ComradeRed
21st January 2006, 21:57
[This user has since left the forum, but I'm going to keep this thread, as it contains lots of valuable stuff. PM me for queries - Bobkindles]
How I will work this thread is move chapter to chapter and "lecture" and the subject. I'll start chapter one and anyone can feel free to discuss it, then chapter two, and more discussion, then chapter three, and so forth.
I do not know how to handle such a task of translating equations into images, but rather than linking the image of the equations (I would have no idea how to translate LaTeX into .jpeg or .gif), I will post the code and expect those who want a more mathematically intensive course to copy/paste it and observe the formulae here (http://sciencesoft.at/index.jsp?link=latex&ochem=false#pic). The code is in the appendix.
Chapter One: On Value
First, in regards to definitions, there will be very few. One I feel that Sraffa defines well is the Ricardian definition of value (in regards to the industry sectors' output): There is a unique set of exchange-values which if adopted by the market restores the original distribution of the products and makes it possible for the process to be repeated; such values spring directly from the methods of production.
Now, Ricardo's theory of value was very interesting because there are many interpretations of it. However, I will entertain the one relevant to Marx.
There are essentially four "axioms" that Ricardo (and Smith) laid down for their theories:
Value is "socially necessary labor time";
Under capitalism, when markets are in equilibrium, commodities exchange in proportion to the amount of value they contain;
Under capitalism, the ability to perform work, labor-power, has itself become a commodity;
In production, labor transfers its value directly to the product, while the commodities used up in production transfer their value indirectly.
With respect to Ricardo, he has an alternate, hidden plan. A sort of "93%" labor theory of value. Consider this passage from chapter one:
Originally posted by Ricardo
Possessing utility, commodities derive their exchangeable value from two sources: from their scarcity, and from the quantity of labour required to obtain them. There are some commodities, the value of which is determined by their scarcity alone. No labour can increase the quantity of such goods, and therefore their value cannot be lowered by an increased supply. Some rare statues and pictures, scarce books and coins, wines of a peculiar quality, which can be made only from grapes grown on a particular soil, of which there is a very limited quantity, are all of this description. Their value is wholly independent of the quantity of labour originally necessary to produce them, and varies with the varying wealth and inclinations of those who are desirous to possess them. These commodities, however, form a very small part of the mass of commodities daily exchanged in the market. -- emphasis added
What Ricardo really seems to be trying to state is that supply and demand is what determines value, yet supply is determined by labor and demand is in turn determined by such a relation (of labor and supply). Thus everything relies on labor!
That is to say that everything relies on labor, which in turn regulates supply and demand (which determines everything in the economy). That is my opinion, yet it is what Ricardo seems to be implying.
One note that is worthy of mentioning is Ricardo's belief that utility is the foundation for value. This is a correct notion that he has, it makes intuitive sense (why would anyone buy something useless? This of course goes to the commodity fetishism, which we'll discuss when we get to Marx); Marx adopts such a position, yet it seems to be a common notion to the classical economists.
Curiously, Ricardo seems to ask for the labor theory of value in a unique way. He notes: If the quantity of labour realized in commodities, regulate their exchangeable value, every increase of the quantity of labour must augment the value of that commodity on which it is exercised, as every diminution must lower it.
Essentially what Ricardo asks for is that the commodities which go into the production of a given good be reduced down to dated labor. The value is directly related to it. (See Appendix).
The ultimate value per commodity is the total labor per output. (See appendix).
But what about price? Value is fine and all, but it is too abstract and decoupled from reality. Ricardo aptly points out that (in his time) money is Gold, and gold is a commodity, thus money itself is a commodity. This is the source of inflation, deflation, and so forth.
However, how could we distinguish inflation from a decrease in output (with the amount of capital and labor remaining the same)? Or from increasing production and firing workers? Or any other anamoly?
This seems to be Ricardo's escape plan, if the Labor Theory of Value doesn't work, it is because either the change in supply of money or the commodity's value is simply determined by rarity alone.
One thing that I thought was rather interesting was Ricardo's passage:
It cannot then be correct, to say with Adam Smith, 'that as labour may sometimes purchase a greater, and sometimes a smaller quantity of goods, it is their value which varies, not that of the labour which purchases them;' and therefore, 'that labour alone never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can at all times and places be estimated and compared;' - but it is correct to say, as Adam Smith had previously said, 'that the proportion between the quantities of labour necessary for acquiring different objects seems to be the only circumstance which can afford any rule for exchanging them for one another'; or in other words, that it is the comparative quantity of commodities which labour will produce, that determines their present or past relative value, and not the comparative quantities of commodities, which are given to the labourer in exchange for his labour.Labor ultimately regulates the value of labor (remember, labor itself is a commodity). Even if you adopt Ricardo's ideas that corn regulates the value of labor, labor regulates the value of corn. This seems to be a bit paradoxical: labor isn't paid its full value but the value of corn. Where does the difference go? <HINT HINT, NUDGE NUDGE, WINK WINK>
For section 3, "Not only the labor applied immediateley to commodities affecting their value, but the labor also which is bestowed on the implements, tools, and buildings, with which such labor is assisted." Curious proposition.
Again, this is covered more mathematically in the appendix, but this is a consistent way to calculate the value of an item: add all the labor that was put into the "implements" of production and the labor just applied.
It is something to think about when reading Marx.
"There can be no rise in the value of labor without a fall of profit." (Section 4)
This is important to consider when reading Marx, for there really is no rise in wage without a fall in profit. Some see this as the workers "stealing" from the capitalists (cough*AynRand*cough), but this is nonsense.
Profit, as Ricardo seems to be hinting at, is from the workers' labor; not "supply and demand".
APPENDIX
\documentclass[12pt]{article}
\begin{document}
\begin{equation}
V=\sum^{x}_{i=0}\ell_{i}
\end{equation}
$V$ is value, $x$ is the number of production periods up until now, $i$ is a counter of the production periods that include the present, and $\ell_{i}$ is the (dated and recent) labor.
If we were to include Ricardo's definition of value, then for a final commodity $C$ we would need a boolean (a mathematical function that returns 1 or 0 if certain conditions are met). In our case of utility, the boolean is $\mu$ that determines if the consumer has placed utility in the commodity (1 if there is utility, 0 if there is none), and the commodity equation is
\begin{equation}
C=(\mu)(V)=\mu\sum^{x}_{i=0}\ell_{i}
\end{equation}
Thus there is value if and only if there is utility and there is no value if there is no utility. Utility plays no role in terms of "magnitude" of utility but as to whether it exists or does not.
The value per commodity follows simply from this as
\begin{equation}
\frac{\mu\sum^{x}_{i=0}\ell_{i}}{C}
\end{equation}
\end{document}
How I will work this thread is move chapter to chapter and "lecture" and the subject. I'll start chapter one and anyone can feel free to discuss it, then chapter two, and more discussion, then chapter three, and so forth.
I do not know how to handle such a task of translating equations into images, but rather than linking the image of the equations (I would have no idea how to translate LaTeX into .jpeg or .gif), I will post the code and expect those who want a more mathematically intensive course to copy/paste it and observe the formulae here (http://sciencesoft.at/index.jsp?link=latex&ochem=false#pic). The code is in the appendix.
Chapter One: On Value
First, in regards to definitions, there will be very few. One I feel that Sraffa defines well is the Ricardian definition of value (in regards to the industry sectors' output): There is a unique set of exchange-values which if adopted by the market restores the original distribution of the products and makes it possible for the process to be repeated; such values spring directly from the methods of production.
Now, Ricardo's theory of value was very interesting because there are many interpretations of it. However, I will entertain the one relevant to Marx.
There are essentially four "axioms" that Ricardo (and Smith) laid down for their theories:
Value is "socially necessary labor time";
Under capitalism, when markets are in equilibrium, commodities exchange in proportion to the amount of value they contain;
Under capitalism, the ability to perform work, labor-power, has itself become a commodity;
In production, labor transfers its value directly to the product, while the commodities used up in production transfer their value indirectly.
With respect to Ricardo, he has an alternate, hidden plan. A sort of "93%" labor theory of value. Consider this passage from chapter one:
Originally posted by Ricardo
Possessing utility, commodities derive their exchangeable value from two sources: from their scarcity, and from the quantity of labour required to obtain them. There are some commodities, the value of which is determined by their scarcity alone. No labour can increase the quantity of such goods, and therefore their value cannot be lowered by an increased supply. Some rare statues and pictures, scarce books and coins, wines of a peculiar quality, which can be made only from grapes grown on a particular soil, of which there is a very limited quantity, are all of this description. Their value is wholly independent of the quantity of labour originally necessary to produce them, and varies with the varying wealth and inclinations of those who are desirous to possess them. These commodities, however, form a very small part of the mass of commodities daily exchanged in the market. -- emphasis added
What Ricardo really seems to be trying to state is that supply and demand is what determines value, yet supply is determined by labor and demand is in turn determined by such a relation (of labor and supply). Thus everything relies on labor!
That is to say that everything relies on labor, which in turn regulates supply and demand (which determines everything in the economy). That is my opinion, yet it is what Ricardo seems to be implying.
One note that is worthy of mentioning is Ricardo's belief that utility is the foundation for value. This is a correct notion that he has, it makes intuitive sense (why would anyone buy something useless? This of course goes to the commodity fetishism, which we'll discuss when we get to Marx); Marx adopts such a position, yet it seems to be a common notion to the classical economists.
Curiously, Ricardo seems to ask for the labor theory of value in a unique way. He notes: If the quantity of labour realized in commodities, regulate their exchangeable value, every increase of the quantity of labour must augment the value of that commodity on which it is exercised, as every diminution must lower it.
Essentially what Ricardo asks for is that the commodities which go into the production of a given good be reduced down to dated labor. The value is directly related to it. (See Appendix).
The ultimate value per commodity is the total labor per output. (See appendix).
But what about price? Value is fine and all, but it is too abstract and decoupled from reality. Ricardo aptly points out that (in his time) money is Gold, and gold is a commodity, thus money itself is a commodity. This is the source of inflation, deflation, and so forth.
However, how could we distinguish inflation from a decrease in output (with the amount of capital and labor remaining the same)? Or from increasing production and firing workers? Or any other anamoly?
This seems to be Ricardo's escape plan, if the Labor Theory of Value doesn't work, it is because either the change in supply of money or the commodity's value is simply determined by rarity alone.
One thing that I thought was rather interesting was Ricardo's passage:
It cannot then be correct, to say with Adam Smith, 'that as labour may sometimes purchase a greater, and sometimes a smaller quantity of goods, it is their value which varies, not that of the labour which purchases them;' and therefore, 'that labour alone never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can at all times and places be estimated and compared;' - but it is correct to say, as Adam Smith had previously said, 'that the proportion between the quantities of labour necessary for acquiring different objects seems to be the only circumstance which can afford any rule for exchanging them for one another'; or in other words, that it is the comparative quantity of commodities which labour will produce, that determines their present or past relative value, and not the comparative quantities of commodities, which are given to the labourer in exchange for his labour.Labor ultimately regulates the value of labor (remember, labor itself is a commodity). Even if you adopt Ricardo's ideas that corn regulates the value of labor, labor regulates the value of corn. This seems to be a bit paradoxical: labor isn't paid its full value but the value of corn. Where does the difference go? <HINT HINT, NUDGE NUDGE, WINK WINK>
For section 3, "Not only the labor applied immediateley to commodities affecting their value, but the labor also which is bestowed on the implements, tools, and buildings, with which such labor is assisted." Curious proposition.
Again, this is covered more mathematically in the appendix, but this is a consistent way to calculate the value of an item: add all the labor that was put into the "implements" of production and the labor just applied.
It is something to think about when reading Marx.
"There can be no rise in the value of labor without a fall of profit." (Section 4)
This is important to consider when reading Marx, for there really is no rise in wage without a fall in profit. Some see this as the workers "stealing" from the capitalists (cough*AynRand*cough), but this is nonsense.
Profit, as Ricardo seems to be hinting at, is from the workers' labor; not "supply and demand".
APPENDIX
\documentclass[12pt]{article}
\begin{document}
\begin{equation}
V=\sum^{x}_{i=0}\ell_{i}
\end{equation}
$V$ is value, $x$ is the number of production periods up until now, $i$ is a counter of the production periods that include the present, and $\ell_{i}$ is the (dated and recent) labor.
If we were to include Ricardo's definition of value, then for a final commodity $C$ we would need a boolean (a mathematical function that returns 1 or 0 if certain conditions are met). In our case of utility, the boolean is $\mu$ that determines if the consumer has placed utility in the commodity (1 if there is utility, 0 if there is none), and the commodity equation is
\begin{equation}
C=(\mu)(V)=\mu\sum^{x}_{i=0}\ell_{i}
\end{equation}
Thus there is value if and only if there is utility and there is no value if there is no utility. Utility plays no role in terms of "magnitude" of utility but as to whether it exists or does not.
The value per commodity follows simply from this as
\begin{equation}
\frac{\mu\sum^{x}_{i=0}\ell_{i}}{C}
\end{equation}
\end{document}