Understanding the labour theory of value: neologisms needed?

[Die Neue Zeit]

I posted this on another board to musings by a "Miser":


Various terms need to be used in order to understand the difference between the Marxist socially necessary labour theory of value, the classical labour theory of value, and the so-called "labour theory of price" (and I thank the work of the non-Marxists Steve Keen and Michael Hudson for helping me crack the Das Kapital "code" :D ):

Value
Use Value
Socially Necessary Labour
Exchange Value
Price
Surplus Value
Profit

All "four values" above are better expressed as units of time and not as monetary values, and are best applied at the societal level and not the level of the firm. "Value" by itself is socially necessary labour.

The rough equivalent of "use value" is "utility" (obviously not as understood by neoclassicals and Austrians). Production of use values is socially necessary labour. Outside of this scope, however, is unproductive labour like that of the self-employed (who you most likely are, hence your staunch, atomized "individualism").

Different from use value is "exchange value." Generally, one can assume that this exchange value is the price, especially in order to appreciate the conflict between use value and exchange value. Under capitalism, all of the exchange value is socially necessary.

Assuming that the exchange value is greater than the use value, the difference between the two is surplus value. This is not identical to your beloved concept of "profit," but this is the source of it.

Why the distinction? Because surplus value has other purposes besides profit. Without this, one cannot replace worn-down equipment, buildings, etc. Without this, one cannot pay for those aspects of public administration that are unproductive. Without this, one cannot take care of retirees, the disabled, etc.

Also, surplus value is the source of capitalist overproduction: all those goods and services being wasted away because of your beloved market anarchy.

In summary, surplus value is three-parts positive, two-parts negative. The aim, therefore, is for the working class to take power in order to get rid of or minimize the negative parts.

As for "profit," Marxist political economy isn't needed to explain this. Classical political economy is more than enough. "Profit" comes in the form of "entrepreneurial"/"industrial" profits on the one hand - and interest ("greedy bankers"), ground rent (absentee landlordism), royalties (for patents, trademarks, copyrights, etc.), monopoly rent, and less discussed forms of rent (such as in the broadcast spectrum) on the other.



It seems to be there's still a debate in Marxist political economy about how to categorize the functions described in the red text above, which comes straight out of Marx's critique of the Gotha Program. Is this use value? Is this surplus value? If the latter (as indicated above), how does the status change from surplus value to use value given the change to the communist mode of production?

[In modern business, "replacement value" is the obvious term used to describe the cost of replacing worn-down equipment, buildings, etc.]

[mikelepore]

I don't think this part is right:
Assuming that the exchange value is greater than the use value, the difference between the two is surplus value. This is not identical to your beloved concept of "profit," but this is the source of it.

The source of surplus value is the difference between these two things: (A) the exchange value of the product; and (B) the total of the exchange value of the tools and materials (constant capital) and the exchange value of the labor power (variable capital).

Use value does not belong in that expression, and the phrase "the exchange value is greater than the use value" is not a possible comparison. Use value is not quantified at all. Use value is an unquantified characteristic, for example, the fact "copper is used for making pipes and wires." The only significance of use value is that, without its presence, the article wouldn't be a commodity.

The use value of labor power, to the capitalist who buys it, is the fact that an expansion of exchange value occurs when labor is performed, which is when "labor power" become "labor." For this reason, labor power is the only commodity that is called variable capital.

[mikelepore]

I also think this part is wrong:


Because surplus value has other purposes besides profit. Without this, one cannot replace worn-down equipment, buildings, etc. Without this, one cannot pay for those aspects of public administration that are unproductive. Without this, one cannot take care of retirees, the disabled, etc.

Replacement of the building and equipment is definitely not part of surplus value. It was already included in the term called "fixed capital", which is part of the larger term "constant capital." It's part of the minuend of the arithmetic subtraction of which "surplus value" is the difference.

Employer-controlled pensions for retirees is a form of deferred wages. The worker produces wealth today, but you will get paid part of your wages perhaps thirty years later.

It's true that surplus value includes more than that profits, but the additional terms in surplus value are not those that are named here. In addition to profit, surplus value includes all results of production that the worker does not receive back in the form of wages: the worker's taxes, the capitalist's dividend taxes, the capitalist's capital gain taxes, and all of the capitalist's business expenses that take the form of sharing part of the extraction with other capitalists, such as advertising, insurance, brokerage, subcontractor fees, and corporate bond interest.

Surplus value also includes all forms of unnecessary waste, and wasted production capacity, such as pollution followed by cleanup, and generation of crime followed by punishment. I would divide waste into two types: useless production and lost potential. The military budget is part of surplus value because it is actual production but its existence is waste, whereas the cost of involuntary unemployment is part of surplus value because it is wasted capacity.

The role of the taxes needs additional clarification. What about those part of tax revenues that workers get back?

That part of taxes that comes back to the worker as retirement income (in the U.S., Social Security disbursements) are deferred wages, not surplus value. The government's role is mainly a pooling effect. If you live many years you may get more out of the program than you earlier paid into it, but if you die young you will draw out less than you earlier paid in.

That very small part of taxes that goes to support disabled people is an exception to the assumptions of the Marxian first order model. The model uses terms in which one employer exploits one worker, and this is not an exact representation of the fact that the entire capitalists class as a class exploits the entire working class as a class.

[ZeroNowhere]

Use value is an unquantified characteristic, for example, the fact "copper is used for making pipes and wires."To clarify, Marx defines a use value as "something useful." How exchange value can be 'higher than use value' is something I am rather uncertain about. But then again, the fact that value, exchange value and use value all have 'value' in their names does tend to confuse people (use-value is the opposite of value, but many seem to think that Marx took 'value' and divided it into use-value and exchange-value or some crap). Also, profits can be used to expand production, I do not see why this requires neologisms. I mean, we have Deleuze and Guattari making up enough sexy unnecessary neologisms for the rest of us. Also, often enough companies can't realize all of their surplus value as profits, but have to spread the surplus value around (rent, interest, etc). This, again, doesn't seem to require neologisms.
Also, the magnitude of value is determined by socially necessary labour time, rather than value being the socially necessary labour time (in which case we would still have values under socialism, whereas Marx was rather clear that this wasn't the case, for example, in the 'Critique of the Gotha Program'). And, of course, if this is all better expressed as units of time, one would have to wonder why Marx generally stuck to expressing them in terms of currency. And seriously, we're supposed to express exchange-value in terms of labour time? Exchange value is the proportion of some other commodity which a commodity is considered equal to. One of Marx's examples was a coat being the exchange value of a certain amount of yards of linen. This is, obviously enough, expressed in money, as the exchange-value of any commodity is a certain amount of money. Of course, if one coat is equal to, say, 10 yards of linen, then this means they must possess equal amounts of something, this being value.

Note:I will probably get back to this, I have to go now, so I just jotted down some stuff, and will edit this later.

[Dave B]

There is so much wrong with this I am not quite sure I know where to begin.

It seems to imply that ‘use value’ is one of the "four values" and can be expressed in units of time or labour time .

Use value isn’t a value like that.


To an individual one thing may have more use value than another, thus to an Eskimo a pair of warm socks may have a greater use value than a wine cooler but as far as the concept of use value on its own is concerned it stops there.

Its relationship to value proper can and does enter into things later but in a different kind of context.


In fact things can be useful or have use value without having any labour time embodied within it at all eg air;


"A thing can be a use value, without having value. This is the case whenever its utility to man is not due to labour. Such are air, virgin soil, natural meadows, &c"

(Capital Vol. I, end of Section 1, Chapter 1)

That is not to say that such things as virgin soil, natural meadows, oil deposits can’t have an exchange value where somebody who so happens to have ‘monopoly’ ownership of an invariably natural use value can’t charge for the use of it.

Karl covered it in volume III under differential ground rent and something called surplus profit mainly in the situation of variable productivity of agricultural land.

Although it does also cover mineral extraction as well which he touched on. And also ownership useful fast flowing streams in convenient places for water mills etc.

The average rate of profit also feeds in to the exchange value of the use values of natural resources etc. It is too complex to go into here but it was fully considered and gone into.

Adam Smith had his own ideas about the concept of ‘unproductive’ labour of the self employed and opera singers etc, so I guess that is where that is coming from. Karl disagreed with it and went into it in Volume Four/ Theories of Surplus Value.


The replacement worn-down equipment, buildings, etc does not come out of surplus value it comes out of constant capital. So surplus value is what is left over from selling the product after you have paid the workers, bought a fresh supply of raw materials and paid for the replacement of used up ‘fixed capital’.

Karl used the example replacing used up spindles in cotton spinning factories I think.

It is possible for the capitalist to continue without replacing depreciated fixed capital. But in that case the value of the fixed capital that he doesn’t replace or maintain or plough back in is just a matter of him taking out or reducing the amount of capital that he has invested in the business and is not profit.

(Karl got him self into a mess in leaving out un-consumed fixed capital in a turnover from the rate of profit that Fred sneaked in with a patch with his ‘actual rate of profit in Volume III.)

Areas of activity that are funded out of surplus value is another complex subject. A good rule of thumb is if we wouldn’t do it in socialism then it is not necessary labour and therefore it comes out of surplus value or surplus labour.

There still would be a concept in socialism of ‘value’ in the sense of how long it took or takes to make something mainly as a way of figuring out the optimal way of producing things.

Which is what Karl meant in the infamously misinterpreted quote;

Capital Vol. III Part VII, Revenues and their Sources, Chapter 49. Concerning the Analysis of the Process of Production


Secondly, after the abolition of the capitalist mode of production, but still retaining social production, the determination of value continues to prevail in the sense that the regulation of labour-time and the distribution of social labour among the various production groups, ultimately the book-keeping encompassing all this, become more essential than ever.

http://www.marxists.org/archive/marx/works/1894-c3/ch49.htm (http://www.marxists.org/archive/marx/works/1894-c3/ch49.htm)

Engels also dealt with it in a similar vein in Anti Duhring.

Also in free access socialism people will take into consideration the relationship between use value and value, or the amount of effort that has gone into making something.

So we may still find diamonds useful as bodily ornaments but would we or a socially responsible individual wish to ‘consume’ one given the amount of effort that went into producing it.

Or would what you got out of it, the use value, be ‘worth’ the effort expended to produce it .

Perhaps if people still want them that much they could spend a month of their own time digging one out for themselves.

Just as Robinson Crusoe on his island would balance out the amount of time and therefore the value of something with the use he would get out of it.

In fact in free access socialism I have advocated ‘keeping value’ and that it would be like nutritional information on food products so you could balance how much you subjectively wanted something with its social cost or value.

It might not be so obvious for instance that one type of food product that might be for you almost as desirable and useful as another and therefore an adequate substitute has in fact taken not as long to produce and therefore not as ‘valuable’ than another.

Anyway from footnote first and Anti-Duhring on value in socialism were he is bouncing around a bit on the ‘oblique and meaningless value’ and the other value

Anti-Dühring by Frederick Engels 1877, Part III: Socialism, IV. Distribution

Footnote;


As long ago as 1844 I stated that the above-mentioned balancing of useful effects and expenditure of labour on making decisions concerning production was all that would be left, in a communist society, of the politico-economic concept of value. (Deutsch-Französische Jahrbücher, p. 95) The scientific justification for this statement, however, as can be seen, was made possible only by Marx's Capital.





From the moment when society enters into possession of the means of production and uses them in direct association for production, the labour of each individual, however varied its specifically useful character may be, becomes at the start and directly social labour. The quantity of social labour contained in a product need not then be established in a roundabout way; daily experience shows in a direct way how much of it is required on the average.

Society can simply calculate how many hours of labour are contained in a steam-engine, a bushel of wheat of the last harvest, or a hundred square yards of cloth of a certain quality. It could therefore never occur to it still to express the quantities of labour put into the products, quantities which it will then know directly and in their absolute amounts, in a third product,


Eg gold



in a measure which, besides, is only relative, fluctuating, inadequate, though formerly unavoidable for lack of a better one, rather than express them in their natural, adequate and absolute measure, time.

Just as little as it would occur to chemical science still to express atomic weight in a roundabout way, relatively, by means of the hydrogen atom, if it were able to express them absolutely, in their adequate measure, namely in actual weights, in billionths or quadrillionths of a gramme. Hence, on the assumptions we made above, society will not assign values to products. It will not express the simple fact that the hundred square yards of cloth have required for their production, say, a thousand hours of labour in the oblique and meaningless way, stating that they have the value of a thousand hours of labour.

It is true that even then it will still be necessary for society to know how much labour each article of consumption requires for its production. It will have to arrange its plan of production in accordance with its means of production, which include, in particular, its labour-powers. The useful effects of the various articles of consumption, compared with one another and with the quantities of labour required for their production, will in the end determine the plan. People will be able to manage everything very simply, without the intervention of much-vaunted "value".


http://www.marxists.org/archive/marx/works/1877/anti-duhring/ch26.htm (http://www.marxists.org/archive/marx/works/1877/anti-duhring/ch26.htm)

I am ignoring the pension, retiree and disabled thing as I am bored now but I have done it before.