined in Chapter One of Volume One of Capital.
Here’s part of the famous passage.
“It is nothing but the definite social relation between men themselves which assumes here, for them, the fantastic form of a relation between things… I call this the fetishism which attaches itself to the products of labour as soon as they are produced as commodities”.
This sort of fetishism stuff is I think generally read as something like: the thing which is manifested and occluded in commodities is the value-producing activity of labour. Value may appear to be a quality of the commodities themselves, but it is actually a property produced by labour, and then fetishistically attached to commodities, occluding the fundamental link between labour and value.
Now, as I’ve already said, I don’t think we should accept that labour has the particular property of producing value, or of endowing commodities with value. Instead, value is a social category produced or enacted by a whole set of social and economic relations.
Under some circumstances, in capitalism, it becomes plausible to attribute the property of producing value not to this whole set of relations, but rather to a particular relation – the relation between a worker and the means of production – and in particular to the labouring activity itself. It becomes plausible to see labour as solely productive of value. But this is not, in fact, the case. We have taken a complex set of social relations, actions, interactions, etc. and attributed their properties or the social properties they produce/enact to a particular object or activity. In relation to the commodity, in Chapter One, Marx calls this fetishism – a “definite social relation among men” which “assumes the fantastic form of a relation among things”. But men are things too – and our labouring activity can also fetishistically be granted properties that are in reality produced by a larger set of social relations. I think the labour theory of value can best be understood in these terms.
Now clearly this kind of ‘fetishism’ is less pervasive, in capitalism, than commodity fetishism; and there’s a whole lot of other stuff that really ought to be said, expanded on, or qualified. But the usual excuses. More to follow, eventually, hopefully.
Okay. Here’s my current favourite passage in Capital:
“It is the extraction of this surplus-value that forms the immediate process of production, and this faces no other barriers than those just mentioned. As soon as the amount of surplus labour it has proved possible to extort has been objectified in commodities, the surplus-value has been produced. But this production of surplus-value is only the first act in the capitalist production process, and its completion only brings to an end the immediate production process itself. Capital has absorbed a given amount of unpaid labour. With the development of this process as expressed in the fall in the profit rate, the mass of surplus-value thus produced swells to monstrous proportions. Now comes the second act in the process. The total mass of commodities, the total product, must be sold, both that portion which replaces constant and variable capital and that which represents surplus-value. If this does not happen, or happens only partly, or only at prices that are less than the price of production, then although the worker is certainly exploited, his exploitation is not realized as such for the capitalist and may even not involve any realization of the surplus-value extracted, or only a partial realization; indeed, it may even mean a partial or complete loss of his capital. The conditions for immediate exploitation and for realization of that exploitation are not identical. Not only are they separate in time and space, they are also separate in theory.” (Vol. III, p. 352)
I’m not sure I’m in a position to expand on this adequately now – but this passage strikes me as articulating the central equivocation in Capital. The issue is – what is the relation between the “immediate production” and the “realization” of value? According to this schema, value can be ‘produced’ that is never realized – and, indeed, the ‘production’ of non-realized value is central to the capitalist system. Does not this lack of ‘realization’ of value that’s been (immediately) ‘produced’ reflect back on, expand, and in a sense transform the concept of ‘production’? Indeed, isn’t this the heart of Marx’s argument – not just his argument about the systemic contradictions that produce crises, but also his argument about the coercive power of capitalist social relations to enforce the exploitations of capitalist production? And doesn’t this stand in marked tension with the ‘standard’ labour theory of value, which I was complaining about in my last post? If I were going to offer an interpretation of Capital – which I’m not, any time soon, because I’ve still got a whole lot of Marx still to ingest – I think I’d probably take my bearings from this passage, and others like it.
Okay – I’m classifying this stuff as way stronger than ‘hunch’, but still quite a bit weaker than ‘I can cash this out in a 100,000 word monograph’. From the top:
1) The Labour Theory of Value, as (I think) it’s generally understood, is wrong. (Which requires a bit of elaboration, so)
- It’s not totally clear to me what ‘the Labour Theory of Value as generally understood actually is. I think there are probably a few different sets of ideas that can be referred to as the LTV. Let’s say the basic one is something along the lines of: you’ve got your human beings. When human beings work, when they labour, as well manipulating and transforming physical objects (or the minds of impressionable young folk; or computer code; or whatever) they also confer onto those objects (or whatever) a social property – value. According to the LTV, labour is the source of all value. Now I’m not totally clear on how formulations like this are generally understood – but this picture seems to me to be prima facie implausible. How is value understood to be transmitted from labourer to product, or understood to be created in the manipulation or creation of the product? The LTV, in this form, seems to be to be powerfully counter intuitive.
- Now I don’t think adherents of the LTV believe that the value created by labour is simple market price. Rather, there’s understood to be a complex relationship between price and value, such that value in some sense regulates price, but that price can and often does massively deviate from value. This removes some of the prima facie implausibility; but it seems to me just to push the implausibility back a step. I’m not sure exactly how value is generally taken to regulate price [because a) I'm pretty ignorant of the literature; and b) what little I've read strikes me as obscure] – but assuming there’s some causal relation such that value regulates price, and assuming that value is ultimately understood to be created entirely by labour, you’re still left with the question – what exactly is being created or transmitted in the labouring process (and what is the mechanism of that creation or transmission?) Labour in > prices out. How?
- The simplest way of understanding this would be that human activity creates some sort of mana (???) or immaterial substance (??), ‘value’, which is embedded in the products of labour (and which can then be transmitted from those products to other products through the mediation of further labour). But this seems, again, implausible. It seems metaphysically implausible (why are we positing such a substance, even if we call it a social substance rather than a metaphysical one?), and it also seems empirically implausible. It seems like a familiar empirical fact that lots of commodities that don’t involve much labour in their production sell for high prices – or are regarded as very valuable. Whereas lots of commodities that involve heaps of labour sell very cheaply and are regarded as relatively valueless. Obviously this isn’t true all the time; but there seem to be pervasive enough counter-examples to throw what seems to be the LTV into some doubt.
- [Plus how exactly would labour inputs determine price? People buying products don't know how much labour has gone into producing them; the people selling them need not either. And even if everyone does know the relevant labour inputs, why would this influence exchange values? If the influence is taken to be indirect, what would the causal mechanism of this indirect influence be? I can't think of a plausible causal chain, here, that transmits labour inputs into prices, even as a general trend or in aggregate.]
- If I understand right, many adherents of the LTV don’t argue that the LTV is true at any micrological level (even as a long-term trend), but argue that it is true for the system as a whole. Which again, removes some prima facie implausbility, but again seems to me simply to push the implausibility back a step. Put aside as irrelevant the fact that it only makes limited sense to talk about prices in aggregate. (Because it does make sense to talk about, say, the rate of profit in aggregate, and that kind of thing is where the LTV is taken as having descriptive / explanatory power.) I still don’t see why say the ratio between constant and variable capital (or, in orthodox economics’ terms, between capital and labour) should influence the rate of profit (= the amount of value created relative to money spent). The question is still – what’s the causal mechanism here?
- [For what it's worth, I've been in intermittent attendance at the Historical Materialism conference; on Sunday Geert Reuten presented an interesting paper (cowritten with Peter Thomas) about the shift in Marx's discussion of the falling rate of profit between the Grundrisse and Capital. Basically (if I understood right) Reuten was talking about a shift (in Marx's thought) from the falling rate of profit as a long term trend, with an eventual apocalyptic conclusion for capitalism, to a cyclical account that sees crises as providing capitalists, or capital, with the opportunity to recalibrate the capital-labour relation in a way that re-establishes a more substantial rate of profit. As far as I can tell, the implication of this latter argument (though Reuten didn't I think discuss this) is that the falling rate of profit shouldn't be understood as a long-term trend, and that therefore the changing organic composition of capital is not the major factor in the establishment of the profit rate. But that's probably by-the-by.]
- Anyway, upshot is I just don’t see how the labour theory of value can provide an adequate account of the determination of prices, micrologically, in aggregate, or in the short or long term.
More to follow in subsequent posts.
“A meaningful scientific hypothesis or theory typically asserts that certain forces are, and other forces are not, important in understanding a particular class of phenomena. It is frequently convenient to present such a hypothesis by stating that the phenomena it is desired to predict behave in the world of observation as if they occurred in a hypothetical and highly simplified world containing only the forces that the hypothesis asserts to be important…. Such a theory cannot be tested by comparing its “assumptions” directly with “reality.” Indeed, there is no meaningful way in which this can be done.”
” ‘reality’ [is] one of the few words that means nothing without quotes”
“‘Literature was not born the day when a boy crying “wolf, wolf” came running out of the Neanderthal valley with a big gray wolf at his heels; literature was born on the day when a boy came crying “wolf, wolf” and there was no wolf behind him.”