Hardy’s Problem

[twc]

Formulation

Here is an idealized formulation of Hardy's problem.

1. Everyone assumes that capitalist productivity grows at enormous rates.

[Example. The apparent productivity growth rates may be illusory. But, take the semiconductor industry. Its productivity appears to have matched Moore's "Law" for nearly 40 years — geometric progression of 200% every 18 months. While the appearance exaggerates the reality of its productivity growth, the semiconductor industry's productivity growth is nonetheless enormous.]

2. Social growth rates of capitalist production, social [average] profit and social [average] interest limp along at a few disappointing per-cent a year.

[Example. Currently social production growth, social profit and social interest rates have taken a social nose-dive into negative territory following the economic downturn of 2008, yet social productivity growth continues to skyrocket.]

3. Is social productivity growth only as low as production growth, social profit and social interest rates at a few miserable per-cent per year?

[This is Hardy's assertion.]

4. Does social productivity growth actually exceed production growth rates, profit rates and interest rates?

[This is counter to Hardy's assertion.]

5. If, counter to Hardy's assertion, the social productivity growth rate does exceed production growth rates, profit rates and interest rates, what is its material form, and who consumes its material form?

As I see it, Hardy's Problem is ultimately about:

Looking backwards. Why capitalism didn't long ago destroy its free market through increasing productivity increasingly devaluing all of its commodities?

Looking forwards. What is the long-term destiny of the capitalist social system [if left to itself by us disruptive socialists] as its increasing productivity continues to increasingly devalue everything it produces?

Hardy's Problem is not the most urgent issue for socialists. Convincing the working class of its class interest to join us in gaining political control of the capitalist system in order to implement our Object on behalf of human kind is.

But Hardy's Problem raises important social aspects of capitalist production that we need to understand. 

Its solution goes beyond Marx's directly abstract analysis of capitalist production in Capital Volume 1 and enters Marx's investigative concrete analysis of capitalist production as a developing process in Capital Volume 3. It is here where reality [theory] must explain appearance [the phenomena we experience under capitalism].

As with Marx, solutions to Hardy's Problem should rely on free markets — ideal capitalism.

[ALB]

I don't think Hardy was arguing that productivity didn't increase in the intermediate stages of production. He was talking about the average productivity of a whole economy which is calculated by dividing total output (as measured by money) by total man-hours. Here's another article of his on the subject:http://www.marxists.org/archive/hardcastle/risingprices.htmThis brings in the depreciation of the currency which explains why prices have risen when, with increased productivity and so less labour input per unit, they should have fallen. Once you take out currency inflation the price of most products has fallen and continues to fall (this is particularly the case with electronic products). But not all. As Hardy pointed out here, there are certain products (coal, oil and other mined products) where the labour content has risen because of more difficult geological conditions encountered as more is extracted. Also, there is the cost of training and maintaining labour-power (education, training, health) which is comparatively labour intensive and costly. There is also the waste of the labour that under capitalism has necessarily to be expended on arms and on the whole business of buying and selling, money counting and shuffling.I think all these factors explain the relatively slow increase in average productivity under capitalism. At the moment average productivity in a country like the UK has fallen because output has but the total number of man-hours worked has fallen less.Note Hardy's estimate here that, with the elimination of capitalism, production could be doubled in a comparatively short period of time with the same total labour force, i.e. a 100% increase in productivity.Anyway, what do you mean by "social productivity" as contrasted with the sort of productivity that Hardy and in fact government statisticians and bourgeois economists talk about? For a definition of (labour) productivity and recent figures for various countries see here.

[DJP]

ALB wrote:

 For a definition of (labour) productivity and recent figures for various countries see here.

That link seems to have expired. Could you post the name of that publication so I can search for it on their website?

[twc]

Yes, Hardy is correct. For Marx, the following three conditions hold. Here is Andrew Kliman's summary Reclaiming Marx's Capital, (2007) p. 144 [prior to Kliman, mathematical economists failed to prove Marx's conditions, and triumphantly demolished Marx's scientific reputation]:"Marx's three aggregate value–price equalities follow immediately from his conception that competition leads to a different distribution of the surplus-value without altering the total amount already produced:total profit equals total surplus-valuetotal price equals total valuethe "aggregate" price rate of profit equals the "aggregate" value rate of profit""In Marx's view, these aggregate equalities were immensely significant. They confirmed both the law of value and his theory that all profit has its origin in the exploitation of the workers." [Andrew Kliman]ProductivityFor Marx, "aggregate" productivity is precisely "aggregate" rate of exploitation. Here are four equivalent expressions for it:total surplus labour time / total necessary labour timetotal profit / total wagetotal surplus-value / total labour-powertotal profit / (total price – total profit)So the annual growth rate of productivity for this year´ relative to last year, has these equivalent expressions:(total-profit´ / total-wage´) / (total-profit / total-wage)(total-profit´ / total-profit) / (total-wage´ / total-wage)relative increase in total profit / relative increase in total wage.The last expression clarifies exactly what Hardy is saying:the rate of productivity increases in direct proportion as the total profit increases the rate of productivity decreases in direct proportion as the total wage increases.So, if total wages keep pace with total profit, then — in purely capitalist exploitative terms —  total productivity hardly changes! Of course. Hardy is absolutely correct. [That is certainly not what I expected.]But Hardy's Solution must also be understood as a uniform gloss upon the terrible disproportionalities that lurk beneath the apparently serene "statistical lie" of social averages.We need to unmask the un-serene actuality in future posts.  

[ALB]

I hadn't realised that I was providing a link to a site where you probably have to pay the second time you look at it. Anyway, here's how I found the statistics. I went here:http://www.oecd-ilibrary.org/sites/factbook-2011-en/03/03/01/index.html;jsessionid=3lr9owoj37ivj.delta?contentType=/ns/Chapter,/ns/StatisticalPublication&itemId=/content/chapter/factbook-2011-24-en&containerItemId=/content/serial/18147364&accessItemIds=&mimeType=text/htmland clicked on "Indicator in PDF" in the top right hand corner. The document is entitled "Labour Productivity Levels" and the source is given as OECD Factbook  2011-2012 Economic, Environmental and Social Statistics.Hope this link works (long enough) this time. If not, here's how productivity is defined:

Quote:

Labour productivity is measured as GDP per hour worked.

and from wikipedia on the OECD's definition of productivity:

Quote:

Labour productivity is equal to the ratio between a volume measure of output (gross domestic product or gross value added) and a measure of input use (the total number of hours worked or total employment). (Freeman 2008,5)labour productivity = volume measure of output / measure of input useThe volume measure of output reflects the goods and services produced by the workforce. Numerator of the ratio of labour productivity, the volume measure of output is measured either by gross domestic product (GDP) or gross value added (GVA). Although these two different measures can both be used as output measures, there is normally a strong correlation between the two. (Freeman 2008,5)The measure of input use reflects the time, effort and skills of the workforce. Denominator of the ratio of labour productivity, the input measure is the most important factor that influences the measure of labour productivity. Labour input is measured either by the total number of hours worked of all persons employed or total employment (head count). (Freeman 2008,5) )

Obviously, Marx could not have used figures for this since these statistics were not available in his day. The nearest he came to this is what TWC refers to, i.e. GDP/total wages paid. The OECD has produced some statistics on this too (see: http://www.oecd-ilibrary.org/employment/oecd-employment-outlook-2012/labour-losing-to-capital-what-explains-the-declining-labour-share_empl_outlook-2012-4-en 0Actually, what they measure is total labour income/national income as a percentage. What the figures show is that between the early 90s and the late 2000s the average labour share in all OECD countries fell from 66.1% to less than 62%. Or TWC's "social productivity" (national income/total wages) rose during this period from 1.51 to 1.62 which is not a very rapid rise over 20 years. By coincidence, there'll be a short article on this in the December Socialist Standard

[twc]

  Complex Adaptive CapitalismHardy's Solution shows precisely why capitalism survives.It also suggestively reveals the complex-adaptive-system that human society, which unfortunately includes capitalism, clearly happens to be.I list its complex-adaptive-system hallmarks.System is human society — human society conceived of as a single unit, an entity, an object in its own right.Consequently the word "social" refers to society as a whole. A class-divided society is therefore a wounded thing — something ideally whole but materially divided.It cries out to us to heal its wound.System driving force is social production — social labour acting on social resources by means of social instruments — or class labour acting on class resources by means of class instruments.Production is constant and periodic.System invariant is fixed social property relations — social or class ownership and control over social production.In Marx's terminology, social relationships of ownership and control over production are called the social base.System behaviour is a Marxian "reflection" arising from the foundation — a feedback mechanism that limits possible development trajectories for system behaviour. It is a consequence of the social base.In Marx's terminology, system behaviour is called the social superstructure.System trajectories evolve through persistent periods of self-similarity.In capitalism, we see an evolving self-similar free-market superstructure raised upon an evolving self-similar social base of fixed but shifting capitalist-class ownership-and-control relations.System transitions transform one persistent self-similarity state into another persistent self-similarity state by revolution — periods of stability punctuated by phase transitions.When a system trajectory exhausts the superstructure's possibilities [behaviours], there follows a system crisis characterized by the remarkable Marxian mechanism of the base determining the superstructure to redetermine the base. This is the social revolution. The crisis is overcome by the superstructure deterministically changing the system's base to correspond better to its already deterministically-changed superstructure.System agents are us. We social human beings acting out our social needs.  

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