From: "jurriaan bendien" <Jbendien-AT-globalxs.nl>
Subject: Re: M-TH: value
Date: Fri, 28 Nov 1997 16:29:33 +0100


 Justin Schwartz  writes
> >
> >I think the LTV requires two theses... 

> >       Labor is the source of all value.
> >
> >In addition there is also the proposition that:
> >
> >       Socially necessary labor time is the measure of all value.
> 
> However in his "critique of the Gotha programme" Marx explicitly
dissociates
himself from the view that labour "is the source of all value".  Anyway
Marx
is not talking about "all value" but only the value of goods and services
produced for sale in the market.  Furthermore Marx argues the law of value
is that "the value of goods and services is determined by the average
labour time socially necessary to produce them".  He is not seeking, like
Ricardo does, for a universal measure of value (econometric yardstick) -
this is explained in I. I. Rubin, Essays on Marx's Theory of Value (Publ. 
Black & Red); I. I. Rubin, A History of Economic Thought (Publ. Ink Links);
and in e.g. J. Witt-Hansen, Historical Materialism: The Method, the
Theories), and by Geoff Pilling in various books, e.g. Philosophy and
Political Economy. 
	Ricardo really wants to say that the value of a commodity is the labour
expended on its production which is "contained" in it.  He gets into a
problem however explaining where the surplus value (profits) comes from. 
Marx, although assuming that Ricardian premise in some contexts for the
sake of discussion, shows quite clearly furtheron that this is a primitive
view that cannot be sustained. The Smithian and Ricardian model is actually
based on petty (or simple) commodity production.  
	Apart from that, Marx's object of explanation is actually very different
from Ricardo and Smith.  Marx does not assume the "hidden hand of the
market" (the law of value) he tries to explain how it asserts itself, what
"mechanisms" are involved. So Marx asks questions like, how can labour
effort and social need be balanced out, in a society based on a universal
market ?  What sort of  relations must exist between people that allow
value to express labour time ?
	He is trying to explain capitalism as an historically emergent social
organism with its own laws of motion, based on class exploitation, and
prone to crises which are system-immanent, in the sense of growing out of
its inner contradictions.  When Marx uses the language of "contradictions"
he is only really saying that capitalism is a dynamic and not a static
system, it keeps "falling from one state into another state" or
"moving/swinging from one state into another state", according to different
forces pulling or pushing in a different direction. Nevertheless capitalism
has a definite developmental dynamic, developmental tendencies or path.  E.
Mandel explains this quite clearly in one of his articles, in the New
Palgrave Dictionary of Economics.
	Marx points out the valuation of average socially necessary labour time,
expressed through exchange-value and price, is only established through
sale in the market "a posteriori", that is, after the goods have been
produced, the values can only at most be anticipated or estimated in
advance.  (It is the same way with profits, hence for example the term
"profit expectations").  So Marx then studies the relationship between
output and social need, in order to understand the dynamics whereby they
are adjusted to each other. He says production costs set a basic value
(production price) but this value is modified by a whole number of
conditions, including by relative productivity within and between sectors,
and by demand conditions.
  	So it turns out that actually the concept of "average socially necessary
labourtime" is quite a complex one and not so straightforward, as is shown
in commentaries by writers such as I. Rubin, R. Rosdolsky, E. Mandel, M.
Itoh, K. Uno and P. Giussani.  Marx actually rejects Say's Law of Markets,
according to which supply will always generate its own demand, so that the
market is cleared automatically (a good commentary on this is in E. Mandel,
Marxist Economic Theory).
	Among other things, if an output is produced, but it remains unsold, value
has been produced by labour, but the labour itself is wasted, it is in
excess of the socially necessary labour time. 
	A lot of Marxists admittedly get stuck with the concept of "average
socially necessary labour time" at the Capital Volume 3 level probably
because (1) the subjectmatter is complex, (2) Marx's discussion isn't
always very adequate and he did not finish it for publication, (3) they do
not clearly see the dynamics of capitalist production Marx is trying to
reveal (Carchedi & Freeman, Marx & Non-equilibrium Economics say some quite
good things about this topic).  

Jurriaan.


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