Date: Sun, 14 May 95 09:44:46 BST
From: Chris Burford <cburford-AT-gn.apc.org>
Subject: Value - Steve's paper: Part 2


Part 2, Comments on "A Marx for Post Keynesians"

Steve Keen appears to be concerned about
what he sees as the theoretical inadequacy of Marx in addressing two 
requirements of an economic theory of capitalism - an explanation of the 
tremendous creative power of capitalism and an explanation of the formation
of prices.

I accept that any current economic theory will be at a disadvantage 
if it does not appear to address these questions. But I would say they
are addressed by Marx, and Steve's problem is not with Marx but with 
the Sunday School way of reading Marx. I accept that crash courses in 
Marx do not exactly emphasise the great benefits in labour productivity
that capitalism has brought, with an abundance of use-values beyond the 
imagination of Adam Smith.

In the Marxian model the creative use of capital with technical 
innovations is handled with the concept of *excess surplus value* or 
super-profits, which are in the model, a form of *relative surplus
value* 

Part IV of Volume 1 of Capital is "Production of Relative Surplus Vaue".
I grant the presentation focusses on the question of the 
proportion of the day in which the labourer is reproducing the value of
his/her labour power, and the portion available as surplus value. However 
by the fourth paragraph Marx writes:

>>>
Hitherto in treating of surplus-value, arising from a simple prolongation
of the working-day, we have assumed the mode of production to be given
and invariable. But when surplus-value has to be produced by the 
conversion of necessary labour into surplus-labour, it by no means
suffices for capital to take over the labour-process in the form under
which it has been historically handed down, and then simply to prolong
the duration of that process. The technical and social conditions of the 
process, and consequently the very mode of production must be 
revolutionised, before the productiveness of labour can be increased. 
By that means alone can the value of labour-power be made to sink, and
the portion of the working-day necessary for the reproduction of that 
value, be shortened.<<<

It is at this point that Marx immediately goes on to give his definitions
of absolute and surplus value, so it is quite clear that he intends to
cover the creative power of technical innovation. 

In the later section of the same part on Relative Surplus Value, highly 
relevant to Steve's claim that Marx overlooked the role of machinery in 
adding value to the commodity *in a way that also could contribute to 
surplus value*, 
entitled "The Value Transferred by Machinery to the Product", 
Marx writes in the first para:

>>>
it is clear at the first glance that, by incorporating both stupendous
physical forces, and the natural sciences, with the process of production,
Modern Industry raises the productiveness of labour to an extraordinary
degree<<<

                  But

>>>
Machinery, like every other component of constant capital, creates no new
value, but yields up its own value to the product that it serves to beget.
In so far as the machine has value, and, in consequence, parts with value
to the product, it forms an element in the value of that product.
<<<

Although Steve thinks Marx should have said that machinery creates
additional value, available as surplus value, and although he thinks that
certain Marxist axioms, which he calls the "commodity axioms" could be 
consistent with this, it is absolutely explicit that Marx does not in his
model deal with the matter in the way Steve thinks he should. There is 
no point in arguing about this or implying there are logical flaws here in 
Marx, it is not part of his model. Steve is entitled to make it part of 
his.

The contribution of technical innovation to surplus value and profits in 
the Marxian model is dealt with differently. It is understood that 
as long as the technical innovations introduced by the capitalist remain
unknown to other enterprises of the same field, he receives 
superprofits, excess surplus value. The commodities cost the capitalist
less whereas he can sell them at the same price as before or only slightly
under this price.

The individual enterprise usually keeps such an advantage for only a 
very short time. Other enterprises also introduce technical improvements.
Since the value of commodities is determined by the average socially
necessary labour contained in them, the general introduction of technical
improvements leads to a fall in the value of the commodity, and thus the 
individual enterprise is deprived of its advantage. 

While undoubtedly this leads to an increase in the abundance of use-values
available to the society, unless the workers are strong enough to get a 
share in the increased use-values (which is a question of the 
endless tug of war over the division of the working day), the actual labour
content of the commodities required to reproduce that labour power *at the 
previous prevailing conditions of subsistence* falls as a proportion of 
the total available commodity producing mass of labour power of the 
society, increasing the proportion of the total commodity producing labour 
time of the society going to surplus value. 

It is in this sense, in 
the Marxian model that the rate of exploitation may rise, while the 
technical and cultural level, and the amount of use-values and wealth
of the society may have visibly risen. If of course the workers succeed 
through economic or social struggle in increasing the expectations about
their level of subistence so that they fully share pro-rata in the 
increased productivity of the collective economy, then there is no 
increase in the rate of exploitation. As this is all done against a
background of shifting exchange value of money, not only through inflation,
but through fluctuations produced by technical change filtering through 
the economy at different rates, it is very complicated. The devil is in 
the detail, but the way the creative role of technical change and 
entrepreurial skill in harnessing that technical change is dealt with 
in the Marxian model is IMO as I have stated.

Although Steve's approach shines a creative spotlight on the variety of
contradictions handled in Marx's analysis of capital, I see no reason to 
support Steve's claim that there is a logical inconsistency between
one set of axioms in Marx and another set.

As this post is already long, I will leave a third to deal with the other
error I think Steve makes in his description of the Marxian model and 
it is a very fundamental one, because it is about price formation.


Cheers,

Chris Burford.



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