Date: Tue, 02 Aug 94 10:44 CDT
From: Andy Daitsman <ADAITS-AT-macc.wisc.edu>
Subject: LTV debate


Chris writes:
 
>     I appreciate Paul's passion with regard to this subject,
>but I hesitate to continue this thread much longer, for fear
>of boring the rest of the participants who have "heard that
>song before."  Perhaps we should just agree to disagree.  As
>for the calculation debate.... <smile>....
 
Speaking for myself, as the one whose fairly innocent observations about the LTV
may have sparked this little debate, well I'm not bored in the slightest.  As
far as I'm concerned, this has been the most instructive interchange I've
witnessed since I stopped taking classes and started giving them.  :-)
 
I do, however, want to jump back into it, now that the experts seem to be
reaching an impasse...
 
Chris writes:
 
>     It is not enough for Paul to claim that good practices
>exist objectively.  Of course they do.  But there is a real
>question with regard to how one MEASURES such `good'
>practices.  It is also not enough to claim that Marx
>relegates to the competitive process the determination of
>that which is "socially necessary."  What is at issue here,
>is not MERELY the assertion that a process determines the
>"socially necessary."  What is at issue is the assertion that
>a process determines SPECIFIC prices that are proportional to
>SPECIFIC values, which derive from a SPECIFIC notion of what
>is "socially necessary."
 
To which Paul responded:
 
>What we start out with are input output tables with statistics
>for the amount of labour used in different industries during
>the course of the year. The question is, how do we know if this
>labour should count as socially necessary, since we have no
>independent measure of what is socially necessary. The logical
>structure of the test that we perform is as follows:
>
>1) If the actuall distribution of labour between branches of
>   production approximates to a socially necessary distribution.
>AND
>2) The labour theory of value is correct
>THEN
>3) There should be a close correlation between observed prices and
>   computed labour contents
>
>This hypothesis has now been tested for the US, UK, Italy and Jugoslavia,
>and in all cases the predicted close correlation has been observed.
>Note that since the condition being tested is a conjunction, a
>failure of either of its parts would have led to a different result.
>We can thus conclude that both the labour theory of value is valid
>and that actual distributions of labour, are, through competition
>brought into alignment with socially necessary distributions.
 
By this point in the debate, it is becoming absolutely clear that Paul and Chris
are talking about distinctly different things.  Chris wants a theory of value
that can be used to *predict* prices.  The Austrians have supplied him with
this, quite effectively if the Nobel prize committee knows their stuff.  (Hayek,
the most prominent of the Austrians, has won the Nobel prize for economics,
precisely because of his work on prices.)  Paul, on the other hand, wants to
show the validity of the LTV, because as he points out in a part of the post I
already erased the entire Marxist critique of capitalism would collapse without
it.  Rather than predicting prices, he seeks to show that observed prices
concretely reflect the (otherwise unknowable) "socially necessary labor" that
went into their determination.
 
Paul and his buds have done extensive calculations for various countries, and
their results have convinced them that there is a correlation between labor
expended in the production of commodities and the global prices of those
commodities.  If I understand him correctly, the calculations will only work
when applied at least at a national scale, because any given industry might very
well not approach the maximization of necessary labor needed to give the close
correlations that have been found in macroeconomies.
 
So where does that leave us?  Well, I think that Cockshott et al have done a
remarkable job at suturing up a gaping hole in the Marxist theory of value
(thanks to Diskin and Sandler for helping me get through this tough concept in
L&M, and thanks especially to Jonathan (if he's still reading) for the cite),
but their seam still leaves holes big enough for a Mack truck.
 
Any theory, after all, is a closed system.  That is, it explains in its own
terms the features that fit within its terms (i.e., it interiorizes certain
elements) and it explains away features that don't fit (it exteriorizes others).
This explaining away is what I'm referring to as a suture, it closes up a theory
in such a way that that which is left outside appears no longer to exist from an
internal perspective.
 
Reality, however, doesn't conform nicely to any individual theory, and external
elements don't just go away.  Instead, they keep coming back in pesky little
ways to remind us of their existence.  Kuhn called this process anomalies that
challenge the paradigm, and held that when the anomalies added up to the point
that they could no longer be explained away then the paradigm itself collapsed.
 
L&M see sutures as gateposts, signaling paths out of the closed theory.  They
seek to build off certain sutures (in particular the entire Marxian theory of
hegemony) in order to reconstruct a new progressive social theory.  Along the
way, however, they simply drop other sutures, and in particular they simply
reject the Marxist economic critique without however proposing any credible
alternatives to it (again my deepfelt thanks to Diskin and Sandler).
 
Paul, in my estimation, hasn't gotten to the point where his anomalies have
challenged his paradigm, and the orthodox Marxist critique of capitalism still
holds for him.  Chris has openly and explicitly rejected Marxism, precisely
because of its inadequate representation of the price question.  He offers
instead the Austrians, who he believes can form the basis of a new progressive
politics.
 
Personally, I tend to lean towards Chris's appreciation of the price question,
without however rejecting the validity of the work of Cockshott et al.  I mean,
there probably is a correlation between prices and labor inputs, but I'm still
not sure that correlation proves particularly useful in the attempt to explain
social reality.
 
On the other hand, I think Chris's faith in the Austrians, at least in terms of
progressive politics, might also be misplaced.  Mises and Hayek after all
openly apologized for Italian and German fascism as a necessary evil to combat
communism.  In this they followed the German conservative democrat Carl Schmitt,
who after struggling against the Nazis during Weimar joined the Nazi party in
1933 (I think he and Heidegger went down to party headquarters together...).
Hayek carried that ambivalence toward right-wing totalitarianism down to the
present.  In 1980 or 1981, he visited Pinochet's Chile and openly praised the
general's "good work" in rescuing the country from the red menace and
establishing the bases for a sound economy.
 
In sum, anyone who wants to incorporate the Austrians into a left discourse has
to come to grips with their real historical political practice.  Otherwise, I'll
keep looking for other ways past the LTV suture, thank you very much.
 
This went a little longer than I thought it would.  Hope you don't mind.
 
See ya,
Andy
 
 
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Andy Daitsman                      +  "Without complete freedom of the press
Department of History              +   there can be neither liberty nor
University of Wisconsin, Madison   +   progress.  But with it one can barely
adaits-AT-macc.wisc.edu               +   maintain public order."
                                   +     Domingo Sarmiento -- El Mercurio, 1841
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