Readers who infer from the title of this post that silliness is to follow would do well to heed the wisdom of their own inference and get out now if silliness is not their thing. Readers hoping for economics might likewise flee to the mountains to avoid persecution of their senses. Readers reaching this particular sentence of the post’s introduction are assumed to be as ready for silliness as its author and can be under no illusions as to what follows. To those of you remaining, congratulations: you are the heart and soul of what makes Heteconomist what it is.
In the comments section of the previous post, which considered the idea of labor as the sole creator of value, a participant provided a link to an interesting lecture by Steve Keen. Although I had not seen the lecture prior to posting, broadly speaking I have been aware of Keen’s developing perspective on Marx’s theory of value since reading the first edition of Debunking Economics. It may not have been evident to most readers, but partly I had Keen’s critique in mind when writing the post. It seems to me that his analysis highlights a need for those of us who defend Marx’s theory to explain why it is correct to consider labor the sole creator of value. In entertaining one possible rationale, the previous post was not intended as a proof of anything. Otherwise, I would have titled it a proof rather than a musing. But now it might be worth backtracking a little to provide some background on the rationale for that post.
I am pondering the legitimacy or otherwise of Marx’s claim that labor is the sole source of value in capitalist commodity production. It is not clear that such a claim can be proved. Sometimes it is simply presented as an assumption. Other times various motivations or intuitions are offered. Here are some thoughts of that nature.
When it comes to the means of production, society can be considered as falling into two basic groups – ‘owners’ and ‘non-owners’. Acceptance of a tax-driven currency can be achieved through the exertion of pressure on one or other of these groups, or both. In a low-tech, labor-intensive economy, the state essentially compels non-owners to supply labor services to owners. In a high-tech, capital-intensive economy, there is less need for such compulsion. It will become increasingly viable to place the initiative on owners to supply final output in exchange for the currency as technology continues to advance.
In the previous post, we encountered the views of a small subset of Internet Marxists who appear to adhere to a rather hard-line, Chicago-like neoclassical understanding of the capacities of the state. There is another small subset, the Austrian Metalist Internet Marxists (or Austrian Marxists, for short), who appear to believe that a state currency not “backed” by gold must surely have zero value or, at the very least, command a level of acceptance likely to crumble at any moment. In reality, the choice between a gold standard and fiat money changes little of significance when it comes to the value of the currency or its acceptance, although it does of course affect the policy space a state leaves open to itself for as long as the currency arrangement remains in place.
There appears to be a small subset of Internet Marxists – emphasis on the words small subset – who embrace Neoclassical or Austrian ideas. Take, for instance, the Freshwater Say’s Law Internet Marxists, who maintain that the state is powerless to do anything to alter the level of capitalist production and employment. In the end, the state will supposedly drag down capitalists under the weight of its own “unproductive” activity or bring on a Fiscal Crisis of the State. This will be the day on which the issuer of the currency somehow runs out of its own currency.
This is surely a time of year when we can take a step back to ponder any crazy thought that might enter our heads. Nothing – in the theoretical realm – should be considered unthinkable. Some may be tempted to disagree, a few paragraphs along, but that could only add to the fun. Hopefully I will not be permanently banished from the internet for expressing such idle curiosities. If this is the price that must be paid, it won’t be pleasant, but so be it.
It has been pretty serious around here of late. Perhaps that is excuse enough to let our proverbial hair down for a week or so. That hair may be more proverbial for some than others. But who’s really counting at this time of year? It’s not clear, exactly, what Heteconomist might actually have done to deserve credit for the holiday amusement, other than to slap together a few YouTube videos featuring the comic and/or musical talents of others. But here, too, who’s really going to notice? It’s the festive season.
In recent parts of the series, we have been considering the temporal single-system interpretation (TSSI) of Marx’s theory of value. We have considered how, in the TSSI, the values of constant capital and variable capital depend upon the prices that prevail when inputs and labor power enter production. In contrast, the values and prices of output are only determined once production is complete and the commodities are ready for sale on the market. This conception of value and price determination requires a more general formula for the MELT (or ‘monetary expression of labor time’). The basic meaning of the MELT remains the same. It is still the amount of monetary value attributable to an hour of socially necessary labor or, conversely, the amount of labor, represented in commodities, that a unit of the currency can command. But there is now a need to account not only for the rate at which living labor creates monetary value but also the rate at which monetary value is transferred from the means of production to final output. In the TSSI, the method for calculating the MELT needs to be modified under most circumstances.
The previous post introduced the temporal single-system interpretation (TSSI) of Marx. It was seen that, under this interpretation, Marx’s three aggregate equalities all hold. It was noted that the same can be said for other single-system interpretations. As long as constant capital and variable capital are defined as the amounts paid for the means of production and labor power, the equalities are logically valid. In this post, a possible rationale is offered for defining constant and variable capital in this way. Attention then turns to Marx’s own writings on the matter to consider whether the single-system understanding accords at all with his view.