Why Capital is Overvalued

Max Sawicky sawicky at epinet.org
Sat Mar 6 12:19:54 PST 1999



> >The main point in the present context is that "assets" are overvalued
> >because of the labor theory of value. . . .

You sound like you're invoking the "buy-back" problem. Obviously in the static sense the workers' wages are less than the value of their output, and capitalists will consumer less than they receive in profits as well. But,

a. for the economy as a whole unconsumed income buys net investment; capitalists accumulate more capital; and,

b. credit permits people to consume in excess of their income, both in the sense of workers who already earn income, and in the sense of credit that expands markets; both have the effect of absorbing the new capacity that has been created by virtue of positive net investment.

c. it is not obvious that this can't go on indefinitely. There is clearly a price to pay in terms of financial instability and periodic catastrophies outside of the core industrialized countries, but whether this merits the name "crisis," in the sense of something that can bring down the system with a crash, or merely routine is highly debatable (and we've debated it quite often).


> To say that capital flows here because of unlimited investment
possibilities flatly contradicts and is incompatible with any labour theory of value. Investment of capital demands surplus values. But surplus vlaue is labour and in any given country labour is of a given magnitude. From a given working population only a definite mass of surplus value is extortable. . . .>

Why is that? Labor productivity is not limited the way or to the extent that labor time is. Consumption can certainly expand.

mbs



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