[ox-en] Marx’ Theory of Value and Why Exchange Can Be “Equal” and Still Bad
- From: Stefan Meretz <stefan meretz.de>
- Date: Mon, 9 Mar 2009 09:54:37 +0100
Repost from
http://www.keimform.de/2009/03/07/marx-theory-of-value-and-why-exchange-can-be-equal-and-still-bad/
by Christian Siefkes
This post resulted from a thread on the p2presearch mailing list. The
discussion started when a remark by Joseph Jackson’s “forced” me to
clear up some frequent misunderstandings about the meaning of the labor
theory of value, as formulated by Karl Marx. The thread then turned to
Marx’ criticism of capitalism and I tried to explain why (according to
Marx) the root cause of raising inequality and other detrimental
effects of capitalism isn’t “unequal exchange,” but rather exchange per
se, regardless of whether or not it’s equal.
Quotes from Joseph Jackson are indented and printed in italics:
Economics has no coherent Theory of Value and we must solve this
problem if we are to establish the field of Abundance. The Labor
Theory of Value has advantages in that it is objective and normative
—it states that price should tend toward the cost of production; it
also allows us to determine what constitutes equitable exchange.
Actually, the Labor Theory of Value, as first formulated by Adam Smith
and Ricardo and later refined by Marx, is not normative, but
descriptive: it describes the basics of price formation in capitalism.
Of course, the value of goods is only their average price—actual prices
will usually be somewhat below or above the average because of
fluctuations in supply and demand etc.
Also, what Smith and Ricardo didn’t know but Marx found out (described
in vol. 3 of Capital) that there is a further systematic distortion
between value and average price that assures that the average rate of
profit will be about the same in all sectors (assuming free
competition). However, that’s only a modification (which follows from
the fact that the ratio between present, living labor—performed by
workers—, and past labor—embodied in machines and such—differs from
sector to sector) of the price building mechanism, which is still
basically derived from the labor required to produce different goods.
Unfortunately, the LTV does not acknowledge that the amount of labor
embodied in products is constantly diminishing with the advance of
automation and improvements in capital.
On the contrary, the main reason that drives capitalistic competition is
that you (as a capitalist/company) can outperform your competitors by
reducing the value of your products, which allows you to sell at a
lower price (thus enlarging your market share) and still make a higher
(or equally high) profit per product. The LTV explains why capitalism
relies so strongly on automation and technical innovations that reduce
the necessary labor.
This seems to be a useful, very detailed discussion of the LTV:
dreamscape.com.
[Joseph Jackson replied:] I agree with most of the LTV and
by “normative” I meant that the LTV provides an objective notion
of “fair price” (if price exceeds the average cost of production it
is a sign that some barrier prevents competitors from entering).
That’s true, but if that’s your ideal, it’s not much different from what
things are now, since in most areas, the barriers of entry are
sufficiently weak to make the actual prices quite similar to the “fair
price,” as you call it.
The problem with capitalism isn’t that prices are “unfair”—most prices
aren’t. There are other problems. First, production only takes place if
there is profit. The goal of all capitalist production is to make
profit, i.e. to turn money into more money. So, in order to get the
things you need, you have to convince some capitalist that they need
you, i.e. that employing you allows them to make more profit than they
would make otherwise. But capitalists only need a limited number of
personnel, much less than there are people on Earth, so that’s the big
hurdle which most people fail to overcome (when speaking on a global
scale).
A second problem is that, as a worker, you don’t sell the results of
your labor, you sell your labor power (workers, or would-be workers,
are people who don’t have anything to sell than their labor power—most
people haven’t). The deal by selling your labor power is: you get paid
the value of your labor power (NOT the value of your labor—labor
doesn’t have value, it produces values), and the value of your labor
power is what you need in order to survive (according to your local
community standard of living). In return, you have to give your full
labor power (according to the local standard for the length of the work
day/week, say, 8 hours a day/40 hours a week). If the production of the
goods you need for your standard of living takes 20 hours a week, you
still have to work 40 hours—the other 20 hours are the “surplus”—they
go to the capitalist, become their profit and are, in fact, the only
reason why they employed you in the first place.
So the problem isn’t unfair prices, it’s the fact that people have to
sell their labor power, because they don’t have anything else to sell.
And this situation will necessarily arise in a market system (even in a
fictitious scenario where initially everybody had some means to
production—inevitable, some people would go bankrupt and again have
only their labor power to sell).
In contrast, after classical economics was abandoned economists have
simply said that subjective preference rules supreme—price is
whatever consumers are willing to pay. (nothing wrong whatsoever
with charging anything I can for a bottle of water in a desert
regardless of what it actually cost me to produce and transport that
good). The only problem I have with LTV is making labor the most
important “source” of value. To me, capitalism would be great if we
actually had univeral ownership of capital. Pretty much everybody
would love to receive income without laboring!
Capital doesn’t create value, only labor does. Money doesn’t turn
itself into more money by itself (you could send a dollar to the moon
and leave it there for 100 years to find out whether money can multiply
by itself).
Rather, capital only allows you to get “income without laboring” because
it gives you the means to employ other people’s work. It’s their
surplus labor which pays your income.
I find the theory of Binary Economics interesting in this respect
because it emphasizes the ever increasing power of technology to
actually “do work.” If we instead emphasize the role of technology
as primary it leads to new perspectives. What happens with the
advent of true personal manufacturing? There is no more average
price when everything is a custom order. Do we have one theory of
value for standardized commodities and another for custom goods? I
don’t have answers to any of this now, I’m just not sure the
classical LTV can function for these situations.
LTV is only meant to work for situations where people trade their work,
or the results of their work. If everybody had a personal manufacturing
device catering for all her/his needs, trade would no longer be
necessary, and value would no longer exist. That’s a rather fancy
scenario, but there are other, more realistic scenarios that make
value, and trading, superfluous. For example, when people employ
commons-based peer production
[http://en.wikipedia.org/wiki/commons-based_peer_production] to jointly
produce what they need, so they don’t have to trade and sell their
labor power. I’ve written about that in my book, “From Exchange to
Contributions” [http://peerconomy.org/wiki/Main_Page].
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