NOTE 22: The falling rate of profit and the collapse of production on the basis of exchange value
In part 2 of his 2013 essay, Crisis Theory, the Law of the Tendency of the Profit Rate to Fall, and Marx’s Studies in the 1870s, Heinrich argues Marx makes a far-reaching assertion that is impossible to demonstrate empirically: in the long term the rate of profit must fall. As Heinrich points out the very nature of the law — that it only points to a tendency — implies past historical data cannot simply be projected indefinitely into the future. The rate of profit may well have fallen in the past or it may have risen, but this does not mean a given historical trend will continue in the future.
The argument Heinrich makes in this section appears to challenge a long-standing Marxist assumption that there is at least an indirect link between capitalist crisis and social revolution. For some Marxists — notably, Andrew Kliman and company — the crisis produced by the falling rate of profit is a theoretically necessary assumption, because such a crisis is thought to be the material force that ultimately triggers a working class social revolution. Without the crisis, and the deepening poverty and political discontent it creates, many Marxists have no ready explanation for why the working class would overthrow capital. Thus, if we accept Heinrich’s argument about the falling rate of profit, what are we left with as a trigger for the social revolution?
Continue reading “Schrödinger’s Capital: Heinrich’s hilarious ‘refutation’ of Marx on the falling rate of profit”
NOTE 21: The collapse of production on the basis of exchange value
In my previous note, I argued the exchange value paid out as currency wages since the collapse of Bretton Woods in 1971 has been zero. My assertion is based on the consensus among scholars within both the value-form and MELT schools. This consensus among Marxist scholars assumes that, since 1971 and the collapse of the Bretton Woods agreement, the money we use to purchase commodities has no value of its own.
However, although both the MELT school and the value-form school generally agree the dollar does not represent any exchange value after 1971, both schools deny this change has any material impact on labor theory analysis.
Both the value-form school’s argument and the MELT school’s argument that nothing changed after 1971 should, in all honesty, require empirical evidence prices behave the same irrespective of the labor content of money. Yet neither school has ever once produced any evidence for this view. Despite the fact neither school has ever shown prices behave the same even if the labor content of the object serving as money is zero, this, it seems, has no effect on the discussion, for the simple reason that, surprisingly, no Marxist has ever demanded empirical proof from either school of their claims. You really have to wonder how Marxists can see one of the fundamental assumptions of their theory simply dismissed out of hand and not demand empirical proof.
Continue reading ““Schrödinger’s Capital”: How Michael Heinrich deliberately twisted Marx’s Grundrisse argument”
NOTE 20: The fiction of wages
In an excerpt from his book, The Science of Value, Michael Heinrich argues, “the independent existence of exchange value is only expressed adequately as self-valorizing value”.
I have no idea what Heinrich means by this nonsense statement, so let’s see if we can parse it.
In the first place, what is meant by “the independent existence of exchange value”? For exchange to have an independent existence can only mean that money, in the form of some particular commodity, has emerged as the universal equivalent of all other commodities. The problem with this view for the value-form school is that, according to the value-form school, no commodity has value, the latter being only an artifact of the exchange of commodities for money. If no commodity has value, including the commodity serving in the function of money, how can exchange value exist?
According to Arthur in his 2003 essay on the subject, we “posit the presupposition” use values have value by measuring their worth in units of a money. Money, says Arthur, creates the dimension of value and is the measure of value. The value of a commodity is nothing more than its money price.
Continue reading “Schrödinger’s Capital: Wherein Heinrich explains profit as a price markup over costs”
NOTE 19: The monetary expression of labor time (M.E.L.T.)
If we state the total product of labor produced in a given period of time in terms of the commodity money prices of those commodities, we are, at the same time, stating the aggregate socially necessary labor time of society in so many units of the socially necessary labor time required to produce a unit of the commodity money. If it takes one hour to produce an ounce of the commodity money, the total socially necessary labor time of society is equal to so many units of money.
The problem with MELT theory, however, is that it uses a unit of measure, fiat money, that has no socially necessary labor time. Its employment as a tool to measure the labor time of society is at least problematic.
This is one way to interpret the validity of the MELT function: nothing about fiat currency tells us anything about the socially necessary labor times of the commodities for which it is exchanged, because it does not share the common characteristic of being a product of labor. However, another more interesting and far more fruitful way to interpret the results of the MELT function is that a fiat currency always states the duration of socially necessary labor time as zero.
Continue reading “Schrödinger’s Capital: What is not forbidden by labor theory is compulsory”
NOTE 18: Is there a material limit to socially necessary labor time?
The charts I introduced in my last note on the value-form school raises an interesting question. If the charts provide two different measures of value — one drawn from Marx’s labor theory of value, the other drawn from value-form theory — they also provide two different measures of socially necessary labor time. If this is true, which measure of necessary labor time is accurate?
Let me restate Arthur’s argument this way: What we today call value is a mental abstraction that only develops after the emergence of money. Commodities do not have a common attribute called value; rather, our practice of attaching prices to commodities creates the notion they have value. We act on commodities as if they have value and thus “posit the presupposition” they are values.
Since value is a manifestation of the socially necessary labor times required for production of commodities, does money also determined social production times as well?
Continue reading “Schrödinger’s Capital: All labor is necessary so long as someone pays for it?”
NOTE 17: Do trident nuclear missiles have value in the value-form argument?
The charts I published in my last post present a puzzle for any analysis rooted in historical materialism. This is because the two definitions of value offered by Marx and the value-form school result in two different pictures of the history of the US economy.
We have to ask ourselves which of these two definitions of value produces a valid picture of the actual history of the US economy? Continue reading “Schrödinger’s Capital: A not very ‘useful’ definition of value”
NOTE 10: What is the value of empirical evidence?
According to Arthur (2003):
“The primary function of gold money is to ‘posit the presupposition’ that commodities count as values. This it does in virtue of the price-form, not because as a material body it has any such magical powers. So a substitute material may be found in paper, if this is granted forced circulation by the State, and hence acquires the key determination of immediate exchangeability.”
Money, according to Arthur, plays a purely symbolic role in that it introduces the assumption use values in a commodity producing community are values. The use values become values because they are exchanged for the value-form, money, not because they contain any intrinsic value. What the prices (exchange values) of commodities tell us is that the object has been exchanged for a money, nothing more.
Continue reading “Schrödinger’s Capital: Why the value-form school never publishes supporting empirical data on money”
NOTE 9: Value equals price?
Marx makes a pretty simple argument in Capital: In any exchange, the only property a commodity has in common with any other commodity is that it is a product of labor. The values of the commodities consists of an expenditure of homogenous human labor power.
Later (in chapter six), Marx defines labor power this way:
“By labour-power or capacity for labour is to be understood the aggregate of those mental and physical capabilities existing in a human being, which he exercises whenever he produces a use-value of any description.”
For some odd reason, Marx only actually says what he means by the term, human labor power, in chapter six. But, okay. What he means by the term “labor power” is the “capacity for labor”. And this must be emphasized: labor power, or labor capacity is not actual labor, which latter is always concrete. So far as I can tell, human beings do not labor in the abstract any more than any other animal.
The total capacity for labor of a commodity producing community, or its total labor power, however, is the aggregate mental and physical capabilities they possess.
Continue reading ““Schrödinger’s Capital”: The neoclassical core of the value-form argument”
NOTE 7: Why the value-form school carefully avoids empirical proof of its claims
In his 2003 paper, Money as Measure of Value, Arthur seems to recognize the obvious fact that, taken in isolation, commodities do not possess a value property in the same way they possess physical properties like weight, mass, chemical composition and spatial dimensions.
Of course, this was the whole point of the first few paragraphs of chapter 1 of Capital. There, Marx argues, try as we might, no amount of physical decomposition of a use value will find even an atom of value. The value of commodities is not a property they individually possess, as they might possess weight, mass, chemical properties or spatial dimensions; rather, the property of value arises solely from the social context within which the use value is produced.
Thus, the reason why we can’t see the values of commodities is because these values are the manifestation of social relations of production, not a physical property of the objects. In this sense, Arthur’s argument is a welcome advance over the vulgar reading of Marx where it is sometimes assumed each commodity actually contains a substance called value. Again, following Marx, Arthur explains that money is the only adequate form of exchange value: it is the only way the value (i.e., social properties) of commodities can appear to us.
And then, inexplicably, Arthur goes weird on us.
Continue reading “Schrödinger’s Capital: Chris Arthur explains why inconvertible fiat is as ‘good as gold’”
NOTE 6: Why did the gold standard collapse?
In 2003, Chris Arthur wrote a paper which if valid has staggering implications for labor theory. The topic of the paper was one question facing labor theorists: Was Marx correct to insist money had to be a commodity?
The implication of the question is staggering, because, since 1971, the international currency system is not tied to any commodity. The system is a collection of valueless currencies not backed by any commodity that float against each other. All Marxists agree Marx himself held that in the final analysis money had to be a commodity. If this is true, something with huge implications for labor theory of value occurred in 1971 — something so huge no labor theorist can ignore it.
Continue reading “Schrödinger’s Capital: Is Marxism now a variant of anarcho-capitalism?”