Date: Wed, 29 Nov 1995 09:51:40 -0800 From: James Miller <jamiller-AT-igc.apc.org> Subject: law of value ERNST AND THE LAW OF VALUE I appreciate John's effort to get back to me and defend his interpretation of Marx's law of value. In his latest post John quoted from _Capital_, Vol. I, Chap. 12, on the effect of the changing productivity of labor on the value of the product. To summarize briefly, Marx argued that when the productiveness of labor doubles, and nothing else changes in the conditions of production, the new value added per hour by a given number of workers is the same as before, only this value is now spread over twice as many products. So that, as far as the new value is concerned, each product of labor has one-half of the former amount. In the example quoted from Chap. 12, the new value added per unit of product was reduced from 6p. to 3p. when productivity doubled. Given that not all firms within a sphere of industry can introduce the labor-saving technology at the same time, the capitalist who innovates first will be able to undersell his competitors, because the individual value of his products will be lower than the social average product value, which is determined by the productive technology which still prevails within the sphere. For the innovator within a sphere, it is possible to sell products below their social value, yet above their individual value, and make more profit than the average prevailing in the sphere. Initial condition: 6 c + 3 v + 3 s = 12 product value Following innovation: 6 c + 1.5 v + 1.5 s = 9 product value However, twice as many products per day are produced Initial condition: 12 products per day at 12 value each = 144 daily value (social value) Following innovation: 24 products per day at 9 value each = 216 daily value (individual value) The innovating capitalist pays the same daily wages as the others, but the wage per product is only half as much as for the others. Thus the innovating capitalist may sell the product for any amount above the individual value but below the social value. Let us say he sells for 10 per product, when the individual value is 9 and the social value is 12. In this case the daily output of 24 products will sell for 10 each, for a daily total of 240. In the case of the innovating capitalist selling the product for 10, while the social value is still 12, he will make a superprofit. While the other capitalists are still making 12 products per day at 3 profit per product, their daily surplus value is 36. The innovator, selling 24 products per day at 10 each still has to pay 1.5 wages per product, plus 6 constant value, so is able to reap a profit of 2.5 each on the products, for a daily total of 60 in surplus value. Of course, if he sold at the individual value of 9, he would only reap 24 X 1.5 s = 36 surplus value per day, the same as the other capitalists. But why would he sell at 9 and gain no superprofit? True, he would undersell the other capitalists much more drastically, but he wouldn't be able to profit by it. On the other hand, he could sell at 12 and make an even bigger superprofit, but would not be able to undersell his competitors, and would not gain market share. So he sells at 10 or 11. If he sold at 11, his daily surplus value would be 11 - 6 c - 1.5 v = 3.5 profit each X 24 products = 84 daily surplus value. To summarize the basic points: 1. New technology is labor-saving, i.e. it means that more products can be produced with a given amount of labor time. 2. When new technology is introduced, the individual products have less labor time represented in them than formerly, so that they have a lower value per product than formerly. 3. The social value of products within a sphere is determined by the prevailing level of the productivity of labor within that sphere. 4. When one capitalist within a sphere innovates, and improves labor productivity, the individual value of the product made in his factory will be lower than the prevailing social value in the sphere. 5. The innovating capitalist can sell his products at a price lower than the social value, but above the individual value, and thus reap a superprofit. Are you still with me John? Let me know. Jim Miller Seattle --- from list marxism-AT-lists.village.virginia.edu --- ------------------
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