Do machines produce surplus value?
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Can anyone one provide a concise summary of the arguments that machines cannot produce surplus value but only transfer the value embodied in them. I think there are several such argument but I have yet to find a source that systemtically lists and discusses them all. Anyone know of a useful link?
I have in mind a kind of broad-based counter approach to Steve Keen's Neo-Ricardian approach in Debunking Economics on the question of the contribution of machinery to the value of commodities. He rejects Marx's view on the matter while supporting some other aspects of Marxian economics. Needless to say, this has implications for the Marxian theory of exploitation
Maybe Andrew Kliman's book on Reclaiming Marx's Capital has something to say on the subject but I havent read the book yet….
Well, I'd have thought it would go 'by definition', so you're back to the first premises of Labour theory (that it's the only universal element of all commodities): if value is by definition human labour, and surplus value by definition is the difference between the value of labour power and value of labour added, then machines can no more add value than seas or trees can.
What's wrong with Marx's own view as set out in Chapter 8 of Volume I of Capital on "Constant Capital and Variable Capital" where he explains why he describes capital invested in machinery, buildings, raw materials, etc as "constant" — because they only transfer the whole or a part of their value unchanged to the product.That machines transfer a part of their value is shared by accountants where the wear and tear of machines is counted as "depreciation", a transfer of their cost to the product which will needed to be replaced.It is also shared by national accounts statisticians with their concept of "value added" (their actual term). Here's their definition of Gross Value Added:
Quote:Gross value added is the value of output less the value of intermediate consumption; it is a measure of the contribution to GDP made by an individual producer, industry or sector; gross value added is the source from which the primary incomes of the SNA [System of National Accounts] are generated and is therefore carried forward into the primary distribution of income account. ( https://stats.oecd.org/glossary/detail.asp?ID=1184 )and of Net Value Added:
Quote:Net value added is the value of output less the values of both intermediate consumption and consumption of fixed capital ( https://stats.oecd.org/glossary/detail.asp?ID=176 )In other words, GVA less depreciation, though "consumption of fixed capital" conveys the meaning better. NVA is the nearest that can be got to Marxian s (surplus value) + v (variable capital)..So accountants and startisticians (also opposed to professors of bourgeois economics) accept that machinery, etc transfer a part of their value to the product. When this is excluded, what is left — net value added — is a measure of the new value created. Marxian economics says that this (which in fact is calculated as profits + wages) has been created by the exercise of productive labour-power (which the statisticians don't accept of course).What is Steve Keen's objection? Has it something to do with the averaging of the rate of profit meaning that constant capital "attracts" more profit than the value its transfers?
By Marxist definition of value they can’t; I think the word might be axiomatic. However there was an interesting argument, that Karl fully addressed,that agriculture or growth, of wheat produced in the example, produced “surplus value”. Ie a bushel of seed wheat producing another 100 bushels etc. The argument was that that was ultimate the source of all surplus value; and the manufacturers obtained their surplus value from that by obtaining agricultural products at below its value etc. You could argue I suppose that machines create extra surplus exchange value in the sense that the stuff that they produce exchanges at above its value due to the necessity to maintain the average rate of profit? I think computing software and associated paraphernalia is an interesting example as they are machines after a fashion and once created can be replicated for nothing. Then you have these licensing ‘rentier’ systems were part of the price or exchange value of the product can be surplus exchange value and thus the likes of Microsoft can make surplus profits above the average? That should encourage other capitalist to enter into the game and go into competition.
ALB wrote:What is Steve Keen's objection? Has it something to do with the averaging of the rate of profit meaning that constant capital "attracts" more profit than the value its transfers?No, I dont think so. That was Bohm Bawerks line of argument – wasn't it? – were he talked of the fatal "contraction" between vol 1 and vol 3 of Das Capital which I think was dealt with by Hilferding and Bukharin. Keens particular gripe with the LTV centres on something else which is nicely explained in this link I came across Keen decidedly joins the latter, contending that Marx’s labor theory of value is invalid, because of an inconsistency that, he believes, vitiates Marx’s argument on how surplus value is produced. The inconsistency–Keen thinks–lies in the “asymmetrical” manner in which Marx dealt with labor and non-labor inputs in surplus value production. https://juliohuato.org/2012/04/06/steve-keen-and-the-labor-theory-of-value/
robbo203 wrote:ALB wrote:What is Steve Keen's objection? Has it something to do with the averaging of the rate of profit meaning that constant capital "attracts" more profit than the value its transfers?No, I dont think so. That was Bohm Bawerks line of argument – wasn't it? – were he talked of the fatal "contraction" between vol 1 and vol 3 of Das Capital which I think was dealt with by Hilferding and Bukharin.
Slight correction. He does appear to have gone along with the conventional argument against Marx's views respect to the so called transformation problem"- now put to rest by the good folk from TSSI camp like Kliman and Freeman – but it was not his primary line of attack on Marx. That as I said seems to focus on the question of whether machine produce surplus valueI think the belief that they do is implicit in "Okishio's theorem" – the argument that investing in more machinery must raise profitability otherwise the capitalists wouldnt make such an investment from which it is inferred that machines must ipso facto produce surplus value.
robbo203 wrote:I think the belief that they do is implicit in "Okishio's theorem" – the argument that investing in more machinery must raise profitability otherwise the capitalists wouldnt make such an investment from which it is inferred that machines must ipso facto produce surplus value.As I suspected, it seems that there is a confusion between the creation of (value and) surplus value and its realisation. Due to the averaging of the rate of profit, capitalist enterprises with relatively more fixed capital tend to capture more surplus value (from the pool of surplus value created by the working class as a whole) than is created in them — otherwise there'd be no incentive to invest in more up-to-date and productive machinery. But it is not the machinery itself that creates the surplus value.
ALB wrote:robbo203 wrote:I think the belief that they do is implicit in "Okishio's theorem" – the argument that investing in more machinery must raise profitability otherwise the capitalists wouldnt make such an investment from which it is inferred that machines must ipso facto produce surplus value.As I suspected, it seems that there is a confusion between the creation of (value and) surplus value and its realisation. Due to the averaging of the rate of profit, capitalist enterprises with relatively more fixed capital tend to capture more surplus value (from the pool of surplus value created by the working class as a whole) than is created in them — otherwise there'd be no incentive to invest in more up-to-date and productive machinery. But it is not the machinery itself that creates the surplus value.
Wasnt Marx's argument that the innovating capitalist would attract higher than normal profits to begin with but as others followed the rate of prpfit would tend to decline with the overall rise in the organic composition of capital? I understand the point you are making about more capital intensive businesses capturing more surplus value as a result of the averaging of the rate of proft but I suppose Keen would say he is not talking about this but rather about the more fundamental point of whether machines produce value and therefore surplus value . He would probably say that even with relatively labour intensive businesses, machines still add value to the product as opposed to simply transfer the value congealed in them over the lifetime of the machine. Intuitively I think this argument doesnt make sense but I am trying to marshall the array of different arguments that can be used against it
Some interesting comments in these links to a blog which seems decidedly hostile to Marxian economics…. http://socialdemocracy21stcentury.blogspot.com.es/2015/05/karl-popper-on-labour-theory-of-value.html http://socialdemocracy21stcentury.blogspot.com.es/p/the-labour-theory-of-value-as-presented.html http://socialdemocracy21stcentury.blogspot.com.es/2015/04/the-labour-theory-of-value-and-animal.html
robbo203 wrote:He would probably say that even with relatively labour intensive businesses, machines still add value to the product as opposed to simply transfer the value congealed in them over the lifetime of the machine.But does Keen actually say this? And does he say that it is only machines that add surplus value and not the other elements of Marx's constant capital (academic economics's "non-labour inputs")? If so, why does he exclude buildings, raw materials and power from creating surplus value too? Or does he accept the concept of "constant capital" but wants to narrow it to exclude machines? If so, again why?I'm a bit surprised that, as an academic economist even if one who wants to make a name for himself as a bit of an unorthpdox one, he has any use for the concept of "value" at all and doesn't want to try to analyse the capitalist economy in terms of price only.(which the so-called "transformation problem" is basically all about).
A quote from John Ramsay McCulloch, The Principles of Political Economy (5th ed.) [1864] http://oll.libertyfund.org/titles/mcculloch-the-principles-of-political-economy-5th-ed-1864 "That commodities could not be produced without the co-operation of the powers of nature, is most certain; and we are very far, indeed, from seeking to depreciate the obligations we are under to our common mother, or from endeavouring to exalt the benefits man owes to his own exertions by concealing or underrating those which he enjoys by the bounty of nature. But it is the distinguishing characteristic of the services rendered by the latter, that they are gratuitous. They are infinitely useful, and they are, at the same time, infinitely cheap. They are not, like human services, sold for a price; they are merely appropriated. When a fish is caught, or a tree is felled, do the nereids or wood-nymphs make their appearance, and stipulate that the labour of nature in its production should be paid for before it is carried off and made use of? When the miner has dug his way down to the ore, does Plutus hinder its appropriation? Nature is not, as so many would have us to suppose, frugal and grudging. Her rude products, and her various capacities and powers, are all freely offered to man. She neither demands nor receives a return for her favours. Her services are of inestimable utility; but being granted freely and unconditionally, they are wholly destitute of value, and are consequently without the power of communicating that quality to any thing" The implication of this is that value (and hence surplus value) is essentially a social relationship based on generalised commodity exchange. Machines, like pristine raw materials, do not enter into an exchange with the capitalists but unlike pristine raw materials have labour already congealed in them. Workers on the other hand , do enter into an exchange relationship with the capitalists. Labour power is exchanged for a wage. So there is a qualitiative difference between labour power and machines. At the end of the day, machines are simply the extension or amplification of human labour One further point, I think. Value (and surplus value) is only comprehensible as a concept at the level of the economy as a whole. As stated, it is not a thing but a social relationship. The suggestion that machines produce surplus value is an attempt to "concretise" (turn it into something with "thinglike" qualities) the concept of value by locating it within the confines of the individual business firm employing machinery to raise the productivity of its workforce. This makes no sense in terms of the labour theory of value Finally, if machines produce surplus value then you could just easily assert that slaves produce surplus value (or indeed animals). But they dont. Slaves produce an economic surplus but not surplus value. I like Mandel's succinct explanation of the difference betrween surplus value and other forms of the economic surplus: It can take the form of straightforward unpaid surplus labour, as in the slave mode of production, early feudalism or some sectors of the Asiatic mode of production (unpaid corvée labour for the Empire). It can take the form of goods appropriated by the ruling class in the form of use-values pure and simple (the products of surplus labour), as under feudalism when feudal rent is paid in a certain amount of produce (produce rent) or in its more modern remnants, such as sharecropping. And it can take a money form, like money-rent in the final phases of feudalism, and capitalist profits. Surplus-value is essentially just that: the money form of the social surplus product or, what amounts to the same, the money product of surplus labour. It has therefore a common root with all other forms of surplus product: unpaid labour (Ernest Mandel, 1990, "Karl Marx", Marxian Economics, John Eatwell, Murray Milgate & Peter Newman (eds.), London 1990, p.1-38).
Dave B wrote:I think computing software and associated paraphernalia is an interesting example as they are machines after a fashion and once created can be replicated for nothing.In that case they have nothing — no value — to transfer to the product. Robbo's quote from MacCulloch makes this point, as does Marx in this passage from Chapter 9 of Volume I:
Quote:If we look at the means of production, in their relation to the creation of value, and to the variation in the quantity of value, apart from anything else, they appear simply as the material in which labour-power, the value-creator, incorporates itself. Neither the nature, nor the value of this material is of any importance. The only requisite is that there be a sufficient supply to absorb the labour expended in the process of production. That supply once given, the material may rise or fall in value, or even be, as land and the sea, without any value in itself; but this will have no influence on the creation of value or on the variation in the quantity of value.Marx Premise 1 wrote:Let us take two commodities, e.g., corn and iron. The proportions in which they are exchangeable, whatever those proportions may be, can always be represented by an equation in which a given quantity of corn is equated to some quantity of iron: e.g., 1 quarter corn = x cwt. iron. What does this equation tell us? It tells us that in two different things – in 1 quarter of corn and x cwt. of iron, there exists in equal quantities something common to both. The two things must therefore be equal to a third, which in itself is neither the one nor the other. Each of them, so far as it is exchange value, must therefore be reducible to this third.Marx Premise 2 wrote:If then we leave out of consideration the use value of commodities, they have only one common property left, that of being products of labour. But even the product of labour itself has undergone a change in our hands. If we make abstraction from its use value, we make abstraction at the same time from the material elements and shapes that make the product a use value; we see in it no longer a table, a house, yarn, or any other useful thing. Its existence as a material thing is put out of sight. Neither can it any longer be regarded as the product of the labour of the joiner, the mason, the spinner, or of any other definite kind of productive labour. Along with the useful qualities of the products themselves, we put out of sight both the useful character of the various kinds of labour embodied in them, and the concrete forms of that labour; there is nothing left but what is common to them all; all are reduced to one and the same sort of labour, human labour in the abstract.https://www.marxists.org/archive/marx/works/1867-c1/ch01.htm#S1Pretty much the whole of Capital rests on these two premises, and lives or dies by them.And, finally, another long quote, from the chapter on Exchange, which I think is quite key
Marx wrote:It is plain that commodities cannot go to market and make exchanges of their own account. We must, therefore, have recourse to their guardians, who are also their owners Commodities are things, and therefore without power of resistance against man. If they are wanting in docility he can use force; in other words, he can take possession of them. [1] In order that these objects may enter into relation with each other as commodities, their guardians must place themselves in relation to one another, as persons whose will resides in those objects, and must behave in such a way that each does not appropriate the commodity of the other, and part with his own, except by means of an act done by mutual consent. They must therefore, mutually recognise in each other the rights of private proprietors. This juridical relation, which thus expresses itself in a contract, whether such contract be part of a developed legal system or not, is a relation between two wills, and is but the reflex of the real economic relation between the two. It is this economic relation that determines the subject-matter comprised in each such juridical act.https://www.marxists.org/archive/marx/works/1867-c1/ch02.htm
The point I was trying to make is that is you confound or equate value with exchange value, which is easy to do, it can look as if under certain circumstances, like the introduction of new productive technology or some kind of Microsoft like monopoly can create a ‘surplus exchange value’, which I think Karl calls surplus-profit. https://www.marxists.org/archive/marx/works/1894-c3/ch10.htm https://www.marxists.org/archive/marx/works/1894-c3/ch14.htm That surplus profit or exchange value is the capture of surplus value from other spheres of production. Ordinarily that would tempt other capitalists to enter into that more lucrative sphere of production and even disinvest from less lucrative ones. The exchange value of commodities produced with high amounts of unconsumed fixed capital ie machines are higher than their value.
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