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sov0k
[P. Cockshott]: {https://www.youtube.com/watch?v=JNIUK7d8bRM}
[Zulu]: There are many ways in which 1st-worldism is erroneous, but the fact that Paul left constant capital out of the equation while comparing the supposed PoL between workers in India and the US is plain embarrassing. Same as saying an excavator operator is like 1000 times more productive than a worker with a shovel (and should draw a 1000 times more wage...) Also, the argument that we can't have a certain theory, because it doesn't support our preferred solutions, is blatantly unscientific.
[P. Cockshott]: There is a more subtle sense in which I left constant capital out - I left out the labour content of the depreciated constant capital. But unless the workforce producing means of production for the US steel industry was of the order of half a million workers, which is very unlikely, it would not change the substance of the argument. If ZuluDFA wants, he could use the Indian and US input output tables to estimate how many workers each country had working indirectly to maintain the constant capital stocks in their steel industries.
[Zulu]: Well, the depreciation of constant capital corresponds with its value transferred by workers onto the product (only on top of which they add new value), and that's exactly what I was driving at. As for the country-by-country output tables, those are considered largely outdated by us 3rd-worldists, since many workers in this planet's global supply chains work to indirectly maintain constant capital stock in other countries, not just the mass of consumer goods on which the workers in the imperialist core thrive.
[John Lowrie]: as Marx explains, "The value of the commodity... is determined by the labour which is required to produce the the whole amount....and not by the particular labour-time each individual capitalist... requires." However the market value is determined by the weighted average. Some capitalists produce under better and others under worse conditions than the average, but, "Which of the categories has a decisive effect on the average value will in particular depend on the numerical ratio or the proportional size of the categories... The general result is this that the general value of the products of this group is the same for all. The commodities thus represent unequal quantities of labour-time. The commodity produced under more favourable conditions (i.e. US steel) contains less labour-time than that produced under less favourable conditions (i.e. Indian steel) but it sells at the same price and has the same value AS IF it contained the same labour time, though this is not the case.
[Zulu]: So, Indians have to put in longer hours than Americans to produce the same amount of steel, which can only have one value, figured out in the global market. But what does the "better or worse conditions" part mean? It generally means - more or less constant capital available for the capitalists to command to be put in operation by the workers. And the more constant capital is put in operation, the more of its value is transferred onto the product, hence less labor time required per unit of the product. Thus the higher productivity of labor means more of the value of constant capital transferred per hour, not more new value added to it.
And, by the way, what about the value of labor power? Surely it must be given the same treatment as steel... And it is, only not by the 1st-worldist Marxists, but by individual capitalists, who seek to outsource as much as they can to places where the "conditions" are "worse", but they don't have to pay imperial premiums purchasing it at a price much higher than its value...
[Dempa3]: If we created a socialist economy, which disregards national borders, and we decided that everyone gets a labour token for one hour of labour, wouldn't electronics become more expensive (in terms of how much I need to work to be able to afford the product), because of that my time, and the time of the African miner, and the time of the Chinese manufacturer is valued the same? If so, wouldn't that support the unequal exchange idea? China has a well developed electronics industry, and some minerals can only be extracted in certain parts of the world, so how do we take that in to account? How can the price of coffee be explained? I do not know of rich countries that grow coffee on any significant scale. But coffee, in terms of how much labour one gets in one cup, is cheap. If I would pay 1 hour of my labour for one hour of growing coffee,
I wouldn't be able to afford it, and as far as I know, there are no significantly more efficient ways of growing coffee at the moment. How does one reconcile these things? Many thanks in advance!
[Zulu]: That's why not a single 1st-worldist is really ready to disregard national borders. They maintain that productivity in the imperialist core is much higher than that in the periphery, as well as the value of labor power. And the workers in the periphery should only work better to improve their countries' productive forces first and then maybe their national labor tokens will appreciate... It's called social imperialism, or social fascism.
[P. Cockshott]: {https://www.youtube.com/watch?v=QOln2yAfh9Q}
[Zulu]: While this certainly will strengthen the resolve of your 1st-worldist followers, as far as I am concerned this is an exercise in futility, and just adds to the embarrassment. You say it yourself that you weren't expecting the organic composition of capital to turn out to be lower in the industrially developed USA than in underdeveloped India. Of course, you didn't expect it, because it shouldn't be possible, according to Marx. Yet somehow paradoxically the US productivity of labor turns out to be higher, which is to be expected only if the organic composition of capital is higher there. Hence, either classical Marxism has flaws, or the methodology of using comparative statistics based on entirely bourgeois metrics of "value added" is flawed. Or both. Personally, I thinks it's both, but let's focus on the latter for the moment.
First of all, "value added" is denominated in USDollar, which is no longer money as Marx understood it, because at least since 1971 it's a completely fiat means of exchange, more like Proudhonian free credit, and cannot really serve as a reliable measure of value. Secondly, when Bob buys an apple from Alice for $0.5 and a minute later resells it to Charlie for $0.6, that $0.1 mark up in price is counted as "value added" by bourgeois economists and statisticians, which obviously has nothing to do with production of value in the Marxian sense. Therefore, these comparative tables are inadmissible as evidence in the court of true political economy.
But there is a simple and obvious solution to both the paradoxes in the first paragraph and the fact that Trump had to impose protective tariffs to give the super-productive American steel industry (and the coal industry) a chance in the competition against 10 times less efficient 3rd-world producers. The labor power in the US (and other 1st-world countries) is hugely overpriced - that's the long and short of it... OK, maybe a little longer version would include Lenin's "The Highest Stage", even certain passages from Engels concerning the whole business of "bribing the labor aristocracy", which is facilitated by unequal exchange. Which, by the way, Marx himself did not deny, as he stipulated in Vol. III (if I remember correctly) that exchange of commodity equivalents takes place only in pre-capitalist conditions of simple commodity production, while in capitalism market prices decouple from the intrinsic SNLT value of commodities and factor in average rate of profit and land rent.
Therefore, calling the very idea of unequal exchange "un-Marxist" is un-Marxist. The 3rd-worldists just think that exchange became even more and more unequal over the past hundred years.
And if you seriously wish to theoretically debunk 3rd-worldism, you must address not a random youtube commentator, but the work of John Smith: [1], [2], [3].
I'm sure you will remain entrenched in the positions of century-old misconceptions, but still may come up with some valid criticism, which could be useful for further development of 3rd-worldism. Will be looking forward to it.
[P. Cockshott]: You say that because value is measured in $ or Euro rather than in gold then the labour theory of value no longer holds. This is a particularly absurd version of the old bourgeois mantra that Marx is outdated. It does not matter whether you measure relative values in $ or gold, the relative prices of commodities are still determined by their labour content. Value is a vector property of commodities. Altering the unit of account is a scalar transformation of the vector - changing its overall length. It I have a vector of temperature measures from different times, it makes no difference whether I chose to measure it centigrade or Fahrenheit, similarly it made no difference to relative prices in France when de Gaulle replaced the old Franc with the New Franc at a 100 old to the new.
I and other Marxists have published many papers showing that the correlations between monetary values of industries outputs and the direct and indirect labour they use is very big indeed - typically over 95%. So the change to fiat money has made no difference.
I had expected that the organic composition of capital would be higher in the US steel industry, but that is because I had neglected that the composition of C for the steel industry is overwhelmingly dominated by purchases of raw materials. If you look at a steelworks the physical capital stock is imposing, but depreciation of that stock is a small cost compared to coal and iron ore. Since raw material costs dominate, higher efficiency in mining can easily lead to a relative cheapening of the elements of constant capital. It may well be that on a stock basis, the organic composition is higher in the US, one would have to investigate this, but for the question that you originally raised - whether the figures for productivity per worker are right, it is flow data we need not stock data. The flow data I have produced show conclusively that your original objection was groundless.
You claim that value added data are not to be relied on because John Smith points out that Apple, for tax reasons, chooses to book its profits in places far from where production takes place - notably the Republic of Ireland. But my example of productivities deliberately did not use value added. It took two industries and a pair of countries and compared their productivity in use-value terms not money terms. It showed that the number of tons produced per worker in the US was much higher than in India both for Agriculture and Ferrous metals. So whilst tax evasion tactics of multi-national companies are an interesting topic in their own right, they are completely irrelevant to what my video showed: that labour productivity is much higher in the USA. You raised an objection, suggesting that my calculations would no longer hold if I included the constant capital in the steel industry. I have shown that they hold even more strongly.
[Zulu]: What can I say, if Marx explicitly postulated that it would be impossible to fully separate money and credit from some kind of physical commodity serving as universal measure of value, but that's exactly what happened with the USDollar in 1971?
[P. Cockshott]: Yes he did, but that is irrelevant to the question of whether relative commodity prices are very closely proportional to labour content. The latter is an empirically demonstrable fact.
[Zulu]: Then how come the price of cheeseburger varies so greatly not only between the 1st world and the 3rd world countries, but also across countries within the same category?
How is speculation possible, with bubbles persisting for as long as decades sometimes?
And no, I'm not saying that prices are completely out of touch with the labor content of goods and services. But they are certainly not "very closely proportional". [If they are, show me the mechanism... until then, assume that -] At best, they are somewhat proportional, but that proportion is non-linear, but rather "geometric", meaning prices (including the price of labor power) become grossly inflated by proximity to the central banks of the imperialist core, that create "money" at will out of thin air, and facilitate the "vacuum cleaner" effect, which sucks the surplus value out of the periphery into the core via the "hose" of global trade (as well as its redistribution within the core via various credit schemes and subsidies). It's not unlike the example of distortion of distance on 2D representations of 3D objects that you use in one of your videos...
So yeah, price data may be useful, if and only if you know which corrections need to be applied to every piece of that data. But you seem to be taking the content of these input-output tables without so much as a single grain of salt...
And you do rely on value added stats in part where you calculate intermediate product inputs and the composition of capital (leaving out stock funds, which is indeed quite questionable in and of itself). And, like I said, the difference in wages is enough to inflate the denominator in the American ratio to make the organic composition of capital seem lower in the US, although fewer workers operate more machines and process more raw materials there, which translates into higher productivity than that in India.
The ratio of the total amount of use-values produced to the total number of workers employed still doesn't mean more Abstract Economic Labor value is created by an American worker compared to an Indian worker... Suppose in the future all steel mills become fully automated and operated/supervised by a single worker, and his productivity thus formally increases to, say, 1000 times against that of an average American and 10000 times against that of Indian steel mill worker today. Does it mean he will be creating 1000-10000 times more value all by himself? No, it means this imaginary worker of the future will be creating exactly the same amount of new value as either of the two real workers today while transferring little by little huge amounts of value of the "dead labor" of generations of workers, scientists and engineers embodied in the constant capital of these fancy automated steel mills they all directly or indirectly partook in constructing.
So, yeah, although I disdain quote mining, but you insist on treating Marx like the Muslims treat prophet Mohammad, I'll sign off with a quote of Marx, which John Smith brings up in his book:
"variations in productivity have no impact whatever on the labor itself represented in value, as productivity is an attribute of labor in its concrete useful form, it naturally ceases to have any bearing on that labor as soon as we abstract from its concrete useful form. The same labor, therefore, performed for the same length of time, always yields the same amount of value, independently of any variations in productivity. But it provides different quantities of use-values during equal periods of time."- Das Kapital, Vol. I, Ch. 1, Sec. 2.
J. Smith utilizes this reference in Ch. 8 of his book to emphasize what seems to be the fundamental difference between the 1st-worldist and the 3rd-worldist outlook. Namely, the former suggests that constant capital varying in quantity and/or quality may somehow "magically" increase to a varied degree the "magical" value creating power of labor. The latter maintains that constant capital is simply converted into new product "in chunks", with a little bit of new value equaling newly expended labor time added to each "chunk".
[Jorge Crego]: I am not sure what you want to show with that Marx's quotation. However, if "during equal periods of time", the same labor "yields the same amount of value" but "different [higher] quantities of use-values", each unit of those "use-values" encapsulates "less value" after the rise in productivity.
For J. Smith, what is "magical" is the way different productivities yield different values per unit. What I find "magical" in Smith's reasoning is his statement that the more productive capitalist "capture" value...
[Zulu]: I don't know how magical it is, but many individual capitalists do nothing at all except capturing value. They have zero involvement in any real sector and only speculate financial "instruments", yet they often somehow turn out to be among the most "productive" - meaning, profitable - capitalists.
As for "encapsulating less value", Marx practically praised capitalism for this. This and only this could open the road to abundance and a post-scarcity socio-economic order.
[Default]: The quote you give from Marx does not mean what you think it means. Marx is talking about variations of productivity not across space, in different regions, but across time. Variations of productivity across time do not affect the value of of the same amount of labor time, but that is not the case for variations in productivity across space. To quote from the first section of the first chapter of the first volume of Capital:
"Some people might think that if the value of a commodity is determined by the quantity of labour spent on it, the more idle and unskillful the labourer, the more valuable would his commodity be, because more time would be required in its production. The labour, however, that forms the substance of value, is homogeneous human labour, expenditure of one uniform labour power. The total labour power of society, which is embodied in the sum total of the values of all commodities produced by that society, counts here as one homogeneous mass of human labour power, composed though it be of innumerable individual units."
[Zulu]: You know, time and space are actually one and the same thing... But then again, there are "Marxists" busying themselves by debunking "Einsteinianism", because it doesn't fit with their personal relationship with Marx...
On a more serious note, I'll simply put it that you are wrong and exactly the opposite is the case. The quote I brought up after J. Smith (and many others) refers to different types of concrete labor at any given moment of time. So, yeah, Marx meant, like I said, the "equality of labor" (nice term, by the way, gotta spread it out in the struggle against you, social chauvinists) across space. And you could surmise it simply from the fact that it's from Chapter 1, Volume I, where Marx must have been going through the basics. Variation of productivity with time due to the progress of science and technology is obviously a more advanced concept, and on that account Marx was of the opinion that the old "dead" labor does tend to devalue.
And it just so happens that my quote clarifies your quote (have you even gotten to Section 2 of Chapter 1?). In your quote Marx puts forward the concepts of "homogenous" abstract labor, "uniform" labor power and "sum total" of the product of a given society. Well, guess what, in a globalized society, such as we live in today, it is the global labor power and the sum total of the global product that counts, not the fractions of it arbitrarily singled out by mainstream bourgeois economics on the basis of superstructural legal and administrative divisions called "countries".
The loafer does not create more value, than the workaholic, but he does not create less value either. And no more or less value is created by the foreman who kicks the loafer in the butt from time to time, so that he would not loaf too much to drag the averages below the quotas handed down by the industrial tycoon.
[Default]: Imagine what would happen in your hypothetical future where someone tried to produce steel using the current American methods of steel manufacturing. How would the value produced by one hour of this fool's labor compare to the value produced by one hour's labor of the automated steel mill worker? The former value would be thousands of time smaller than the latter value.
[Zulu]: If the product of the fool's activity does not enter the market, he doesn't draw a wage and is not employed, then it's not labor at all, not a socially necessary one anyway. It would the be rather a form of self-amusement, a pastime, a hobby. Like people who dress in red coats and loricae to reenact historical events, or do science with unreliable and bogus datasets because these are the only ones available...
But if the product of the fool's labor is accepted on the market as a commodity, then estimation of the value added by the fool (or the loafer, or whoever) would be very easy, actually. It is exactly the same amount of value as that added by the automated mill operator. 1 hour per hour. The fact that the fool is still employed and draws a wage, despite his ineptitude, signifies the fact that his labor is socially necessary in the present socio-economic system. So long as hand-loom workers or Pentium-1 CPU users are not yet out of job, their labor is socially necessary and yields 1 hour of value per 1 hour of their labor time to be added to the previously created value embodied in the hand-loom and wool, Pentium-1 CPU and electricity, and whatever the rest of the means of production, which is transferred onto the product by that labor.
And, by the way, the same applies to the polizei, private military contractors, and all the "bullshit jobs".
You see, the essence of capitalism, the function of the total aggregate global capital, is literally that of sucking in as much of human lifetime as possible (hence the dependency of capitalism on population growth). But then it must hand out differential rewards to individuals in order to keep functioning. The larger portion of workers (employees), that is the real proletarians in the 3rd world, get only so much as to remain alive and keep on giving up the time of their lives to the system; the smaller portion of workers (employees) - the petty bourgeois "labor aristocracy", including cops, PMCs and the so called "working class" in the 1st world, get more than they give in in terms of labor time (a.k.a. value), which makes them able consumers of the stuff the system churns out, so the surplus value can be realized on the market (which would be impossible, if there were only proletarians and capitalists), and the gears would keep grinding.
All this is not too hard to understand, provided you've unlocked the ultimate achievement of Marxism - figuring out the difference between value and use-value. But, very sadly, this achievement seems to elude even some of the brightest minds that committed their entire lifetime to studying and improving scientific communism.
[Construct Beats]: When profit rates in advanced countries are higher because of higher productivity why the hell then they are outsourcing production? What is the economic motive behind that?
[P. Cockshott]: Are profit rates higher? In general profit rates are rising in countries with rapidly growing populations and stagnating or falling in countries with static populations.
[Construct Beats]: the first thing that came into my mind was better technology gives higher productivity and a greater surplus. But since labor is the only source of value, this cannot be correct. Its confusing.
[Zulu]: You invest 1x capital and gain 2x return, that's a 100% rate of profit. You invest 10x capital and gain 15x return, that's only 50% rate of profit but the amount of profit is higher than in the latter case. Workers with shovels can give you the maximum rate of profit, but there is only so many ditches they can dig. If you want more ditches dug, you'll need to improve productivity by employing workers with excavators. After a while, you find yourself investing 50000x capital to gain 50500x returns. That's called diminishing returns a.k.a. the tendency of the rate of profit to fall. (Which may be somewhat alleviated for a little while longer through inflationary monetary policy...) Of course, that wouldn't have to be the case, if the more productive labor made more value, instead of just more use-values.
[P. Cockshott]: I suggest you do a search on the empirical work on the subject using the authors Zachariah, Ochoa, Petrovic, Frohlich, Cockshott, Shaikh as search terms. The strong empirical relationship between prices and values has been repeatedly demonstrated.
[Zulu]: Have you or your colleagues made this kind of study on non-OECD countries? Does the correlation there repeat the same ideal pattern like that??
Because to me it looks too good to be true. If anything, even in the case of strong causality, I would expect the dots to form a more dispersed cloud, with more outliers like the oil industry. But, looking at this picture depicting >.95 correlation, I can't help but suspect a third factor acting as determinant of both variables. [An artefact?]
[P. Cockshott]: Petrovic did Yugoslavia. I tried Mexico and got similar results.
[Zulu]: I went back and watched again your initial video on unequal exchange, the video in reply to my comment on the former, and then downloaded and looked closely at the same US'2019 and India'2017 input-output tables that you used in your reply. So there are a few points, I'd like to draw your attention to:
[1.] First of all, there seems to be a mistake in your calculation of the c/(s+v) coefficient for India. While in the US table "Value added" includes taxes, in the Indian table the "Taxes less subsidies" are excluded from "Value added"! If you count the taxes in, the c/(s+v) coefficient for India is ~2.5, which eliminates the ridiculous conclusion that the organic composition of capital in the industrially developed USA is lower than in the developing India. In the end it will result in the estimate of the ratio between American and Indian productivity by your method of calculation as ~6.5, which is slightly lower than the 6.7 figure in your initial video.
[2.] But then there is a problem of how you arrive at the number of workers employed in the production of intermediate inputs. You simply multiply the number of workers employed in the production of steel by the "c/(s+v)" coefficient for the "Primary metals" category for the USA and "Basic metals & fabricated metals" for India. (Too bad the Indian table contains no info on wages...) This effectively means that you assume the same composition of capital and universal average payrate across all branches of industry supplying those inputs, which obviously can't be the case. So it's a rough approximation at best.
In order to calculate the real number of workers indirectly involved in the production of "Primary metals", you would have to establish the number of workers employed in each of the industries supplying the intermediate inputs, then divide that number for each industry in proportion with the part of the output of particular industries going into the "Primary metals" as intermediate inputs, and sum up those numbers... But those intermediate inputs have their own intermediate inputs, so the operation may be repeated ad infinitum in pursuit of better accuracy of the estimate of the indirect labor. Of course, it's complicated and probably impossible due to lack of available data.
But actually it would make little sense anyway, because here comes the tricky part: the total output of "Primary metals" in the USA amounts to M$ 241603, while total use of them amounts to M$ 366369, meaning ~1/3 of all "Primary metals" come from abroad (mostly from Latin America). This apparently includes some of those "Primary metals" that are used as intermediate inputs in their own branch - M$ 73301. The same with the category "Mining, except oil and gas", which presumably includes all the ores that are raw materials for the "Primary metals": the total output of "Mining, except oil and gas" amounts to M$ 108812, which is ~83.4% of the total use of M$ 130455. So, a large amount of ore used in the production of "Primary metals" also seems to come from abroad. Specifically, of the iron ore imported in the USA more than half comes from Brazil. The imported inputs are simply lumped together with domestic inputs of the same category.
And this is the central point of my argument. How the labor content of the imported inputs compares to that of the domestic inputs, there is no way of telling. At the very least, it may be assumed that more labor intensive imports (compared to domestic US inputs) must increase the labor content of the US outputs (and lower the overall productivity of the labor embodied in the final product). Obviously, the larger the gap in productivity, the bigger the equalizing effect of the imports. The effect is still bigger, as the US$ price tag represents larger quantities of the actual commodity when it comes from a cheap labor country, than that originating in the US itself.
That's why I said earlier that these input-output tables were "outdated". I meant that for the purpose of determining SNLT inputs they are useless, because of the global trade, because more and more of the intermediate inputs come as imports, with the inequities of labor content totally unaccounted for. The "outdated" component of the input-output tables method is not the input-output tables themselves, but the fact that their compilation is confined by the borders of nation-states, unlike the movement of commodities. I would very much like to see an input-output table compiled on the global scale.
[3.] Anyway, the one single most important factor skewing the productivity of labor in favor of the US steel industry is the that, ~2/3 of the iron and steel produced in the USA is made from recycled scrap, rather than from iron ore. But the use of labor saving technologies and processes has no bearing on the "productivity of the workers" as it is presented by the 1st-worldists. Sure enough, the output of use-values per worker may be higher in this or that area of the globe. What does it tell us about the new value created by the living labor on top of the past labor embodied in the constant capital? Only that it is LOWER per unit of output, compared to the more labor intensive production in the periphery.
Incidentally, John Smith, whose book I referred to before brought up exactly the steelworkers to underscore his position: "This is so fundamental, it must be repeated: A steelworker operating more technologically sophisticated machinery does not produce more exchange value, s/he simply allows her/his capitalist employer to capture a larger share of it."("Imperialism in the 21st Century", Ch. 8.)
[4.] Even if we pretend that those cross-border labor inputs do not matter, and go along with the outdated comparative (country-to-country) approach, problems remain.
You say, that your and your colleagues' research proves empirically the close proportionality between labor inputs and monetary outputs. Moreover, that it shows Marx actually overstated his case on the issue of the transformation problem, which, according to the result of your research, does not exist, as the commodities are exchanged based on their labor values, rather than prices of production... Even though you refer to Anwar Shaikh's article, which does not dispute the validity of the prices of production model, as empirical evidence for the LTV. Elsewhere Shaikh goes even further and admits the existence and importance of the unequal exchange, even if he stops short of bringing it to the fore in the capitalist system:
"at the most abstract level of Marxist theory, aggregate profit is simply the monetary expression of aggregate surplus value. But it is often forgotten that profit can also arise from transfers between the circuit of capital and other spheres of social life. Marx calls this latter form of profit alienation, which — unlike a profit on surplus value — is fundamentally dependent on some sort of unequal exchange. Its existence enables us to solve the famous puzzle of the difference between the sum of profits and sum of surplus values brought about by the transformation from values to prices of production."(Anwar M. Shaikh & E. Ahmet Tonak, 1994, "Measuring the Wealth of Nations".)
In this article D. Zachariah points to the fact that purported labor values differ all too little from the production prices, so it may just as well be said that market prices are determined by the production prices, not labor values, as Marx asserted, even though his supposition of equalized profit rates does not hold (which is a whole other topic, seeing how the national I/O tables provide data to compare different branches of industry, but not different enterprises within the same branch...).
But here you say it quite bluntly that Marx was very much mistaken in Vol. III of "Das Kapital". This deserves a bit of elaboration as to why exactly Marx could get so confused...
The fact remains, that criticisms of your entire approach summarized here in section 5 are on point, and your ultimate reply to those is not convincing enough for me, especially on the issue of tautology/circularity.
You resort to the explanation that the "complexity of labor" fully accounts for both the wage and value added differentials. But being a whole can of worms in itself, it does not break the circularity, since the product of the simplest labor is still abstracted in the form of prices and equating them with values remains but an assumption. Even if this assumption is true, there is a bolder assumption yet in the suggestion, that the labor complexity accounts for the differentials in full, and no other factors, unrelated to labor input, skew them. The most obvious of such factors is the balance of supply and demand of specific skilled labor types on the labor market. Then there is the activity of trade unions, etc. Both may help the "complex laborers" to leverage their bargaining position into what results in increased "value added" in the I/O tables. And for the "simple laborers" there is the minimum wage...
In any case, it cannot be denied, that over the course of the past century, capitalism evolved quite a lot compared to its classical stage Marx described in "Das Kapital". This consideration alone should draw much caution in any attempt to retroactively apply empirical data gathered from the modern economy to that of the mid-19th century. The reality of the mid-19th century was such that in the advanced countries there was nearly perfect market competition with minimal state interference in the economic activity. By the mid-20th century the situation was reversed. Mono/oligopolistic market setups easily account for the profit rates divergence. Some corporations are able to gain high margins despite high organic composition of capital or compensate for the lack thereof in the industrial sector via speculation in the financial sector; others get by with life support from the government, because they are "too big to fail".
Even if we assume that your approach and findings are 100% legit, it seems likely to me that you just misinterpret the results, getting the whole thing backwards. After all, correlation does not mean causation. The temptation to jump to the conclusion that labor content determines monetary output is understandable, but statistically speaking, it may as well be the other way around. Or they may be both determined by a third factor.
One of the main goals that governments have pursued up until recently, while "meddling" in the economic matters through various means, is reduction of unemployment. They have pursued this goal for both political (social stability) and economic (realization of surplus value) reasons. Squeezing the last drop of sweat from the employees for minimal compensation is no longer a sole priority on the enterprise managers' agenda. All the featherbedding this has led to is aptly summarized under the title "Bullshit Jobs". Specifically, in Ch. 5 of his book, D. Graeber gives account of how improvement in productivity leads to bloating of the white-collar section of the workforce. In Chapter 5 of "Bullshit Jobs" he brings a concrete example when a tea-processing factory's increase in productivity resulted in a dozen more white-collar staff moving in... He even equates the dynamics in the supposedly capitalist countries to that in the USSR, with both systems "converging" towards the full employment policy.
[Of course, the blue collars always could use a rise in their wages at the expense of the managers' salaries and stockholders' dividends, but the balance of labor and output that you've shown is already reached as it is... nd of course, such a rise would only amount to redistribution of the surplus value extracted from the real proles of the 3rd world.]
So, in the final analysis, the correlation between labor inputs and monetary outputs that you observed may very well be interpreted as more revenues allowing and prompting companies to hire more employees and subcontractors (consultants, representatives, etc.), whose (indirect) input towards the commodified output of value is rather dubious, yet their labor time (or wages/salaries) is counted regardless of their actual productivity (from any perspective), and is payed for (adding to "value output") with respect to the payrates prevalent in the area. Simply put, the more profitable a sector is, the more "workers" it may allow itself to hire, and maybe it does just that - "wastes" profits on "bribing the working class", as Engels (and Lenin after him) suggested long ago. This "artificially" lowers the organic composition of capital in the more profitable branches and increases correlation between labor and output.
In fact, the whole issue of the "unproductive labor" seems completely lost in your input/output table analysis. There are entire industries of "faux frais" services, such as legal, FIRE, etc., which, according to your own views do not create any value, yet they are treated on equal grounds in the I/O tables, and intermediate inputs from these "branches of production" are counted towards each and every branch that deals in real goods. The ratios of white- to blue-collar labor within different real industrial branches also remain unintelligible from the wage or man-hour totals of the I/O tables... This particular problem for me is moot, actually, but it shouldn't be for you, and you don't seem to account for it at all.
Bottom line, it's neither surprising, nor revealing of anything that inputs of overpriced labor power strongly correlate with other overpriced commodities. If the prices of production determine market prices (as per Vol. III), there is no reason why they should not determine the market prices of labor power, meaning the petty bourgeois workers getting their "fair share" of profits, that is, surplus value extracted from others elsewhere.
Sure, this picture looks nothing like the "good old days" when capitalism had only recently emerged from the simple commodity production (where goods and services may indeed have been exchanged by their values, so that it was only natural for Marx to make that assumption in Vol. I, to show how the exploitation of workers initially arose in those conditions, just as it was natural to go into the rabbit hole of the transformation problem in Vol. III, where he described how capitalism actually worked at the time of the writing, that is, after it developed to a more mature stage). Sure, the present picture could look much more logical, if the increased productivity of labor in the advanced countries led to unemployment in the range of 30%-40%, maybe even 60%. And it would have, were it not for billions of fresh proletarians ready to be exploited in the 3rd world, where the law of value may be still relevant in regards to the labor market.
The latter point is basically the argument John Smith arrives at in Ch. 8 of his "Imperialism in the 21st Century". His approach is to combine Marx's explanation of exploitation via the LTV, and the "superficial" explanations of depressing wages below the value of labor power and redistribution of the surplus value via monopoly. Indeed, these explanations do not falsify one another, they are complementary.
But personally, I disagree with him about that. I'm more with Samir Amin, who concluded that the law of value is no longer operational anywhere at all, except when applied to the global aggregates of value, labor and capital. The unequal exchange is facilitated primarily by the monopoly privilege of the metropolitan centers, most importantly on (but not limited to) the issue of the credit world money. Concurrent views are laid out by Fred Moseley in "Money and Totality".
Samir Amin also draws attention to the fact that "Das Kapital", even if one counts its volumes published posthumously, remained incomplete and did not fulfil Marx's initial plan to deal with the role of the state and global trade. Thus, the labor theory of value itself remained open to interpretation, and nobody can claim that invalidation of some particular interpretation of it must necessarily lead to invalidation of Marx's theory as a whole. What it must lead to is modification and further development of the theory.
[5.] Finally, you say, the complete loss of intrinsic value by the money utilized as the means of exchange (abolition of gold standard of the US$ in 1971) "is irrelevant to the question of whether relative commodity prices are very closely proportional to labour content". Well, if so, show me the mechanism, how this close proportionality could be established and/or maintained. Мarx in his day did propose a plausible mechanism which was integral to the operation of the law of value. Every time they were exchanged, all commodities were to be confronted with the universal equivalent, a specific commodity, that served as monetary expression of the SNLT, because it embodied within itself the same abstract SNLT. But this is no longer the case. Without the universal equivalent, the "labor theory of prices" cannot but degenerate into a circular argument: "Why are the prices such as they are? - Because they are proportional to the SNLT. - But how do we know the proportions? - From the prices..."
So how exactly the SNLT may find a way to express itself in a fiat currency "made out of thin air"? Governments' fiscal policies; central banks' monetary policies; commercial banks' maximization of profits by virtually unrestricted expansion of credit; stock, commodity and currency exchange speculations (on a scale unimaginable in the 19th century); ever increasing concentration of capital and ever decreasing market competitiveness, - how the "close proportions" to the labor content could survive all that? And why should they?
I'm not saying prices are completely random. Of course, bicycles are unlikely ever to be priced higher than automobiles. But the SNLT does not function as an "attractor". It is more like an "anchor", with the price attached to it by a "line", which is extended (or contracted) by multiple factors, but mainly by the availability of credit to producers and consumers. Needless to say, geographic and socio-economic proximity to the centers where credit originates is what tends to extend those "lines" and inflate nominal prices, including the price of labor power.
Social relations (the relations of production and the superstructure) must conform to the the general level of productive forces. Such is the main tenet of the Marxian materialist conception of history. That is why he concluded that some time in the future, due to the development of productive forces, the total mass of social product would expand to such a degree, that relations of production would be able to proceed without the law of value and commodity-money exchange, and the capitalist mode of production would come to an end. He also expressed certainty that capitalism would be superseded by a non-exploitative social formation. Well, it seems, he was right about the former, and wrong about the latter. The productive forces have developed. The universal equivalent turned from a measure of value, necessary for efficient allocation of labor, into a fetter hampering further development and accumulation of wealth; so it was abolished. Without it, the law of value ceased to operate.
The future is here. Capitalism is being dismantled - or transformed into Kautskian ultra-imperialism - whichever way you want to put it, but it is no longer the capitalism that we, let alone Marx, used to know. It has no use for commodity money, or the labor proportions. Among the productive forces, financialization (based on fast communications and computing power) opened a path to infinity (or so the "vanguard party" of the "Iron Heel" thinks). The MMT may be dead wrong about the origins of money, but it is dead right about its ultimate function:
Dollar finance by foreigners cannot constrain spending by either the U.S. government (on domestic output or imports) or by the domestic private sector (on imports). U.S. government spending is the source of the dollars that can be used to buy Treasury bonds domestically, and U.S. spending on imports is the source of the dollars that can be used to buy and hold Treasury bonds abroad.- L. Randall Wray. "Does America Need Global Savings to Finance Its Fiscal and Trade Deficits?"
Excess savings do not slosh around the global economy providing the means by which profligate Americans can engage in excessive spending. Rather, the global savings are created by the “profligate” spending of Americans. Many nations pursue a strategy of depressing domestic living standards in order to increase export output, often with the purpose of obtaining dollar-denominated assets.
One can find an excellent summary of the path of development that capitalism went through since the time of K. Marx, particularly with respect to the monetary and credit system, in this article: Ramaa Vasudevan. "From the Gold Standard to the Floating Dollar Standard: An Appraisal in the Light of Marx's Theory of Money". It shows that the "inversion of the traditional formulations drawing on Lenin, [in that] imperial hegemony today is associated with net capital imports (rather than exports) by the dominant country" is not some weird anomaly, but the only logical outcome. The article was mainly written prior to the 2008 crisis, and the tendencies described in it have only strengthened since then, as the "reassertion of the monetary constraint" did not last long and the "export of fragility to the periphery" of the global system continued as before.
The article brings up the following quote а from "Das Kapital", Vol.3, Ch.27: "On one hand it develops the motive of capitalist production, enrichment by exploitation of others’ labor, into the purest and most colossal system of gambling and swindling and restricts even more the already small number of exploiters of social wealth; on the other hand however it constitutes the form of transition towards a new mode of production". What has been overlooked about this quote is that it may be even more insightful than Marx himself intended it to be. Indeed, after enough attempts to get rid of "the metallic barrier", the capitalist system succeeded, and thus started transforming itself into that new mode of production. And it did so with the help of the masters of the old one, not the revolutionary proletariat.
There is another researcher by the name of Ron Baiman whose work is notable for juxtaposing the unequal exchange and the rentier economy. Due to his subscription to the fallacy of the country-by-country analysis, instead of the world system analysis, he can't grasp that both supposedly different economic models are, in fact, essential and mutually necessary, complementary part of the same system. The notion that you can't have an unequal exchange system without it leading in a very short order to the "rentierization" by the beneficiary class(es) of much of the unequally exchanged surplus value totally evades him. After all, what is rent if not an ultimate manifestation of unequal exchange, when something (like labor time) is exchanged not just for something else of lesser value but for nothing at all... So he claims the "proper" unequal exchange, is to be maintained and perpetuated, for it is "how the world economy evolves", and the "overall productivity improves", even though, admittedly, "most of the benefit initially [sic!] accrues to leading economies". This is contrasted by the "rentier economies" that draw income "without producing advanced manufacturing output in exchange", which "does not advance world economic progress". Speculating on these premises, he goes on to suggest taxing the rentier sector out of existence to make America great again (like Germany) in the good old Keynesian reformist social-fascist fashion, and then democratically vote into existence some kind of international (but not supranational) body that would be recommending how to steer the unequal exchange system away from free trade towards fair trade, so that the "developing economies" could finally catch up with the 1st world.
But despite that kind of wishful thinking nonsense, or, rather, due to it, Baiman has no qualms about exposing the mistakes of those who are in denial of the unequal exchange paradigm in general, and about showing how it actually works (even as he strives to relabel this part as a "rentier economic model"). For example, he succinctly explains the (rather obvious, when you actually think of it) source of the apparent growth of the core's workers productivity:
if an increasing share of production is outsourced to lower-cost producers so that the intermediate purchases no longer contribute to domestic multifactor productivity growth and [the weight of intermediate purchases] declines due to lower cost production of these intermediate goods, the value-added contribution of the outsourced [intermediate purchases] in [the measurement of multi-factor productivity in manufacturing] to total multifactor productivity growth is presumed to decline. This means that value-added growth of the remaining production, assuming the finished product is sold at the same price or at a reduced price that does not fully pass-through cost savings, is automatically assumed to increase even if the remaining labor and capital costs for producing the remaining parts of the product remain exactly as they were before.- Ron Baiman. "Unequal Exchange and the Rentier Economy"
Bottom line, this quote from Samir Amin will best suit to underscore my position here:
In those conditions, the domination of capital is expressed in the unequal distribution of the total income, and value has no longer any meaning except on this integrated and global scale. The concept of value would persist only because society would still be alienated, mired in scarcity thinking.- Samir Amin. "The Law of Worldwide Value", p.53.
Would a system that had reached such a stage of its evolution still merit the appellation "capitalism"? It would probably not. It would be a neo-tributary system based on systematic application of the political violence (linked to ideological procedures capable of giving it the appearance of legitimacy) indispensable for the perpetuation of inequality. Such a system is, alas, thinkable on a globalized scale: it is already in the course of being built. I have called it "apartheid on the world scale." The logic of the forces governing capitalist reproduction works in that direction, which is to say, in the direction of making "another possible world," one even more barbaric than any of the class societies that have succeeded each other throughout history.
P.S. I noticed that I wasn't alone in the comments on Youtube requesting a review of John Smith's work and/or other unequal exchange theorists' arguments, like the "GDP illusion" and such. IMHO, this matter is of paramount importance, while such topics as Plato's idealism and Newton's influence on Marx are of peripheral interest and little relevance. Of course, I do realize that I'm in no position to insist that you change your schedule to accommodate our 3rd-worldist demands... But at the same time, so long as these questions remain, I can't help but consider your entire position and analysis of the present day political economy inadequate. Which is very unfortunate, considering your past work on debunking the "calculation problem", advancing the notions of central planning, non-circulatory means of distribution, etc.
[P. Cockshott]: I deliberately specified my measurements in that video in terms of physical outputs measured in tons not in terms of money to avoid these issues. The workers employed per ton of steel produced are more than 6 times greater in the Indian industry. That measures the final stages of steel production, it is not an attempt to measure the labour content of steel as that would depend on labour used in iron ore and coal mining as well. It is just looking at the final step. Similarly for agriculture it is output in tons of grain divided by workers in agriculture. If anything this underestimates the productivity of US grain production since it includes the fruit growing workforces as well where the productivity differential is probably less than in grain. The reason for doing things in terms of physical outputs is that it avoids claims that the value figures are distorted by international trade.
What one needs to get to is why Marx was right when he said that the labour of more productive nations creates more value per hour. It comes down to the basic analysis of socially necessary labour time. It is the production with the more advanced technology that determines what amount is necessary. This comes out in his analysis of how power loom cloth production replaced hand loom production. This is posed in terms of labour used per yard of cloth, i.e., physical labour productivity. That is why if you want to understand the underlying causes of different value productivity you first have to look at it in terms of physical productivity.
[Zulu]: The advanced technology determines that by gradually displacing the retarded and obsolete technology. But so long as they co-exist during the transition period, so long as the product made with retarded technology meets its demand, so long as the advanced technology has FAILED yet to drive the retarded technology out of the market, the production with the retarded technology is just as necessary as that with the advanced technology, and thus the socially necessary labor time is the WEIGHTED AVERAGE of all labor expended on all the similar product with all technologies present in the society.
And this is the main (if not the only) reason for international trade to exist at the scale that it does, that it allows the exchange of product of more labor-hours for product of fewer labor-hours. If you intend to refute this statement, you need not avoid the claim that international trade distorts the value figures, but confront this claim, by showing that such distortion does not take place, despite the cross-border intermediate inputs, as well as the mass of end-user goods consumed not only by the super-productive employees of particular branches, but also by the multitude of those in other branches that don't deal in physical commodities and whose contribution to the social production process in some of these branches is about zero or maybe even negative. In other words, even if we assume that the US steel workers earn their keep (I think they don't, but whatever), who earns the keep of the 80% of the US workforce, employed in the service sector?
Maybe Marx wasn't right about the labor of "more productive nations" creating more value per hour. Maybe he was at the time, but times change. Anyway, Marx's assertion rests solely on the assumption that labor regulated by advanced machinery is more "intensive", because it disciplines the workers and leaves them no time to dawdle during the work day.
So, the assertion that the Indian steel workers' ~6 times lower physical productivity of use values means they create ~6 times less value per hour amounts to the assertion that their labor intensity is 6 times lower. Supposedly, they spend 5/6 of their working hours on coffee breaks. And the Indian agricultural workers are even more lazy... But, while it is possible that in some industries the imperfection of production processes may result in unsteady workflow with some hiccups and slack time, the fact is that all the most super-taylorist assembly line type jobs have been outsourced from the developed countries. And those that haven't, tend to draw the lowest wages.
In any case, Marx also postulated that "it is impossible, for instance, to squeeze as much surplus-value out of 2 as out of 24 labourers" (no matter the machinery and intensity). So either he was wrong on this, or the 1st-worldists are wrong that the workers in the core are orders of magnitude more productive of surplus value. Which is it?
[P. Cockshott]: No, the power loom labour did not count as creating more value per hour than hand loom labour due to being more intense. Go back and read the relevant chapter. It counted as more value creating because the hand loom labour was no longer carried out under socially necessary conditions, so that the hand loom labour did not count as value creating at the full rate per hour. If Marx was wrong on this most basic part of his theory then the whole of the analysis in Capital falls. If you think Marx's analysis of the transition from manufacture to modern industry is wrong, you need to come up with some alternative theory that better fits the facts. Good luck to you there.
[Zulu]: The count only stopped when the power loom undercut the hand loom in the market by flooding it with cheaper cloth that satisfied the total demand. Until that point, when the total demand could not yet be satisfied by the power loom alone, the hand loom remained "socially necessary", so the value embodied in an amount of cloth was the weighted average of power loom labor and hand loom labor.
Has the (supposedly) advanced American steel industry flooded the global market with cheap steel? Has it driven the (supposedly) inefficient Indian steel industry into bankruptcy? No, quite the opposite is true - Trump had to impose a 25% (!) tariff to protect the American steel industry from bankruptcy. Therefore the suggestion that it is the American steel industry that unilaterally sets the standard for "socially necessary conditions" can hardly be taken seriously.
I have no major objections to Marx's analysis of the transition from the 18th century manufacture to the 19th century factory industry. But I object to applying Marx's (incomplete) description of the 19th century capitalism to the 21st century reality dominated (among other things) by global supply chains. Marx's analysis, although not without flaws, was the best there was at the time. But time passes, it has been 150 years since, and for this reason it holds less and less water even in its most solid parts. It's not some sacral edifice to "stand" or "fall". It's a thing that must evolve and be kept up-to-date.
[P. Cockshott]: Yes you are right that it is the average labour requirement that determines value. But this makes not difference to the question at hand, the relative productivities of the Indian and US steel industries.
Ignoring in both cases labour to produce coke and iron ore, we have the labour per ton of steel in India is 0.0076 of a person year, in the USA it is 0.0011 of a person year.
Suppose the world average is x person years. The relative value productivity of the US steel worker is then x/0.0011 and for the Indian worker it is x/0.0076 if you divide the value productivity of the US worker to the Indian worker the x cancels out and you get 0.0076/0.0011, roughly 7 times as great whatever the value of x is.
[Zulu]: And it's still USE-value productivity, not the pure-economic-labor-value "creativity".
As for ignoring the indirect inputs - raw materials, equipment, and all the constant capital, what can be less Marxist than that? Like I said in the very first comment, that started all this, it's embarrassing. How can you not see this? Of course, the American steel worker is more productive, because ~2/3 of his raw materials consist not of ore and coke, but of recycled scrap, while in India only ~1/4 of steel is made from scrap! Of course, it's easy to be "more productive", when half or so of your "value added" was already "added" by your dad 30 years ago! How can I put this in more simple terms?
Why the use of recycled scrap increases productivity? Because the worker's job is not only to create new value, but to transfer old value. It is how much of the old value is being transferred per each unit of produce, that determines how much of the newly created value gets embodied in each unit. The less new value needs to be embodied in each unit (because more of the old value is transferred) the faster the worker can be done with one unit and start transferring old value onto and add new value to the next unit. Which results in more units being produced in the same time period / per the same new value created.
So, this argument to physical productivity is blatantly fallacious and it does nothing to refute the theory of unequal exchange. In fact, its theorists are well aware of it and in about every book and article of theirs point to "Das Kapital", Vol. I, Ch. 1 -
"However then productive power may vary, the same labour, exercised during equal periods of time, always yields equal amounts of value. But it will yield, during equal periods of time, different quantities of values in use; more, if the productive power rise, fewer, if it fall. The same change in productive power, which increases the fruitfulness of labour, and, in consequence, the quantity of use values produced by that labour, will diminish the total value of this increased quantity of use values, provided such change shorten the total labour time necessary for their production; and vice versâ."
Even if you disregard this basic postulate of Marxian LTV, as well as my earlier quotation from the "relevant chapter" about the idea of squeezing as much surplus value from 2 workers as from 24, as well as the footnote in Vol. I, Ch. 24, saying that -
"In order to examine the object of our investigation in its integrity, free from all disturbing subsidiary circumstances, we must treat the whole world as one nation."
- and insist on differential labor-value "creativity" in "key industries" as the basis for all the wage differentials between nation-state bracketed "capitalisms", including those in the equally (un)productive "non-key" industries (as well as differentials in profit, rent and interest - all sucking on the surplus value extracted in the "key industries"), the purported ~7-10 times difference IS NOT ENOUGH to account for the GDP per capita differentials, which is 30 times higher in the USA compared to India. Where does this additional >2000% of "product" come from? Never mind the "US capitalism" trails (in labor productivity, one should suppose) behind such industrial powerhouses as Monaco, Liechtenstein, Macau, Switzerland, Ireland, Norway and Iceland... The discrepancy is more flabbergasting (both ways - up and down from the US figure) if you look at the GDP per hour worked.
Of course, you can always adjust those figures by the "purchasing power parity". But that is nothing but a convoluted trick by the bourgeois economists to make disparities appear less obscene (J. Smith, by the way, explains this at some length in Ch. 5 of his book). And it still fails to explain away all of the "inter-country" anomalies. For example, isn't Ireland's success story a beauty? Apparently, the labor productivity there over the past 50 years increased ~500% relative to that in the USA (never mind the fact that the Irish steel production represented by a single plant was shut down in 2001). In the meantime, in the PRC, despite the wisdom of the Dengists and its rapid industrialization, the growth relative to the USA was <300%, and in absolute terms the gap doubled; see: [1], [2], [3], [4].
[P. Cockshott]: Of course the difference in the steel industry productivity is not enough to account for the difference in GDP per capita in the USA and India. Steel is at the end of the productivity spectrum most favourable to India. It is where the Indian lag relative to the USA is the least.
That is why I gave both steel and agriculture as examples. For Agriculture the output ratio is 70 to one in favour of the USA. Your point about the US using more scrap is in practice of no importance, since the cost of scrap in the US is around $250 a ton, and about $25 of electricity is used to melt it. This compares to the cost of iron ore plus coal to produce 1 ton pig iron which is about $260, so it makes very little difference which route is made. The value passed on by the scrap plus electricity from an arc furnace is to within 10% the same as the value passed on by the coal and iron ore via the blast furnace route.
The difference in GDP per capita between the USA and India is roughly 30 fold. The steel industry is by Indian standards relatively modern and tends to pull Indian productivity up closer to world average levels, but Agriculture is vastly larger as a share of the labour force in India and thus pulls it down. The point about taking the two extremes was to illustrate that even in the best case, Indian industry lagged far behind that of the USA in productivity. The difference in GDP per capita between India and the USA or Germany is overwhelmingly explained by the huge differences in productivity between advanced capitalist nations and one where the process of capitalist industrialisation is at a much earlier stage.
[Zulu]: And here I thought you skipped the agriculture, because the disparity of the constant capital there was the most glaring... But, whatever.
OK, the convo is going in circles now, so we should perhaps wrap it up. You're obviously too entrenched and enamored with your "empirical proof" of the LTV. With it on your mind, your dismiss parts of Vol. III, making it seem like capitalism up to this day abides by the laws of simple commodity production. You conflate value and use-value to explain productivity and outright deny the existence of imperialism. And then you call other people's thoroughly thought out theory "pernicious unmarxist nonsense"... Well, to me those >.9 correlations just scream "tautology".
Too bad a single obscure passage from the "Critique of the Gotha Program" could lead to so much confusion. Especially since there is zero reason to use the man-hour as the unit of account in central planning, when you can use the kilowatt-hour for that and avoid a bunch of unnecessary complications with "complex labor" and such. So, yeah, whatever...
[P. Cockshott]: {https://www.youtube.com/watch?v=uwGG32IIIcw} "On the world market the more productive national labor reckons as the more intense". [But...] Wages are the price of labor power and cannot be treated as the measure of value created by the labor power.
[Zulu]: It bemuses me how you can be so right on the interpretation of the skilled labor problem and so wrong on the unequal exchange problem. Because at the core it's the same problem.
Comparing productivity of labor between the USA and India is like doing it between England and Scotland, or between Manchester and Birmingham, or between two factories situated across the street from one another and owned by the same parent company. One may have newer machinery and fewer workers, whose labor is presumably more skilled (and for that reason less intensive in physical terms), which results in higher output per worker. But that does not justify nor explain any wage differentials between them.
So, by writing that "оn the world market the more productive national labor reckons as the more intense", Marx actually contradicted a bit his own LTV, which would not have happened, had he said that the "more productive national labor" reckons as more complex. But, in any case, this quote is actually only the first part of Marx's sentence, which was in fact a caveat to the idea (incorrectly) formulated in the preceding paragraph. The second part of the sentence reads: "so long as the more productive nation is not compelled by competition to lower the selling price of its commodities to the level of their value" [Vol. I, Ch. 22]. So, in fact, Marx himself admitted that this "reckoning as more intense" actually may result in selling commodities of a whole country above their value in the world market! That's unequal exchange right then and there! In the very same sentence you truncate to back up your denial thereof!*
[CatchTwenty2]: If you recognise that India is less productive, and recognise that prices of exchange are equally determined by labour time, then you should conclude that Indian workers have to be paid less because the ability to extract surplus wealth from Indian workers is smaller than that of American workers who are more productive. This distinction explains lower wages in India. However, Marxism isn't blaming the workers in this case, because it is the capitalist class who will not invest in greater forces of production. If capitalists invested in greater forces of production, it would negate the ability to exploit a reserve army of labour by replacing cheap labour from a surplus of workers with costly equipment (constant capital), which depreciates over time and needs repairing/replacement. Abundant populations like India allow capitalists to just depend on a constant supply of excess labour.
[Zulu]: I don't recognize that labor time is the sole factor determining prices. Other significant factors include monopoly privilege and credit availability. But abundant population indeed allows capitalists to just rely on constant supply of excess labor. Only this matter isn't contained within India or any other particular 3rd-world country's borders. It is a feature of the GLOBAL IMPERIALIST ECONOMY. Thus, the surplus value extracted from the Indian and other such low wage workers is redistributed not only among the global capitalist class, but also to the global petty bourgeoisie, which includes the "labor aristocratic" workers of the metropolitan jurisdictions.
[Backwoods Compatible]: Are you saying that the "global petty bourgeoisie" determines working conditions in other countries like India?
[Zulu]: I am saying that the global petty bourgeoisie benefits from the working conditions in countries like India. It consumes a mass of cheap goods and doesn't have to endure such working conditions itself.
[Backwoods Compatible]: That doesn't follow. Even if the global petty bourgeoisie wanted to keep Indian workers producing their goods (which they wouldn't, they don't want to control Indian people's lives, of course), they'd want those workers to be able to output more for less effort by, say, equipping them with superior means of production for whatever those products were, making the goods even cheaper in fact! this doesn't happen because it isn't the demands of the "global petty bourgeoisie" that Indian workers must toil away for the output, it's the demands of their local capitalists trying to keep capital intensity low (by not producing via high tech means among other "cost savings") so profits are high.
[Zulu]: Of course, it doesn't matter what the petty bourgeoisie wants. It's called "petty" for a reason. What matters is the profits, but the likes of Lakshmi Mittal are hardly "local" capitalists.
[VolVol]: I agree they benefit from the conditions in global south. For countries like India where capital isn't exactly an issue and have a greater degree of political autonomy how do you think global North prevents them from advancing their productive forces? I agree it is a problem if you are a small country which needs external capital injection a lot to advance. I am trying to understand how it is true for India.
[Zulu]: I guess the Indian businessmen and politicians simply can't see any benefits that might outweigh the risks should they decide to shift their stance from playing ball to rocking the boat.
[VolVol]: So the onus is one the Indian side to advance their economy understanding long term benefits... Am I understanding this right?
[Zulu]: No. There is no "Indian side". There is the global system of imperialism, the global capitalist class, the global proletariat and the global petty bourgeoisie. Everything is global now. The material conditions for the world revolution of, by and for the proletariat have never been so ripe, yet its class consciousness seems to still be where it sunk to about 40 years ago - at the bottom.
[Backwoods Compatible]: If it doesn't matter what the petty bourgeoisie wants, then what is your argument? nothing you say disagrees with the idea that Indian capitalists exploit Indian workers and people in other countries have little to do with this.
[Zulu]: People in other countries benefit from this. Does it mean it's their fault and they are to blame? I don't care, I'm not in any kind of moralizing racket.
[P. Cockshott]: {https://www.youtube.com/watch?v=uT5C_8QZG9I}
[Zulu]: Ha-ha! Now your position comes complete with typical leftist moral/political sectarianism. "We can't have this theory, because it'll get in the way of preaching socialism in our neighborhood!"
[Truong Dang Manh]: I'm sorry, Mr. Cockshott, but I don't understand why you are trying to deny unequal exchange which Marx agreed with, that's why he had the theory about transforming value into price of production. The numbers currently might not align with the theory but it by no means indicate that the theory is wrong. Engels gave a historical explanation of this transformation (until his time) in the Supplement to Capital Vol 3: https://www.marxists.org/archive/marx/works/1894-c3/supp.htm which I think is a reasonable explanation. There were many times in which Lenin state explicitly following Marx that the agricultural price is never sold at its value but higher, due to the fact that the constant capital component is lower due to backwardness, and also due to monopoly on land, preventing the formation of the average profit rate in agriculture. So if the empirical numbers do not align with the transformation theory, I think it might be due to monopoly capitalism.
For example, we know that oil is a scarce resource, so therefore there might be some sort of "oil rent" at play which prevents the the formation of average profit rate. Once again I think that the phenomenon of unequal exchange is real and we should not deny it. I have also noticed your fascination with a kind of mechanical Marxism and a pathological fear of Hegel. I wonder if this is a beginning toward a new revisionism?
[Lyn Marness]: There is no equalization of the rate of profit, this has been proven empirically several times. If a theory does not match reality then it is wrong, plain and simple. Rather what happens is that rates of profit are inversely correlated with capital intensity, just as the labour theory of value would predict. The reason that agricultural and mineral products sell based on the marginal rather than average value is because of the existence of declining returns to scale in those industries, which means that below-marginal producers benefit more from simply selling at the higher price rather than lowering prices to gain market share. This is not the case in manufacturing, which features constant or increasing returns to scale, and so prices gravitate towards the average labour value there. Hegel was an unscientific speculator and not worth anyone's time.
[Truong Dang Manh]: As I have said, I suspect that the reason we do not observe empirical numbers confirming the transformation problem and the lowering of the rate of profit is because of monopoly capitalism. For example, oil rent. Your example of marginal returns is the same as Marx, who was inspired by Hegel, did in Poverty of philosophy. Hegel did not produce any labour theory of value, Marx did.
In "Notebooks on Imperialism" by Lenin, notebook Alpha, on the book "Finance Capital" by Hilferding there is a quote "Heavy industry. Outflow of capital difficult (the path to monopoly)". He quotes it also in the Imperialism book: "In Great Britain it is the size of the enterprise and its high technical level which harbour a monopolist tendency. This, for one thing, is due to the great investment of capital per enterprise, which gives rise to increasing demands for new capital for the new enterprises and thereby renders their launching more difficult". Here we see that because the equalization of profit rate supposes a free market in which capital can move freely, under monopoly capitalism this does not hold because the capital required is too big so that capital no longer moves freely as before.
If a big company like Amazon is to be competed with you need at least as much money to compete with it, and no way the banks are gonna give a loan to some random 90% of the smaller companies? That's why those companies are called "too big to fail".
[P. Cockshott]: The result of the equalization of the rate of profit is an economy that is now incapable of reproducing since for each sector, supply and demand are now out of alignment.”
[Zulu]: Perhaps that’s exactly what happened throughout the 19th century? Underdog capitalists tried to achieve “fair” profit margins, driving the system into overproduction crisis every now and then. Some went belly up, others carved out pieces of foreign markets or introduced labor saving tech. And it was not until the rise of monopolies and finance capital (the banker comes along and says, that "if you boys gonna behave yourselves, I'll give enough credit to all of you"... [Hilferding, Ch. 11]), that competition was reduced and differential profit rates stabilized. But that was the first step towards the “abolition of the entire system of capitalist production”, at least as Marx knew it.
This is the chapter {https://www.marxists.org/archive/hilferding/1910/finkap/ch11.htm} where Hilferding analyses the obstacles to equalization of rates of profit. Indeed, if you've invested a billion dollars into building a nuclear power plant, it's not like you can easily sell it at will to reinvest that capital in solar panels. Also, when enterprises from different branches report different rates of profit, they count the interest on their borrowed capital and the rents they have to pay as costs, whereas we know where those come from... But in any case, the rates of profit need not be equalized for prices to decouple from values. They only need to be skewed due to imperfect market competition, or government intervention, or banks' credit policy.
Hegel is total rubbish and waste of time, though.
[Rotciv Tilems]: You have no refutation, just petty sarcasm.
[Zulu]: I have plenty of refutation, but this conversation has been going in circles for some time already. Sadly, Paul just keeps missing or ignoring the points I make. For instance, to counter my assertion that scrap as raw material increases productivity, he shows that it costs as much or even slightly more per ton of steel product.
But this doesn't matter. What does matter is that during the same period of labor-time the same number of steel workers can process more constant capital in the form of scrap into more tons of steel, than they can process constant capital in the form of coke&ore. Because it takes longer to smelt the ore and imbue it with carbon, than to basically just remold what has already been steel since the last time it got produced. Thus, the same length of labor time (value) gets added to, say, $1000 of scrap, as to $300 of coke&ore. Voila, here is the increased productivity in terms of physical use-values, and diminished productivity in terms of new labor-value per unit of output.
But this is neither here nor there, because Paul, it turns out, spent decades of his life as a researcher on the "empirical proof" of the LTV and consolidated his interpretation of Marxism around it. The theory of unequal exchange (which has nothing to do with Proudhon, see - https://imgur.com/tbMjttv) is clearly at odds with his interpretation (which seems to have more in common with neoclassical economics than with Marxism, at least so far as the "close correlation" of values and prices is concerned). If his interpretation unravels, so will the "empirical proof". And since he is so much invested in it personally, he won't let it unravel. This simply isn't a kind of situation, when "Ooops, I was wrong" admissions come around.
Therefore, further discussion is pointless. It's been somewhat fruitful, though, as a source of insight into the denialists' thinking, the peculiarity of Paul's position notwithstanding. So I'm glad it happened.
[Oh God Not This!]: It seems to me that outsourcing does produce a labour aristocracy. I'll put it into numbered points. What's wrong with this?
1. If businesses outsource to poor countries, they can take advantage of lower wages to increase their rate of profit.
2. This seems equivalent, in cost of production terms, to employing new labour-saving capital.
3. Competition between outsourcing capitalists should eventually drive the down the price of the product when it is exported back to the rich country.
4. This reduces the rate of profit for these companies exactly in line with the decline in the price - i.e. the temporary surplus is eaten up by the reduction in the price of the end good.
5. Consumers in the rich country are the ultimate beneficiaries with a cheaper product. 6. So ultimately, 1st world consumers are getting the original surplus in the form of cost savings on goods produced with lower developing world wages - i.e. labour aristocracy.
[Ajente002]: I think the error in your analysis is on point number 2. (equating "outsource of production to poor countries with lower wages" and "employment of new labour-saving capital"), as the first one produces higher rates of profit for the capitalist (as the organic composition of capital is lower in third-world countries and, therefore, is more labour-intensive), while the second one produces lower rates of profit for the capitalist (as the organic composition of capital is higher and, therefore, is less labour-intensive). Even if both processes reduce costs of production, prices, and (in the case of basic needs products) labour cost, they generate totally opposite results in the rates of profit (which affects the decision of the capitalist on whether to increase productivity or not).
[Zulu]: He said in #2, "in cost of production terms". This also means "from the point of view of individual capitalist (firm)". So it's accurate. Except maybe the price of higher risk. Because for the system as a whole, it is indeed less profitable to invest in labor saving tech for the reasons you describe. His ##3-5, though, assume perfect competition, which is no longer the case. In the oligopolistic market setup we have in the real world the likes of Walmart and Amazon retain a large degree of control over the price. Plus the state takes its share in the form of VAT and other taxes, which it then redistributes for the benefit of its own employees and to the general population in the form of welfare and public access goods and services (and that even before the MMT). So #6 remains true.
[Krzysztof Broda]: The wages in the old capitalist countries are still driven down by the competition with the third world workers.
[Oh God Not This!]: You could still have generalized unskilled wage differences though. It is not possible to outsource many jobs, eg. cleaners, shop keepers, catering, construction labourers, etc. Suppose that you outsourced all the jobs that you could, but you still had lots of jobs left over. These jobs would not be competing with the poor workers because they can only be done by locals. In a sense this would constitute a sort of labour rent created by national borders and citizenship/residency requirements.
[Zulu]: It's called "imperial rent".
[P. Cockshott]: Well you are clear about your class allegiance Zulu. It is with the capitalist class of the USA. You are shamelessly adopting the ideology of neo-classical economics in order to justify attacks on the working class.
[Zulu]: Really? Seriously? Class allegiance? My allegiance is with the facts first and foremost. And the facts are such that the labor aristocracy in the 1st world has been thoroughly bribed by the imperialists for over a hundred years and still is being bribed, albeit not so lavishly as it used to before the 2008 crisis.
As for the neoclassical economics, it's you who equate prices with values, not me... Wage is not the value of labor power, it is the price of labor power. Once the price of labor power gets inflated over its value, all prices in the area get likewise inflated. Hence your tautological "proof".
[P. Cockshott]: In that case, as I say you have to throw out all of Marx's analysis of exploitation in Capital. According to your view the workers in England in the 1860s were not being exploited at all. Your class position could not be clearer.
[Zulu]: No, thank you, I think I'll keep Marx's analysis at the basis of my understanding of exploitation. Which other brilliant thinkers expanded upon, such as Luxemburg, Bauer, Grossman, Hilferding, Lenin, Baran, Amin, to name a few.
As for the workers in England in the 2nd half of the 19th century, I will defer to the expert, who said that the majority of them were exploited, but a small yet significant minority were not and became labor aristocracy. He thought this tendency could go in reverse quickly, but it didn't. It was only the beginning of a long process. It went on with certain ups and downs throughout the 20th century, until all the workers in England became labor aristocracy, thus leaving the proletarian class and joining the class of petty bourgeoisie (except for the small minority of migrant workers perhaps). Which makes the class position of those pseudo-Marxists who advocate for them, to the detriment of the real world proletariat, much clearer than mine.
* * * *
[Sam Williams]: With the election of Gorbachev, the economists who strongly defended the view that commodity-money relations and the law of value either do or rather should prevail during the construction of socialism won the day. The consequences of their victory are all too obvious today.
The famed Argentinian-Cuban revolutionary Che Guevara, who was killed by the CIA in 1967, many years before the election of Gorbachev, defended what even then was the minority opinion among economists in the socialist countries on this matter.
[Zulu]: Gorby has nothing to do with the prevalence of the view that the law of value must remain operational during socialism. It prevailed long before him. The whole point of Stalin’s last theoretical work “The Economic Problems of Socialism in the USSR” was to combat that view which he (to his unpleasant surprise perhaps) found already rampant among the Soviet economists in the post WW2 period. Unfortunately, Stalin was not such a great theoretician himself, and died soon after anyway… Then there was that “sincere fool” Khruschov, and then the creeping counterrevolution won completely in 1965 with the Kosygin-Liberman reform, which essentially restored capitalism in the USSR (in the form of state monopoly capitalism, but nevertheless…) And Guevara returned to the jungle because of what he saw in the Soviet Union.
Ironically enough, the operation of law of value was phased out by the chief imperialists in 1971, when they abolished money. And that happened precisely for the reason of the overdevelopment of the productive forces, which could not be constrained by the law of value any longer. (Can’t wait for your explanation of this new twist with the stronger dollar after all those QE’s and the continued trend of the gold price to fall).
As for the ground rent, there is an unsolved contradiction in Marx’s theory of it (see: Dick Bryan. ""Natural" and "Improved" Land in Marx's Theory of Rent").
What Marx could not grasp (but which would fit perfectly in his materialistic political economy, although through partial rehabilitation of the Physiocrats and even Malthus) is that “land” serves as the natural source of the productivity of labor (and its increase) as it provides physical energy which puts in motion the means of production and the laborers themselves, in the form of food and fuel. That’s why the coal mining capitalists in his day seemed to draw a rent on their property which wasn’t really capital, just like the landlords. And the same thing goes to the entire energy sector these days and more than ever, of course, due to the ever rising energy requirements of industry. The manufacturing sector in general is willing to pay that “power rent” to the energy sector, as energy is what amplifies the productivity of labor.
[Boffy]: Marx, Capital, vol. III: “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.”
And in what meaningful way gold continues to act as a proxy for abstract labour, and so the basis of determining value and exchange-value. Marx and Engels point was that a quantity of gold came to act as a proxy for a given amount of abstract labour. But, this only continues to be the case when gold remains the basis of the monetary system. Today it isn’t. As Marx describes there is no need of any such relation. All that is required is a representative of social labour-time. Today that representative takes the form of the various currencies.
[Zulu]: But in what meaningful way do the fiat currencies serve as “representatives” of abstract labor time? They are constantly “printed” and speculated against stocks, commodities and each other. Prices of goods and services are heavily influenced by multiple factors such as governments’ tariffs and subsidies, commercial banks’ credit and loan extensions, lack of market competitiveness, etc.
Assertions, such as “commodity prices are very closely proportional to labor content”, to put it simply, are baseless, and plain circular arguments: Why are prices such as they are? – Because proportions. – But how do we know the proportions? – From the prices.
And if I remember correctly, Marx did say that a proxy for abstract labor was required for the law of value to operate. That’s why he stated that it would be impossible for money and credit to detach completely from gold or some other money commodity. That’s why Sam here says that “if … Marx was correct, … “non-commodity” money is simply impossible as long as commodity production and therefore capitalism exist.”
Well, first of all, commodity production does not equate to capitalism. Secondly, another thing Marx said was that capitalism was likely to be discontinued at some point in the future due to the tendency of the rate of profit to fall... Which leads us to a rather logical solution to this token money conundrum. Namely, that the future is here and that the present mode of production is no longer to be called capitalism. It is something else entirely. The law of value is no longer operational in any shape or form (and hasn’t been for a while now, possibly even prior to 1971).
The Germany’1923 monetary disaster, which is invariably brought into these discussions, may no longer be relevant either, because bourgeois economists have had almost a whole century to figure out ways to keep inflation under control, and they did just that, the results of their studies manifesting in the form of MMT. For starters, Germany had to pay its debt (WWI reparations) in foreign currencies which was the main reason for the paper mark to collapse; the US and EuroZone don’t face this issue, so they can print as much as they like.
Another important conclusion of MMT is that as long as only a small fraction of the “printed” money reaches the actual consumers, the prices of consumer goods will remain stable, and in case of emergencies, unemployment may be used as a “safety valve” to cool off the inflation (bogus lockdowns should prove quite handy in this regard…). Of course, prices of stocks, real estate, etc. will go exponential. But who cares, as that’ll only mean the rich getting richer, and the poor poorer, which is the whole point, isn’t it?
By the way, bitcoin could theoretically serve as a money commodity. Because it takes a lot of electricity to run the algorithm. But will it?
Of course, gold can have its “monetary uses”, but any commodity can, be it sheep, salt, oil, cocaine or Coca-Cola. That doesn’t mean Coca-Cola is money and the amount of valueless fiat currency issued in the world is somehow determined by any one of these commodities alone.
I understand the horror one might experience at the thought that since money was abolished (in their Marxist definition anyway), the law of value has ceased to be the guiding force of the global economy. But hey, wasn’t that exactly what Marx predicted? Sure, he thought that would mean the inevitable advent of communism... But that part of prediction, apparently, was an error, and we have to deal with it.
* * * *
[P. Cockshott]: [Capitalists buy not labor, but labor power...]
[MBK]: Couldn't you say though the same thing about a steam engine as a human? You buy the machine's ability to work but you can get more or less work out of it. In physical terms human muscles and machines are the same, aren't they?
[P. Cockshott]: Yes the amount of work you got out of a steam engine depended on how many hours you ran it for. The incentive was therefore to keep it running 24 hours a day and bring in shift work. What Marx is doing is transfering the rationality of the capitalist hiring a steam engine to the rationality of the capitalist hiring labour power and in both cases the incentive is lengthen the period of work.
[MBK]: But couldn't you say then the surplus value comes from the steam engine, not the worker? (or any other input).
[P. Cockshott]: It is certainly conceivable that value could be determined by actual energy consumed in production. But it turns out that this does not seem to be empirically true. The money value of industry outputs corresponds less closely with energy used than with labour used.
[Zulu]: Value comes from labor. Surplus comes from energy. How about that?
[MBK]: Is "value comes from labour" an empirical assertion and if so could it be falsified? In general, what do we mean by 'come from'? we can say a piece of matter came from somewhere, but do prices 'come from' anywhere?
[Zulu]: The empirical confirmation of the LTV can be found in the study of real world trade for MMORPG virtual items. The real world prices for these virtual items (excluding items that classify as unique and get sold to the highest bidder) are indeed closely proportional to the amount of time it takes an experienced player to obtain them in game. Of course, "crafting" and "farming" those items for sale in the real world for real world money falls strictly within the framework of simple commodity production. There were reports that some corrupt elements in the PRC used slave labor of convicts for the same purpose, but these cases were not available for study, obviously.
Prices come from mutual exchange of products between individual producers and depend on the specific social relations under which this exchange takes place.
"Pieces of matter" come from nowhere. They get transformed from one form to another. Transformation of matter takes energy. These processes occur all the time. Some forms are more useful to people that others, so people found out ways to direct the processes of the transformation of matter via application of energy. But this direction of energy takes time, and time is the ultimate scarce thing that every person has a limited (and unknown) amount of. That's why it is the source of value.
https://www.youtube.com/watch?v=YcvmGbv95Go
[MBK]: Time is not the only scarce element, of course. So is energy or water and many other things. So this does not make human labour time unique. The question is when you have heavily mechanised/automated production processes is it still correct to claim that profit 'only comes from' human labour.
Imagine a car factory that is fully automated and the only input of human labour is that in the morning and by the end of the day somebody presses a button. Now suppose the cars get sold for 10 million dollars, 1 million of which is profit. Now let's say of the cost price of 9m 8.99m was for the machines and 0.01m (10K) was for employing that person pressing the button. Is it plausible to say that 1 million of profit only 'came from' the labour of pressing the button 2x a day? (and what does 'come from' even mean?)
[Zulu]: The million dollar of cars will come from all the previous labor of workers, scientists, and engineers, who invented and built the automated factory. In a fully automated economy, when all productive tasks are performed by robots (as depicted in "WALL-E", for example) there is no profit and no value to speak of.
Time is the sole scarce resource. Because you can expend it to gain (harvest) more energy and with enough energy you can literally make anything out of hydrogen. But you can't get more time, because "god" or "fate" has only so much of it for you. That's where the very idea of scarcity ultimately comes from. Of course, you can try and pretend that you extend your time by getting rich and claiming other people's time via money. But you won't be able to take your money with you to the afterlife, because there is no afterlife.
[MBK]: That's an interesting theory, on the other hand it's no longer Marx's theory. the LTV claims that profit comes from new (live) labour only; labour embodied in MoPs, even if it's knowledge, is simply transferred to the product.
It's true you cannot buy infinite amounts of time, however you can in a sense buy time by money by hiring other people and thereby not having to spend your time with the things you don't want to, thereby freeing up your own time. and of course you can just turn around the value equation and say it's determined by this, i.e. the subjective value of things to people.
[Zulu]: The only subjectivity concerns the perception of time by individuals. But since there is an objective way to measure time, the subjectivity ends with the individual. So when Robinson meets Friday, their social and economic relations are objective from the start.
And no, Marxian LTV claims that surplus value comes from living labor. Therefore in an automated factory there is no surplus value. The aggregate (total) profits are equal to the aggregate (total) surplus value, but individual profits come form the distribution of the total profit among the profiteers. So as long as there is still some living labor performed elsewhere, the owner of such a factory may get in "on the action", just as if he lent his capital to other people and received interest on it.
[Ajente002]: You can produce energy by transforming matter in a power plant. You can produce water by electrolysis on acids. But you can't produce time. Time is absolutely scarce. The other scarce goods are just relatively scarce, as far as they need human labour time to be reproduced.
If no one press that button each day, machines won't run, cars won't be made, and therefore there won't be any profit at all. The issue is not how easy is the labour done (as labour with higher organic composition of capital - it is, machinery - will be more efficient and easy than labour with lower organic composition of capital).
[MBK]: OK, so automate that last step too. now there can be no profit on the cars, whereas if a human pressed that button there could be 10% profit margin on them. although they are the same cars. implausible!
Human labour time can be bought too, like the other inputs. you can have more or less labour power just like water and you can 'produce' more human labour time by population growth. So I don't think it's scarce in a fundamentally different way than other inputs. now, in the 19th century no tasks requiring a level of intelligence could be automated. so labour was indeed a unique, irreplaceable element. but this has changed or is changing, and i think it makes it less and less plausible that profit 'comes from' human labour only (this seems like a metaphysical statement anyhow, but ok one can mean it in the sense of 'correlate with').
[Zulu]: Time is literally the scarcity, at the most fundamental cosmological level, due to the second law of thermodynamics. It will run out eventually and nothing can be done about it. Every human individual obviously has a lot less time than the universe as a whole.
Of course, labor, i.e. human time, can be substituted for by automation of the production process, but it will reduce profitability. In the case of 100% total automation of the global economy it will reduce profitability to zero. This effect is directly observable: capitalists choose to outsource production to the 3rd world rather than increase automation in the "developed countries". Such is the nature of capitalism - it's a system of appropriation of other people's time. Any exploitation of human by human is, and capitalism, historically, has been the most effective so far. That's why, indeed, it isn't a coincidence that during the 19th & 20th centuries the rapid development of capitalism was predicated on enormous growth of population, so that more human time could be "produced" and appropriated. But this seems to be coming to an end soon.
Without time appropriation there is no profits. If Elon Musk, Bill Gates and Jeff Bezos, for example, became owners of all the enterprises in the world between the three of them, and all goods and services (including security) in those enterprises were produced by fully automated robots, they'd have to give everything away to other people at zero price, and couldn't even trade between themselves. At that point they might as well proclaim communism with themselves as a "steering committee" or something, or declare everybody their slaves. The third option would be to have people "employed" in "bullshit jobs", such as snooping on each other for "hate speech", reposting memes on twitter, serving as test subjects, etc. to earn "social rating" that would allow differential access to the goods and services provided by the trio, but that would obviously be not capitalism with real profits in any other sense than a sham with a heavy tinge of a mystery religion.
Never mind this is exactly the direction where things are going right now...
So there is no fundamental rift between the scarcity theory of value and the labor theory of value. Human time is the ultimate (subjectively) scarce resource, everything else is made available via expenditure of human time in the process of labor. So the LTV is in fact a scarcity theory of value done right. In any case, one has to keep in mind that there is a reason why value and price are separate categories.
[Galerkin B]: Value and price are separate categories because the exchange value of some items is not derived (or regulated if you want) by some underlying process. But a lot of products that are exchanged, their price is derived from value and is regulated by it. You see people, even economists, not being clear on how the law of value applies when there is a question with a certain class of commodity/product, probably because it is not clear to them either. To Marx it was probably clear, but evidently his exposition is not rigorous(even though the underlying principles are sound) precisely because he was lacking(due to the time he was writing probably?) a mathematical formalism to express these relations more succinctly, rigorously and avoid the whole confusion that "diamat" has caused.
What I have in mind for example is to adopt a "vector space" description for LTV, where the set of elements(commodities) for which LTV is operational is rigorously defined. Marxist economists might be aware that essentially they are operating on elements of a vector space but it is not popularized as such, with the detrimental (and comical at times) effect that people will attempt to refute LTV by raising questions about mudpies, paintings or even prostitution services. Evidently these "commodities" are not elements of the LTV vector space.
Plus, there are obviously products which are reproducible and are being sold for profit but still the LTV is (probably) not operational. I am thinking for example the weapon systems. On what criterion should such products be excluded from the LTV framework? The LTV describes the laws of motion of an economy insofar as commodity production and exchange is the primary economic relation. Maybe for profit production existed in earlier periods of human history, but because the general level of (technical) development was low, commodity production and exchange was a niche activity. There, LTV would have little to no power.
[Zulu]: No, it wasn't quite clear to Marx, not really. See "Why Did Marx’s Capital Remain Unfinished?" by Ludo Cuyvers, for instance. And, no, the LTV is applicable universally throughout the history of mankind, it just might not work to explain equally well the prices under different conditions of production and exchange. So, whether you think of AK-47s, Picasso's ugly paintings or glasses of water in the desert, prices do not necessarily conform to values, nor they have to with any other commodities, be it chewing gum or labor power...
[Ajente002]: I'm quite certain there has been serious efforts to formalize Marxian economics. However, I'm doubtful these formalist approaches are as useful as you think they would be; for starters, most people engaged in Marxian economics (even professional economists) aren't well versed in mathematical jargon, so the confusion would still exist for most of them, or (worse) would be obscured even further for them because of the complex mathematical conceptualization; and second, while I agree there needs to be a more rigorous and mathematically sound definition of Marxian categories, some of them scape by their own qualitative (dialectical) nature to formalist approaches (for example, the dialectical relation between use-value and exchange-value forms).
[Zulu]: And any "rigorous formalization" would require and be in itself an interpretation of Marx, prompting debate whether the formalization in question is "correct" or "distorting". So one might as well develop a mathematically rigorous LTV without reference to Marx at all, and should expect to be criticized on its own merits.
[Galerkin B]: A rigorous description/formulation of Marxian categories need not concern itself with outdated mystifications of the dialectical philosophy. The core of "dialectics" is (supposed to be) about how things(systems, societies, definitions, etc.) change. Well, we are fortunate to have a better toolbox to deal with change when it comes to measurable quantities, and that is differential equations. The "dialectical relation between use value and exchange value forms" is a pointless intellectual exercise if you pay attention to it more time than it needs.
[Ajente002]: I'd be more cautious to not reject dialectical thought just because it appears as "outdated mystifications". Reducing dialectics simply to differential equations (an otherwise valid comparison, as Engels himself used them as examples of dialectical logic in "Dialectics of Nature" and "Anti-Dühring") leaves behind other important aspects of dialectics apart from just material change (like the inherently contradictory nature of reality, the relation between opposites, or the qualitative changes emerging from quantitative changes), turning any supposedly Marxist approach in just another neopositivism, and depriving Marxism of its explanatory power outside of the purely numeric relations (specially in history and politics).
[Zulu]: This is religious talk and though plain and simple. The Marxian/Hegelian dialectics is nothing but a mixture of platitudes and nonsensical mumbo-jumbo. It is indeed an outdated mystification and needs to be discarded as such.
In the USSR it did indescribable harm, by enabling any opportunistic position or decision to be "theoretically backed" using the "dialectic method", including, but not limited to the economic (counter)reform of Kosygin, when things were proclaimed (such as, for example, "distribution according to labor") while in reality the opposite was the case. G. Orwell was quite right to satirize "dialectics" as "doublethink" in his book.
It's all too bad Marx&Engels fell for it back in the day, and it is of an academic historical interest why they did, but persisting in it in this day and age is lunacy.
[Galerkin B]: There is no contradiction in "reality", only insufficient knowledge (or class antagonisms) that makes it appear contradictory. This is what "dialectics" should be about, but it instead used by politiscience grads or opportunists for their own personal reasons. I understand that historically it had meaning and its place (Mao), but we are making this discussion now, in 2021. "Relation between the opposites" is a schema that can literally be projected onto everything without rly making things clearer. Can you give me an example? As for "quantity changes lead to quality changes", again, correct but really unnecessary because it is too abstract and ambiguous. I do work in the field of elasticity and mechanics in general and I can give you many examples where this schema can be applied post-facto, once the heavy lifting by means of differential equations is done.
The behavior of the material changes from elastic to plastic once it's total strain exceeds a certain threshold, which is definite given certain conditions. An damped oscillating structure in an airfield will start to oscillate without bounds if the relative velocity exceeds a certain limit, leading to catastrophe. "Ah yes, quantity changes into quality". I am sorry, but no, this is not the time, nor the place for it.
[Ajente002]: Funny enough, I'm a political science graduate. And, as far as I understand it, dialectics are purposefully abstract and general, as they're supposed to be the most basic principles for development and change processes (in nature, society, and thought). This doesn't mean they have to be ambiguous or tautological as you may try to suggest, and any opportunist trying to mystify them should be called out.
Contradiction principle isn't just apparent; to Marxists it's ingrained in the very constitution of matter: photons behave as waves and as particles at the same time; we can't measure the position and momentum of a particle at the same time; "units" of matter are always at the same time composed by smaller "units"...
The same happens with the "relation between opposites" principle (phenomena acting as a unity and acting on each other): most feedback processes in nature, centripetal and centrifugal forces, inner pressure and gravity in dying stars, capital and labour, electoralism and reformist deviation...
Natural scientists tend to disregard this dialectical philosophy of science, as it's clearly easier and more intuitive for them to work with metaphysical categories. However, in social sciences we deal a lot with complex processes, composed by thousands of variables that we can't isolate, and sometimes dialectical thought makes it easier to explain and analyse them. This isn't a discussion between "science in 1871" vs. "science in 2021", it's a discussion about which scientific framework is better suited to study an economic phenomenon.
[Galerkin B]: In the examples you give you are just forcing a "dialectical framework" in scientific theories that were developed by other frameworks. Do you have any example where a scientific truth was derived using the "dialectical framework" and not just modes of expression akin to dialectics (like Marx did)?
[Ajente002]: The dialectical framework wasn't "forced" in those scientific theories, but derived from them. If you read Engels' works, you'll see his process of abstraction and generalization, from particular observations of distinct natural/social/thought processes, into general dialectical principles. About your question, all of Marx's discoveries (class struggle, historical materialism, labour theory of value...) were concluded using the dialectical method. About your question, all of Marx's discoveries (class struggle, historical materialism, labour theory of value...) were concluded using the dialectical method. David Harvey has an amazing didactical chart showing Marx's process in Capital...
[Zulu]: This is empty scholastic, devoid of essence, but quite in line with a religious type of devotion to the doctrine of Marx. Quite understandable, though, since pattern seeking and agency attribution are undoubtedly beneficial evolutionary adaptations of the human intelligence, but known to play all sorts of "false positive" tricks on the more credulous minds.
And here is some formalization. Andrea Ricci in his Dec'16 paper "Unequal Exchange in International Trade: A General Model" comes up with a plenty of formulae on top of an impressive bibliography to substantiate and quantify the global value transfer in its many forms. Fast forward to the present year, and out comes his book and a few articles, in which he reaches the conclusion that the annual value transfer from the periphery to the core countries/regions totaled almost $4 trillion in 2019. In my view, that seems somewhat conservative. But then if you think that most of that value was embodied in real goods, raw materials, consumables, apparel, electronics, spare parts, etc., while much of the value "produced" in the core was "embodied" in various bullshit services... well, you get the picture.
* * * *
[P. Cockshott]: {https://www.youtube.com/watch?v=uwGG32IIIcw} [Skilled labor is more complex labor (the labor spent in training is like the means of production...)].
[Fahim Wahid]: Do you think this complex vs. intense labor distinction is compatible or incompatible with Sohn‑Rethel's intellectual and manual labor distinction?
[P. Cockshott]: No, they are not the same. Many manual jobs require prolonged training and are thus complex.
[Oh God Not This!]: Presumably it would be more efficient to pay a skilled worker slightly more to incentivise them not to switch jobs if the state has already been burdened with the cost of their training.
[P. Cockshott]: Skilled work is usually more interesting which is its own reward. The airforce is not plagued by pilots transferring to the infantry.
[Ta-Seti Kasu]: I thought that paying everyone equally was a capitalist distortion of socialist economics. What is the rationale for paying everyone equally across the board?
[Fempa3]: Now in the USSR people were not paid equally across the board, but the differences were not as stark as in capitalist economies. But, if we turn the question around. What could motivate that some people are better paid than others?
[電脳主体]: I'd imagine when all training is free you'd have to pay extra for unskilled jobs instead, who would want to be a janitor when they can go learn and spend their life on something they're actually interested in.
[Ta-Seti Kasu]: Being a surgeon is far more complex and difficult than being a janitor, so the surgeon should be compensated for the difficulties in both attaining the qualifications and the difficulties in performing the job.
[Backwoods Compatible]: Complexity and difficulty of a task is an opinion, labor costs and training times are, to a degree, not, so that isn't true even in real economies. As the video said your wages reflect how expensive your training was and if socialists subsidize everything wage differences will decrease. Strangely enough, studies also show that higher wages can yank more output with repetitive tasks (and indeed management books going back to the 40s will reflect this) but the opposite is true of skilled labor.
[Ta-Seti Kasu]: Surgeons perform in a profession that is far more difficult and exacting; the consequences are also far more important -- and this is quite simply not an "opinion". The financial costs of a field of study is only one consideration; the mental difficulty in acquiring, absorbing and executing the volume of information and data in certain fields is far higher than menial jobs; these people should be compensated. I don't understand the opposition to paying certain people higher for performing more important and difficult tasks.
[Backwoods Compatible]: I'm saying an employer already knows how "hard" a given task is based on preexisting labor costs already accounted for in terms of training time (same goes for perceived difficulty of study) and nothing else. Anything else would be "an opinion" as it implies someone could get higher wages by complaining they simply deserve it due to task difficulty and this just doesn't happen in real economies.
As Paul says, given that real economies already work this way "motivating people with money" seems to be a problem no one actually encounters. Furthermore we aren't saying that doctors simply must be paid similarly to miners out of socialist morals, but that is the real effect socialist subsidies would have on a given job market.
[John Lowrie]: The question is do we require material incentives to distribute labour power among the various departments of the economy? For example, why would a girl elect to become a surgeon rather than be content to be a hospital receptionist? or a boy decide to become a fisherman rather than sell the same fish across the counter in a supermarket? Of course, under communism, remuneration is according to need, that is of course socially determined need, not individually identified want.
This question cannot be adequately addressed by arguing that those whose labour is more intense or demanding receive more free time. An engineer working in the power industry may be called out for emergencies at all times and in all weathers. On the other hand, baristas can easily be given no end of free time, since their labour hours are easily regulated and their numbers readily trained up. If I recall correctly, Bogdanov for one, in arguing against Preobrazensky and Bukharin in holding that the law of value no longer applied under socialism, asserted that an equalisation of remuneration would lead to a deficit of labour in unpalatable occupations.
[P. Cockshott]: As you know, Marx and Stalin held that work should be paid by intensity.
[Zulu]: Stalin tended to equate skill with intensity. In 1931 he demanded abolition of equalized pay rates, because they led to the workforce "fluidity", which interfered with the completion of the production plans. Later on, he stated** that "We have remuneration of the collective farmers, the workers, as well as the intelligentsia, according to labor. People of different qualification receive different pay; the labor of an engineer, for instance, is three times higher in qualification than that of a worker". Of course, he derived the qualification differential from the pay rate differential, not the other way around.
Thus, under Stalin pay rate differentials were increasing all the time, reaching up to 10 times the magnitude in the early 50s. This was reversed somewhat under Khruschov, which led to the growing discontent of the intelligentsia (who thought, not unlike Stalin, that they should be paid more than workers for their complex labor). In reality these seemingly ideological oscillations only reflected shortages in certain types of labor. That is, in the beginning (1930s), people of higher education were in very short supply. In the end (1980s) they were abundant, while many medium-skilled labor-intensive worker professions were undermanned.
So the government had to use "material stimulation" to balance the allocation of the labor power in the economy. Ideological conflation of this matter with the slogan of the "distribution according to labor" didn't bode well, and resulted in a certain M. Khodorkovsky, who would become the richest Russian oligarch at one point, only to be dekulakized by Putin's crew, saying in a book he authored in the early 90s that they, the "New Russian" businessmen "came to life to indeed realize the beautiful postulate of socialism: from each according to their ability, to each according to their labor", and that they themselves received their high income "according to labor". It's just that their labor was so much skilled and complex, apparently...
[Galerkin B]: That's a good point. "I became rich because I worked hard and smart", but with socialist characteristics...
[Zulu]: Yeah, this rabbit hole of "fair distribution" goes very deep, which is exactly the point Marx was criticizing the Gotha Program for, and which is, unfortunately, ignored by all the labor voucher enthusiasts, including our esteemed host on this channel...
[CatchTwenty2]: The implication that a surgeon is paid as much as a nurse, and moreover a nurse to an unskilled worker, means that an individual who invests the time to dedicate their working life to learning and training in a technical field undergoes large risks. If they do not pass the requirements, if they lose interest in the work or have a change of interest, if the indirect or direct labour is overwhelming - their occupation cannot be changed. They are expected by the state to contribute to that occupation for the rest of their working life as that is what the state has planned them for and because such skilled workers are scarce which must necessitate them to do such work. In addition, not all labour is equally desired in society, and so combined with no incentive to work in undesirable fields, is the inevitable risk of training for skilled labour in an undesirable industry (e.g. sewerage services, mining (dangerous), paramedics (due to trauma) etc.) which needs to be done.
This is an issue of which historical materialism would not support the Marxist progression of history towards a democratic socialism. Neuropsychology has illustrated that the motivation from neurotransmitters such as dopamine is incredibly strengthened and dependent not only by the anticipation of a reward, but the possibility or precariousness of reward itself. This is best manifest in the dynamics of the gambling industry and human sexual attraction. Without the response to a reward, no work will be incentivized to be done - from indirect labour (study and training) to contributions to the means of production (direct labour).
A functioning society is one which will incentivize special labour payments to those of skilled professions, to be motivated and persist in undesirable occupations. It cannot simply rely upon the idolatry of honouring unpleasant work contributions alone. Hence, a functioning society that is socialistic in the sense of state planning with worker lobby groups (such as unions) would have to operate under state capitalism.
[P. Cockshott]: The USSR had no shortage of doctors although they did not have a premium over heavy manual work. You underestimate the moral incentive people have to take up medicine and help people.
[CatchTwenty2]: Perhaps you're right although the incentive around altruistic cooperation is undermined nowadays from contemporary capitalist alienation due to technology and the breakdown of social capital. Such altruism would definitely be effective within tribal/nomadic societies operating within the range of Dunbar's number, since the scale and roles of society can be easily visualised in small societies. However, modern civilized society is now international and is evidently struggling to grasp the level of human suffering and the response that is necessary to provide adequate medical services. This is not a unique phenomena to medicine as it also applies to the caring for the climate crisis and the need for planned grazing in animal husbandry, reduced consumption of animal products in general, the need for recycling and reforestation to create a clean carbon cycle.
My point is, is that occupations will need to be incentivized to make people productive because even if needs are identifiable, the ability to plan them precisely requires a technocratic system in charge that can accurately calculate the planning within the economy. Such a system therefore can only be empowered by the praxis of incentives to reward. These are not possible if everyone is equally remunerated by social credits per labour time worked despite differences in technicality of the labour being performed.
[Dempa3]: How about if, during budget planning/voting time, unions propose bonuses for the strenuous/dangerous/unpleasant work of their members. And then budgets are formulated and voted on by the citizens, who collectively then bear the reaponsibility to correctly incentivize right type of work. And these bonuses should be paid out of our taxes as incentives. And all bonuses should be available for everybody to see and form an opinion on. And hopefully, we can match this way our needs to the intensity of work of the individual. Or are there issues here I am not seeing?
[CatchTwenty2]: Given that most skilled workers are of the minority of workers, I'm not sure how a general union in communist society would be able to vote in privileges for certain occupations like tax benefits, unless the majority were sympathetic or understanding of the implications that these skilled and undesirable occupations face. Moreover, even if that were possible, now we are drifting away from LTV and returning towards monetary economy, which may return to capitalist production relations if labour credits/benefits begin to centralize into an elite minority.
[The Tumans]: I think I find myself somewhere between your position and that of Paul's. I think we should always reserve the ability to increase a profession's pay whenever it would help society.
[Dempa3]: So, we need a practical solution that makes sure that people will feel that the extra effort people put in performing strenuous/unpleasant/dangerous work is recognized beyond beautiful words, else these words will soon start to ring hollow, and people will become disillusioned. So I am all ears for any suggestions. This topic is very interesting! I would say that it is key that there is a very understandable and practical solution, which both is fair, and is perceived as such, if we are to succeed.
[N. P. Adams]: Didn't Marx himself state unequivocally in the Critique of the Gotha Programme that under the "lower phase of communism" (i.e. socialism), income differentials were an inevitable "defect" under the "equal right" of distribution according to labor (in his own words, "equal right presupposes inequality"), and that this would ultimately be resolved (or "sublated") by overcoming the contradiction between mental and manual labor as well as town and country? Maybe I'm misreading him but it seems like Marx didn't think that material incentives and unequal outcomes were a huge controversy at the time.
[Zulu]: Yes, but the "material incentives" are in contradiction with the "equal right" a.k.a. "equal amount of pay for equal amount of labor", which is exactly at issue here. The demand/slogan of "equal right", which is Lassallian in origin, as Marx pointed out there, runs, on the one hand, against the fact that certain specific kinds of labor are more or less preferable than others due to such immaterial and hardly measurable considerations as prestige or lack thereof, and on the other hand, against the requirements of the society as a whole to balance the allocation of the labor force in the economy.
It appears that the Chinese revisionists strive to theoretically and ideologically justify the inequality of wages in the PRC by claiming that it follows from the LTV (kind of what Stalin did 90 years ago), and Paul Cockshott here theoretically debunks their claims, all the while elsewhere striving to theoretically and ideologically justify his equalitarian (but only so on the "country-by-country" basis, no free lunches for those lazy Indians...) proposal of the labor voucher system, using the same claim, and falling in the same trap of explaining prices by prices, that he criticizes Cheng Enfu for.
Well, to quote Stalin, "both are the worse", because in truth, the LTV is not that important (if at all) for the construction of communism, and justifying this or that policy, necessitated by the requirements of said construction, by bending and distorting the theory and ideology to conform to a bastardized 19th century's political slogan, is, to quote yet another catchy adage, "worse than a crime, it's a mistake".
[John Lowrie]: Personally, I think Marx was mistaken in introducing the concept of a lower stage of communism. He introduced this concept of equality of remuneration to clarify that under socialism workers contributed labour in one form and received the equivalent labour in another form, and nothing else was involved in the process but labour. But if we look at societies that have introduced communism, we see that they do not equalise labour-time. Take the Maoist Commune as exemplified by Jack Chen ("A Year in Upper Felicity", 1973, Pp. 156-160). From that part of production devoted to the consumption fund a distribution of grain and beans was made to all team i.e. village members. Thereafter distribution was made according to work points . A day's labour earned 10 work points, but more strenuous labour (e.g. coal-hauling) was evaluated at 12, while lighter work at 7.
Of course there is a school of Marxism that holds that communism will outproduce capitalism and such abundance will result that citizens will enter goods outlets and just take what they "need". This is petty-bourgeois anarchism run rampant, whereby Marx's "from each according to their abilities, to each according to their needs" is misread as "to each according to their individually identified wants"! Socialism will demand the strictest rationing including of consumption goods by work points deposited in a credit account and debited when used up ( i.e. work vouchers)! Were this not the case, why does Marx argue that under communism there would be a need for more bookkeepers than under capitalism.
[Zulu]: So what do you call the transitory period, after the political revolution of the proletariat has already taken place, but the institutional and, more importantly, cultural/behavioral transformation of society into fully fledged communism has not yet been accomplished (which arguably may be achieved only after a generation completely "unspoiled" by the overthrown exploitative formation and its "birthmarks" takes over)?
And Marx did NOT introduce the concept of equal remuneration. The Gotha Program and previous non-Marxist socialisms introduced it, and Marx criticized it, even if provisionally accepting it. But, Marx and Engels "invented" scientific communism, in the first place, in direct opposition to all those socialisms, accounted for in Chapter 3 of the "Manifesto", with only one kind of socialism found suitable for an alliance of political expediency. Unfortunately, this alliance of political expediency promptly led to complete conflation of communism with that socialism, something which Lenin belatedly attempted to correct by divorcing them, after the pro-WWI debacle of the 2nd International and the formation of the Comintern, with the term "socialism" retrofitted to serve interchangeably with the "lower stage of communism" in the Marxist-Leninist tradition, which was indeed a mistake, in retrospect, if, perhaps, an unavoidable one.
[John Lowrie]: In any case, it wasn't Marx's view that the LTV will become irrelevant after the fall of capitalism: "Even after the abolition of the capitalist mode of production, though social production remains, the determination of value still prevails in the sense of the regulation of labour-time and the distribution of social labour among the various production groups becomes more essential than ever..."
This brings us back to the question of intensity of labour. This cannot just be reduced to the quality of instruments of production and of training. It was notorious that the Soviet Union turned out shoes nobody wanted as the quality of workmanship was inferior. I had personal experience of this while staying at an old czarist era hotel with very long corridors. It had a beautiful central Asian carpet laid throughout the corridors but when the workers had come to a corner they had just folded it over rather than fitting it, so that the tramp of feet on the folds was causing the carpet to crack. Similarly, I had a colleague who worked in East Germany, who said that regularly when they would arrive at some restaurant they would be told it was closed for 'stocktaking'! Let us now apply the category of value: the restaurant workers are not exchanging equal labours; their labour time does not produce a product commensurate with the social value of the time that has gone into their enterprise.
[Zulu]: The distribution of labor among the branches of production must be the first to conform to the communist principle of distribution, namely, "according to need". Without this the lower stage communism will never develop into the higher stage.
After the proletarian commonwealth sufficiently mechanizes and automatizes the real sector, and dispenses with all the "bullshit jobs" and "bullshit tasks", it shouldn't be much of a problem, since the necessary labor time for the working population to support a healthy and sufficiently comfortable standard of living for all members of society must fall to like ~20 hours per week, as even some bourgeois economists, such as J. M. Keynes, predicted a hundred years ago.
As for the unit of account, and the means of exchange (currency) the labor-time may be substituted with "power-time", i.e. electric current. So kilowatt-hours may be literally used instead of money, with power plants acting as banks "printing" the "budgets" of that "money" as needed.
On the production side, the production plans will have to be compiled using pretty much the iterative method Cockshott proposes, but with the kilowatt-hour as the unit of account, arriving at the optimal allocation of resources within the existing power budget of society. The allocation of the living labor, "manning the jobs", will then require an additional and separate planning process. This will likely result in somewhat imperfect efficiency, but (and this is the most important idea to grasp here) it is absolutely necessary to decouple the living labor from and make it irreducible to all other goods and services in order to truly de-commodify and liberate it.
On the consumption side, people may be credited a certain amount of kilowatt-hours to their personal accounts, both as UBI and as wages for the work they perform for society. Additionally, workers may receive premiums in the form of bonus "labor points", only without any connection to the actual amount of labor they perform, but as "material incentive", as the government sees it fit to stimulate people into particular necessary but unpopular (hard, hazardous, boring, dirty) jobs or to do overtime on the jobs that fall short of manpower in the current plan period.
When they go to the the local department or on-line store, they will see basic consumption articles (bread, cereals, corn based food, simple apparel, hygiene items and such, as well as electricity itself and other utilities, local transit, etc.) priced only in kilowatt-hours, which will be the exact amount of the kilowatt-hours that went into the production of these articles and their intermediate inputs, and advanced articles (sugary and animal protein food, caffeinated and alcoholic beverages, gadgets, personalized services, long range transportation, vacation tours, etc.) will have additional tags requiring to spend the labor points. Both the electric currency and the labor points will have expiration dates (say, 1 month for the former and 5 years for the latter) to prevent hoarding. Any unspent and thus forfeited points will be considered as that person's voluntary contribution and gift to society.
As the society progresses towards the higher stage of communism, this voluntary contribution of labor points as gift to society will become a primary need and indeed a competition between individuals. If in capitalism the competition was about who takes the most from the common table, in communism it will be about who brings the most.
[John Lowrie]: "According to need". Of course, so long as we recognise that need is socially determined need and not individually decided "need" i.e. want.
[Zulu]: I get you, but the difference may be very blurry, as you should know. And any process of social determination, i. e. decision making, you may come up with is bound to returns errors. It was known as the The "Red Caviar Problem" in the USSR.
[John Lowrie]: Already we have here in Scotland the distribution of some goods according to need e.g. medicines; these are not distributed 'help yourself at the Chemists', but prescribed by doctors free at the point of use. Similarly, women's sanitary products are distributed free; but note they are distributed according to a need that is easily socially perceived as being a natural cycle, and so the amount of labour-time necessary for their production is readily calculated. But consider the case of women's shoes. Are young women to enter shoe outlets and help themselves to what they 'need'? The shops would soon be empty! Or the case of alcoholics: are they just to help themselves to what they 'need' in liquor stores? I recall being sternly advised by a super-Marxist that under socialism there would be no alcoholics! Idealism run rampant. By its very nature social planning is a form of rationing, all the more urgent given the climate change.
I recall at a meeting some students advocating that pensioners should get their heating free. I opposed this, for some would just go out the house and leave the windows open.
[Dempa3]: Where I live, most rented apartments have heating included, and even though our rents charge us for heating, people do not tend to waste heat just because they "already paid for it".
[John Lowrie]: If they did, of course, the rents would go up! I know, I have come home to my house to find the central heating on and the windows open! Also, one, and only one! of my family members insists on wasting too much water in cleaning their teeth. Water needs to be rationed as it already is in many places. All this idealistic talk by some Marxists about the advent of abundance once capitalism and/or "Stalinism" is overthrown belongs to Cloud Cuckoo Land and has severely discredited communism. How as water sources are depleted is abundance to arise? Certainly in his day Marx was already concerned about the diversion of agricultural land into meat and dairy farming (Foster&Clark, "The Robbery of Nature", 2020, Ch. 4b). We must as materialists be forthright in advocating the severest rationing.
[Zulu]: As materialists, we should not make fetishes out of anything. That goes for not making a fetish out of rationing too. And, as materialists, we should always keep in mind that humans are monkeys and don't like rationing, when they perceive it as unjustified and/or unfair.
[John Lowrie]: All societies practice rationing; only the mode of its application varies. By its very purposes socialist planning is a form of rationing that aims to meet social needs. Thus I argue we should as socialists be advocating a wartime style planned economy when we had central planning, state direction of production, rationing of raw materials (e.g. wood, currently rationed here despite 40 % rise in price!) and consumer goods, inroads into the rights of private property and income tax on the rich of 90%. Of course at the moment citizens will look at this amiss. As a leading UK socialist told me, "people won't like that". Indeed, but they will like the ravages climate change will visit on them even less, so at least we socialists will have been seen to have been advocating policies that address the imminent catastrophe.
Already in his day William Morris was arguing in "Useful Work vs. Useless Toil" that much that was produced was pointless. Now it is decidedly detrimental to the survival of human society. Yet there are still those Marxists who argue that communism will usher in a realm of cornucopia. I wonder: on which planet?
[Zulu]: Well, depending on the definitions and caveats you apply, cornucopia and rationing may not be mutually exclusive. But the examples you put forward make me think you fetishize rationing as some kind of virtuous goal in itself. It makes sense to ration fresh water where it's scarce, but in some places it is abundant. Rationing water in Canada won't make it more available in Libya.
The costs of central heating are very much dependent on the way it is produced. When there is the profit motive in it, then, of course, in will be expensive. But heat is actually an abundant byproduct of electric power generation and other industrial processes (in terms of physics, heat is literally waste), so it only waits to be channeled to people's homes with smart engineering solutions.
As for animal protein, including meat, it's arguably an indispensable element of a healthy diet, which makes it a need of every citizen, much more so than a personal motorized conveyance, no matter how eco-friendly.
I've described right above how I see the distribution system working in the lower stage, with the consumption articles divided into the most basic necessities, the bare minimum of which could be covered by the UBI and thus essentially free, and the advanced articles for which people would have to work.
And in the higher stage there indeed won't be many alcoholics, as everybody will be educated enough so as to refrain from of any kind of antisocial excesses in behavior, or it won't be the higher stage yet.
[Galerkin B]: On the issue of skilled labor, how do we define it? I feel this is important and treating any non-simple labor as a coefficient*simple_labor is not clear, at least to me. Maybe you can make sense of a skilled laborer being more productive (because he is using advanced machinery) than the "unskilled" one, but what type of activity is not labor, skilled or unskilled. Training a software engineer is expensive but is he considered a "skilled laborer"? I can see for example how a Caterpillar operator is a skilled laborer, compared to a laborer with a pick, but again, what comes into play here is machinery which augments human capabilities in the first case.
[Ajente002]: I'm sure the definition of "skilled labour" used by Marx and Cockshott isn't just "more productive unskilled labour", as there are situations where it entails not just a quantitative change in productivity (more intense or mechanized labour), but also a qualitative change in the produced goods or services (more complex or specialized labour). You can replace unskilled construction workers using shovels with skilled construction workers operating a backhoe, but you can't replace paramedics with neurosurgeons (though you can compare their abstract labour and exchange them when they're expressed in value form). In the second case, there is more than just "human capabilities augmented with machinery".
[Galerkin B]: Agreed, but I don't think neurosurgeons can be classified as "workers". The way I see it is that in order for the LTV to be consistent, the labor time spent doing X needs to be reflected on the thing you produce and be "crystalized" in that thing. For every single car produced we can deduce the portions of labor time expended by the workers in making it because the processes involved are measurable. The work of the mechanical engineer, also a "worker" , who produced the design of the said car model does not belong to the same space (in the math sense) because, well, he only needs to design the car once.
[Zulu]: Designing cars, developing new materials, etc., like almost all modern scientific and engineering endeavors involve many people crunching numbers, performing tests and doing other such repetitive and often boring tasks, so it's not that different from manual work in this sense. And the results are "crystalized" in every future product that is based upon these results. There is no departure from the LTV here.
[Galerkin B]: Agreed, but the tasks of scientists and engineers, however valuable, they do not contribute towards the (Marxian) value of, in this case, the car. They contribute indirectly in the betterment of forces of production (investment) but if you claim their work is "crystalized in every future product", then, from an political-economic point of view, should we pay rent to these scientists for as long as the product is produced and sold? And how far back does this have to go? Are retired engineers owed money from the things they worked on 40 years ago?
The engineers and scientist "skilled workforce" is akin to a petty property owner. Investment was initially made so that these people can be "trained" but this knowledge they got is "personal [property]". This is a "contradiction" that AES systems paid little attention to and ended up screwing themselves royally.
[Zulu]: No, I don't think in the lower stage of communism neurosurgeons and such should be paid rent on their qualification as it happens now. I think the government should use a system of "material incentives" as necessary to balance the allocation of labor power in the economy, subject to regular revision and adjustment to conform with the current 5-year plan. But it must NOT pretend that "distribution according to labor" is even a goal, let alone the state of affairs.
[Comrade Bear]: People leaving to higher paying capitalist countries after getting their training for free in socialism can cause a brain drain. What would be the best way to solve this?
[Zulu]: The only good way to solve this would be to stop having socialisms in one country and make the world revolution at last.
[Construct Beats]: I don't see a revolution (like 1917) in the next 10 to 15 years. It seems as we are entering another protectionist period. I never read Lenin's book on Imperialism, but there's an interesting interpretation of Imperialism not as the last stage of capitalism but as a point in a cycle. So it goes like protectionism, free trade, globalism (imperialism), protectionism, free trade, ... and so on. We are now doing this for the third time.
[Zulu]: Protectionism and free trade are two tendencies that were always present in capitalism, sometimes one clearly prevailed over the other, sometimes not. But this is no longer relevant, I think, since we're witnessing a transition from capitalism to another socio-economic order. And judging by how few people seem to be taking notice (instead of trying to reinterpret Critique of the Gotha program backwards), I'd say the revolution won't be possible in the next fifty years. And probably not at all.
Yanis Varoufakis explains how capitalism has ended.
[Construct Beats]: Some clear explanations from Varoufakis. Also remarkable he as a popular figure pointing out the limits of Keynesian politics. But coops alone wont solve this problem. So here communists should step in with planned economy. Also strange how he refuses to talk about socialism and instead talk of postcapitalism, and instead of monocapitalism he talks about techno-feudalism. But that's maybe not so relevant.
[Zulu]: Yes, coop based marksoc is a pipe dream, but his recount of the history of capitalism and the current trends towards the end of this history is spot on.
As for "techno-feudalism", the term may be debatable, as it's a new thing, and consensus on how to call it will naturally take a while to form. One of the better ones, I think, would be "credentialism", reflecting the role of fiat credit money as the driving force in the economic basis, as well as that of the other forms of social credit and differential privileges in the superstructure.
An argument can be made also that this new socio-economic order may be legitimately called "socialism". Not in the sense of the "lower stage of communism", of course, but in the sense of the "bourgeois socialism", as per Ch. 3 of the "Manifesto", with an admixture of some reactionary socialisms' features and newer developments, like those around the climate issues. After all, the MMT, which is currently all the rage and almost mainstream already, is but a new incarnation of Proudhonian free credit ideas (now practically implemented, facilitated by the modern ICT), and many of its proponents openly call themselves "socialists", and also advocate for policies like the "job guarantee" and what not.
[Construct Beats]: But even when they buy back shares with central bank money, still are profits the leading motive, capitalists don't make productive investments when the profit rate is low. Credit doesn't change this law.
[Zulu]: Yeah. The profit rates. As Marx predicted, correctly, it turns out, they have become terribly low in the real sector, so now they are made mostly in the financial speculations, facilitated by the continuous expansion of the monetary base. And most of the productive investment is made by the money printing state, either directly, or via government contracts, with occasional bailouts of failed enterprises. And that was even before this Covid-19 story with all the "stimulus packages" and shutting down of entire branches of economy by executive decree.
This is not self-serving, self-replicating, self-increasing capital. This is "zombie" (in Varoufakis's terms) capital on life support virtually increased by the state.
[Construct Beats]: Yes, a broken order in its last days, kept alive by numbers on a bank account. All that is fine, but as materialists it shouldn't distract us from the real source of value: the human workforce; Since Money only represents labor time and is not creating value as such.
[Zulu]: Except it's more like a new order in its early days. One in which value creation by labor doesn't matter that much, just as it wouldn't in communism. Which only proves that, sad as it is, communism could work, but the history of mankind took a wrong turn somewhere around the 1970s, and now we're stuck with this "neo-tributary" global system (Samir Amin's term), which has been formed instead of communism and is now rapidly consolidating itself. They openly talk about this "Great Reset" at Davos, so it's hardly a "conspiracy theory" any more.
[Construct Beats]: I'm maybe wrong but people who follow Samir Amin and David Harvey tend not to strive for an empirical proof for the labor theory of Value. Anyway the missed opportunity during the 70s only shifted a communist order to a later time period. Here I'm more optimistic, when even a ruling class Ideologist like Klaus Schwab promotes shareholder "Capitalism" (Ownership of Capital by workers) now then what happens, when the global surplus population drops to a point where we have much better bargaining power?!
1. Birth-rates are falling. Developing countries are the last stronghold of relatively high birth rates, but with industrialization and urbanization, this source of big profits also dries out.
2. If history moves in cycles, then we are now in or close to another protectionist stage of development. That means: tougher border policies and capital intensive production. The former reduces the reserve army of labor (higher wages) and latter implies a bigger amount of surplus going into productive activities.
3. And last but not least: the global warming will put national economies under pressure so they don't waste surplus unproductively.
[Zulu]: And what good an empirical proof of the LTV (even if it's correct) would do, when larger and larger portion of the labor power is employed unproductively either of surplus value or of real use value? FED & ECB de facto claim the bulk of the surplus value produced globally, then redistribute it "according to credit". All inefficiencies resulting from the inoperative law of value and absence of central planning are covered by further extension of credit. Sure, there are a lot of moving parts in this system - financial, legal, political, diplomatic, military - and they all need to be greased with money, but when the money is made "out of thin air" with a key stroke, this can go on for a very long time.
As for that cycle pattern, it is false. Capitalism developed through several stages from primitive accumulation to ultra-imperialism, constantly expanding its geographic and demographic base. During this expansion both the protectionist and free trade tendencies were present at all times, with prevalence swinging between them pendulum-like.
Now the limits of capitalist expansion have been reached and the technological base has even outgrown it. Realizing all that, the "vanguard party" of the ruling class is openly proceeding with what it calls a "Great Reset". It's a qualitative change, and it is already happening. Therefore drawing only from the past developments, as if the "business" was still going "as usual", likely will not lead to any remotely accurate predictions.
So no, I don't expect the bargaining position of labor to improve. Short of a real pandemic or a world war that wipes out like some 2-digit percentage of the working-age population globally, the "relative surplus population" isn't going anywhere. On the contrary, it may only increase due to "technological unemployment". Any work with remotely decent conditions and pay will become a privilege. And this "shareholding" nonsense is but a "we're a team" pep talk - a technique used by companies to "build up morale" among the employees. At best, it's yet another version of coop/pre-Marxist socialist ideas that can be made work, only for the benefit of the ruling class, who have total control over everything at this point.
All in all, like I said, the situation is looking pretty grim and the prospects of a proletarian revolution non-existent within anybody's life time. Any short/medium-term optimism is unfounded and detrimental to the work that really needs to get started, namely, to stop duct-taping Hegelian mysticism to the steam engine and draw up a new and fresh revolutionary theory, based on modern science(s) and actual analysis of the present socio-economic order. Because, as the Fermi paradox strongly suggests, the next chance, even if it cares at all to present itself, will be our last one.
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*] Regardless of this particular point as who how the "more productive national labor" should be "reckoned", as more intense or more complex, there are other avenues for the phenomenon of unequal exchange to manifest itself. See: Andrea Ricci, "Unequal Exchange in International Trade", 2016.
**] It appears there are several versions of this document probably coming from different stenographic transcripts of the actual conversation between Stalin, the Politburo members and the editors of the textbook. The English translation of it along with a few other similar conversations that took place a decade later, is published here with a decent foreword/summary by the publisher. However, it contains a few discrepancies with the Russian text, so the quote above, about the "three times difference" between the workers' and engineers' salaries is translated from the Russian text sited at "marxists.org". This Russian version of one of the later conversations contains a note, confirming the existence of another archival copy of the record with certain small discrepancies.
It should also be noted that some other documents, contained in the Volumes 14 through 18 of Stalin's Collected Works (i. e. the ones published for commercial reasons after the collapse of the USSR) appear not to be authentic, either heavily fictionalized, as here, or complete fakes, such as this one, so "caution is advised", especially if a particular item lacks proper sourcing, either to periodic press, like "Pravda", or to the archival records, like "RGASPI".