Wednesday, February 27, 2013

Essays on Marx's Theory of Value

Essays on Marx's Theory of Value by Isaak Illich Rubin is one of the best books I've read on Marx's critique of capitalism. It contains a very detailed explanation of many aspects of Marx's critique of political economy.

The book is available here.


The most important aspect of this book is Rubin's reintegration of the fetishism of the commodity as underpinning Marx's entire critique of capitalism. In this way, political economy becomes
not a science of the relations of things to things, as was thought by vulgar economists, nor of the relations of people to things, as was asserted by the theory of marginal utility, but of the relations of people to people in the process of production. (Introduction)
This is not necessarily easy to understand, nor does it seem initially particularly convincing (or perhaps it appears to be uselessly obvious?) but it enabled Marx to look behind the veil of money, employment, interest and rent, work-time and industrial production; to expose these interactions as ideological constructions that we have created between each other. Our day-to-day lives are lives where we act out our roles in a capitalist society as though these relationships between commodities and people are really existing categories rather than socially constructed phantoms of our consciousness.
One can only wonder why Marx's critics did not notice this inseparable connection between his labor theory of value and his theory of the reification or fetishization of the production relations among people. They understood Marx's theory of value in a mechanical-naturalistic, not in a sociological, sense. (Chapter 8)
Since Rubin's time - he wrote these essays in the 1920s - it hasn't just been Marx's critics that didn't notice the inseparable connection, but the bulk of his biggest fans: Marxists.
Since the things come forth with a determined, fixed social form, they, in turn, begin to influence people, shaping their motivation, and inducing them to establish concrete production relations with each other. Possessing the social form of "capital," things make their owner a "capitalist" and in advance determine the concrete production relations which will be established between him and other members of society. It seems as if the social character of things determines the social character of their owners. Thus the "personification of things" is brought about. (Chapter 3)

Rubin's ability to summarise economists is superb. He does so in one paragraph:
Vulgar economists commit two kinds of errors: 1) either they assign the "economic definiteness of form" to an "objective property" of things (C., II, p. 164), i.e., they derive social phenomena directly from technical phenomena; for example, the ability of capital to yield profit, which presupposes the existence of particular social classes and production relations among them, is explained in terms of the technical functions of capital in the role of means of production; 2) or they assign "certain properties materially inherent in instruments of labor" to the social form of the instruments of labor (Ibid.), i.e., they derive technical phenomena directly from social phenomena; for example, they assign the power to increase the productivity of labor which is inherent in means of production and represents their technical function, to capital, i.e., a specific social form of production (the theory of the productivity of capital). (Chapter 3)
According to Rubin, Marx's approach is the inverse to how economists analyse the world:
Starting with the social forms as given, the Classical Economists tried to reduce complex forms to simpler forms by means of analysis in order finally to discover their material-technical basis or content. However, Marx, starting from a given condition of the material process of production, from a given level of productive forces, tried to explain the origin and character of social forms which are assumed by the material process of production. (Chapter 4)

Rubin links value with prices, in a way that all the Klimans, Bortkiewiczs, Cockshotts, and Sraffas persistently fail to do:
The basic error of the majority of Marx's critics consists of: 1) their complete failure to grasp the qualitative, sociological side of Marx's theory of value, and 2) their confining the quantitative side to the examination of exchange ratios, i.e., quantitative relations of value among things; they ignored the quantitative interrelations among the quantities of social labor distributed among the different branches of production and different enterprises, interrelations which lie at the basis of the quantitative determination of value. (Chapter 8)
The deviation of market prices from values is the mechanism by means of which the overproduction and underproduction is removed and the tendency toward the reestablishment of equilibrium among the given branches of production of the national economy is set up. (Chapter 8)
The average prices do not correspond to the actual movements of concrete market prices, but explain them. This theoretical, abstract formula of the movement of prices is, in fact, the "law of value." From this it can be seen that every objection to the theory of value which is based on the fact that concrete market prices do not coincide with theoretical "values," is nothing more than a misunderstanding. Total agreement between market price and value would mean the elimination of the unique regulator which prevents different branches of the social economy from moving in opposite directions. (Chapter 9)
This "moving in opposites directions" is the result of the uncontrolled overproduction and underproduction in the anarchic commodity economy.
In a commodity economy, no one controls the distribution of labor among the individual branches of production and the individual enterprises. No clothmaker knows how much cloth is needed by society at a given time nor how much cloth is produced at a given time in all cloth-making enterprises. The production of cloth thus either outruns the demand (overproduction) or lags behind it (underproduction). (Chapter 8)

Chapters 17 and 18 were the most challenging for me. Chapter 17 explains how supply and demand relate to value. Chapter 18 concerns the relationship between production prices and average profits, on one side, and value, on the other. This is more famously described as the transformation problem (the linked Wikipedia page needs a complete re-write, by the way.) Rubin provides no mechanistic transformation of value to production prices, but links them as layers in a general scientific theory.
The increase of productivity of labor, expressed in the labor-value of products, cannot influence the distribution of labor any other way than through its influence on the distribution of capital. Such influence on the distribution of capital is in turn possible only if changes in the productivity of labor and labor-value cause changes in costs of production or in the average rate of profit, i.e., influence the production price. (Chapter 18)
The labor theory of value is a theory of simple commodity economy, not in the sense that it explains the type of economy that preceded the capitalist economy, but in the sense that it describes only one aspect of the capitalist economy, namely production relations among commodity producers which are characteristic for every commodity economy. (Chapter 18)
This layering works in much the same way as the theory of the cell gives way to organs, systems and organisms in biology. Perhaps a better analogy is the distinction between the matter of the brain and the formation of human consciousness. We know that human consciousness stems from chemical and electrical impulses in the brain, but we'll probably always be clueless as to how that manifests as what we experience as consciousness. In a similar sort of way, there is no mechanical transformation of value into price. However, we know the sociological truth that workers have nothing to sell but their labour-power. Workers are employed in a system that is so productive that they can easily out-produce what they need to survive, as workers, from day-to-day. This excess produce is captured and shared (between those that own everything) via an intellectually sophisticated and enforced social relationship, money. The only thing different between this - capitalism - and slavery or serfdom is that the excess produce isn't completely consumed by those that own everything, but used to expand this way of life.

NB This is not to suggest that the value-price relationship suffers from the same issue as the brain-mind relationship, an explanatory gap. The relationship between value and price is fully explained. It's merely that the relationship cannot be fully explained solely in economic or mathematical terms.


Rubin's life in soviet Russia appears to have been especially traumatic. From his Wikipedia page:
Rubin was arrested on December 23, 1930, and accused of being a member of the All-Union Bureau of Mensheviks, a fictitious secret organisation. [...] On January 28, 1931, Rubin was brought to another cell, where he was shown another prisoner and told that if he did not confess, the prisoner would be shot. Rubin refused and the prisoner was executed before him. The process was repeated the next night. After the second shooting, Rubin negotiated a "confession" with his interrogators, who insisted that he implicate his mentor David Riazanov as a member of a secret Menshevik conspiracy.
Rubin served most of his prison term in solitary confinement, during which he continued his research as best he could. When he fell ill with a suspected cancer, he was removed to a hospital and encouraged to make further confessions in return for favourable treatment, but declined the offer. He was released on a commuted sentence in 1934 and allowed to work in Aktyubinsk, Kazakhstan, as an economic planner. Rubin was arrested once more during the Great Purge in 1937. After this arrest he was never seen alive again.

Thursday, February 21, 2013

Old Age Marxism

The following is a response to Paul Cockshott's review of Michael Heinrich's Introduction to the Three Volumes of Karl Marx’s Capital, New Age Marxism. Read Cockshott's review first.


Cockshott begins his review by criticising Marx's and Heinrich's biological metaphor:
The anatomy of man is a key to the anatomy of the ape. On the other hand, indications of higher forms in the lower species of animals can only be understood when the higher forms themselves are already known
I'd agree with Cockshott that to suggest humans are better than other apes is ridiculous. There are no higher and lower forms of life, just ones that are successful (extant) and unsuccessful (extinct). However, other than using sloppy language, I'm not sure that Heinrich and Marx are saying anything controversial. If one replaced "lower" with "less complex" and "higher" with "more complex," there wouldn't be an issue. They're not actually suggesting that humans are better than other apes and they're not even really talking about evolutionary biology.

Value Theory

It's when discussing value theory that Cockshott goes awry:
The establishment of capitalist industry went hand in hand with the development of artificial sources of power: coal then oil. We also all know that in today’s world the owners of oilfields are fabulously wealthy, so might energy not be the source of value?
There are a couple of problems with this:
  1. It appears as if Cockshott is suggesting that value only came into being at the beginning of capitalism. But value relates to commodity exchange, not capitalism as such. There were commodities before capitalism and therefore there was value before capitalism. Since coal and oil use, at least in any generalised form, came after commodities, how could they be the source of value?!
  2. Cockshott makes a logical jump from oil/coal to energy. Oil/coal is not the same thing as energy. There have been lots of different sources of energy throughout human history with vastly different uses. E.g., burning wood for heat and food; burning candles for light; oil/coal for industrial production. Can one really jump through wood-candles-coal-oil to energy, from there to a value theory, without any theoretical complications?
Cockshott's argument is that the labour theory of value is lacking, so we must look to what science does.
If one adopts the normal method of science, the answer is simple. You see what price structure would be predicted by the labour theory of value, what price structure would be predicted by the energy theory of value, and see which theory gives the better predictions. Such tests have been done, and they show that actual prices correspond much more closely to what the labour theory of value predicts than to what the energy theory predicts. But as we will see in the next section Heinrich’s approach prohibits this sort of scientific test.
Does science really work like this? It's true that empirical measurements are essential to science, but it's at least misleading, probably downright wrong to apply empirical results to a poor theory. For a scientific theory to be accepted, it needs to make coherent, logical arguments in a purely abstract form that then fits fairly well with reality. If the theory is faulty, the evidence is irrelevant.

As an example, I could propose f = mac (force = mass * acceleration * crap). Most of the time c is 1, but occasionally I decide that it's 1.5 or .5 for masses that I have a peculiar distaste. Now, it could be, with God's favour, that the world really does agree with my formula, f = mac. Or it could be the case that we never come across masses that I don't like (e.g., invisible pink elephants). (My formula would be essentially f = ma.) Neither of these possibilities have anything to do with the fact that this formula is logically inconsistent with other physical laws.

My point: you have to sort out your theory, regardless of the evidence! Cockshott suggests you can "go through the passage from Marx above and wherever there is a reference to labour substitute energy or power and the essence of the argument would be unchanged." If that were true, Marx's labour theory of value would be wrong. It would not be theoretically sufficient. It would need to be revised or abandoned.

I do not agree for a moment that you can substitute terms in Marx's theory. For a start, Cockshott missed a crucial section, the fetish of the commodity. This grounds Marx's value theory as part of the social consciousness of humanity. The commodity, abstract labour, value-form, etc. is a psychological trick.

Abstract Labour

Cockshott truly breaks with my reading of Marx in the notion of abstract labour:
So abstract labour is the abstract expenditure of human physiological effort and society has only a certain amount of this effort available to it which can be expended in different concrete forms.

This concept is indeed ‘naturalistic’ and ‘a-historical’. It is naturalistic in that it depends on our adaptability as a species, our ability to turn our hand to any task. It is a-historical in that any society with a division of labour has abstract labour.
Marx's theory is the opposite of this view. It is concrete labour, actually doing stuff in the world, that is the only transhistorical, ahistorical or naturalistic conception of labour in Marx's theory. Concrete labour existed before capitalism, before class society. Abstract labour is vastly more modern and arises with commodity exchange. Abstract labour did not arise with the division of labour because many societies - those based on slavery or serfdom, for example - hardly measured and compared work at all. To the extent that they were not based on the exchange of commodities, they were not societies based on value and abstract labour. The key thing lacking in Cockshott's theory in these paragraphs is a clear understanding of the history of social production.

I.I. Rubin sorted out the issue of abstract labour and physiological effort long ago:
Marx never tired of repeating that value is a social phenomenon, that the existence of value (Wertgegenstandlichkeit) has "a purely social reality" (C., I, p. 47), and does not include a single atom of matter. From this it follows that abstract labor, which creates value, must be understood as a social category in which we cannot find a single atom of matter. One of two things is possible: if abstract labor is an expenditure of human energy in physiological form, then value also has a reified-material character. Or value is a social phenomenon, and then abstract labor must also be understood as a social phenomenon connected with a determined social form of production. It is not possible to reconcile a physiological concept of abstract labor with the historical character of the value which it creates. The physiological expenditure of energy as such is the same for all epochs and, one might say, this energy created value in all epochs. We arrive at the crudest interpretation of the theory of value, one which sharply contradicts Marx's theory. (Essays on Marx's Theory of Value, Chapter 14: Abstract Labour)
Cockshott's theory becomes incredible problematic when we bring in temporal concerns. If abstract labour is physiological effort, what can you say about that effort when the value of the commodities you've already produced halve in value because a competitor produces the same commodity for much cheaper? How does your physiological effort - that you've already expended - suddenly disappear into the ether? As abstract labour is the substance and measure of value, you've got a problem explaining where it went to.

Cockshott says:
On the other hand there is no doubt that were we to accept Heinrich’s reading we would have to abandon any claim that Marxian analysis of value was scientific. Science rests on the testability of its propositions and has to be wary of hypothesising causal entities which are in principle unmeasurable. If we say with Heinrich that the labour time that creates value can not be independently measured, can only be inferred from the price at which things sell, then you no longer have a testable theory.
Yes, it's true, we don't have a testable theory in the same way that a lot of the physical sciences do. If you tried to measure every aspect of commodity production, concrete labour-time, physiological equivalents, prices, etc. you would not arrive at Marx's critique of political economy. You would arrive at the tools of appearances that we already have: supply/demand curves, employment rates, economic statistics, etc.

Marx's critique has many complexities and subtleties that does not make it appropriate for empirical measurement as proof in the way Cockshott would prefer. One huge issue, for example, is moving from value to production prices and average profits. (See: Value and Production Price)

Finally, possibly the worst part of Cockshott's review, is a comment on a quote from Marx to Kugelmann:
“It is self-evident that this necessity of the distribution of social labour in specific proportions is certainly not abolished by the specific form of social production; it can only change its form of manifestation. Natural laws cannot be abolished at all. The only thing that can change, under historically differing conditions, is the form in which those laws assert themselves.” One can scarcely have a more explicit assertion of the natural and a-historical basis of abstract labour than that.
However, Marx was not talking about abstract labour in slightest! He was simply talking about the necessity for humans to work. Humans, from the time when we developed self-awareness, have had to work to survive. We need to gather, sow, reap and kill for food. We need to bring-up the young, collect water and dispose of waste. We need to look after the old. We will have to do this until we cease to exist as a species. Nothing, not pre-class society, slavery, serfdom, mercantilism, capitalism or communism is going to prevent this necessity for work. All that changes is how we organise work in society, as the most social species on the planet. What does abstract labour have to do with it? It is nothing but the form of how we are choosing to work at the present time, under capitalist conditions.

To suggest that abstract labour is going to be the form of society, not only of capitalism, but also communism, brings nothing but horrible images of totalitarian monsters into our mind.

Down with measurement!

Friday, February 1, 2013

Critique of the Gotha Programme

The Critique of the Gotha Programme (text) was written by Karl Marx in 1875 as a response to a document by the nascent Social Democratic Party of Germany. It was one of Marx's last writings (he died in 1883). The Wikipedia page describes the SPD as "one of the first Marxist-influenced parties in the world." It's difficult to see how that could be true given Marx's deep criticisms of the Gotha Program (which was adopted by the party). It is not until the Gotha Program was eventually replaced by the Erfurt Program (text) in 1891 that the statement on Wikipedia starts to have some truth to it. Engels wrote a critique of the Erfurt Program.

As usual, I've made the text into an e-book:

Wealth, Value and Labour

I remember reading this document ten years ago and being immediately confused by Marx's distinction between wealth and value. I remember Anthony patiently trying to explain it to me. I kind of half got it, but not really. It's taken fifteen years for me to understand the entire scientific critique of political economy that Marx presents. Even a year or two ago I still refused to accept it on scientific grounds. I could not fully grasp the basic distinctions and categories. Turns out that Marx was correct.
Labor is not the source of all wealth. Nature is just as much the source of use values (and it is surely of such that material wealth consists!) as labor, which itself is only the manifestation of a force of nature, human labor power. The above phrase is to be found in all children's primers and is correct insofar as it is implied that labor is performed with the appurtenant subjects and instruments. But a socialist program cannot allow such bourgeois phrases to pass over in silence the conditions that lone give them meaning.
I'm not alone in my failure to understand Marx's critique. The SPD didn't understand it in 1875. They don't understand it today. Most Marxists don't understand it. To the great misfortune of millions of people, the pre-existing communists of the USSR, China, Cuba, Vietnam, etc. didn't understand it either. Marx is clear, but it is difficult to understand, especially if you grow up in a world almost entirely dominated by the bourgeois mode of production. To make matters worse, there are a lot of people who don't want to understand it or don't want you to understand it.
The bourgeois have very good grounds for falsely ascribing supernatural creative power to labor; since precisely from the fact that labor depends on nature it follows that the man who possesses no other property than his labor power must, in all conditions of society and culture, be the slave of other men who have made themselves the owners of the material conditions of labor. He can only work with their permission, hence live only with their permission.
The only other modern scientific theory that has come under sustained attack is the theory of evolution. That attack, almost entirely by religious forces, continues into the 21st century. Nevertheless, even at its most ferocious, the scale of the attack on evolution barely registers compared to the scale of the attack on the scientific critique of capitalist society.

Higher and lower stages of communism

The Critique of the Gotha Programme gets you thinking about a future communism. One of the notable things Marx discusses is the lower and higher orders of communism. I used to find this splitting of the idea of communism problematic, but I don't think I do anymore. Marx's justification is:
What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges.
Lower order communism is best described as "To each according to his contribution."
[...] the individual producer receives back from society — after the deductions have been made — exactly what he gives to it. What he has given to it is his individual quantum of labor. For example, the social working day consists of the sum of the individual hours of work; the individual labor time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labor (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labor cost. The same amount of labor which he has given to society in one form, he receives back in another.
Marx described higher order communism as:
In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life's prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly — only then then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!
Of course, money needs to be abolished immediately. However, there is no longer a need for labour vouchers. We have these wonderful machines - computers and the Internet - that we could use to track peoples' contributions and ensure necessities are distributed correctly. The logistics of this isn't trivial; keeping track of billions of people wouldn't be easy. However, Facebook already tracks one billion accounts. It isn't a monumental effort to extend this infrastructure so we could record vital information on the entire population of the planet. A new form of distribution needs to be quickly realised. A disruption to distribution (or a failure to transform existing distribution) is where there is a huge risk to lives from starvation and disease.
If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one. Vulgar socialism (and from it in turn a section of the democrats) has taken over from the bourgeois economists the consideration and treatment of distribution as independent of the mode of production and hence the presentation of socialism as turning principally on distribution.
The state

There are some interesting comments on the state in The Critique of the Gotha Programme. Marx is very critical of the idea of the "free state." Engels, in his letter to August Bebel, sums it up really well:
All the palaver about the state ought to be dropped, especially after the Commune, which had ceased to be a state in the true sense of the term. The people’s state has been flung in our teeth ad nauseam by the anarchists, although Marx’s anti-Proudhon piece and after it the Communist Manifesto declare outright that, with the introduction of the socialist order of society, the state will dissolve of itself and disappear. Now, since the state is merely a transitional institution of which use is made in the struggle, in the revolution, to keep down one’s enemies by force, it is utter nonsense to speak of a free people’s state; so long as the proletariat still makes use of the state, it makes use of it, not for the purpose of freedom, but of keeping down its enemies and, as soon as there can be any question of freedom, the state as such ceases to exist. We would therefore suggest that Gemeinwesen ["commonalty"] be universally substituted for state; it is a good old German word that can very well do service for the French “Commune.”
Marx has some good stuff on the state and education:
"Elementary education by the state" is altogether objectionable. Defining by a general law the expenditures on the elementary schools, the qualifications of the teaching staff, the branches of instruction, etc., and, as is done in the United States, supervising the fulfillment of these legal specifications by state inspectors, is a very different thing from appointing the state as the educator of the people!
Ultimately, Marx seals the fate that the SPD succumbed to.
The German Workers' party — at least if it adopts the program — shows that its socialist ideas are not even skin-deep; in that, instead of treating existing society (and this holds good for any future one) as the basis of the existing state (or of the future state in the case of future society), it treats the state rather as an independent entity that possesses its own intellectual, ethical, and libertarian bases.