Thursday, 3 January 2008

Labour Power v Horse Power

I am in the process of undertaking a Review of Theories of Value. In this section I am looking at the Labour Theory of Value, and asking various questions, which I am trying to answer through an iterative process of discussion with myself. Feel free to join that discussion.

Some Questions

1) Why is Labour time the measure of Value only the time worked by the human, rather than the time worked by say a horse, or following that a machine?

2) What is the function in answering this of the part played in exchange? That is a free human takes part in exchange i.e. it is a SOCIAL relationship. A horse does not it acts merely as a means of production as does a machine. The horse is simply employed and receives means of subsistence.

3) But what then of the slave? The slave does not take part in exchange, but in effect plays no different role than the horse being merely provided with means of subsistence! Does this mean that slave labour does not count in determining exchange value, that it can like the horse or machine only transfer its own production cost (value in labour time) to the commodity?

4) If so then what about surplus value? Does a slave not produce surplus value for the slave-owner? In a slave mode of production this can be overcome because what the slave produces is a surplus product not a surplus value. However, what about the slave in a commodity based economy? Did the slaves in the US South not produce surplus value in the cotton??

5) The slave like the worker is able to work longer during the day than is required to produce their own means of subsistence. Whether the surplus produced over this minimum is described as a surplus product or a surplus value surely depends on the mode of production within which it is produced. But by the same token a horse is able to work longer during the day – during which time it is producing an output (say energy by turning a turbine) whose value may be greater than the value of the horse’s subsistence. So surely this is a surplus product too. But can’t the same be said for a machine? It has a cost of production and costs for maintenance, but it too can continue producing – indeed more so than a human – values that exceed this cost! The question here though is how is this value of output determined???

6) The horse and the machine are set in motion by human labour. They are an adjunct of that labour. A dangerous argument surely. The worker is set in motion by the entrepreneur on that basis value added is added by the entrepreneur whose productivity is increased by the use of labour-power. On that basis the entrepreneur is put in the place of the worker, and the worker in the place of the machine!!!

7) What would be the situation if there were more than one sentient species? Suppose Neanderthals or aliens walked, worked and traded amongst us. Would human labour power STILL only be the source of new value, and human labour-time the only measure of exchange-value??? How does the widely different ability of such species affect the determination of Vale if the labour of all is counted, via the averaging out of all labour-time? What about the rise of sentient machines?
Some answers and some further questions.

Part of the answer is given above – that is the calculation of exchange values requires participation in the process of calculation, requires participation in exchange, therefore. See: here

This means that only free participants in exchange, and therefore in the process of calculation can assess exchange values, and therefore it is only their Labour time that can be a measure of value. If I capture a horse to use for powering a mill to grind wheat I only take into consideration the labour time needed to capture the horse, sustain the horse, not the time the horse actually spends grinding. The same is true if instead of a horse I capture a slave. Marx says in the Grundrisse:

“IN production based on slavery, as well as in patriarchal agriculture…..the slave does not come into consideration as engaged in exchange at all.” (419)

and “in the relations of slavery and serfdom….The slave stands in no relation whatsoever to the objective conditions of his labour; rather, labour itself, both in the form of the slave and in that of the serf, is classified as an inorganic condition of production along with other natural beings, such as cattle, as an accessory of the earth.” (p489)

So the condition set out by Marx for determining exchange value appears to be that the economic agents participating in exchange must base their calculation of how much of one commodity to exchange for another based upon THEIR OWN expenditure of labour. This is the basis of Value as opposed to Exchange Value. It is the generalisation of this calculation within the context of SOCIAL Labour which produces Exchange Value. That is the calculation becomes not how much labour would I have to expend to obtain this commodity, but how much would other similar owners of commodities, who participate in exchange freely, have to expend in order to produce this or that commodity. If a society is one which has generalised commodity exchange, yet retains labour in the form only or mostly of slave labour – which Marx explains would be contrary to the way capitalism functions - then the labour time of this slave labour cannot be treated any different than the labour of an animal or a machine i.e. it can only pass on its value, and not create new value, not produce surplus value. In that case we have the peculiar situation in which the Exchange Value of the product of the slave is determined under such conditions only by the labour-time of the slave owner in procuring and maintaining the slave, and only the labour-time of the slave owner (or other free participants in exchange such as slave supervisors) then counts as living labour, and therefore productive of surplus value.

The slave does not participate in this process according to Marx because they are neither free to make the necessary calculation of how much Labour Power to exchange for a given quantity of means of subsistence, and also – and in this case amounts effectively to the same thing – not the owner of a commodity which they bring to market to be measured against other commodities.

How then to deal with the question of valuing the product of slaves in the US South? Presumably, if all producers use slave labour then only the labour-time used in procuring and maintaining the slave can enter the Exchange Value of the product. No Surplus Value is created by the slave, only the labour-power of the slave owner and his free workers create new and Surplus Value. The consequence must be that the Exchange Value of the product, and the quantity of Surplus Value produced must be considerably reduced. This appears a valid conclusion, because according to Marx the slave is no different here to the animal or machine used in production, and we would expect the exchange values of products produced by machines to fall compared to those produced by free manual labour. But the Southern slave owners sold their cotton on a world market where the exchange Value is determined not by this slave labour, but by the labour of free workers. The same is true for the capitalist that employs a machine. The exchange Value of his product is determined not by his particular production, but production in general. If the machine means that the Value of his particular output is lower than the Exchange Value of his output then he obtains a competitive advantage is able to capture a larger market share or make a bigger profit. If the employment of a slave allows the same advantage then the slave owner benefits in the same way as the machine owner.

It is only the existence of this large liquid market where Exchange Values are determined by the labour-time of free workers that allows this calculation to be undertaken. Yet there seems logically something wrong here.

Marx would accept that in slave society the slave produces a surplus product. The slave consumes a certain quantity of the product of society, but through his labour produces a greater quantity of products. To consider the situation otherwise has to be to consider the slave merely as a tool, to put the social surplus down entirely to the slave owners use of the slave as a tool. But this social surplus is a surplus of USE Values, and the slave’s labour is certainly productive of USE Values just as is Nature itself. See Marx’s Critique of the Gotha Programme where he chastises Lassalle for the argument that only Labour creates Value. This surplus produced by the slave cannot be considered, however, a Surplus Value for the simple reason that in a slave society there is no general commodity exchange. If products are exchanged it is only of the surplus, and exchange is generally conducted not within society, but between societies. No real calculation of exchange Values takes place, and therefore no Surplus Value can be produced, because Surplus Value is specific to capitalist production.

Yet to some extent this appears a semantic difference. In both slave society and capitalist society – indeed in all civilised society – a social surplus is produced. In each type of society the means by which this social surplus is produced is different, and the differences create the specific dynamics of each type of society, the classes on which arise out of the different forms of property that develop etc. Capitalist society differs from all previous forms of society precisely because the social surplus takes the form of Surplus (Exchange)Value not Surplus USE Values, the ultimate expression of which is the accumulation of Capital as objectified Surplus Value. Yet as Marx outlines the source of the Social Surplus is effectively the same in each type of Society. Society produces more than it consumes output exceeds what has to be used to simply replenish what has been used up in production. But in all class society the real act of production is always at least in its vast majority the production undertaken by the exploited class. The social surplus arises because this class or classes produce more than they consume. In the case of the worker s/he is paid a wage (the exchange Value of their Labour-Power) which ensures his/her reproduction through the transformation of this exchange Value into Use-Values, but is less than the Exchange Value of the output (Use-Values) of their Labour, and hence produces a social surplus in the form of Surplus (Exchange) Value, whereas the slave similarly receives use values as means of subsistence to ensure their reproduction, and produces a greater volume of use-values as a consequence of their labour thereby creating a social surplus of Use-Values. In both instances one set of Use Values is negated in the act of production, and the process is completed via the negation of this negation in the resultant use values which form the beginning of the new cycle. The difference being that under capitalist production the process is mediated by Exchange Value, which inserts itself into what was previously a process of direct transformation.

It is, of course, entirely conceivable that a wage worker might receive in Use Value no greater share of society’s output than does a slave, indeed no greater absolute amount. At the beginning of the 19th century when the working class was created in Britain as a result of the driving off the land of the peasants through the general Enclosure Act of 1801 the condition of these workers was certainly much lower than had been the condition of workers, peasants and serfs in the previous 500 years, manifest in the halving of their life expectancy. Yet the development of production meant that 50 years later living standards for workers had almost recovered to previous levels – though they were now working twice as many hours per day, at far greater intensity, and in far worse conditions to achieve it. Subsequent increases in production, together with the organisation of workers have seen a further rise in living standards.

But two questions then arise. If the worker like the slave receives means of subsistence, and by their labour produces a greater output in what real sense can the one be described as unproductive (of surplus value), and yet the other productive of surplus value – apart from the terminological difference that one produces a surplus of use values, and the other a surplus of Exchange Values. Secondly, if the requirement for labour-time to count towards the calculation of Exchange Value is that those undertaking the calculation are owners of commodities free to exchange them in a liquid market then how does this really apply to wage workers. The definition of the working class as a slave class derives precisely from the fact that it can only sell its labour-power to a monopsonist buyer – the capitalist class – and under conditions, thereby in which it provides some of its commodity for free! If there were as many buyers of labour-power as there are sellers, or alternatively to say the same thing if each worker owned the means of production and bought their own Labour-Power then this monopoly power over Labour could not exist. In Capital Marx relates that even up to the last third of the 18th century - i.e. even after the Industrial revolution had begun – capitalists could not make substantial if any profits out of workers for the simple reason that their was such a shortage of Labour-Power due to the fact that the majority of people were still peasants, and even landless labourers were able to make a living from the Common Land.

Yet whereas according to Marx the Labour-time of the slave does not enter the calculation of Exchange Value it is precisely the labour-time of the wage-slave that is determinant of Exchange Values.
Slave Labour and Wage Labour

If we take two firms.

A has £100 in machinery and materials, plus a wage worker.

B has £100 in machinery and materials plus a slave.

Both the slave and wage worker receive the same use-values for subsistence, and work the same number of hours, and intensity, producing the same use-values.

The worker in A, and the slave owner B both have to by the use-values for means of subsistence in a large liquid market, therefore, both have to pay the same exchange Value for them. However, in order to buy these USE-Values the wage worker has to sell his Labour Power to A, and forms A’s variable as opposed to Constant Capital. It not only reproduces this exchange Value, but produces a Surplus Value in addition, contained in a certain quantity of use-values.

We have say:

For A
C (Machines and materials) £100, plus V = £100, and S = £100 – Total Exchange Value = £300.

For B
C(Machines, material and slave) = £200, V = 0, S = 0. Total exchange Value = £200.

This £200 forms the particular Value of B’s output. However, as exchange Values are determined by the market then if we take A as representative of producers of these Use-Values then the market Value of each will be £300. B will make £100 profit the same as A. How? If B were to sell his product at its particular value then the purchases would obtain these goods at £100 less than the market price, an additional £100 profit would be thrown into the pool of profit for distribution. But every sphere of capitalist enterprise shares out the profit in accordance with the proportion of total capital which they form, this is how the rate of profit is averaged. If the rate of profit is low in one sphere Capital moves to another where the rate is higher, and vice versa. Supply falls in one and rises in another. Prices and profits move accordingly. Capitalist B employs the same quantity of Capital as A, and will demand the same share of the loot.

Capitalist B appropriates Surplus Value of £100 not as a result of surplus value created by the slave, but as a consequence of his ownership of Capital, and the right this gives them to a share of the total Surplus Value created by society.

Is there a contradiction here? No. All capitalists obtain their right to a share of total surplus value from their ownership of Capital. This merely tells us something about the sphere of Distribution. It tells us nothing about the source of Surplus Value which resides in Production.

There are consequences, though, for new class theories, resulting from this, where they posit on the one-hand Capital, and on the other Labour as effectively “slave” labour in the USSR. Marx is clear “Capital” cannot exist in situations where production is undertaken solely or mostly by slave labour, precisely because such slave labour can convey only its own value to the commodity, and NOT Surplus value. Such a society can only produce a surplus of Use-Values, not exchange Values. As Capital is objectified Surplus Value, and Surplus Value is a surplus of Exchange Value the social relationship cannot be Capitalistic. If, for example, it is assumed that a State Capitalism exists but employing workers not as wage workers, but as slaves, and if we want to posit the accumulation of capital as objectified Surplus Value, we then have to enquire as to the source of this Surplus Value if it can no longer be considered to be the slave worker who like the machine or animal only transfers their own exchange Value to the product. We arrive at the surprising conclusion that this surplus value could only derive from the labour of the State Capitalist slave owner, the productivity of whom is enhanced by the setting in motion of the machinery, animals and slaves!!!!! As with our previous example the surplus value could stem from the world market, but for that to be the case we would have to demonstrate that all commodities within the economy circulated at world as opposed to domestic prices etc.

The reality is as Marx demonstrates Exchange Value can ONLY assume its complete form with the establishment of free wage workers, precisely because every other market participant can always acquire goods at a cost lower than the actual amount of labour-time used in their production. If the market is only THESE participants then the relevant calculation is not the amount of time that some human spends working to produce them, but the time/cost that they have to expend to acquire them. It is only free wage workers who having no-one beneath them to exploit have to pay the Exchange Value as actual labour-time expended, who can force the calculation to be on this basis – which also requires that wage workers form the bulk of consumers. Engels makes a similar comparison in one of his Prefaces to Capital where in response to the idea that Profit is merely an addition to costs, he argues that this amounts to the same as Marx’s theory of Surplus value, PROVIDED THAT it is understood that the only Market participant that cannot put such an uplift on the commodity they sell is the worker. The last thing that any new class theorist wants to admit is that workers in any way participated in the calculation of exchange values/prices.

If A and B are slave owners then in determining values they are only concerned at the Labour time THEY must expend. That means they are only concerned with the cost(labour-time) required to acquire the given materials, and a given amount of work. The fact that the slave doing the work might spend all day working is of no more concern to the slave owner in making this calculation than were it an animal or machine doing the work. If all labour is slave labour there can be no Surplus Value because the exchange Value of all output is equal to the value of the inputs. This does not mean there is no social surplus, but this is a surplus of use values not exchange values.

The key to the problem lies with the wage workers. The slave does not come to market as a participant – merely as a commodity to be bought and sold – the wage worker does. The slave owner and the capitalist both ask, “how much labour-time must I give up for this commodity. For both the answer is enough to buy the Use values required for production. Were capitalists the only commodity owners that come to market then again no surplus value could be created because they would compete it away, reducing prices down just to cost, because they would value the things they buy in the same way i.e. what would it cost me to acquire this? I.e. just its cost of production, and that cost is always LESS than the actual Labour-time precisely because the worker gives some of his labour time for free.

Unlike slave production, however, the owners of finished products are not the only buyers and sellers, NOT the only ones participating in this evaluation of labour-time and values. The worker has to buy commodities in order to live – whereas the slave is provided with them. If the worker owns his means of production he can undertake this calculation. What he brings to market is the product of his labour, and exchanges this on equal terms with other commodities brought there by the capitalists. They can evaluate a certain commodity they wish to buy in terms of the labour-time required for its production, and exchange it for some commodity they have produced which requires the same amount of labour-time. Say a worker produces by such means some commodity that requires 10 hours work. The capitalist might acquire this product for say 5 hours work, because they are able to buy the labour-power of a worker for this amount, and then obtain 10 hours work from the worker – 5 hours replace the cost of his wages, and 5 create a surplus value for the capitalist. Yet this capitalistically produced item would exchange on equal terms with the item produced by the worker using their own means of production. This is why peasants and artisans were not originally keen to give up their own means of production. It is why early settlers in America and Australia quickly saved money to buy land so that they could transform themselves back from wage-workers to peasants, and why the freed slaves in the Caribbean mentioned by Marx did the same.

But it is the time required by the worker to acquire these means of subsistence which then determines their Exchange Value on the market, not the cost to the Capitalist. Surplus Value arises precisely because the worker can only acquire commodities at their full cost, whereas the capitalist can acquire them at a cost lower than this.

However, this raises further questions. Is the calculation of Exchange Value only partial because the calculation is done BOTH by capitalists and workers? Marx makes clear the importance of the fact that workers form the majority of consumers i.e. for that process of calculation. But:

1) What consequence does this have for commodities NOT bought by workers – luxury goods, Capital goods

2) What level does workers consumption have to fall to until it is qualitatively not decisive in the calculation of exchange Value i.e. that Exchange is predominantly between Capitalists

3) What consequence for this is the growing Organic Composition of Capital i.e. that Constant Capital and the purchase and replacement of it dominates the purchase of Variable Capital, and the purchase of Wage Goods.

See also Why Animals and Machines Do Not Create Surplus Value

No comments: