I profess communism (not just socialism, unless it's transitional to communism): the system of total democracy in which the economy itself is controlled by the People and for the People in a society that is effectively of the People. No rhetoric here, just real and total democracy beyond the feudalist residue of private property.
But, even if I have left my most purely Anarchist ideas behind as unworkable and somewhat utopic and have embraced at least some aspects of Leninism (although I still profess strong respect for Kropotkin). My conflicts with Marx' economics are most important and have come to light recently in a number of debates, making myself to reconsider even if I should use the label "Marxist" at all when talking in first person or even at all.
The issues are as follow:
Value: use vs. exchange value
Marx insists in using a virtual case or particular solution for the problem of value. He picks exchange value instead of use value as the real or at least practical measure of value.
I understand that exchange value only exists in market conditions and is highly variable, being often unrelated to the actual practical worth of the good. For example food has a first quality use value (because we all need to eat regularly, demanding such good once and again), instead gold has almost no intrinsic worth, as its practical uses are very limited beyond exchange and hoarding in market conditions.
For a self-proclaimed communist and scientist, Marx really disappoints by insisting not just in picking the exchange value above the use value, but also by reinforcing the bourgeois notion of gold and money (in his age still an extension of gold and silver) as commodities and not as what they really are: mere accountancy tokens.
The only value I can accept, from a revolutionary viewpoint, is use value: things are worth the use we can make of them.
I admit that this concept is slippery because it is strongly affected by subjectivity (although there are measures like caloric intake and in general energy fluxes which are pretty much objective, albeit also impractical for economic purposes) and that complex approximative measures must be undertaken to evaluate it. But I also understand that exchange value is no better: it is a mere approximation of bourgeois nature and does not capture well the real value, use value, of things.
Labor theory of value
The labor theory of value was first stated as such by Ricardo, a major bourgeois economist who had an undue influence in Marx. By reason of it, all value is claimed to be ultimately product of human work (not mechanical or animal, never mind untamed nature). This is so obviously wrong that I strive to understand why I should even discuss it.
Let's say that a lush and healthy fruit tree has grown naturally in a wild patch of land, never attended by human hand. For whichever reason I end up setting up camp, building my home just a few meters away from that wild tree, whose presence I can't but consider propitious, and, just beside it I plant some other fruit trees, which take a decade or more to grow, tended by my caring hands, with hundreds, maybe thousands of working hours invested in them.
In due time I collect the fruits, the wild kind from the wild tree, where I just need a few minutes to grab them and bring them home (where by convention I realize their value as food) and the domestic kind from the planted trees, where I also need just a few minutes to collect the product but have hundreds of hours of previous work invested. Both tree types produce about the same amount of fruit and both fruit types are similar and give equivalent food in terms of calories and other nutrients.
Which fruit is more valuable? Logically both are similar, so both are similarly worth, let's say equal to simplify. That according to use-value. However according to Marx' misconceptions the domestic kind of fruit is worth, say a month's salary, while the wild kind is worth almost nothing.
How obviously wrong!
Of course, normally, human work can add (or subtract) worth, value, from a commodity, but this is far from being a universal law. 200 diggers with teaspoons do not produce more value in terms of ditches than a single one with a decent hoe and spade even if both work the same in terms of human effort and working hours.
But crucially, and hence my first example, Nature's work is also most important but almost never accounted for. This is a bourgeois vice that got ol' good Karl as well.
Conclusion
These two are my major and fundamental complaints about Marx' economics.
Marx' economic theory still has some value. For example, in spite of all its vices, he was still able to make quite decent forecasts about his focus of work: Capitalist economy and society. He was able to forecast the inevitability of overproduction crisis, caused by the internal dialectic of Capital between cost-reduction and price-minimization, leading to the drop of profit towards zero.
Or he was also very much able to foresee as far as our social stage in his posthumous manuscripts, where he describes an advanced Capitalist society (real subsumption of labor into capital, alias Toyotism) that was not even imagined in his time - except by the genius of Trier.
For all the constituent vices of Marx' economics, it can still produce in the right hands, good results. But obviously, some 145 years later (and what 145 years of accelerated change!), we can't rely only on Marx, much less treat him as some sort of all-knowing God-inspired prophet, as so many do.
145 years after the publication of Capital, we need to move on and forge a genuine economic science that can effectively be a scientific tool to plan in a post-Capitalist era.
I can't really outline it, we'd need more knowledgeable and dedicated people, but it's clear that it needs the following pillars:
- Value = use value
- An ecological theory of value in which human work is just a particular case in the perpetual transformation of things, sometimes into valuable commodities for the human taste
- A physical theory of production in which the factual concept of transformation is emphasized over the misleading Promethean concept of production, which resembles that of creation and appears to disdain the raw materials and other resources destroyed in the process of production, or rather transformation.
My two cents, as is usually said.
This page was first published as blog article and the space for discussion is there.
Hi, why do you think that gold is not a commodity? It certainly has had use-value even when it wasn´t used as money (i.e. the Incas), and of course, it has an exchange-value, independently of its function as money.
ReplyDeleteAnother thing: why do you think that the analysis of capitalist economy has to necessarily contradict bourgeois ideas to be correct?
"reinforcing the bourgeois notion of gold and money (in his age still an extension of gold and silver) as commodities and not as what they really are: mere accountancy tokens."
And why is the idea above more "bourgeois" than the one that you uphold? After all, many orthodoxs would agree with you, denying the money-commodity the character of universal-equivalent.
I also don´t understand the criteria according to which ideas are ok if they are compatible with a revolutionary viewpoint, instead of simply being ok because they make sense.
Only if an idea is accurate it can help us to change the world. A false idea can´t help us, even if it makes us feel better about its goodness or something else.
"The only value I can accept, from a revolutionary viewpoint, is use value: things are worth the use we can make of them."
I find this post very strange, and i´d like to post some more questions in the future.
Greetings,
Ezequiel.
Hi and welcome, Ezequiel.
DeleteTo your first question, that would be like saying that paper has a use value and deriving the value of bank notes from it: it's an obvious error. Gold as commodity has two different use values anyhow: one as a material with some uses (for example artificial teeth not so long ago or more modernly in some technological applications) but the most common one is the other: as luxury exhibitionist element, whose value is mostly derived from its exchange value in fact.
Whatever the case the exchange value of gold is mostly unrelated to its value as commodity. And I would say that its overall value is mostly derived from its use and wide recognition for exchange, not its value as pure utilitarian commodity.
"why do you think that the analysis of capitalist economy has to necessarily contradict bourgeois ideas to be correct?"
Not sure if this can be extrapolated from the sentence you quoted from me (I don't think I meant to say that with it) but certainly it should IF Capitalism as social ideology is incorrect. Eventually any analysis of Capitalism must either find it a well founded social and economic model or (at least to some extent) erroneous. And IF it is wrong, then so are the bourgeois ideas or at least a substantial part of them.
In any case I think that Marx' analysis is superior for its time, meaning that the bourgeois theories of Smith, Ricardo and others are much worse. However Marx did not exist in a vacuum nor was a demi-god gifted with a perfect intellect. He was a wise man product of his society and age, and therefore he borrowed many ideas that I question radically, as pillars for his own theories.
Besides all scientific theories are limited by definition and is our moral duty to honor Marx' scientific mind by criticizing, improving and eventually overcoming his own theories with something better. Marx himself would have done that, I'm positive.
"... the criteria according to which ideas are ok if they are compatible with a revolutionary viewpoint, instead of simply being ok because they make sense".
I did not say that but still...
It makes sense to me that (thesis) Capitalism is expansive-predatory and (antithesis) Earth is finite and is being exhausted. This means that Capitalism is inviable in the long run (long run that has already run its course or most of it) and that either (synthesis A) some form of eco-socialism must be implemented instead or (synthesis B) the juourney of Humankind and Earth-as-we-know-it is going to end very soon.
Communism or extinction!
As I see it exploitation of the working class (of most of humankind by a small parasitic fraction of it) is just a particular solution of the more general equation of Capitalism, which is predate and move on. This means that Capitalism is inviable and therefore that any valid socio-economic solution MUST be revolutionary, socialist or communist but not just that: it must also be environmentally balanced.
Capitalism and its obsession with production and progress has opened many a gate for Humankind indeed but at a price. I do share Marx' strange admiration for the monster in that aspect. But I realize that even Capitalism itself, with its strange "mad genius" and whichever other virtues, is subject to the law of diminishing returns and therefore each days gives less and takes more to Humankind in general, making itself "redundant", disposable. But it's worse than just inefficient: it has become a very destructive force wielding enormous power of destruction (nuclear, environmental) without any hope of half-efficient restoration.
It's cycle has ended but I guess it can still decay for long, if there is no revolution that changes it all. There's no destiny: we make it after all.
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Delete"Only if an idea is accurate it can help us to change the world. A false idea can´t help us, even if it makes us feel better about its goodness or something else".
Totally in agreement. That is why, among other things, I feel obliged to go beyond Marx. It's not because Marx' ideas are "false" (he was clearly honest and makes many excellent points, valid in spite of all) but they are certainly wrong and obsolete in some key aspects and we must improve those revolutionary theoretical foundations if we are to head where Marx (and so many others) wanted to.
... "i´d like to post some more questions in the future".
Feel free. Of course I can only offer my opinion: I do not pretend to be right no matter what but I do think what I say and I do sincerely believe that it is radically necessary to revise and even reinvent Marxism not in any bourgeois reading but, on the contrary, in a radically revolutionary way, in a scientific way.
There's a tendency among Marxists to "worship" Marx as if some sort of illuminated prophet. That's a total error in all senses. We must understand that Marx, as well as other revolutionary intellectuals, were humans just like you and me, and that they got things wrong more than once. We must also understand that hardly a theory, specially an economic and political one, can withstand 150 years of history without radical reforms. If that happens in physics (where Newton and even Einstein are relatively obsolete), how cannot that happen in socio-economy?
Marx theory is "Newtonian" so to say and we need a "post-Einstenian" one instead.
Of course, I am not going to formulate it - I don't feel adequately knowledgeable for it. Others will have to. But I felt the need to express that criticism on such a fundamental misunderstanding: money comes not from gold (much less gold as commodity) but from debt-accounting units, possibly back in the day made of clay, which can be tracked to Sumer, etc. Gold (or also cattle, etc. in certain contexts) is a convenient commodity substituting for such abstract accounting units in unregulated contexts, but nearly all its value (use value) comes from its exchange value, unlike what happens with a normal commodity, showing it is mostly a mirror-good and not a true good.
I agree with your predisposition to advance in social sciences without worrying about orthodoxy in marxism or whatever.
ReplyDeleteHowever, i find that Marx´s fundamental notions make perfect sense until now and i´d like to make a few points:
-Marx didn´t say that money comes from gold. If there were a commodity better suited to be the universal-equivalent, let´s say "kryptonite", the Kr would be the exchange commodity. Of course, in earlier times, other commodities have been the universal-equivalent, as you have said: cattle, cacao seeds, shells, silver, copper, etc.
In other words, the social need for money is logically previous to the use of a given commodity as money.
-And, is gold simply another commodity? Yes, just like silver, for example. Where does the exchange value of silver come from? It´s no longer considered important as a reserve in the central banks, yet its value is still high. And of diamonds before their industrial use? Why did the Incas accumulate gold when they had no need for money? The aztecs too, yet they used different commodities as money, not gold, unless my memory fails me. Therefore i believe that gold has "always" had use value (not high or low use-value, since it´s unquantifiable) for purposes of ornamentation.
"nearly all its value (use value) comes from its exchange value, unlike what happens with a normal commodity, showing it is mostly a mirror-good and not a true good."
Where does the exchange value of gold come from? Who or what determines it? Does the same happen with silver, etc?
This will take us to the issues of value and use-value, which i´ll have to adress later.
Greetings.
Sorry, i hadn´t seen your first comment.
DeleteI´ll only add to what i said above, that paper money is not a commodity, while gold is a commodity. The first-one has no use value, it only represents the real money, the money that is held in Fort Knox as a reserve: gold. The second one has a real use value, independently of its function as money, as i said above.
"Sorry, i hadn´t seen your first comment".
DeleteBlogger does not accept comments over X size (spam-madness I believe) and hecne sometimes one has to split a comment in two or even in three blocks. My apologies.
"... paper money is not a commodity, while gold is a commodity".
Actually paper IS a commodity, a relatively cheap one however, as is the ink, etc.
It does not matter anyhow because you could well use the even better example of electronic money, electronic annotations, accountancy, may be a service but not a commodity.
My point is that the value of money does not come from gold itself but from accountancy and the notion of debt. Gold is just a convenient way to express it depending on the circumstances, as you say it could be kryptonite, cattle, cocoa seeds, etc. or an annotation in an electronic checkbook. What matters is that it is generally accepted as something valuable and as mirror of all other values. Today gold does not fulfill that purpose mostly because most people can't recognize real from fake gold, when they can recognize real from fake money instead - also trading with gold, even when done properly, incurs in intrinsic exchange loses.
I would not accept gold as payment normally, I would accept euros (or dollars or yuans) instead. Or rather I would accept gold only in some circumstances, as businessman (not that I am but hypothetically), the same I would accept oil barrels or a real state deed - exceptional means of payment in exceptional circumstances only, not apt for common trades.
So why am I as small shop owner or worker (not as oligarchic businessman) accepting paper-money and not gold or oil? Because what I want is easily fungible exchange value (money, even e-money!) and not a commodity, which I would need first to translate to the universal code of "real" paper money or e-money.
The problem is that in Marx' time and for long before him, gold was "real" money in a way that it is not anymore. And that confused him and others before (and after) him on the origins and meaning of money, which is nothing but an accountancy annotation in various formats, reflecting (as in a mirror) commodities' (and services') exchange-values.
We must understand that money does not derive nor in any way is a commodity, it is a conceptual mirror of commodities (and services). This mirror can adopt different material forms depending on circumstances but, while it acts as money, the actual use value of the commodities implied is altered and even totally ignored: it becomes an speculative (again from speculus: mirror) element, not a material one.
Marx is just obsessed with re-materializing human ideas like money but then he fails to insist in the only ultimate materiality of all values: use-value, and becomes trapped in the elusive exchange-value of things (which is always an idea), not as a mere accounting tool (which could be understandable) but as a central pillar of all his economic theory, which is therefore rendered unoriginal and not too useful.
When I contemplate Marx critically, I see a Hegelian wanting to be a physicist (materialist) but not physical enough at any point. He would have benefited a lot from implementing thermodynamics and other ideas that were being developed in his very lifetime. Marx, we must understand was just at the entrance gate of the Capitalist Age, we sit at the end of it and therefore we should have a much better understanding, however the political clout of Marxism (which I admire and respect and consider generally valid) hinders from a proper critical of Marx as a 19th century thinker and, as all other 19th century thinkers, obsolete in so many ways.
We must step in the 21st century with analytical resolution and no major ties to the past. And only that way we must make it the First century of the Communist Era, something much needed.
OK, i don´t know if you have tried to refute the marxian idea that commodities are equivalent to each other (in terms of exchange value) and that one of them arises as the universal-equivalent as a necessity of exchange; or if you have instead chosen another conception of money without taking the previous step.
DeleteAccording to this conception, what determines the value of money and of the different national moneys? Being immaterial, it would seem hard to find a solid cause for its magnitude.
According to Marx´s theory, the emission of money to cover deficits by the state (not the normal endogenous emission) would create inflation because the quantity of paper-money (that represents the real money) would exceed the quantity of reserves in real-money. This would be the case of present-day US dolar. What would be the explanation for this depreciation or for other similar phenomena whith the theory of immaterial money? Do you connect it to the weakness of the economy?
When i think about this immaterial theory of money, i look back in time and i can´t find a moment when trade hasn´t happened as Marx explains it, with an univeral-equivalent embodied in a commodity, a money-commodity with value of its own. So, why is it any different now? Only because the gold doesn´t circulate, and it´s in reserve in the Central Banks? Why is it in reserve in the Central Banks then? Marx said (since there already was paper-money back then) that the paper simply represents the gold reserves.
But probably our disagreement about what is the basis of value will make improbable an understanding (since for you, the magnitude of value is very dependant on the use value). Maybe i should have started by adressing that central issue, instead of this one, which seems subordinated to the other.
"i don´t know if you have tried to refute the marxian idea that commodities are equivalent to each other (in terms of exchange value) and that one of them arises as the universal-equivalent as a necessity of exchange"
DeleteWhat I question is that it has to be a commodity at all: it takes the shape of commodity essentially where the state is too weak to guarantee the currency: in China it was typically not gold nor cattle but abstract accounting units as we use today (paper-money printed with the blessing of the state). The use of a commodity (cattle among pastoralist tribes, gold and silver in semi-barbaric Europe) only reflects the (initial) weakness of the state in the areas where it was prevalent.
This may be related to the relatively lack of interest on the so-called "Asian mode of production".
But I am not even sure that commodities are essentially equivalent: they are made equivalent for reason of the needs of a market economy, which needs to simplify them into an accounting equivalent of some sort (money), but they are not intrinsically equivalent either in terms of "work" because work alone cannot define the value of anything: one can work a lot in things (material or immaterial) that have no market value, one can be paid for pointless jobs "digging holes" or raising pyramids in some cases, or there can be a lot of value to commodities which have relatively little work input in them. What defines their value is not the Ricardian/Lockian work-value equivalence adopted by Marx (erroneously in my opinion) but their use value.
Sincerely Marxism as economic theory, would not be viced of Ricardianism since the very beginning, could have used some analytic tools that were being developed in parallel like thermodynamics (which would help to give much more materialist, physic, foundations to the theory) or demand-offer theory, which approaches better the reality of exchange-value (price) being determined (at least in essence) by use-value (manifest as demand). I don't think Marx was ever really aware of all this and, because of the immense clout of his influence, this is an obstacle for a revolutionary economic theory of Capitalism and beyond.
... "what determines the value of money and of the different national moneys? Being immaterial, it would seem hard to find a solid cause for its magnitude".
Availability and law. In principle (even when it was coined in precious metals) money was always regulated by the state, which tried to use it as key tool to regulate the economy (not always successfully). Today I'm not even sure anymore if it's the states or the banking system (central banks have been redefined as a corporation of corporations, a super-bank of the banks) but, whichever the case, a central planning institution is in charge. People or even subservient states or banks cannot in principle just print money, as you know, and by law they must accept it and must pay taxes and regular transactions with it.
"According to Marx´s theory, the emission of money to cover deficits by the state (not the normal endogenous emission) would create inflation"...
That's totally correct, assuming that the economy does not grow or other factors are not at play. That's actually mainstream economy. However, as the overall economy grows (in Capitalism conditions it almost does) a semi-fixed amount of money such as gold causes deflation, which is even more problematic than inflation. Moderate inflation, as proposed by Keynes, has in fact served well the Capitalist system, helping its growth for long periods.
"Do you connect it to the weakness of the economy?"
I do not relate inflation with economic weakness: it actually helps money to keep a relatively low profile, promoting the "real" economy instead. Otherwise (with a rigid money supply such as gold) deflation would rule and investments would lose value quickly, damaging the economy - always in a Capitalist context.
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Delete"... i can´t find a moment when trade hasn´t happened as Marx explains it, with an univeral-equivalent embodied in a commodity, a money-commodity with value of its own".
I has happened for most of the 20th century, in Tang and Song dynasty China and the Mongol Empire. It's probable that the Venetian merchants adopted the concept from the Mongols, although they were still subject to the fetish of gold and silver. Of course, it seems to require certain degree of political evolution and consolidation, the ability of the state to impose its will on its subjects/citizens, with only marginal failure.
This is possible because it has always been that way intrinsically, gold or wheat or cattle was used because it was easier to persuade everyone that it had a value on its own right, but the role they played was always not that of a commodity but of equivalent of commodities and services. It is just normal that at some point the commodity fetish had to be challenged - but it was not Marx who did it. It was reality: at some point there were just too many banknotes for all the gold they claimed to represent and people realized they represented no such thing in fact.
The real problem was that gold was never useful specially for an expanding economy, so even in Marx' times already money was being printed at much greater amounts than the gold it was supposed to represent. It never really represented anything but itself (abstract money) as equivalent of whatever it could buy.
(But then gold was used because it was mostly useless but extremely durable, so good for the commodity theory. Before modern technology gold had very limited applications: nothing that could justify its value other than its use as currency - just like paper-money).
"since for you, the magnitude of value is very dependant on the use value"...
Yes I once though that such was actually the "materialist" approach of Marx, what I though it was absolutely correct. When I re-read Capital (parts) and realized that he was actually saying the opposite, I realized that Marx was very wrong in his approach to the economic reality.
If I dedicate 40 hours of work to dig useless trenches in a field just because I produce zero value. If I dedicate four hours to fish I produce a value of N fish, which are valuable because people eats them. If the fish rots the value goes again to zero. But then again not all the fish is the same: while it may cost me the same to fish, low quality fish may be valued at, say, 1 euro/kg, while high quality fish may be at 30 euro/kg. It is just obvious that it is not the mere work what creates value but that it is the use-value, realized as demand, what creates an exchange-value (price).
If I get N rotten boots or N medusas instead of fish, because the sea is very degraded, probably the exchange value of my fishing work will again be nothing. Work may be an element of value but certainly not the only thing.
"I has happened for most of the 20th century, in Tang and Song dynasty China and the Mongol Empire. It's probable that the Venetian merchants adopted the concept from the Mongols, although they were still subject to the fetish of gold and silver. Of course, it seems to require certain degree of political evolution and consolidation, the ability of the state to impose its will on its subjects/citizens, with only marginal failure."
DeleteThat´s interesting, but those notes surely represented real money which could be exchanged for their paper representatives at the "bank" or whatever.
I must admit that i´m not prepared to prove a connection between the quantity of gold and its value, on one hand, and the quantity of paper-money and its value, on the other, but i´ll study this further and come back to the issue. I´ve read, however, a couple of works of Astarita (i lincked here from his blog) that seem to prove at least a correlation.
Now i think it´s time to move on to the topic of value. At the moment i´ll adress your last comment:
"If I dedicate 40 hours of work to dig useless trenches in a field just because I produce zero value. If I dedicate four hours to fish I produce a value of N fish, which are valuable because people eats them. If the fish rots the value goes again to zero. But then again not all the fish is the same: while it may cost me the same to fish, low quality fish may be valued at, say, 1 euro/kg, while high quality fish may be at 30 euro/kg. It is just obvious that it is not the mere work what creates value but that it is the use-value, realized as demand, what creates an exchange-value (price).
If I get N rotten boots or N medusas instead of fish, because the sea is very degraded, probably the exchange value of my fishing work will again be nothing. Work may be an element of value but certainly not the only thing."
Actually you are correct, not every work creates value. But Marx is in this matter different from Ricardo. Your comment can attack the ricardian view, but Marx, instead, would agree with you.
Let´s remember, firstly, that value is for Marx a social entity, a social substance. For him what creates value is not work alone, but the famous "socially necessary labour", which has two dimensions:
The first and most well-known is the time that, in average (in average conditions of productivity, etc) is needed for the production of a commodity. So value doesn´t depend on the particular conditions of the individual producer, but on the general average conditions. If you fish more boots than fish, you´ll lose money or you´ll earn little money, etc.
The second is the time that the society is willing to invest in the production of a commodity. This could be assimilated to "demand". If you produce 1 ton of fish but society has only need for half a ton, then the value of your production will be half of what it would have been with a perfect demand for your fish. This allows the mechanism by which the production can satisfy social needs, via the oscillations of the market price, and the production of unnecesary goods is discouraged.
In the long run, what would happen is that the profit rate of the fisher would fall and so his capital would seek another employment, diminishing the production of fish (eventually, till it gets to half a ton). At this point, offer and demand are equal, and so the determinant factor to cause its value must be something else, which in marxian theory, is socially necessary labor.
In my blog this may be better explained, i hope.
Greetings.
I tried to comment some of this in your blog, in Spanish, yesterday morning but I'm having random problems commenting in some WP blogs (not others, oddly enough), so the comment did not make it through although the WP comments subprogram had obviously read it, so when I tried to send it again it said that I should not repeat myself. As I say, it happens in other blogs and not just to me (see: http://www.nakedcapitalism.com/2012/10/on-tech-woes.html).
DeleteWell, in any case:
"those notes surely represented real money"...
"Real money" as in "gold"? Well, that's what they were made to believe also in Europe but in fact there was much more nominal gold (real state-printed money that everyone accepted as good) than gold, so they eventually dropped the gold reference altogether, at least in Europe (haven't studied the Chinese case in depth).
"I must admit that i´m not prepared to prove a connection between the quantity of gold and its value, on one hand, and the quantity of paper-money and its value, on the other, but i´ll study this further and come back to the issue".
It's something well known since at least the times of the Habsburg Empire. Quevedo himself let a famous satiric poem on how the newly arrived silver from America caused massive inflation and little more (because Castile did not have a sufficiently advanced economy and it was spent in militaristic adventures without benefit).
I must insist here on the fact that gold was no doubt chosen as money not for being a commodity but for being a quite useless (yet durable and rare) commodity. It's the luxury commodity by definition: rare (= valuable), durable (= apt for long term investment) and shiny but for use-value it almost none (gold teeth, artistic decoration and modernly some rare tech applications).
In fact gold is much, although not exactly, like our paper-money: mostly worthless... except for its exchange value, which comes from their economic role and nowhere else. That's why it was chosen for coinage.
"Actually you are correct, not every work creates value. But Marx is in this matter different from Ricardo. Your comment can attack the ricardian view, but Marx, instead, would agree with you".
I know that Marx, whose genius I do not question (but even geniuses can be wrong), realized this and elaborated more on the matter but for whatever reasons (for example his communist "workerist" ideology, which I share, or just the economic ideas of his time) seems unable to fall back to the basics use-value and insists in defining value as some sort of accumulation of energy, or rather "work". He's not 100% wrong if we decipher this in terms of thermodynamic flows and such, but Thermodynamics itself was a young science in those times (Maxwell is a contemporary of Marx): that is indeed involved in the transformation ("production") of materials and commodities (and services).
But it is not the source of its social value, which is one of subjectively perceived use-value (demand). Again demand-supply was a mathematic-economic tool that was being developed roughly at the publication of Capital - Walras published in 1874-78 (in French) with Marx dying in 1883 and Capital I, where he lays the foundations of his theory, is from 1867). Notice that I'm not saying here that the Marginalist School is right, just that some of their foundations seem to be correct for an ideal market economy, notably the general understanding of "demand" (subjectively perceived use value described in exchange-value numerical terms) as true cause of value.
Marx grasps some of this but does not reach far enough and seems trapped in ideas like commodity-money and work-value that are not really good tools at all. Without good enough foundations the whole Marxist economic theory ends up lacking and not being the tool we need, neither to describe Capitalism properly nor to overcome it.
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Delete"The second is the time that the society is willing to invest in the production of a commodity. This could be assimilated to "demand"".
Aha. This part I may be missing (what chapter is this in?) However I don't think Marx emphasizes this at all or explains it well.
I feel that, with whatever limitations, the supply-demand theory offers a much better model, where you can still factor work within supply (although there's also natural supply, mostly not created by humans such as clean water or virgin forests or oil deposits, etc., and work that produces nothing marketable) and use-value in demand. The interaction of both generates the "real" exchange-value (in market conditions).
I have always the impression of Marx being conscious of all this in an intuitive form but that he fails to explain it properly. This is normal because while I know of supply-demand curves since childhood, in Marx' times this was still a novel concept in development.
I think that "Marxist" (or other communist) economists, should go beyond the "closed school" ("messianic" or "scholastic") methodology and stop trying to "save" Marx' theories' "perfection". Nobody is 100% immune to "idolatry" but "personality cult" is simply wrong: the greatest of all people commits many errors and the strength of the Worker Class is not individual but collective, social. Hence each individual, even the most prominent intellectual and leaders, are just cells of a living organism (society). A single cell, mo matter how prominent, cannot do much: it is the organs and the organism as a whole who does.
That is Society, that is Humankind. The virtue of the Capitalist Class is that they have managed to organize (in a rather parasitic manner however) that collective work that is not so much mercantile value but overall social development, knowledge and potential. This social dimension of Work however was not fully developed in Marx' time, yet he was bright enough to foresee it in some of his posthumous manuscripts (and his overall understanding of the Working Class as the real chained power behind the bourgeois throne). It is however fully developed in our time, which is the late part of the apogee of Capitalism (at least if we follow Negri's interpretation of Marx' posthumous materials, notably the so-called posthumous "chapter VI", which is truly visionary on how Capitalism and the Working Class would evolve).
In the development of science, economic science and revolutionary theory (and praxis) also, it is collective work and not the work of any single person which makes it. Marx is an important part of the historical process but not the end of it. We should let our minds be opened by Marx (or whoever else worth it) but we should not chain them anew to Marx (or anyone else). He would have hated it himself.
The second determination is implicit in the first chapter of Capital, as Marx says that use-value is a necessary condition of the existence of a commodity with value, therefore, a commodity that can´t be sold, lacks value, since it has no use value for the society.
DeleteBut this is made explicit later on, on chapter 3:
"To-day the product satisfies a social want. Tomorrow the article may, either altogether or partially, be superseded by some other appropriate product. Moreover, although our weaver’s labour may be a recognised branch of the social division of labour, yet that fact is by no means sufficient to guarantee the utility of his 20 yards of linen. If the community’s want of linen, and such a want has a limit like every other want, should already be saturated by the products of rival weavers. our friend’s product is superfluous, redundant, and consequently useless (...) All the linen in the market counts but as one article of commerce, of which each piece is only an aliquot part. And as a matter of fact, the value also of each single yard is but the materialised form of the same definite and socially fixed quantity of homogeneous human labour."
http://www.marxists.org/archive/marx/works/1867-c1/ch03.htm#S2a
The supply-demand model was not only known in the nineteenth century, but it was actually attacked by Ricardo because it was considered common sense and Ricardo disagreed with it, as i believe Smith did.
The arguments are simple: if a commodity is produced in a quantity that matchs the demand, then there´s no unbalance to raise the prices or to bring them down. So, at this point of equilibrium, what should the value be? We know it isn´t cero, because we see in the market that every commodity has a different price above cero. And now someone might object that these different prices are caused by different relations between offer and demand... the most expensive goods would be the most scarce and so on.
But then we must remember that all commodities (not goods in the austrian sense) can be reproduced, in production, to meet the demand, and that´s what happens, because it´s profitable.
So, in the mid and long term, every commodity is produced in the quantity necessary to meet the demand, yet different commodities have different prices, and not only that: different commodities seem to maintain their exchange rates relative to the other commodities (this raises the cientific question of what determines these exchange rates, to which Marx answers).
So, in conditions of reproduction of commodities, supply and demand can´t explain prices.
About what you say about idolatricing Marx and so on, i agree with you, but i simply don´t find errors in Marx´s theory of value, at least not in the core. Let´s admit that the advance of time and of social science doesn´t necessarily refute older ideas. Brilliant thinkers have tried to improve Marx work by denying its core, like Lenin, Trotsky (maybe unwillingly), Baran and Sweezy, but their own constructions couldn´t resist the test of reality, as capitalism didn´t explode on its own.
And the test of reality is what makes me believe that the laboral theory of value is correct.
If necessary to prove the honesty of what i´m saying, i don´t believe the same of other marxian works, especially in History, which is my privileged area of "inexpertise".
Greetings.
"So, at this point of equilibrium, what should the value be? We know it isn´t cero"...
DeleteZero can only be if D=0, if there is no demand. Actually the supply side has costs (salaries, investment, reserves) which mark a minimal bidding prince, under which it can not normally be sold in any case. The supply curve never begins at price=0 but at a positive figure.
But in a "perfect market" the price tends to fall to barely above the costs, that's clear, what is enough for the self-employed or comparably small business but hardly for profit-oriented companies. But not zero.
Zero price can only be when workers and/or investors give away their costs altruistically, like in a charity or NGO or, say, Wikipedia. Sometimes is also done for marketing reasons (free blogs, free antivirus software... for example). But this would be more like "anti-economy", really.
"So, in the mid and long term, every commodity is produced in the quantity necessary to meet the demand"...
What do you mean? The demand is nothing absolute, depends on the desire for the product and its price. The demand, as the supply, is a curve; its particulars may vary but almost always they meet at one point, which is the equilibrium. And the curve itself may shift anyhow.
"... supply and demand can´t explain prices".
On the contrary: all you say only emphasizes the importance of the constrains behind the supply curve (costs typically) and the supposed market flexibility to adapt to the demand. In the end the supply-demand equations are just an elegant solution to how, in ideal market conditions at least, work (costs, production, supply) meets use-value (demand) and together they make exchange-value (equilibrium point).
"And the test of reality is what makes me believe that the laboral theory of value is correct."
It is not because exchange-value has not a single cause and essentially it is use-value what gives things a value, even if not an specific monetary figure. The specific monetary figure is product of at least two forces: supply (i.e. the materialization of work, even if controlled often by capitalists) and demand (i.e. the numerical expression of use-value as product of the social convergence in a market of many subjectivities).
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Delete"Brilliant thinkers have tried to improve Marx work by denying its core, like Lenin, Trotsky (maybe unwillingly), Baran and Sweezy, but their own constructions couldn´t resist the test of reality, as capitalism didn´t explode on its own".
I don't think this has much to do with the economic theory itself. Still, I think Marx understood, yet did not dare to publish (i.e. the unpublished "Chapter VI") that Capitalism was still in his time at the beginning of its cycle (he lived the transition between the first and second phase but barely so). What Lenin and others tried to do was to accelerate this process, not resigning themselves to wait for the "natural" evolution of Capitalism. I think this has to do with the fact that all revolutions are worker revolutions, even if ideology and leadership are in others' hands. The change between the "bourgeois" French revolution and the "proletarian" Russian one, is that, while both are essentially anti-feudal initiators of Capitalism, in the latter the Working Class is much more self-conscious and organized, displacing the bourgeoisie and creating, if not Communism, at least a Capitalism without bourgeoisie as result (something even Lenin admitted to).
But IMO Capitalism is right now facing its utmost limits, which are not only the "internal contradiction" that Marx proposed (overproduction) but also most serious external contradictions in terms of environmental destruction and impossibility to extend our modern oecumene, which is Earth and nothing else.
Something that is clearly amiss in most economic theories is ecology, what is ironic when we realized that both come from the same root "oikos" ("home", by extension "environment"). Years ago I read an Aragonese economist J.M. Naredo, who is among several who have tried in recent decades to conciliate economy and ecology and found him rather interesting. Naredo claimed that economics is essentially accountancy and as such very limited in scope when we want to comprehend the real thermodynamics, the real physics, the real materialism involved in all that.
That is one reason why I strongly question the work-value model because it almost exclusive relies on human work, when anyone with a grasp of permaculture, for example, knows that production is not necessarily reliant on human work only or mostly but that Nature does a lot of the work almost gratis instead. These kind of ideas Marx and the people of his time could not really grasp because the closest thing to that was Physiocracy and this Illustrated economic school, tightly associated to the last decades of French Absolutism, had been dissed as a failure. So we'd have to wait until well into the 20th century for ecologism and an exploration of (human) economics in relation to Nature to be initiated.
"Zero can only be if D=0 (...) The supply curve never begins at price=0 but at a positive figure."
DeleteExactly, that´s the neoclassical correction of the older version, which is the one i was referring to.
But the neoclassical version is faulty too, in its own terms.
In order to determine prices, the demand side needs an homogenous unit in which to make all goods equivalent, in order to compare them. For the NCs this is utility or better yet, marginal utility.
But this marginal utility can´t be quantified in any way, and quantification is not optional to determine how much a group of goods is preferable to another.
If i have a determined purchase power, and i go to the supermarket, then i have to chose between the groups A, B, C, etc, of lots of different goods combined. To make that choice in NC terms, i´d have to assign a number, a definite, unambiguous number, to each utility, and then add it to the rest of the utilities of the group of goods, and do the same with each group. Is that something we do? I know i don´t, but it doesn´t matter what i personally perceive at the moment, anyway. What matters is that subjective preferences, such as love, hate, dislike, utility, etc, can´t be measured. This is fundamental. The austrian and NC notion of marginal utility can only survive in a world of barter, where two people make a very simple exchange. But at the moment that we go to a more complex scenario, it falls apart, because quantification becames necessary. Actually Samuelson admited his "agnosticism" about the possibility of measuring m. utility in his manual. Then he fell in the weak of idea of "revealed preferences".
In order to determine the price, on the supply side, we also need an unit that determines the costs. For Marx, we know, it´s s.n. labor. For the neoclassicals it´s the "costs of the factors", but they have had to make a few corrections to their ideas, as they made no sense. What is the NC version that you defend, exactly?
"What do you mean?"
I mean that if 10 cars are demanded, at a given price, then 10 cars will be produced. If immediately 15 cars are demanded, then immediately, or almost, 15 cars will be produced. The supply meets the demand. Then the supply curve is horizontal, then the demand can´t co-determine prices (in a context of reproduction of commodities). Only supply determines overall prices, the global value of production. Demand only acts in short periods of dismatch between supply and demand, raising some prices and lowering others, phenomena quickly corrected due to the possibility of producing more commodities, or less.
"On the contrary: all you say only emphasizes the importance of the constrains behind the supply curve (costs typically) and the supposed market flexibility to adapt to the demand."
Well, as said above, demand only affects short-term variations, and supply effectively determines the prices by costs, but not the neoclassical notion of costs.
"It is not because exchange-value has not a single cause and essentially it is use-value what gives things a value(...) two forces: supply (i.e. the materialization of work, even if controlled often by capitalists) and demand"
In this last paragraph i believe you make a fusion between the NC theory of s. and d. and the marxian notion of cost (answering my previous question in this comment) as labor, so if the demand side is left out of the equation, we only have labor as a determining factor of exchange-value.
"I don't think this has much to do with the economic theory itself"
Actualy, i was referring to the theoretical changes in marxian economic theory introduced or accepted by them: the monopoly theory as opposite to the competition theory (held by Marx) on which the whole theory of value rests.
"But IMO Capitalism is right now facing its utmost limits, (...) which is Earth and nothing else."
DeleteYes, David Harvey is a marxist very worried about this, also Marvin Harris from a similar point of view.
About Naredo, i agree that "economics" is mere accountability, as long as we talk about the NC notion of it.
But i don´t agree that the notion of NC economics is similar to the marxian materialist one, which involves the whole fabric of society and specially, social relations.
However, though Marx had in mind the relation of Man with Nature as fundamental, i suppose he didn´t develop that aspect as Harris, Harvey and many others did after him.
"That is one reason why I strongly question the work-value model because it almost exclusive relies on human work (...) So we'd have to wait until well into the 20th century for ecologism and an exploration of (human) economics in relation to Nature to be initiated. "
Marx explicitly said that wealth comes both from work and from nature (i believe he quotes Petty or someone else), and this is very important in his criticism of the Gotha program that said that wealth only comes from work.
This said, Marx indeed claims that value (not material wealth) is a social substance, and that it´s magnitude depends on the amount of that substance.
This has to do with the criticism of physiocracy. You say it was dissed as a failure. We should ask ourselves why. In those times it wasn´t hard at all to understand that nature contributes to the economy. Their mistake was to build a physical notion of value, based on that idea.
The same did Ricardo before he realized that was a dead end, and the same was attempted by the neo-ricardians in the XXth century, with the same result:
Physical theories of value can´t comprehend qualitative additions of value, that can only be understood under a social notion of value. A very complex work creates more value even if the physical product doesn´t content more physical units than those of the original input.
All this doesn´t mean that the fertility of a field doesn´t affect value. It does, when a field is more productive than another one, the work involved in the production becomes "empowered work" (trabajo potenciado), in the same way that work under high tech becomes empowered work in relation to more simple work. This is explained in the Theory of Rent.
In three blocks this time, sorry.
Delete(1) Of course that rational expectations and all that is just or mostly theory. The map is never the territory and, in all sciences, we have to accept that fundamental source of error and confusion.
The so-called "Neoclassical" school (why "Neoclassical" anyhow?) also has many limitations. I can think of these for example: (1) the general problem of theories being always (overly) simplified models of a much more complex reality, (2) the lack of understanding that Nature is not a mere scenario for human-centric economics but the source of it all, (3) rigid Newtonian-like mechanical concepts and formalisms, when Economics like Climate or actually everything should be analyzed as the Chaotic system it is, with Chaos Maths and all, (4) the fixation with money instead of with use-value (i.e. satisfying human needs instead of just making more and more in terms of GDP and mere accountancy money).
Most of these very important limitations are shared by Marx, sadly. But they grasp better in any case the importance of use-value, making it one of the two major dialectical forces of their model in the form of demand.
"... we also need an unit that determines the costs. For Marx, we know, it´s s.n. labor".
This is one of my conflicts with Marx: labor is important in many cases in producing use-value (true value) or even exchange-value (numerical, formal value - they have a relation, as I say) in form of commodities or services. But it's not the only force and here Marx, like the bourgeois economists falls (excepted the Physiocrats) in the same error of ignoring the productive forces of Nature.
I was earlier thinking of an example: an oak that gives shadow and acorns, for either people or their sheep or pigs (among other less obvious environmental services), is clearly providing value (use-value but, if I have legal property of the tree, I may want to charge for its use, so it may be converted into exchange-value as well). This is a clear example of how a 100% natural item generates value without a single sweat drop or minute of labor.
This is just one example of a zillion we can consider. Above I chose the example of a fisherman because the sea is just another producer without labor, the fisherman only acting as courier, as transporter, if you ask me (the cook could add value but the fisherman just carries from here to there, from sea to harbor, falling into the category of non-productive labor in classical Marxism in which services, as necessary as they are in a complex economy, are not valued properly because of fundamental errors of concept).
"The supply meets the demand".
Unless the demand pays too low.
"Then the supply curve is horizontal"...
One thing does not derive from the other: the supply curve reflects the restrictions of the production process. In scale economies it is actually slanted downwards, while in other types it is different. Whatever the case the supply curve cannot be horizontal because all the workers and machines of Earth can still not produce infinite of anything, much less of all things - there are limits.
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Delete"Only supply determines overall prices, the global value of production".
It depends. As you said supply reacts to meet demand, so supply is not infinitely but at least greatly flexible: if the supply of, say, Europe does not meet the demand in quantity and/or price, cheaper workshops will be opened in, say, China... as long as the know-how is not a problem.
IF supply meets demand, as you admit, then the supply side only sets up minimal prices (those that cover costs) but not general prices. I can offer free range eggs for example and I must initially offer them at a price that covers the cost. But being an optional product (we can live without eggs or eat the ones produce in the conventional death-farms) I totally depend on demand to realize my investment. If the demand side does not support my product and prices it means (generally speaking) that they lack enough use-value for their exchange-value (or cost-value or labor-value), so my business fails. But if the demand side supports it, then I cam maybe scale up a bit and reduce some costs, increasing profits (or reserves, or even salaries if a cooperative or "generous" owner) until competence forces me to lower the prices.
In the end it depends on the demand and the price they are willing to pay for each product (and the marketing "magic", induced emotions, associated to it).
Notice that this does not mean that demand is the only factor, just that, for what it embodies the use-value, what determines if a commodity/service is valuable and relatively how much it is worth for society as a whole, it is a key element in the determination of exchange-value (price).
"... demand only affects short-term variations"...
Not at all: it determines if something can be sold and in what circumstances. For example corsets or berets were a much demanded product a century or two ago, but now they barely have a small residual demand, so most producers have disappeared. Say pottery, baskets or coal... all them have been affected negatively by demand. Instead induced or spontaneous demand in other products (i-pads or jeans, for example) make them sustainable and profitable business. Demand and its whims totally determines specially the amount demanded (for each price) in the long term also.
The only way that the supply side can control the prices is by manipulating the system by oligopolistic means, what is typical but in theory at least out of the very concept of "market", and by generating, inducing, demand by means of publicity.
"... the monopoly theory as opposite to the competition theory (held by Marx) on which the whole theory of value rests".
I do think that there are monopolistic tendencies in Capital. Even in pure fair play the winners gain an improved position, which can be used to generate oligopolistic tendencies and restrict new business in the mid and long term. Most economic theory relies in the very abstract concept of infinite actors in both sides supply and demand, and this is simply not real: economic actors are finite and because certain processes work better relatively concentrated many choke points are created and the smartest (and luckiest) capitalists concentrate their efforts there because it is mostly where supply is oligopolistic where they can make really big profits. This is classical, if you analyze the robber barons of the US second industrialization (Rockefeller, Morgan), they did exactly that. And today it is the same.
And that's why those sectors would be better, even in "ideal" capitalist conditions, under democratic social management (i.e. nationalized). Otherwise these monopolies and oligopolies parasite even their fellow lower tier capitalists and cause serious strain in the system.
Instead there seems to be little point in collectivizing a classical small-town agricultural market, even in a socialist system.
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Delete"But i don´t agree that the notion of NC economics is similar to the marxian materialist one, which involves the whole fabric of society and specially, social relations".
Of course! Neoclassicals think in bourgeois terms and do not care but about bourgeois profits and such. Marx did make very important analysis of social relations and how the capitalists expropriate the value of labor. For the bourgeois economists a machine is totally unrelated to the workers who made it, it just has a price tag, instead for Marx (and here lays some of his geniality) the machine is first of all concentrated and alienated labor.
Marx always realizes that all the process of capitalist accumulation is a robbery and that is true clarity of vision. However he only sees robbery of labor, when it's also robbery of Nature as something that belongs to all and no one. And also, as I have insisted, he does not seem to give due importance to demand, to the ultimate true nature of value as use-value, regardless of how many working hours were invested. What he does is probably enough to explain to certain mentality how Capital robs from Labor but it is not enough to create an all-comprehensive economic theory that serves us today as analytical and planning science.
"Marx explicitly said that wealth comes both from work and from nature (i believe he quotes Petty or someone else), and this is very important in his criticism of the Gotha program that said that wealth only comes from work".
That is an important remark that would evidence that Marx really grasped the whole picture, just that he decided (or drifted) to emphasize one specific aspect.
As you probably saw in Astarita's blog discussion or even in this one, which is very interesting, the emphasis of Marxist economists and Marx himself is always in that aspect of how Labor is being subsumed (through robbery) into Capital. But is not just Labor, Nature is also. And is not only a production or supply side to economics, there is also a use and demand one.
I think that the holistic economic science that we need today for analytic and revolutionary purposes must therefore be post-Marxist (what is not the same as anti-Marxist: Marx and Marxism are a pillar, the "red thread that runs through the 20th century", and late 19th century, that Negri said). We need to rethink and reinvent ourselves eclectically, with clear revolutionary and communist (and ecologist) goals, but without rigidities.
Therefore it is, I understand, pointless to deny a fundamental role to use-value (expressed as demand), or to ignore the brutally important productive role of Nature (also robbed from us and from itself in so many ways by Capitalism), or to overemphasize production and work, which are ultimately just intermediate needs to fulfill our use-value social goals, our social demands.
"(1) Of course that rational expectations and all that is just or mostly theory. The map is never the territory and, in all sciences, we have to accept that fundamental source of error and confusion."
DeleteSure, but in the marginal utility "map", there are continents and oceans that no satellite can discover... they tell us that Atlantis exists, yet there´s no evidence of it.
What i mean is that the concept of marginal utility is false, because we can not quantify it, and quantification is not optional to determine the magnitude of exchange-value. No aproximation is valid here, we need the numbers. Otherwise we can not decide what group of commodities sums up more marginal utility, and therefore we can´t determine the prices of such commodities.
As i said before, subjective preferences are not quantifiable, and with the neoclasical escape to revealed preferences, they are actually admitting that there´s no way they can prove the actual existence of such a thing as marginal utility. However, they say it´s there, like Atlantis, and that prices are determined by them. How to prove that wrong? It becomes metaphysical, a simple opinion with no scientific value. "It exists because i say so", we are speaking in religious terms.
"I was earlier thinking of an example: an oak that gives shadow and acorns, for either people or their sheep or pigs (among other less obvious environmental services), is clearly providing value (use-value but, if I have legal property of the tree, I may want to charge for its use, so it may be converted into exchange-value as well). This is a clear example of how a 100% natural item generates value without a single sweat drop or minute of labor."
Firstly, the value of the acorns (or its shadow if you can sell it) doesn´t depend on the effort of nature to create those acorns, but it depends on the effort of society to recollect or produce those acorns (the individual tree doesn´t determine the value of the global production, but it´s determined by the average). There´s no way a person can have an idea of how much effort nature has invested in something, and if he could know... what would he care? Why? Did the capitalists that mined coal calculate its price thinking about all the centuries of geological evolution that took the Earth produce that coal? No way.
Let´s remember what you said earlier: the prices are (if we leave out the demand side, as i do) determined by the costs. By competition, they tend to a level where they represent the costs, including the average rate of profit.
Where in the costs of the capitalists does nature´s effort get involved? Who makes that calculation? Nobody. Nobody can do it, and nobody cares.
The key question here is: how much value does nature create on its own? (not wealth, but value) This is impossible to answer, because things don´t carry value on their own.
Only in a society where the social product is produced by thousands of isolated productive units that are at the same time autonomous and co-dependant, it´s necessary that the social product be exchanged in a market, and for this, it´s necessary for each commodity to be equivalent to the others in order to be exchanged. And for this, each commodity has to reach the market with a given quantity of exchange-value.
Only in this context there´s value. If acorns have exchange-value, it´s because they are part of this economy, and their value will be determined by what this society values, which is not the effort of nature. Also, how would you compare the natural effort invested in each and all the different natural manifestations?
I'm not going to defend "marginal utility" as such, I just say that demand must be considered because it is the main and ultimately only factor which gives anything a value. My thousands of hours invested in the sewing of, say, Medieval gowns have or no value if there is a demand, a use, for them. Maybe the change from 0 to 100 dollars is not "marginal" but in a single step but that is not really what matters for me (because I'm not right now trying to build a new empirical theory). Maybe there is demand for one or ten but not the one thousand I have produced so optimistically.
Delete"There´s no way a person can have an idea of how much effort nature has invested in something, and if he could know... what would he care?"
Well, today we can measure much better "the cost of Nature", although of course it's not as simple as working hours. But, mind you, that's either not as simple in humans, is it? There's always an exercise of averaging and oversimplification for the sake of modeling.
But what really bothers me of this sentence (and what surrounds it) is "what would he care?" My answer is how cannot he or she care! After all, it's the essence of all things, including being human. This is not "religious" or anything like that: it's science and true economy - instead of talking of ecology, we should talk of "holistic economy" in fact (although it's true that many ecological approaches wrongly stop precisely at the conceptual barrier of class relations or deal with it with wrong tools, what must be criticized strongly as well).
In the end there is an economy of squirrels (one that is centered in squirrels and that we are interested in precisely because we are humans and hence we are a curious, scientifically-minded, intellectually-oriented, species - maybe if we'd be squirrels ourselves we would not care).
And the economy of squirrels and that of all their econiche, say the pine tree forests of Europe, are important, not just for squirrels and many other species but for us humans as well, and not just as a mere decorative "garden" of sorts. There are communities, which have been living on the same pine tree forest since at least Neolithic times - and they have been making the furniture of much of Europe out of them, mind you - so the human economic effects should be obvious in this case. We have also considered the sea and we can understand why the environment is so important for us (as source of commodities, as dumpster or recycler of residues, as reserve and stabilizer) and we must integrate it in our economic theories.
We can't just shrug before the oak tree and then chop it down for short-term gain, as is typically done in Capitalism conditions and could even be justified if you'd measure in terms of mere work-hours (after all the sheep walk to the tree on their own, not a single human work-second is used in that - but without the oak the sheep would be weak and their produce in wool and milk and lamb chops would not be the same at all: zero work but lots of production effects).
There are factors other than human work. Either you admit to it and go on to quantify them somehow, or you disdain them and you go to an imaginary "Atlantis" of sorts, where workers produce labor-value out of thin air, being consumed by nobody.
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Delete"Where in the costs of the capitalists does nature´s effort get involved?"
Generally nowhere. But why should we accept the errors of Capitalism? We are trying to build a sustainable, fair and dignified Humankind, not to repeat their errors - mind you that we cannot, Earth is already too depleted of invaluable resources of the kind neither the capitalists nor you care until they are chopped down or bottled or transformed in short-term transgenic farms and then cattle ranches and then useless deserts.
Capitalism is a predator and destroys what it touches like the infamous King Midas. At the eve of the Capitalist Era, Earth was still full of resources, immense wealth, like fish or trees or pure water or untamed lands, that we could use. Today all that is vanishing at incredible rates precisely because capitalists (and certain "communists" also) disdain their value. For bourgeois economists nature's value is exactly zero... unless appropriated and "produced" into commodities.
That must change because it is a fundamental error. But Marx and some Marxist do not help.
"If acorns have exchange-value"....
When I talk of value I always talk of use-value. Exchange-value is just a derived term, which may or not be related. In my example the sheep on their own use the tree for food and shadow and that ends up improving the quantity and quality of the ovine products (extracted or "produced" in a separate context, later on at the farm). If the oak tree would be chopped down, it would have to be replaced one way or another (a building for shadow, more quality fodder), what implies a cost. It is this non-existent cost what the oak-tree provide for (never mind the more esoteric interactions with the surrounding prairie at root level, which may also save money to our shepherd).
"... it´s because they are part of this economy, and their value will be determined by what this society values, which is not the effort of nature".
Here you manage to admit to the relevance of use-value ("what society values") only to admit that (our capitalist) society generally does not value Nature and all the services it produces for us asking nothing in exchange but respect.
Mind you that some economists are already trying to measure the cost of Nature, which may be interesting, but, even if it is not measured, the costs and benefits are there: ignorance does not exempt from the laws of Nature: if you ignore the law of gravity you will likely die in a fall; if society depletes and pollutes the oceans, say bye-bye to mackerel.
"Also, how would you compare the natural effort invested in each and all the different natural manifestations?"
I think that we must measure very carefully the effects on our human sphere: those acorns and shadow are valuable for the sheep, even if they can't directly be sold in market (most likely not) nor carry with them a single human work-hour. We can measure the amount of market-bought replacement fodder, the new awning for shadow in a treeless landscape and the loss of value of lamb chops for being now of lower quality (the flavor came with the acorns, who would have guessed - this actually happens with pigs, not sure about sheep).
We can measure market exchange-value equivalent and from that deduce your Marxian labor-value working-hours' equivalent. Even if we cannot measure Nature's efforts easily, we can measure (at least in principle) the efforts we would have to make each time some part of Nature is lost.
"This is just one example of a zillion we can consider. Above I chose the example of a fisherman because the sea is just another producer without labor, the fisherman only acting as courier, as transporter, if you ask me (the cook could add value but the fisherman just carries from here to there, from sea to harbor, falling into the category of non-productive labor in classical Marxism in which services, as necessary as they are in a complex economy, are not valued properly because of fundamental errors of concept)."
ReplyDeleteActually when Marx says that circulation doesn´t add value, he doesn´t refer to transportation. This last does add value because it changes the use-value and adds labor at the same time (it´s not the same a fish in the port than in the city market, it doesn´t have the same utility).
"Unless the demand pays too low."
Sure. But if the demand (effective demand, with purchasing power) rises, then the supply will rise.
"One thing does not derive from the other: the supply curve reflects the restrictions of the production process. In scale economies it is actually slanted downwards, while in other types it is different. Whatever the case the supply curve cannot be horizontal because all the workers and machines of Earth can still not produce infinite of anything, much less of all things - there are limits. "
Actually if supply meets demand (and it does, because demand is not infinite, effective demand isn´t), yes, the curve is horizontal (or as you said, it declines), it doesn´t rise like in the NC graphics.
People can only demad with their incomes, and their incomes come from production, so they are correlated. THere´s no infinite demand on one side, and finite, scarce supply on the other. Both are finite, but none is scarce relative to the other (in general), so the supply meets effective demand, etc.
I´ll have to continue later, greetings.
"[Transportation] does add value because it changes the use-value"...
ReplyDeleteThe use-value? You'd hear a cynic laughter if you'd been here when I read that.
"... and adds labor at the same time".
Then what about the shop attendant? Adds labor and probably changes the use-value by making it available to consumers. Never mind that in one way or another he/she is a necessary worker.
And, if the shop attendant is accepted as value-adding labor, what about the rich mansion's butler, who does essentially the same work but at a more private sphere? It's tricky.
"But if the demand (effective demand, with purchasing power) rises, then the supply will rise".
Actually this would lead us to inflation: too much money for the production capacity does that (regardless on whether it is gold or paper or e-money). It does stimulate the production, yes, but the supply side cannot easily catch up with the demand so the immediate (and lasting) effect is inflation.
Because you really increase general demand when you extend the amount of money. So not as simple as "supply always meets the demand": it tends to but there are many effects and factors. We can see that when the increasing demand is for a limited natural product like oil or gold itself, whose prices rise without much impact on production itself. Here those in the key market positions, for example oil companies or Arab emirs, can extract much greater benefit without even bothering with monopolistic practices, selling all the time at much higher price than production costs.
The key to benefit is scarcity, and that's another reason why Capitalism destroys Nature: the more it destroys it, the greater the unitary benefits for its now rare products, be them tiger paws or eel larvae or caviar or even clean water.
"... [supply curve] doesn´t rise like in the NC graphics".
It depends on the product and production methods. Supply curves decline for scale economies like those typical of Fordist industries but it's not always the case. The first gold nuggets in a newly found bonanza is easy coming but then costs increase as they are harder to find. There are many models and that's no problem for the Marginalist School at all, which just accounts for them.
"People can only demad with their incomes, and their incomes come from production"...
Or Reagan invents "easy banking"... and creates a huge bubble to keep Capitalism going on well above its production "limits".
But in the essentials you are right, assuming you also facture Nature in that: lots of fortunes have been made just by appropriating lands and resources for almost not cost other than being well connected, influential. This is not any trivial matter because many many major fortunes are not in the industrial sector at all but in the primary sector (extraction, agriculture) or the tertiary one (services, notably finances). Your model is too focused on industrial production, which is only a part of the economy, even under capitalist conditions.
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ReplyDelete"It depends. As you said supply reacts to meet demand, so supply is not infinitely but at least greatly flexible: if the supply of, say, Europe does not meet the demand in quantity and/or price, cheaper workshops will be opened in, say, China... as long as the know-how is not a problem. "
So, supply meets demand, it doesn´t matter if the supply comes from China, capitalism is a global system.
"IF supply meets demand, as you admit, then the supply side only sets up minimal prices (those that cover costs) but not general prices"
The supply side sets up minimal prices only if you include profit as a cost (as i said, using the language and mentality of a neoclassical). The costs plus profit are equivalent to the labor incorporated in the commodities, and they do set up the general prices, because the factor of scarcity doesn´t apply, as we saw already.
For prices to be above the cost level there would have to be a problem with the production of more commodities, and as a rule, this doesn´t happen.
"In the end it depends on the demand and the price they are willing to pay for each product (and the marketing "magic", induced emotions, associated to it). "
Let´s try with an example:
The commodity "car" costs $5.000 and the commodity "bycicle" costs $500 (this includes the costs paid by the capitalist plus the average rate of profit).
There are 1000 cars produced and the same amount is sold. There are 600 bikes produced and the same amount is sold.
Why do their prices differ? We know that supply and demand are at equilibrium (if we introduce the factor time, as we already saw, the problem remains the same, since both demand and supply will tend to be again in equilibrium if one of them changes).
So, why does the car cost "x" and the bike cost "y"? Their scarcity is the same, yet their values differ. Then you would have to say that one of them is more "valued" than the other (subjectively), so "utility" is what makes them of different worth.
But for utility to determine prices it can´t be itself determined by prices, so this utility must be abstract, it must be an asocial, previous to the knowledge of the price of the thing, utility, which would need an abstract, asocial individual with a given abstract, asocial "ranking" of utilities.
But we know that the real economic relation is not that of the neoclassicals, but it is that of the consumer who choses a commodity that has a price. The commodity isn´t chosen independently of the price. The world of absolute rationality and the abstract "ranking" is irrelevant. We chose commodities according to their use-value to us and their prices. But this is incompatible with the determination of prices by utility, because the determinant factor can´t be itself, determined by what it´s trying to determine (sorry for the repetition), which is the prices.
"Notice that this does not mean that demand is the only factor, just that, for what it embodies the use-value, what determines if a commodity/service is valuable and relatively how much it is worth for society as a whole, it is a key element in the determination of exchange-value (price)."
DeleteAgain, prices don´t have to rise as the production rises (again, in general) to match the increased demand, so demand only determines the quantity of units produced, and has no long-term effect on the prices.
"The only way that the supply side can control the prices is by manipulating the system by oligopolistic means, what is typical but in theory at least out of the very concept of "market", and by generating, inducing, demand by means of publicity. "
I hope it´s clear that i´m not saying that supply "controls" the prices. I simply say that prices are equivalent to the costs of production.
"I do think that there are monopolistic tendencies in Capital"
Sure there are, both in Capital and in capitalism. But i´m saying that the general dynamics is determined by competition, even if monopolies appear here and there. If the dynamics were determined by monopolies, then all investment would have stopped decades ago, and growth too.
"However he only sees robbery of labor, when it's also robbery of Nature as something that belongs to all and no one"
Actually he was aware of that, it´s somewhere in Capital. But it doesn´t mean that nature can add value, except in the form explained in the Theory of Rent.
"And also, as I have insisted, he does not seem to give due importance to demand, to the ultimate true nature of value as use-value, regardless of how many working hours were invested"
He gives importance to demand, as i explained, but he was aware that it can explain the quantities produced, but never the magnitude of the value of commodities that can be reproduced.
As said before, value exists only because of the form of capitalist society, value is not a manifestation of use-value. While use-value existed in feudal and other societies, value was mostly inexistent. Value is not universal, we must understand where it comes from.
"That is an important remark that would evidence that Marx really grasped the whole picture, just that he decided (or drifted) to emphasize one specific aspect."
I should probably clarify that wealth is material wealth, and value is a different thing, it´s the social value of the production, in Marx´s theory. So when he says that both work and nature create wealth, he´s not talking about the magnitude of value, but only of use-value.
"prices don´t have to rise as the production rises"...
DeleteProduction rises as prices rise: producers are more motivated and less efficient producers can concur only if prices are higher. Of course it depends on the particulars of each economic sector but it is that way for a very fragmented one, which is the ideal of market economics.
"demand only determines the quantity of units"
Quantity per each price value. More people will want, say, cars, if these would be cheaper but at the current prices the demand is which it is and if, for any reason, cars (or an associated expenditure such as fuel, traffic taxes, parking costs) become more expensive then the demand would decline. This is not a change of curve but the same curve for different prices.
I think that you really do not understand the supply-demand theory. You should not fall in these clear errors of interpretation, right?
I insist that I do not adhere to the Marginalist school and will be the first to criticize some aspects of it but I know that it does a decent job describing in relatively simple terms the supply-demand relations. And at least it does recognize the role that demand (as social expression of use-value and purchasing power) actually has.
"I simply say that prices are equivalent to the costs of production".
Tends to that in the correct circumstances. I can agree to that much.
"But it doesn´t mean that nature can add value, except in the form explained in the Theory of Rent".
Nature creates value. It creates things that we value by using them (use-value). Whether or not this is accounted for in prices (exchange-value) it is another issue. If exchange-value is not even approximately the same as use-value, extremely overpricing some things and underpricing others, then the whole system is not working well.
The furniture industry, the oil industry, the food industry, the clothing industry, the steel industry and all the others only retouch (transform) what Nature produces as animals, plants, minerals or even flows of energy like the rivers. We cannot ignore that.
But I'm thinking I better stop here because our disagreement is clear: I recognize use-value as the only real (and materialist) value, exchange-value being at best a particular approximation full of birth defects and accounting errors.
This acknowledgement brings me to emphasize Nature and demand because both are lacking (beyond some abstract recognition) in the Marxist economic theory. The mainstream bourgeois theory recognizes demand, what is a pro, although ignores the relations of exploitation, which are not interesting for them for obvious reasons and retains the dominance of exchange-value (money, markets) over social utility (more is not always better).
Instead I need (we as Humankind need) an economic theory that goes beyond both, clearly recognizing that all the economy should have one goal: to satisfy the social use-value (reduced or increased locally to the level of optimal happiness, not of infinite products) and to keep the planetary ecosystem in full health, so it can keep producing so many nice and free things for us to take, retouch and use.
Marx is clearly insufficient and bourgeois economics is too.
Time to take a break and chew on all this, don't you think?
"The use-value? You'd hear a cynic laughter if you'd been here when I read that. "
ReplyDeleteI understand why. If you have a physical conception of value, then you would hardly imagine what changes in use-value would come from transportation. However, they are obvious from a social conception of value. The grapes in the field have an inexistent use-value for the customer in the city. The same grapes, transported to the city, have use-value (notice that i don´t say much or little use-value, because it can´t be measured, it exists or it doesn´t), therefore, the transportation adds use-value to the commodity, and some labor.
The shop clerk doesn´t add anything to the commodity. If he didn´t exist, then i could get the grapes anyway. Of course his boss would be unhappy, but...
Different is the case of the storage work, because it contributes to maintain the use-value. This is a productive work, needed in every society. The shop clerk is only needed in societies similar to capitalism in which only by sales and purchase the social product can arrive to the consumers.
"Actually this would lead us to inflation: too much money for the production capacity does that (regardless on whether it is gold or paper or e-money). It does stimulate the production, yes, but the supply side cannot easily catch up with the demand so the immediate (and lasting) effect is inflation."
No, an increase of the purchasing power of the people can come simply from a continuous advance in the productive forces, as has happened througout capitalist history. An increase in the production and its value determines an increase in the income of people.
However, i was referring to the increase of effective demand for a given commodity. If more people want and can buy more units of a given commodity, then that commodity will be produced in larger quantities.
"Because you really increase general demand when you extend the amount of money. So not as simple as "supply always meets the demand": it tends to but there are many effects and factors. We can see that when the increasing demand is for a limited natural product like oil or gold itself, whose prices rise without much impact on production itself. Here those in the key market positions, for example oil companies or Arab emirs, can extract much greater benefit without even bothering with monopolistic practices, selling all the time at much higher price than production costs."
Of course, one thing is commodities that can be reproduced, and another thing is those commodities with a natural limit, and specially those that can be monopolized. I´m only talking about the first kind, which is the general kind. For the exceptions there are special theories.
"The key to benefit is scarcity, and that's another reason why Capitalism destroys Nature: the more it destroys it, the greater the unitary benefits for its now rare products, be them tiger paws or eel larvae or caviar or even clean water."
The key to some commercial benefit may be scarcity, but if we are talking about the global benefit of capitalist production, its key is exploitation of human labor.
"It depends on the product and production methods. Supply curves decline for scale economies like those typical of Fordist industries but it's not always the case. The first gold nuggets in a newly found bonanza is easy coming but then costs increase as they are harder to find. There are many models and that's no problem for the Marginalist School at all, which just accounts for them. "
I always talk about the general case, and the majority of goods, actually the totality of commodities that can be reproduced without apparent limit.
The problem for the marginalist NC school doesn´t appear when the curve rises, but when it´s horizontal or it declines, because then demand is nullified as a determinant factor of prices.
"But in the essentials you are right, assuming you also facture Nature in that: lots of fortunes have been made just by appropriating lands and resources for almost not cost other than being well connected, influential. This is not any trivial matter because many many major fortunes are not in the industrial sector at all but in the primary sector (extraction, agriculture) or the tertiary one (services, notably finances). Your model is too focused on industrial production, which is only a part of the economy, even under capitalist conditions."
DeleteThe fortunes that can be made out of appropiation of nature can be explained with the theory of rent.
Before i answer to the two other remaining comments, i must ask you if we are talking about how capitalism really works (which is what Marx wrote about) or we are talking about the things that we would like that capitalist production took into account. I said that capitalists don´t care because they don´t, and i say say nature doesn´t determine prices because it doesn´t. maybe i´d like it to be conidered in the prices, but that´s off the point. We are trying to understand a system that has no goal but profit, and you are trying to say that nature is part of the costs that add up to form the price? How does that happen?
Now, if you tell me that nature is a necessary part of the creation of use-value only, then we would agree, i said that very early in the comments.
"The use-value? You'd hear a cynic laughter if you'd been here when I read that. "
DeleteI understand why. If you have a physical conception of value, then you would hardly imagine what changes in use-value would come from transportation.
You got me wrong. The laughter was just because you were appealing to use-value to justify your point.
I understand well that services provide (use-)value in different ways, transportation being one but not the only one.
"The shop clerk doesn´t add anything to the commodity. If he didn´t exist, then i could get the grapes anyway".
That's not true: the clerk does not just ensure that you don't rob the commodity, (s)he also takes care of the commodities while consumers arrive. It's a productive job in the distribution sector, very tightly related to the transporter in its qualities. In fact some shops are mobile like the classical sausage van, combining both roles (but for practical reasons a static store is usually better).
"Of course his boss would be unhappy, but... "
Not just his boss. You would be when you arrived and saw no goods or all them trashed... Plus things also need a management: the goods must be moved from backstore to shelves, someone must decide that X packs of rice, Y bottles of oil and Z tins of tomato are needed. Even in a socialist store a clerk is needed and his/her work is productive because society finds it useful (use-value).
Clerks could only be replaced by machines or fully removed in very small communitarian systems in which there is a high level of consciousness of the collective good (i.e. their role is distributed among many).
"... an increase of the purchasing power of the people can come simply from a continuous advance in the productive forces, as has happened througout capitalist history".
That sounds fallacious because there is always "continuous advance of the productive forces", even in the Paleolithic (although at slower rhythm indeed), and yet there are periods in which the purchasing power falls. For example now at worldwide level: there is absolutely no loss of technology (on the contrary), there's an army of unemployed workers everywhere ready to produce whatever for a salary... but the effectiveness of the system just has collapsed and is unable or unwilling (or both) to keep the purchasing power (much less raise it).
For Marxist economics this is an overproduction crisis (one of the strong points of Marx' theory): lots of goods but no purchasing power (because the capitalist class is trying to reduce costs and concentrate power, purchasing power, in their own hands, or even in the hands of an elite sub-class among them: financiers primarily).
What you say contradicts both reality as we experience it in this dramatic global crisis and Marxist theory itself, at least the part that deals with overproduction crisis.
"commodities that can be reproduced"
Commodities don't reproduce, only living beings do (or in a wider sense society). Commodities are produced (extracted or transformed) in fact. Re-production implies autonomous self-production, life-of-sorts, what is not the case (people reproduce, plants reproduce, ideologies reproduce... but not commodities).
"I´m only talking about the first kind, which is the general kind".
Then gold is an exceptional commodity, as is oil or uranium or over-exploited fish. Yet they must be analyzed by any serious attempt at economic theorizing.
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Delete"The key to some commercial benefit may be scarcity, but if we are talking about the global benefit of capitalist production, its key is exploitation of human labor".
Not only. Exploitation of nature and exploitation of human deprivation, which is a central factor in the formation of a proletariat, the class with nothing but their work, are also key in the profit (unsure if I should call it "surplus") that Capital makes. Before they take my work, they took my right to the land, so I could not feed myself and would be rendered a mere worker without any wealth worth that name. The whole problem of property begins with the land, which is what feeds the people since time immemorial and provides the other resources for the people to create their homes, clothing, tools, etc.
This original appropriation is not doubt pre-Capitalist but was and still is re-emphasized and aggravated within Capitalism because workers with land are not anymore proletarians but workers who can feed themselves and need not the "slavery of crumb begging" of Capitalism.
"The problem for the marginalist NC school doesn´t appear when the curve rises, but when it´s horizontal or it declines, because then demand is nullified as a determinant factor of prices".
Of course scale economies are NOT a problem because both curves S and D are seldom parallel: they converge at some point. But also the sloping-up curve does not reflect a single producer but all, and the greater the price, the more the producers (and goods available in the end). If prices are too low, producers can't keep up and close the business, so offer falls. "Too low" is different for each producer because they are not identical: some close, others persist with no profits and yet other still manage to make a profit.
But the particulars of the curves are or should be defined by reality, not a-prioris.
"The fortunes that can be made out of appropiation of nature can be explained with the theory of rent".
I don't care as much as I care that it works: in the end it's not hard-work what makes people rich. Definitely not for worker but neither for capitalists. What works in free market under a Capitalist ideology is predation, so psychopaths (or at the very least people with very low empathy) are the great beneficiaries of this system.
I know a lot of petty bourgeois from several generations and they never became really rich, just well off at best. Why? Because they lack the power and are too scrupulous to manipulate the system. They still support it for as long as they can make a decent living but they have no realistic expectations of climbing up. Instead mafiosi and financial speculators succeed. Those are the ones who actually control the Capitalist system and benefit the most of it.
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ReplyDelete"We are trying to understand a system that has no goal but profit, and you are trying to say that nature..."
I want to understand General Economy, of which Capitalism is just a particular solution. Capitalism by ignoring Nature is obviously committing a major error and I would not like to do the same. We, not just as Communists but as simply Humanists, cannot afford to continue with that error.
"... is part of the costs that add up to form the price?"
In the price tag or not it is part of the costs. If the market value does not reflect the real value, then the market value is wrong and the error will be paid for somehow (such as the collapse of our civilization and maybe the destruction of Humankind and life-as-we-know-it, no kidding).
For example the costs of a nuclear power plant do not include (or mostly not) long term damage to the environment or a permanent solution for all those radioactive residues, never mind insurance for accidental the destruction of half a country. TEPCO may not be paying for the hidden costs of Fukushima but the Japanese People is paying for them dearly. Who pays may be a matter of law, politics or accountancy... but in the end the Capitalist system is about managing the social economy in a particular way, so Society pays.
Typically this is possible because the ideologically aligned and intimately corrupt bourgeois regimes effectively subsidize certain economic practices by means of permissive laws. Otherwise all the pollution and environmental destruction should be massively taxed, strongly discouraged if allowed at all, but the system hides important costs, costs that are growing proportionally bigger by the day.
"... if you tell me that nature is a necessary part of the creation of use-value only, then we would agree"...
I only recognize use-value, sorry. Exchange-value is just a particular accountancy solution for the problem of how to describe use-value (real value) in convenient mathematical terms. Today with our computer power we can surely do much better than with that "chaotic and unfair rationing card" that is money-in-markets.
"In the price tag or not it is part of the costs. If the market value does not reflect the real value, then the market value is wrong and the error will be paid for somehow (such as the collapse of our civilization and maybe the destruction of Humankind and life-as-we-know-it, no kidding)."
DeleteOk, then we are not talking about the same thing, i regret i didn´t realize this earlier. The theories of value try to determine what is the factor that determines exchange-value.
You´re interested in something that is not a theory of value, and you are criticizing Marx´s theory of value for being a theory of value instead of being what you want it to be.
I need a theory of value to understand capitalism, that is, our reality. I don´t believe i can explain myself any better than i´ve done till now, so i´ll say goodbye in this comment, and good luck.
I am interested in real, material, value, which is use-value. Market value is a related concept but it is not "value" but price. And I am interested also in an Economic theory that, like biology or physics, can be used for all cases and not just a particular one (Capitalism or more specifically industrial capitalism).
DeleteI criticize Marxist economics for being limited and not truly materialist. He, like you, fail to see how money is an idea, not anything "material". Only use-value is material, real.
Food is food, clothes are clothes, a farm is a farm... money is nothing and and all: it is a socially determined and often very distorted mirror of reality. You can maybe explain and support a market (capitalist, bourgeois) economy with those ideas (for some time) but it is not anything near a general economic theory, which understands all the inputs, utilities and residues (outputs) of a given society (or the whole planet).
And socialist or communist implementation needs of such a comprehensive economic theory, which Marx could not incept. That Marx was unable to develop a general economic theory would not be a problem in itself, what is a problem, it seems to me, is that too many people looks to Marx for complete comprehensive answers and they are not there. In many cases the still need to be articulated.
"I need a theory of value to understand capitalism, that is, our reality".
Our reality is clearly bigger than Capitalism but, in any case, it can be understood from several approaches. And I'd say that to some extent the bourgeois Marginalist school is more correct, although they obviate so many things that Marx does grasp: thesis and antithesis > synthesis, we cannot stay put in either the thesis nor the anthitesis, we need to move forward, synthetically, once and again. Some Marxists are incredibly conservative: you cannot be a revolutionary and a conservative at the same time, can you?
"... i´ll say goodbye in this comment, and good luck".
Same to you: good luck.
I agree that we have explained our discrepancies as much as possible. You seem satisfied with a theory that limits itself to explain Capitalist wealth as surplus expropriation (but only from labor, not from Nature, including domestic species) but is not and cannot be a general economic theory beyond the limited historical (and sometimes even sub-historical) circumstances of industrial capitalism.
I am not at all satisfied with that.
A very good discussion going on, most of which I do not understand. However, I would certainly agree that Nature is Vital for our Survival. There are too many human beings on the Planet.
DeleteHowever, most of the resources are consumed by a small portion of the humanity. The biggest and the most developed economies are facing a serious debt situation. The various wars going on and some potential ones waiting to explode may ultimately be because of the fight for resources.
I don't think there is any purely Capitalist economy. I have not read any books on the principles of Capitalism but for me it boils down to private enterprise and free competition.
I think it would be a good idea if you try and write a book on this topic.
Just for the record the debate above is dead. Guess we agree to disagree even if reluctantly.
Delete"I don't think there is any purely Capitalist economy".
Do you mean "free market"? Of course not: the state is central to capitalism, providing laws and enforcement for its development, almost invariably in a corrupt unfair way (no matter what they pretend) → primitive accumulation. A good communist but non-Marxist read on this could be Kropotkin ("father" of the current known as libertarian communism) who argued that there are three kinds of laws:
1. Those that protect life (and physical integrity) of individuals.
2. Those that protect private property.
3. Those that protect the state itself.
He argued, a bit naively maybe, that in a communist society no laws would be needed therefore because the categories 2 and 3 would not exist nor be protected anymore and most violent crimes are derived from them (thieving crimes against property, political crimes against the state). The rest he argued (inconsistently IMO) that are merely "passionate crimes" and therefore no law can prevent them.
This is not too correct IMO, not just society needs to defend itself against rapists and brawlers but also it should be able to protect its own grassroots communist democracy against power-mongering of any sort, be it political or of illegitimate appropriation of resources. But the basic analysis is valid in spite of all (Kropotkin believed a bit too much in the natural goodness of people).
"I think it would be a good idea if you try and write a book on this topic".
No. I am not even half-prepared for such a task, nor I have the personal disposition needed to write books.
Do you mean "free market"?
DeleteI meant a layman's understanding of Capitalism. I agree that ultimately it leads to a few accumulating too many things. Read an interesting article in The Times of India recently. It stated there are 4 classes in India right now :
1. Politicians
2. Businessmen and Capitalists
3. Middle Class
4. The Poor (Overwhelming Majority)
It stated Class 1 helps Class 2 get rich - they in turn help the Class 1 get back to power. The Middle Class wants a revolution but mocks at the Poor. Class 1 throws some scraps at Class 4 for votes. If Class 3 really wants a successful Revolution they must take along the Class 4 with them.
I honestly think your ideas presented here are very good ones. Take for example the difference between the fruits of a wild tree and fruits from a tree nurtured by a human being. You can elaborate them and maybe prepare a small eBook to begin with.
I don't have much theoretical knowledge and believe it is social setup + the administrators which delivers the end result. But yes, if the system is flawed then even the well meaning individuals cannot make a change.
I think you have lots of knowledge and like to pose questions so I can know more. I hope you won't mind. May not have much free time in the next few months. Keep blogging!
Your "layman understanding" of Capitalism may be not the same as other laymen's, who may see more clearly the aspects of monopoly and brutal exploitation inherent to it. I would just like to emphasize that "free market", at least as described by economists in theory is much more often than not different from real Capitalism. In the ideal and even many practical free markets, a large number of roughly equivalent providers meet a large number of customers, all making or at least approximating rational decision-making for optimal benefit. In such markets the profit rate would quickly tend to zero and the average provider would be always barely making any gains. Even accepting this assumption in practical terms this means that some providers are losing and are lost to the market quickly, which gradually tends to concentration of offer, especially as consolidated providers have generally advantages over newcomers (there are exceptions but that's the rule). So even in the ideal theoretical Capitalism monopolistic tendencies soon ensue, destroying the illusion of free market.
DeleteIn real life, this happens especially in key sectors where concentration is most profitable, for example energy, finances, infrastructures, military, etc. while other sectors are left to subcontractors who may make a decent living but not really ever big profits and are always risking a bad streak that leaves them bankrupt and suicidal after tasting for some time some lesser success.
As for the four "classes" you mention, that is an Hindu-centric idea that became popular in recent decades in some circles (also some Westerners but seems more popular in India AFAIK). Can't recall the somewhat cliché author who proposed it but he was openly borrowing the four varna system and translating it to classes (instead of castes). It is not new but was proposed in the 80s or 90s and if my memory is correct the theorist was an Indian author (who must have made a lot of money by now selling books and giving conferences).
Within Western class theory, whose main school is probably Marxism, there are only two main classes: the bourgeois and the workers or proletariat (a Roman-originated misnomer: those whose only wealth are their children or "prole"). In other words: the owners and those who have nothing. Other classes like aristocracy or rural peasants would be in decline under capitalism and have roles only as secondary actors. The military and politicians (or bureaucrats) are not generally considered classes on their own right but subclasses of the working class at best, being salaried themselves but with particular roles. There is of course a lot of debate and nuances about it.
Whatever the case there is no evidence for the purported cycle claimed by the neo-varna cyclical hypothesis in history. The bourgeois class, even it may be argued that existed as seed in secondary roles in the past never really got the power it has now under Capitalism, being always subordinated to the military-landowner class or aristocracy with very punctual exceptions at best. Also the rural working classes of the past, be them free or slave or whatever else cannot really be compared with the industrial urban educated working class of today, who must know technology, speak languages and what not... but still own mostly nothing (or the bare basics of life, like a home, at a very high cost in terms of worked hours).
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Delete"... if the system is flawed then even the well meaning individuals cannot make a change".
The real question is not if the system is flawed or not in ethical terms but if the system is efficient or not in terms of social survival and stability. In this sense Marx argued that the ever-growing productive capacity of capitalism would clash with the ever-decreasing salaries (the exceptions to this trend have been centrally planned subsidies in form of welfare or cheap credit bubbles, surely caused by the danger of communism itself) generating an overproduction crisis (like the one we suffer now for example).
However there is another non-Marxian contradiction of Capitalism that may be even more decisive, the environmental one: Capitalism (including the "real socialism", which has been accused of just being "state capitalism") is predatory (and much of the previous discussion with Divulgación Marxista was about this) not just of human work but of Nature in general (of which human work can be considered just a particular aspect, even if socially most relevant): whole oceans are being depleted, whole jungles felled, whole reserves of fossil fuels depleted (including their legacy of pollution and global warming)... but the planet is only so big (and all dreams of space colonization will remain as mere science fiction for too long to solve anything). This has caused and even more decisive crisis: the global environmental crisis that we also live through now (and will suffer in the foreseeable future in growing catastrophic consequences).
This is something that Capitalism cannot solve: its very predatory nature is fundamentally contradictory with solving the problem because there cannot be continuous growth without environmental destruction. The solution goes through zero growth - some areas would need to un-grow, others need to continue with some, more sustainable growth but the overall trend is zero or even some negative growth. If we don't organize that, it will be imposed on us by the very laws of physics and biology that we cannot escape.
So nowadays the dilemma is ecosocialism (eco-communism) or extinction. There's no viable eco-capitalism no matter how hard they try because Capitalism cannot coexist with zero growth, with lack of environmental extraction/destruction.
I agree that Capitalism is not geared towards social survival. I don't think the prosperity of the present developed economies would be possible without cheap natural resources and labour from other parts of the world. Plus it destroys the social fabric and families. Eventually leading to aging societies.
DeleteThere are 2 parts of this debate in my opinion.
1. Theoretical aspects of economic setup.
2. The reality of States.
In my humble opinion - the States would never give up their power and we would never have an equal world. There would be wars as the present system collapses. Hopefully, the Earth won't be completely finished off by the Nuclear weapons.
I'd stick with my suggestion about putting your thoughts in the form of small eBooks. You don't necessarily have to sell them. You can offer them as free downloads through this blog.
States or equivalent are the political manifestation of society. A feudal society manifests itself as feudal realms, a capitalist society as the rather misleadingly known as "nation-states" and communism should and hopefully will have its own distinct political organization, necessarily more decentralized and democratic (or else no communism, which is nothing but total democracy, with emphasis in the economic aspects of power, nowadays excluded from the democratic debate and its collective power).
DeleteI'm not going to write any book, thanks for your enthusiasm anyhow.
Maju,
ReplyDeleteI recommend to read almost anything published about Silvio Gesell or about the Worgl miracle under the leadership of Michael Unterguggenberger. Improving the velocity of real money (not simply degraded fiat) will definitely form part of any anti-depression solution. The other part will be denouncing judiciaries and national bank lobbies that refuse to allow regional contingency options for bad economic times. It is unjust for a judge to impose any unfavorable economic condition on the lives of citizens.
What's "real money" for you? Do you mean cash, gold, credit cards?
DeleteFor Marx' real money would probably be gold but my contention is that there's no such thing as real money, that money is nothing but a socio-economic code: a chaotic and extremely unfair rationing card of sorts.
Problem is that Marx' notion of "material" is almost invariably "social" or "socio-economic" (i.e. social codes: subjectivities interacting in the very virtual social frame) and never or rarely truly physical or physio-ecological.
What you say sounds a bit like his errors: confusing REAL stuff like homes, food, energy, ecological balance, etc. with "real" (social-virtual) one: "real money". There's no such thing as "real money": all money types are just variants of the same social code or, if you wish to be more specific, flow of (very virtual) code through the social fabric.
Marx is very dead, as is Gesell and earliest disciples. Yet I have never heard of someone killing someone else because of Gesell's ideas or Unterguggenberger's tenure.
ReplyDeleteI will not fault you for your affinity for needful things such as a home. But I see commentary like yours as somewhat unrealistic and archetypal. Gesell's proposals are ancient but they invite empathy because of the environment in which they were incubated. His lessons were learnt in Argentina and not the armchair of academia.
Nobody ever heard of your gurus, sorry guy, so don't pretend that anybody ever followed them. They didn't. It's just you.
DeleteAnd as for blaming Marx for the fallen in the Class War, that's ridiculous! Capital kills workers every single day and nobody blames Smith or Ricardo personally.
Anyhow, regardless of the merits or demerits of your monetarist gurus, one issue does apply to them at least as much as to Marx: they are from long before today and therefore they only had a preliminary vision of what the force of unleashed Capitalism could do. Also they were surely trapped in primitive pseudo-materialist ideas about what money really is.
DeleteThe real issue with money is not money itself (a very particular and unfair form of rationing cards) but how we, politically (i.e. socially), organize the economy. Under capitalism and some "proto-capitalist" agro-feudal formats, money (state-issued tokens or sometimes more disorganized forms of commodity-money, like cattle or gold) is central, but for 99% of Human evolutionary history money did not exist at all, because communities were far too simple and communist for such kind of organization and a sharing or sometimes gift economy was the only thing.
Money only arose as private property did, with warlord-landlords and herder patriarchs. And it does not come from barter or only very limitedly so. All those theorists of the 19th century and before, simply had not enough information on Paleohistory to judge, so they did through their capitalist and classic history glasses, what gave them a quite imperfect and typically wrong vision of Human Paleohistory or just History (most of which is unwritten) and therefore of the why behind money and Capitalism.
Marx was pretty close in many aspects. He was no doubt a genius. But he was limited by the epoch he lived in and his personality (including his own bourgeois background). At that time ideas like "production" dominated over more scientifically sound ideas like "transformation", ideas like society and progress dominated over ecology and sustainability, ideas like gold and money over matter and energy.
I don't mean to imply that ideas rule in an idealistic manner, not at all, but that they reflected, including Marx' the material underlying conditions to a large extent. So even people as radical and brilliant as Marx were trapped in conceptual dead-ends some times because the objective conditions had not yet evolved to be like ours: when the very survivability of Humankind (and much of the rest of life on Earth) is directly challenged in increased manner by the massive forces developed under the (bourgeois-directed but worker-produced) reality that is Capitalism.
The problem of power, of direction, arises then in an even more direct manner, because if in Marx' times it was one of exploitation and freedom, now it is also one of basic collective survival as Human species and Planet Earth (as we know it, more or less). The bourgeois direction may manage to dribble and even "win" (temporarily) the Class War on mere conflict over exploitation but it cannot at all win on the conflict over the survival of the Human species.
Why? Because the primitive forces of greed that lead them as class and individuals are incompatible with sustainability. Therefore it is more and more clear that they must be displaced as director class and that a workers' democracy (or just democracy = people's power) must be implemented instead. And it must be done urgently and by any means necessary if we as Humankind hope to survive the overwhelming challenges of the Capitalist Era.