Marv:>> And to Jim Devine's notion of "indirectly" versus "directly" productive labour as an extension or modification of the LTOV, which I find persuasive? <<
Julio:> To be honest, I'm not sure I understand Jim's point. <
it was Jim O'Connor's point, that government labor may not directly produce surplus-value (by participating directly in the wage-labor process under capitalism) but could do so indirect, by raising the productivity of productive labor. It's a little like the mainstream concept of an external benefit.
>... In the way a modern economist would frame it and being rather
rough in our interpretation of Marx's concepts, the labor theory of
value simply says that, *given the needs of people*, changes in market
prices ultimately respond to changes in the social labor time required
to produce them. One of the things that makes this theory very
abstract is that it assumes that needs are given. In today's
vernacular, this means that the demand for a commodity is infinitely
inelastic -- or exogenous. In Econ 101 terms, that's a vertical
demand curve.
>In a more realistic setting, other things equal, the quantity
demanded adjusts to changes in prices. So the demand curve tends to
be downward sloping. But as simple as this now seems, this analytical
apparatus was developed in the late 19th century and, more precisely,
early in the 20th century. Marx just wasn't equipped to deal with
endogenous demand. So he abstracted from the problem. Who can blame
him for that? His is not a bad approximation for commodities that are
not highly price-elastic (e.g., energy, foodstuffs and other
necessities). <
there's a point in volume I where Marx assumes that the quantity demanded changes endogenously. If I remember correctly, he assumes that demand had unitary elasticity (though he doesn't use that term, natch).
Marx abstracted from demand because he thought that markets distracted people from understanding what he saw as the true nature of capitalism as an exploitative system. (Demand was necessary abstractly, though, in that something couldn't have value or surplus-value if no-one wanted it.) That is, he tried to bust through the veil of commodity fetishism. His main concern was not the determination of prices, something he left to volume III.
Most of the time, he used the idea that supply and demand determine prices. Except for nonreproducible goods, Ricardian/Smithian "natural" prices (prices of production) were the "center of gravity" for the constant fluctuation of supply and demand. It's like the idea that long-term average cost determines price in the long term.
My interpretation is that Marxian prices of production are connected to values on the macroeconomic level. Total value production equals and limits total price (roughly, GDP), while total surplus-value equals and limits total property income (profits, interest, rent, perhaps taxes).
>With an infinitely inelastic demand, it is a truism that the market
price is determined solely by supply conditions, i.e., by the
(marginal) cost of producing the commodity (assuming the capitalists,
as a rule, seek to maximize their profits). The cost of producing the
commodity is the (opportunity) cost of the resources utilized. Most
standard economists are not particularly interested in this question,
but what is the *ultimate* resource that constrains the economic
choices made by a human society? "Human active time" (human conscious
life) was Marx's response. And, come to think of it, it's a rather
obvious answer for a humanist. I mean, if we traded with Martians,
then we could think in terms of an opportunity cost in terms of
Martian goods, but since our ultimate "trade" is with the rest of
nature, then the opportunity cost is in *our* own "active time." <
I agree. The way I think of it these days is that for Marx, values represent the "social opportunity cost" of the production of commodities to human society. Everything he wrote in CAPITAL was "from the point of view of society as a whole" or "from the point of view of Capital as a whole." These perspectives were supposed to awake the point of view of the proletariat as a whole.
>But, to be fair, Marx wasn't completely unaware that price-elastic
needs would influence the value of commodities. I could find the
exact citations and all, but take my word for it: that awareness is
implicit in the formulation "socially *necessary*," meaning that if
needs shrink (for whatever reasons, endogenous or exogenous), what
used to be value becomes wasted social labor, and if needs expand,
what used to be wasted social labor becomes value. So, all things
considered, I still don't know what's wrong with the labor theory of
value. Its having been formulated 150 years ago and the collapse of
the Soviet Union don't make it wrong. <
in volume I (which is at work, so I can't cite it), he says at one point that if there isn't enough demand, labor turns out to be socially unnecessary. Mostly, however, demand plays the role of changing the mix of what's produced on the aggregate level. -- Jim Devine
"The price one pays for pursuing any profession or calling is an intimate knowledge of its ugly side." -- James Baldwin
This email was cleaned by emailStripper, available for free from http://www.papercut.biz/emailStripper.htm