The Real Movement

Communism is free time and nothing else!

Tag: profit

Whoops! Did Michael Roberts and Fred Moseley just revise Marx?

In this morning’s compare and contrast, we look at two different formulations of the category, socially necessary labor time, in Roberts’ essay, Consistent, realistic, verifiable; his review of a new book on labor theory by Fred Moseley:

Formulation 1: “Marxist value theory is based on the view that commodities are priced in the market according to the labour time expended on them.”

Formulation 2: “The market decides whether certain amounts of labour time expended on producing particular commodities are ‘socially necessary’.”

In labor theory of value, socially necessary labor time, of course, is the labor time required for production of a commodity, its value. However, in Roberts’ summary of the argument made by Fred Moseley SNLT is first described as a quantity of labor existing before exchange. Then it is later described by Roberts as a quantity of labor determined by exchange — by “the market”.

So which is it, Mr. Roberts? Is socially necessary labor time determined by production or exchange? There is no rush on this, Mr. Roberts. I am sure the proletarian revolution can wait patiently while you theoreticians figure this out.

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The TSSI school has completely capitulated to the value-form school

In a surprisingly abrupt about face, it looks like the TSSI school has capitulated to the value-form school of Michael Heinrich and company on all the important points of controversy between the two schools.

Of course, the TSSI school is the least ethical of all Marxist schools, because they want to drop Marx while pretending to defend him. The value-form school at least has enough principles to admit they think Marx was wrong, but not the TSSI school. Expect the TSSI school to continue pretending they uphold an orthodox interpretation of Marx’s labor theory of value.

In any case, we now have it in black and white, courtesy of Michael Roberts, who, in his review of Fred Moseley new book, Consistent, realistic, verifiable, argues that Marx labor theory of value basically examines the capitalist mode of production, “[from] the capitalist point of view, [where] money advanced must lead to more money, or forget it.”

I have no words to describe my reaction to this statement.

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Deflation is good for you and here’s why

I had a short exchange with someone last night about this tweet on deflation:

@davidkorowicz: Deflation [here] we come, and though not polite to say in civilized conversation, the limits to growth are shadowing our present moment

The conversation the tweet sparked reproduced some of the most often made arguments for why deflation is an unwelcome development in a capitalist economy. Among the most important arguments was the assertion deflation will cut wages and increase debts.

The alleged mechanism of the negative effects of deflation on the working class are these:

  • Your company gets less income so they lay you off or cut your wages.
  • With lower wages or no job, your outstanding debts become harder to repay — which is a big thing if, for instance, you have a mortgage on a house or a car loan.

On the other hand, with inflation you get many of the opposite problems.

  • Inflation constantly increases your real cost of living.
  • With prices rising, you either have to get more frequent raises or work longer hours just to remain at your present standard of living.
  • With rising prices, you tend to become increasingly dependent on debt to make up the shortfall between your wages and prices at the checkout counter.

So which is worse? Losing your job and  facing wage cuts? Or working more hours just to keep your head above water?

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“All Slaves Should Get Sundays Off”: Richard Wolff on the four day work week

Richard Wolff, clueless economist that he is, has even managed to fuck up a discussion of hours of labor reduction. He has written a very interesting piece in Truthout proposing a reduction of the workweek with no cut in pay. The idea is very attractive, and Wolff is a ‘celebrity’ Marxist who can give the issue wide circulation.

richard_wolff_photoIn principle I have no opposition to Wolff’s proposal, which at least raises the possibility that the present 40 hours work week was not handed down from Mt. Sinai on two tablets of stone. Wolff shows why we can set any number of hours of labor as the social norm that we want.

Unfortunately, almost from the first, Wolff mangles the discussion of hours of labor reduction in two important ways: First, by conflating his own reduction of hours of labor with several capitalist proposals to  ‘compress’ the work week into fewer days. Wolff never clearly distinguishes his proposal for a reduction of labor hours from the capitalists’ own proposal for a compression of the present 40 hours of labor into fewer days per week.

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Prices, Profit and the Sraffian “One-Commodity” Corn Model

A drop in the rate of profit is attended by a rise in the minimum capital required by an individual capitalist for the productive employment of labour; required both for its exploitation generally, and for making the consumed labour-time suffice as the labour-time necessary for the production of the commodities, so that it does not exceed the average social labour-time required for the production of the commodities. Concentration increases simultaneously, because beyond certain limits a large capital with a small rate of profit accumulates faster than a small capital with a large rate of profit. At a certain high point this increasing concentration in its turn causes a new fall in the rate of profit. (Karl Marx, Capital, Volume 3, Chapter 15)

The problem of prices and profit and of the relation between the two, which has bedeviled the simpleton economist for two hundred years, has reared its ugly head again in a series of posts amounting to a food fight among bourgeois silverqueensimpletons. The question raised in the exchanges, which I have previously covered here, involves the question of the source of profits in the capitalist mode of production and the interrelation between profit and prices.

At stake is far more than is apparent in the obscure criticism raised by heterodox economists against the mainstream neoclassical school that the neoclassical school wants to determine profit by the marginal productivity of capital, and then calculate the quantity of capital in part by asking how profitable it is to own the capital goods. If prices and profit are dependent on each other in this way it calls into question the historical trajectory of the mode of production itself.

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“Karl Marx was right, but it doesn’t really matter.”

I have been reading this short piece by Matthew Yglesias “Where do profits come from? The obscure feud that tears left-of-center economics apart”. As the title states, the crux of the discussion is the failure of neoclassical economics to offer a credible alternative to Marx, who asserted that labor is the source of both wages and profit. The inability of the bourgeois simpletons to offer a credible alternative to Marx’s explanation results in a rather bizarre set of assumptions:

“Heterodox economists argue that it is circular to say that the profits accruing to the owners of capital are determined by the marginal productivity of capital, and then to calculate the quantity of capital in part by asking how profitable it is to own the capital goods.”

takethebigbagLabor theory says that profits are simply that portion of value created in excess of the value of the wages of the workers, while mainstream economics holds profits result from the marginal productivity of capital.

It should be clear that mainstream economics has already conceded this point to labor theory: labor is the source of all profit. No matter how this argument is obscured in all the gibberish of neoclassical economics, it has been demonstrated both theoretically and practically that there is only one source for both wages and profit: the labor of the worker.

As Yglesias points out:

Mainstream economists went through a few iterations of attempting to refute this objection before essentially concluding that it was correct. This is, indeed, one of the reasons why people on the heterodox side often seem to be embittered. The mainstream concedes the point, but tends to deny its significance.

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