Do machines produce surplus value?

[alanjjohnstone]

Apparently there ishttp://www.emeraldinsight.com/doi/abs/10.1108/IJSE-04-2012-0134

Quote:

Findings – This research found that investor psychology is influenced by the full moon, but no effect was recorded during the new moon phase. Confirmed by the paired t-difference test, the small correlation, in addition to the quantitative model, the results show the full moon impacts market behaviour during its orbital phase. Consequently, the authors surmise that the full moon does influence investor cognition and emotion disarray, mood disorders, and aggressiveness, resulting in poor stock trading performance.Practical implications – The need for an active investment strategy is the major implication of this study. During the full moon phase, investors tend to be more aggressive and moody and seek hedonic utility instead of the traditional economics utility, meaning that they tend to follow the sentiment of the market.

[robbo203]

robbo203 wrote:

 One way to test the theory would be to see if there is significant temporal correlation between sun spot events and economic events like crises.  Did Jevons ever do this or was it just speculation on his part that such a correlation  actually existed?

 Ah just spotted in your post , Adam, that Jevons did present such evidence but was the correlation "statistically significant"?

[ALB]

This article contains an outline of Jevons's thinking and argumentation on this point:http://www.economictheories.org/2008/08/jevons-sunspots-and-commercial-activity.htmlI particularly liked this quote from him:

Quote:

If the planets govern the sun, and the sun governs the vintages and harvests, and thus the prices of food and raw materials and the state of the money market, it follows that the configurations of the planets may prove to be the remote causes of the greatest commercial disasters (Inves­tigations, p. 185).

Is this a theory of what causes sun spots too?

[robbo203]

alanjjohnstone wrote:

Is there any corresponding full moon economic theory?

 I think you would have to be a "lunar-tic" to propose such a thing

[Dave B]

 Hershel on the Sun etc Life on other celestial bodies Herschel was sure that he had found ample evidence of life on the Moon and compared it to the English countryside.[29]He did not refrain himself from theorising that the other planets were populated,[30]with a special interest in Mars, which was in line with most of his contemporary scientists.[29]At Herschel's time, scientists tended to believe in a plurality of civilised worlds; in contrast, most religious thinkers referred to unique properties of the earth. [29]Herschel went so far to speculate that the interior of the sun was populated.[29] Sunspots, climate, and wheat yields Herschel started to examine the correlation of solar variationand solar cycleand climate.[31]Over a period of 40 years (1779–1818), Herschel had regularly observed sunspotsand their variations in number, form and size. Most of his observations took place in a period of low solar activity, the Dalton minimum, when sunspots were relatively few in number.[32]This was one of the reasons why Herschel was not able to identify the standard 11-year period in solar activity.[32]Herschel compared his observations with the series of wheat prices published by Adam Smithin The Wealth of Nations.[33] In 1801, Herschel reported his findings to the Royal Society and indicated five prolonged periods of few sunspots correlated with the price of wheat.[31]Herschel's study was ridiculed by some of his contemporaries but did initiate further attempts to find a correlation. Later in the 19th century, William Stanley Jevonsproposed the 11-year cyclewith Herschel's basic idea of a correlation between the low amount of sunspots and lower yields explaining recurring booms and slumps in the economy.[32] Herschel's speculation on a connection between sunspots and regional climate, using the market price of wheat as a proxy, continues to be cited. According to one study, the influence of solar activity can actually be seen on the historical wheat market in England over ten solar cycles between 1600 and 1700.[32]The evaluation is controversial[34]and the significance of the correlation is doubted by some scientists.[35] https://en.wikipedia.org/wiki/William_Herschel The stuff about people living on the Sun which was related to sun spots etc again when you read it wasn’t quite as daft as it sounds. One of the world experts on the Sun is extremely entertaining professor Lucie Green; she has done a few lectures in Manchester that I have attended and she mentioned that. There are only just starting to understand how it works. As prof Brian Cox pointed out on the radio recently bad science isn’t science that turns out to completely wrong later. 

[robbo203]

Has anyone come across Gavin Kitching’s book “Karl Marx and the Philosophy of Praxis” (1988)? Kitching, who I have just been reading, seems to be sympathetic to some aspects of Marx’s thought but is highly critical of his economics and in particular the labour theory of value. Much of his criticism seems to focus on the question of whether machines produce surplus value Briefly, Kitching argues that Marx employs a completely arbitrary “accounting procedure” to sustain his argument.  If a machine has 1000 hours of Socially Necessary Abstract Labour (SNAL) embodied in it then the maximum amount of SNAL hours that the machine can possibly transfer to each product, according to Marx, is dependent on the number of products produced over the life time of the machine itself.  So if the machine lasts for 1 year and is used to produce 50 products, the maximum value transferred from the machine to each product is 20 SNAL hours. But, contends Kitching, Marx is just inventing an example to fit the theory.  There is no reason why a machine, by amplifying the productive power of the worker should not transfer, say, 2000 SNAL hours in total over the lifetime of the machine, meaning double the number of SNAL hours embodied in the machine itself.  After all a machine can work for a longer amount of time than went into the making of that machine.  So why arbitrarily set the limit of SNAL hours it can transfer to just 1000? By the same token there is no necessary reason why the worker should be producing more value than that required to reproduce and maintain herself.  That is to say, the entire surplus value could in theory be produced by machines.  Marx is in effect rigging the whole discussion with those hypothetical examples of his in Das Kapital, using arbitrary figures plucked out of thin air Of course, if Kitching is right this has enormous implications for the whole edifice of Marxian economics. For starters, the whole concept of the “tendency for the rate of profit to fall” goes out of the window since one cannot sensibly talk any longer of the rising organic composition of capital as machines replace labour power.    In theory this means “capitalism” could happily continue even if we had a totally robotised and automated system of production.  The machines would be happily churning out surplus value while the proles are left to languish on the dole paid for out this surplus value. I say capitalism but since capitalism is predicated on generalised wage labour this would hardly be capitalism any more insofar as generalised wage labour would disappear. A revolution would no longer be necessary to make it disappear. The capitalists themselves would, as it were, be the agents of the system’s destruction by going down the road to technological innovation. And this all seems to centre on this vexed question of whether machines can add value or produce surplus value. Personally, I think Kitching is making an elementary blunder in his treatment of the labour theory of value but I would like to hear what others think…… 

[DJP]

Does this Kitching guy also think that coal, warehouses or spanners also produce value? If not why not?I'm suggesting he has made an elemtary blunder…

[DJP]

Quote:

if two tons of coal has 1000 hours of Socially Necessary Abstract Labour (SNAL) embodied in it then the maximum amount of SNAL hours that the two tons of can possibly transfer to each product, according to Marx, is dependent on the number of products produced over the time taken to use up the coal.  So if the two tons of coal lasts for 1 year and is used to produce 50 products, the maximum value transferred from the coal to each product is 20 SNAL hours. But, contends Kitching, Marx is just inventing an example to fit the theory.  There is no reason why the two tons of coal, by amplifying the productive power of the worker should not transfer, say, 2000 SNAL hours in total over the lifetime of the machine, meaning double the number of SNAL hours embodied in the two tons of coal itself.  After all two tonnes of coal can burn for a longer amount of time than went into mining it.  So why arbitrarily set the limit of SNAL hours it can transfer to just 1000?

When laid out like this the mistake is more obvious, no?Machines, like coal, are something that are used up in the productive process. There's nothing arbitrary about saying that their value is transfered to the product as they are used up.

[robbo203]

DJP wrote:

 Machines, like coal, are something that are used up in the productive process. There's nothing arbitrary about saying that their value is transfered to the product as they are used up.

  I guess, putting my Devil's Advocate's hat on, that someone defending the kind of position that Kitching holds would argue that this is not relevant since, as well as transferring the value embodied in them, machines are also capable of generating new or additional values.  That is the argument advanced by Steve Keen in Debunking Economics – namely  that “Marx reached the result that the means of production cannot generate surplus value by confusing depreciation, or the loss of value by a machine, with value creation" ( p. 294). As far as I can tell what this argument is saying is that if machinery enables the amplification of the productive power of workers thereby boosting aggregate value, how can it not be said that machinery adds value… To me though this objection is  axiomatically overcome by the simple observation that machines fo not perform socially necessary abstract labour and therefore by definition cannot add value.  The problem is how to integrate this simple observation with that other simple observation that the productive power of human labour is greatly enhanced by the use of machinery

[twc]

“Socially necessary” means, of course, necessary for the production of surplus value.That is the supreme social necessity, to which all else is subservient, in our social system.

[twc]

 Kitching is wrong.ExampleAssume that we are productive capitalists, and that the going social labour rate, i.e. the socially necessary labour rate (or money equivalent of labour time) is   1 hour of labour time = £1As productive capitalists, we are “productive” because our production process produces surplus value, ostensibly for ourselves but, under competitive capitalist conditions, we are producing it socially for competitive carve up by the entire capitalist class.Purchase of Socially Necessary MachineryTo be competitive—i.e. to be socially necessary—we, as productive capitalists, need to buy machinery, which we look for on the open, competitive, machinery capitalist market.We find a machine that appears perfect for our needs.The maker is selling it for £1000 money, for him potentially valued at 1000 hours of physical labour time.But an unsold commodity is an unloved thing, and asks “Do I really embody 1000 hours of socially necessary labour time? Am I really worth £1000?”Meanwhile, its equally anxious seller, poor fellow, has no inkling of what unforeseen surprises, game changers, and market disruptions may await him, between the manufacture and eventual sale of his product.Fortunately for him, we as part of a competitive community of purchasers, consider his machine is well priced at £1000 for our needs, and we buy it from him for £1000.Our mutual transaction has now collapsed the machine’s physical value into its money price. We, and our fellow purchasers, on the machinery market, have just validated that his machine really does embody 1000 hours of socially necessary labour time.[Note. This market transaction is not a mechanical operation. It is the working out of a socially necessary competitive process, that continually reproduces and refines itself. It is systemic development. It is, in form, though not in content, a continuous Hegelian development operating before our eyes.]End of transaction.Physical v Socially Necessary Labour Time Our machine has now dropped out of the circuit of production. It is no longer a commodity. Its destiny is no longer the market. It has been sold.Its physically embodied labour time is ancient history. Its socially necessary labour time has been settled, socially, by the market at £1000 or 1000 hours of socially necessary labour.But social evaluation is a dynamic process. Tomorrow, a competing capitalist unveils a cheaper machine that drops the socially necessary purchase price of all machines similar to ours down to £500.Lo and behold, 1000 hours of socially agreed embodied labour has been devalued, in a flash, from 1000 to only 500 hours of embodied socially necessary labour time.The actual time to produce remains the same, but capital pays scant respect to dead labour, even less so than it does to the living variety, which begs gentler handling because it alone is productive. And we, purchasers of the higher priced machine, reluctantly have to wear its social devaluation in order to remain competitive, i.e. to remain alive as a competitive productive capitalist enterprise.Relative to our new competitors, we have to spread our surcharge over twice as many products as they, in order to cover the cost of our over-valued purchase.  Paying off the cost of a machine, by the way, is a purely bookkeeping transaction.[Note. To dramatise the difference between impotent dead labour embodied in a machine and virile living labour-power embodied a worker—which is the crucial distinction here under discussion—Ruthless one-off devaluation of constant capital, such as plant and machinery, is periodically enforced by economic collapse to the delight of circling vultures who pick it up “for a song”.Such fire-sale stocks are cleared at a fraction of their original embodied physical labour hours, something that’s not feasible for precious living labour-power, which hovers about a socially necessary norm.]False Accounting in Physical ValueA machine is a socially necessary purchase but not a productive one, in and of itself. Only living labour—labour engaged in the production process—is productive, i.e. preservative of embodied dead labour time and productive of new surplus labour time.Now, most critics of marxian economics think of labour time in terms of fixed physical valuation in one form or another.The supreme example is Sraffa, who chased his tail in recursing through past labour time, reducing embodied labour time to dated labour time, ad infinitum, to utter frustration.It never occurred to Sraffa that market transaction, like our socially necessary purchase of machinery (or raw materials, etc.) is the socially necessary mechanism that short circuits all such labour reduction, once and for all, by collapsing embodied dead labour into socially necessary labour time.Physical labour time, like the category of ‘use-value’, is subservient to socially necessary labour time. And money, as in everything else in the capitalist market, is the ultimate arbiter of labour time.That’s precisely why the capitalist market cannot be understood in pure utility or physical terms.

[robbo203]

 

twc wrote:

 Kitching is wrong.ExampleAssume that we are productive capitalists, and that the going social labour rate, i.e. the socially necessary labour rate (or money equivalent of labour time) is   1 hour of labour time = £1As productive capitalists, we are “productive” because our production process produces surplus value, ostensibly for ourselves but, under competitive capitalist conditions, we are producing it socially for competitive carve up by the entire capitalist class.Purchase of Socially Necessary MachineryTo be competitive—i.e. to be socially necessary—we, as productive capitalists, need to buy machinery, which we look for on the open, competitive, machinery capitalist market.We find a machine that appears perfect for our needs.The maker is selling it for £1000 money, for him potentially valued at 1000 hours of physical labour time.But an unsold commodity is an unloved thing, and asks “Do I really embody 1000 hours of socially necessary labour time? Am I really worth £1000?”Meanwhile, its equally anxious seller, poor fellow, has no inkling of what unforeseen surprises, game changers, and market disruptions may await him, between the manufacture and eventual sale of his product.Fortunately for him, we as part of a competitive community of purchasers, consider his machine is well priced at £1000 for our needs, and we buy it from him for £1000.Our mutual transaction has now collapsed the machine’s physical value into its money price. We, and our fellow purchasers, on the machinery market, have just validated that his machine really does embody 1000 hours of socially necessary labour time.[Note. This market transaction is not a mechanical operation. It is the working out of a socially necessary competitive process, that continually reproduces and refines itself. It is systemic development. It is, in form, though not in content, a continuous Hegelian development operating before our eyes.]End of transaction.Physical v Socially Necessary Labour Time Our machine has now dropped out of the circuit of production. It is no longer a commodity. Its destiny is no longer the market. It has been sold.Its physically embodied labour time is ancient history. Its socially necessary labour time has been settled, socially, by the market at £1000 or 1000 hours of socially necessary labour.But social evaluation is a dynamic process. Tomorrow, a competing capitalist unveils a cheaper machine that drops the socially necessary purchase price of all machines similar to ours down to £500.Lo and behold, 1000 hours of socially agreed embodied labour has been devalued, in a flash, from 1000 to only 500 hours of embodied socially necessary labour time.The actual time to produce remains the same, but capital pays scant respect to dead labour, even less so than it does to the living variety, which begs gentler handling because it alone is productive. And we, purchasers of the higher priced machine, reluctantly have to wear its social devaluation in order to remain competitive, i.e. to remain alive as a competitive productive capitalist enterprise.Relative to our new competitors, we have to surcharge our products over twice as many products as they, in order to cover the cost of our over-valued purchase.  Paying off the cost of a machine, by the way, is a purely bookkeeping transaction.[Note. To dramatise the difference between impotent dead labour embodied in a machine and virile living labour-power embodied a worker—which is the crucial distinction here under discussion—Ruthless one-off devaluation of constant capital, such as plant and machinery, is periodically enforced by economic collapse to the delight of circling vultures who pick them up “for a song”. Such fire-sale stocks are cleared at a fraction of their original value, something that daren’t be done to precious living labour.]False Accounting in Physical ValueA machine is a socially necessary purchase but not a productive one, in and of itself. Only living labour—labour engaged in the production process—is productive, i.e. preservative of embodied dead labour time and productive of new surplus labour time.Now, most critics of marxian economics think of labour time in terms of fixed physical valuation in one form or another.The supreme example is Sraffa, who chased his tail in recursing through past labour time, reducing embodied labour time to dated labour time, ad infinitum, to utter frustration.It never occurred to Sraffa that market transaction, like our socially necessary purchase of machinery (or raw materials, etc.) is the socially necessary mechanism that short circuits all such labour reduction, once and for all, by collapsing embodied dead labour into socially necessary labour time.Physical labour time, like the category of ‘use-value’, is subservient to socially necessary labour time. And money, as in everything else in the capitalist market, is the ultimate arbiter of labour time.That’s precisely why the capitalist market cannot be understood in pure utility or physical terms.

 I would agree with all of this TWC but again from the standpoint of Kitching or Keen it doesnt quite addresss their claim that machines can create  new value and not just transfer their embodied value to the product.  From their point of view you are merely making an assertion – that  machines cannot generate new values – rather than showing why this is the case.  Im trying to understand how what you are saying here could be further developed to the point that could satisfactorily answer their specific objection. At the end of the day I feel the argument boils down to axiomatic point that,  by definition, machines dont perform abstract human labour and therefore cannot be said to generate value in these terms.  .  If you are going to criticise a theory you have to stick with its basic definitions and follow through the logic of the argument to its conclusion. You cannot surreptitiously import another definition of value into your own argument which is what Keen and co are effectively doing, However,  it would be useful to identify some other argument, apart from the axiomatic one, to refute them which is what I am interested in developing.  There is an awful lot at stake  here in this single problematic issue of whether machines can produce surplus value.  Nothing less than the whole Marxian worldvew – or at any rate a substantial chink of that worldview.  Because, as I said,  this question holds out the theoretical possibility that production could become totally automated under capitalism without jeopardising the capitalists' profits so that, in effect, the capitalists themselves, by bringing about the disappearance of wage labour through automation, would have accomplished something that has thus far eluded the socialist movement – the abolition of capitalism itself

[twc]

Well, if you can’t see how the market treats dead labour and living labour differently, there’s no hope for you ever seeing they aren’t the same. Dead labour has already been sold and turned into money.  It has already escaped from the market—which is what we are considering—prior to production.By dead labour we mean the past living labour that is embodied in machinery, raw materials and, it seems, donkeys.It is no longer embodied in a commodity when it enters production.  As means of production, it has been purchased as means of consumption, fit for producing surplus value.Marx’s Capital rests squarely on the fundamental distinction between means of production and living labour-power.  These guys know that, and that’s why they attack this distinction.The answer to your grave doubts therefore lies squarely on the efficacy of Capital to explain market phenomena—something these guys flatly deny. You flounder because you studiously demand I/we avoid Marx’s Capital, just like these guys.***One might reasonably assume that the efficacy of dead labour was a thing of the past, defunct, ancient history.But, having studiously sidestepped Marx, you leave us to entertain the mystical animism of the dead—the revivification of dead labour on each and every successive sale of it as paid-up means of production.  We are asked to confer upon dead labour a phantom ‘labour-power’, which it spookily exercises on its successive incarnations, double dipping, treble dipping, …, through multiple production lives ad infinitum.This scenario is none other, in a different guise, than the dreaded banker scenario. It mirrors 19th century capital by roundabout means—the benefit of deferring immediate enjoyment. The upshot is—dear capitalist, sell your means of production, your dead labour, through n successive stages of production, and you will increase its contribution to your revenue n-fold.By avoiding Capital you have no hope of discovering the difference between the living and the dead.  They are all one — a perpetual enigma of the capitalist universe… which is where defeatist minds prefer to keep it—a mystery.A detailed answer can be found in Andrew Kliman. 

[robbo203]

TWC I dont think you  have quite read what I said.  I  am not siding with Keen and Kitching in this debate.  You make it sound almost as if I am with your bizarre comment "But, having studiously sidestepped Marx, you leave us to entertain the mystical animism of the dead—the revivification of dead labour on each and every successive sale of it as paid-up means of production" I have said quite plainly – have I not? –  that I do not consider  that machines can generate new values and I gave my reason why  I think that.  I am actually on your side in this whole debate  – believe it or not! – , but you seem to have somehow misunderstood the whole point of my previous post. I was actually trying to clarify in my mind what might constitute an additional or supplementary argument against the notion that machines are capable of producing new values based on what you earlier wrote In other words I was simply wanting you to develop the points you were making a bit further so I can see more clearly how they connect with the proposition that machines do not produce new values.  I know the stuff you are talking about and frankly you are preaching to the converted but I am more interested in finetuning the argument and puttting it in more simple plain terms. There is really no need to get all  hyper defensive about it.

[Young Master Smeet]

I think the under studied concept of surplus profit is relevent here: Marx did envisage a competetive advantage to machinery: if there is a predominant method of production in an industry, innovative production methods may allow a firm to produce goods sold at a price above their value, if otehr manufacturers have to sell at a production cost based on the old method.  This isn't rent as such, but it is close.  Such a new machine would seem to create or add value. 

[Author]

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