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Saturday, April 17, 2021


All right, at long last let me try to address some of many intelligent comments provoked by my multipart series on Marx. I have gone back in the comments section and collected up some of them, but by no means all. Even so, I want to try to respond to some of these.


Let me begin with a comment I was unable to locate but which, if my memory serves, was posted by LFC. He (is that correct?) notes that if at an early stage in the development of capitalism the ratio of embodied labor to direct labor is 100 to 1, at a later stage it may have grown to 1000 to 1, and that would seem to keep driving the profit rate down if profit really is the money form of the surplus value extracted from the direct labor inputs. This is exactly the inference Marx drew, which led him to postulate that there would be a tendency for the rate of profit to fall in capitalism. As it happens, Marx was wrong. My colleague at the University of Massachusetts, Sam Bowles, proved rather elegantly that in the sort of economy Marx was analyzing if a new more capital-intensive process of production were introduced by an innovative capitalist resulting in a momentary rise in that capitalist’s profit rate, the consequence when the system settle down into equilibrium would be a rise, not a fall, in the profit rate globally. He announced this result triumphantly to a class he was teaching, only to have one of the students point out that a Japanese economist named Okishio had proved it 10 years earlier. Sam was consequently reduced to publishing an article In the Cambridge Journal of Economics with the title “A New Proof of Okishio’s Theorem.”


The second comment came in the form of an email from Jerry Fresia.  He wrote:  "You write that by means of a long historical process workers who produce commodities are deprived of control over their work, their tools, and skills. What is interesting to me is that this exploitation (the correct term here?) is parallel to the alienation that will take place once the farmer, let us say, enters the factory. So apart from alienation in the factory, a farmer who produces corn as a commodity also suffers a type of market dehumanization.  Would it be correct to say that?"


This is a little complicated but the essential answer is yes. Under the pressure of market competition, the natural rhythms of farm work must give way to a sort of industrial farm production that one sees most clearly in the raising of chickens or pigs for market. It is my impression that some independent farmers to this day successfully resist the market pressures sufficiently to gain a genuine satisfaction from the activity of farming but I think they are rare as compared with the industrialization of food production that is characteristic of advanced capitalism.


Jamie Kelly, a philosophy professor at Vassar College, poses several questions into lengthy email messages.  Let me take up the first of them.  The second is too complicated for me to try to deal with in this post. Kelly first writes:  “If you abandon the centrality of the labor/labor-power distinction, does that mean you also give up on Marx's account of surplus value (i.e., it is the difference between the value labor produces, and the value of labour-power)? That would surrender a lot of the theoretical apparatus of Capital (e.g., his account of the working day, and maybe even his account of automation), but I don't see how surplus value can be cashed-out without relying on the labour theory of value.


To my mind, the key historical claim that Marx makes about the transition from feudalism to capitalism is the doctrine of double freedom: workers under capitalism are free in the sense of having the right to sell their labour power, and 'free' in the sense of having nothing to sell but their labour power. This undergirds both his claims about the exploitation of workers, and his explanation of the enormous productivity of capitalism. Do you think double freedom can be made sense of without the labour theory of value?


Marx leverages the labor/labor-power distinction so much throughout Capital, that I am having a hard time seeing how the working day, machinery and modern industry, or even primitive accumulation (i.e., the best parts of the book) can be salvaged without it.” 


There are several questions in this message, all turning on my rejection of The Labor Theory of Value. First, recall what I said early in my essay about the 19th century meaning of the phrase “theory of value.” To Smith or Ricardo or Marx a theory of value was a theory of natural or long-term or equilibrium price, as we would say today. Marx’s theory of capitalism without The Labor Theory of Value is, many would say, like Hamlet without the Prince. Certainly that is the view of most contemporary writers who identify themselves as Marxists. But I think this is wrong. I do not think there is a single important and valuable element of Marx’s analysis and critique of capitalism that cannot survive scuttling a theory of natural price that turns out to be analytically incorrect. You can see this quite clearly in Kelly’s second paragraph where he talks about the “doctrine of double freedom.” The exploitation of the workers is grounded in their having lost everything but their bare ability to sell their labor and the mystification of capitalism that serves to rationalize it and justify it in the eyes of those who live within it is nicely captured by this notion of double freedom. Marx’s account of the working day, of machinery and modern industry, of primitive accumulation and much else, grounded in his extensive historical studies, nowhere makes essential use of The Labor Theory of Value. Whether you take to my rudimentary effort to develop an alternative analytical framework or not, I think that effort makes clear that one can talk meaningfully about the ways in which capitalism exploits labor quite independently of the particular analytical framework that Marx introduced to explain this phenomenon, which he correctly believed lay at the root of the structure of capitalism. When I hear Marxists insisting that there cannot be Marxism without The Labor Theory of Value, I sometimes think I am listening to Catholics saying it cannot be Christianity without the virgin birth or Shiite Muslims saying there cannot be Islam without the hidden Imam or Jews saying  you cannot be Jewish if you do not keep kosher. I am willing like Spinoza to be driven from the congregation if that is what it takes to follow what I believe to be the truth.


The frequent commentator who uses the nom de blog Marcel Proust, writes as follows:  “So far as I am aware, all economic systems more technologically advanced than that of hunters and gatherers -- perhaps excepting pastoralism -- depend fundamentally on the exploitation of someone. The only reason that I can understand for taking this to be Marx's key insight is that capitalism has successfully mystified itself, if I may engage in a huge bit of anthropomorphism and attribute agency to the system itself. Nearly everyone who is part of the system believes that one way or another, they are making free choices and therefore cannot possibly be exploited.” To which I need only say Amen. Marx could not agree more. What distinguishes capitalism from slavery or feudalism, the two earlier forms of economic organization about which Marx writes, is not the fact but the manner of exploitation as well as the accompanying mystification that is typical of capitalism.


Well, that is enough for today. I will go back and look again to see whether I can surface some other interesting comments.






LFC said...

That first question you respond to was not posed by me. I think it was Marcel Proust but I'm not sure without checking.

LFC said...

P.s. On second thought, perhaps not M. Proust, but at any rate it wasn't me.

Écrasez L'infâme said...

Ah, it seems you’re talking about me. I had commented late, to a post well after RPW’s mathematical one, which might be why no one can find it.

Sam Bowles’s letter on Okishio is available at However, it doesn’t seem to me to address what puzzles me about the whole idea of disembodied labour, which has (I don’t think) nothing to do with profit or its supposed tendencies. I guess in a nutshell, it’s that a widget made in 2021 has a century's more disembodied labour than the same widget made in 1921, and that consequently either the value added by the worker in 2021 must be relatively much less their counterpart in 1921 would have added, or that the final value contained in the widget must be much higher. Either seem possible to me, but both seem puzzling.

But I’ll read the Bowles letter carefully - I’m sure I’m just confused about something.

Finally, prof, I’d just like to add my appreciation and gratitude to others’ for the amazing public service that is your blog.

Robert Loughrey

Uri Strauss said...

Is it possible to account for capitalist exploitation in terms of game theory? Specifically, the bargaining theory branch of game theory, which models what results are achieved when two rational parties negotiate how to split something up?

The math shows that certain factors allow one party to get most of the benefit of the bargain. These factors include (1) the ability to wait for your payoff longer than the counterparty, (2) the ability to fall back on an alternative to striking a deal, and thereby being able to walk away from the negotiation, and (3) having a better understanding of your counterparty's valuations than they have of yours.

If employers tend to have the upper hand in these factors, which would seem to generally be the case, it is predicted that they get the larger share of the value created by the company, not due to merit but due to bargaining advantage. Hence, exploitation?

Écrasez L'infâme said...

Hi, Uri. Be interested to see how that worked out - but the devil is in the details. The truth is that any choice of modelling method smuggles in assumptions. For example, linear algebra has been an extraordinary useful tool for modelling, but just by using it you’re assuming discrete producers and products and production periods, not to mention equal valued inputs and outputs. Game theory would assume rationality, or at least self-interest (which, given climate change, could be described as irrationality!). Those assumptions might be true, or they might be immaterial simplifications to make the theory work, but... the devil is in the detail.

On another subject, I’d say (do others agree?) that Marxist or Marxian economics is not just another branch or school of economics (like neo-classical, MMT, Pikety, Monetarist, etc) because its purpose is different. The job of any school of economics is to advise economic agents on what they should do to achieve their desired outcome - for example, to advise a central bank of what interest rates to set to meet an inflation target, or a chancellor of how much (or, more commonly, how little) to borrow given growth targets, or a firm on how to set a price to maximise profits. All the schools do these things well or badly, and that’s how we judge them. But the Marxist isn’t trying to advise on policy, there’re trying to decide whether capitalism itself can survive, and if so, whether it can do so with justice and universal prosperity and peace while preserving the environment. I take it that if Capitalism could achieve all that, then we’d all become supporters of it immediately - shame on you if you wouldn’t! (Don’t worry - after 400 years, Capitalism hasn’t shown much ability, or even interest, in solving these problems). But in the meantime, Marxists are there to point out contradictions and injustices and to propose alternatives while we still can. Does that sound like a description of our role?


R McD said...

Uri and Robert, Wouldn't game theory assume the validity of methodological individualism, and didn't the "rational choice marxists" try that approach only to end up repudiating marxism? [see, e.g., ]

Écrasez L'infâme said...

Oooo, “Ramsey” - good to meet you again. It’s been a while!

Wow, that lot are news to me. Thanks! I looked up methodological individualism as well - no wonder they reject so much Marxism if they’ve basically assumed that class dynamics are illusionary. It’s like assuming red and green are the same colour and then wondering why you’ve just crashed into someone’s car.

I concede this to individualism: why do we choose to like or support or follow a particular theory or school? Yes, we are swayed by evidence and argument and peer pressure, but ultimately we just like some styles and hate others. If you could prove 100% that, for example Thatcher was right when she denied the reality of society, would I accept it? I don’t think I would. I would wiggle and try and find flaws or dubious assumptions in your argument. Well, that’s human nature, but it’s also a bit mysterious, since we can and do change our minds. So, I would like to follow the Game Theoretic arguments through and see if, necessarily, it leads to the conclusions you mention. Maybe when I retire (seven years now and counting) I’ll have time!

All the best


LFC said...

@ R McD

I'm far from an expert on this, but I don't think all self-identified "analytical Marxists" ended up repudiating Marxism, at least that's not how some of them would put it. I don't have a dog in that fight, so just giving my impression. (I've not read the Wikipedia entry, perhaps that wd alter my view.)

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