21st Centuary Socialism

servicesocialist Wrote:
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> Sorry, the equality between surplus value and use
> value less exchange value is invariably accepted
> by economic students of Marx (see Marx's revenge
> by Meghnad Desai, Verso 2002 page 57.

I think we should hold on this for now, I have not read Desai on this, but what I have done is send your account of surplus value to a mailing list of socialist economists (OPE-L) to see if any of them have come accross this formulation before. I will tell you what the response is.

> The passages you quote imply that Marx believed
> value always expressed itself economically in
> commodities (ie visibles or tangibles). He does
> not seem to say value is also embodied in a
> service like teaching, parenting, writing etc.
In Theories of Surplus Value volume 1 he clarifies that services which
contribute to the formation of labour power are productive:

"Productive labour would therefore be such labour as produces commodities or directly produces, trains, develops, maintains or reproduces labour-power itself. Adam Smith excludes the latter from his category of productive labour; arbitrarily, but with a certain correct instinct—that if he included it, this would open the flood-gates for false pretensions to the title of productive labour."

>
> The passages also suggest that value is labour
> power embodied in a commodity and this is
> measurable by working out the amount of time used
> (under a particular set of technical conditions)
> in producing it.


One should distinguish between Marx's concept of labour power and labour, which follow the distintion that James Watt made between power and work done. Watt defined the horse power of his steam engines as their ability to do work over time - specifically to lift a certain weight per minute. The work done, is the final lifting. For marx Labour Power is the ability to do work, labour which contributes to value is the actual work done. It is the same as the distinction between kiloWatts ( which measure power ) and kiloWatt hours, which measure work done.


>
> There are two problems with this. The first is
> that the value of the labour time is calculable
> based on the worker's wages. But what are the
> worker's wages? These are determined by demand for
> wage labour which is in turn determined by the
> surplus value process. So there is a circularity
> in this analysis (chicken or egg; wage or surplus
> value as the starting point for the system).
-------------------
This circularity in earlier versions of the labour theory of value is what Marx overcame by the distinction between labour power and work done. The wage rate is paid for hiring the ability to work, the actual amount of work done during a working day then varies, capitalists obtain profits by lengthening the working hours and intensifying the work done.
>
>
> If you use the time measure to assess the value of
> a service (how much time have I spent producing
> this note for example?), there is no determinate
> answer. You might say five minutes, since this is
> the amount of time I am sitting here. Therefore,
> the value of this is 1/12th of my hourly
> salary/wage. I would argue that the time spent on
> this letter should also encompass my thinking
> time, my reading time and, in fact, all the
> elements of my mental formation since birth that
> have contributed to me doing this. That's going to
> be quite a lot more than 1/12th of my hourly
> salary/wage.

This is correct, a socialist economy would have to count the amortised cost of training in the labour spent on a project
>

You wrote

In Theories of Surplus Value volume 1 he clarifies that services which
contribute to the formation of labour power are productive:

"Productive labour would therefore be such labour as produces commodities or directly produces, trains, develops, maintains or reproduces labour-power itself. Adam Smith excludes the latter from his category of productive labour; arbitrarily, but with a certain correct instinct—that if he included it, this would open the flood-gates for false pretensions to the title of productive labour."

It is not clear what "directly produces, trains, develops, maintains of reproduces labour-power itself" actually means. Does that mean that Marx considers teaching (however measured) as a commodity? If it is, how would Marx analyse it in terms consistent with his analysis of the production of a commodity (which is essentially value-added/input-ouput)?

You said:

"One should distinguish between Marx's concept of labour power and labour, which follow the distintion that James Watt made between power and work done. Watt defined the horse power of his steam engines as their ability to do work over time - specifically to lift a certain weight per minute. The work done, is the final lifting. For marx Labour Power is the ability to do work, labour which contributes to value is the actual work done. It is the same as the distinction between kiloWatts ( which measure power ) and kiloWatt hours, which measure work done."

I understand the difference between flow and stock, but I don't see how that addresses the question thrown up by Marx when he said value is measurable in terms of labour time (flow) and expressed in the value of a commodity (stock). If that is the case, how do you accurately or scientifically value a service since it is impossible to define scientifically how much time is really involved in producing teaching or other brain services?

You wrote:

"This is correct, a socialist economy would have to count the amortised cost of training in the labour spent on a project."

Actually, what I am saying is that it's impossible to do that since you cannot scientifically work out the real value of the training since that in turn requires forming a view about the inputs that have gone into the teacher (his or her education and mental formation etc, etc).

My fundamental point is that you can't work out scientifically the value of a service and (consequently) the value the use of that service creates. If you can't do that, you can't work out surplus value and the rate of exploitation and you can't the present income distribution (or any other income distribution) as wrong or right in any terms that can be scientifically defined.

Consequently, the Marxist basis for analysing and criticising the capitalist mode of production evaporates when you look at services, though we can all complain about it being unfair. This may or may not explain why Socialist arguments have failed to win over service workers in the way they won over manufacturing workers, who could at least see that Marxist analysis was actually about what they did in a factory. An accounts clerk working in an insurance firm really can't do that.

You can, however, reconstruct a corruscating critique of the capitalist mode of production by asking the fundamental first question: what is value and how is it created in a service economy (and in my view in any economy).

My answer is that value is only created through human interaction/co-operation/collaboration and that value is immeasurable, though every human knows what it is and can attempt to quantify it from his or her own subjective perspective.

For example, my relationship with my brother exists, it is important to me and add values to my life and, I hope, to his. But I would never attempt to quantify it in money terms or endeavour to offer payment for it, as you would normally do for the exchange of tangibles, since the very act of doing so would damage that relationship and reduce its value to us both. The relationship is not a linear, buy-sell one. It is interactive and delivers value to both of us in different ways that can't be quantified.

I do however give and receive gifts of things and in kind in order to express that I value the relationship that I have with him. And in doing so, I am simultaneously enhancing the value of the relationship between us.

What is important is the relationship: the tangibles from birthday presents to a room for the weekend are only the means or process by which my relationship is facilitated. Hence my original argument that value creation involves two elements: relationships (where value is created) and processes, which facilitate relationships and the consequent value creation. The cup has no value in and of itself (though it has a price). It's worth is expressed comes when it is used in a social, value-creating context.

This mundane illustration of what value is, how it is created and how it is increased might be used to analyse how value is created and distributed in a service economy in general.

A doctor uses his or her skills to help a patient. That patient helps the doctor by honestly talking about his or her physical condition and co-operating with the doctor. The doctor receives a tangible (though this is done through the state in the UK) which does not encompass in full the value created in the interchange but acts more as a gift that expresses gratitude in a tangible form rather than a payment that pretends to capture the full worth of what the transaction has delivered to the patient.

Can you fault the analysis of what is going on in this example of a service transaction (substitute teacher and pupil, diner and restaurant waiter, financial adviser paid a fee and a customer etc according to taste)?

It may not be Marxist, but isn't it ethically Socialist?

The problem with taking value to be an immeasurable is that I dont see how you are going to be able to construct a scientifically testable theory from that.

I agree that service workers - in the private financial sector - are not traditionally supportive of socialism, but service workers in the public services often are.

But this probably reflects real class interests that no amount of clever argument will overcome.

Because it isn't measurable doesn't mean it doesn't exist.

20th century Socialists focussed on measurables and immeasurably damaged their own cause. Stalin believed collectivising farms (tangibles/processes) would increase economic growth but it actually achieved the opposite by destroying the social connections that made much of rural Russia productive.

Post-war planners replaced crumbling houses with modern tower blocks but unwittingly simultaneously destroyed the invisible elements that bound low-income communities together and made them work, as my parents can testify. The history books show that practically every attempt at Socialist construction (Marxist or not) has tended to emphasise the production of tangibles and marginalised the role of human interaction where value is actually created.

On the final two sentences, service workers in the private sector (and they don't all work for banks; you will find them in construction, the media, training etc) are the largest element of what might now be called the working class, though I reject all such social categorisations. Your comment suggests that this group, most of whom are inadequately paid and have less job security than their public sector counterparts, is irredeemably lost to Socialist argument.

Despite their low pay, lack of assets, poor pensions and limited personal autonomy, they are in fact (if my reading of what you said is accurate) part of the exploiting class. This is objectively wrong since they are the most exploited workers of all in terms of the difference between the use value and exchange value of what they produce. The evidence is that the most profitable companies in Britain are service firms, not companies that produce tangibles.

The reason why the majority of low income workers (in services or anywhere else) are not rushing out of their homes to demand Socialism is that the arguments they have hitherto heard and the examples they have so far seen are either incomprehensible or unnacceptable.

It's not their fault, it's ours.

I do not claim to have recently read everything. I wanted to get to the root of the Marxist view about what value is and how it is created.

My original question was: did Marx, and do subsequent Marxist economists, make a distinction between the production of tangibles and intangibles.

Your categorical answer is no.

I have asked Mr Cockshott the same question and he also seems to give the same answer.

If everyone else concurs, my inquiries are now at an end.

Thanks everyone.

Servicesocialist, I have to agree with Paul C. You clearly haven't read much, if anything at all, of Marx's economic writings- instead you are quoting a member of the British House of Lords for your information about Marx's analysis!

Re: 'intangibles'. Marx was of the view that service production in the private sector can be analysed in the same way as the production of material goods. This is a famous passage from Chapter 16 of Capital vol. 1 (it's in page 644 of my Penguin edition):

"That labourer alone is productive, who produces surplus-value for the capitalist, and thus works for the self-expansion of capital. If we may take an example from outside the sphere of production of material objects, a schoolmaster is a productive labourer when, in addition to belabouring the heads of his scholars, he works like a horse to enrich the school proprietor. That the latter has laid out his capital in a teaching factory, instead of in a sausage factory, does not alter the relation. Hence the notion of a productive labourer implies not merely a relation between work and useful effect, between labourer and product of labour, but also a specific, social relation of production, a relation that has sprung up historically and stamps the labourer as the direct means of creating surplus- value. To be a productive labourer is, therefore, not a piece of luck, but a misfortune."

Marx is absolutely clear on this: "That the latter [the school-owner] has laid out his capital in a teaching factory, instead of in a sausage factory, does not alter the relation."

And the same would apply to a chain of hairdressing parlours, or to Richard Branson and his transport businesses, or to privately-owned health clinics.

You may agree or disagree with this. Paul Cockshott suggests a re-formulation of the concept of 'productive labour'; this is interesting & ought to be considered.

Paul has read Marx and therefore has some basis for his critique.

Servicesocialist, why don't you read what Marx actually wrote before you claim that Marx's analysis of commodity production and surplus value doesn't apply to service industries?

Now to use value and exchange value.

I haven't read Baron Meghnad Desai's book, but if you are quoting accurately, "the equality between surplus value and use value less exchange value", or, as you put it in an earlier post, "surplus value equals use value minus exchange value paid by the user of the commodity bought before its use in production", then then I would suggest this to you: don't rely on Lord Desai!

You can't subtract use value from exchange value, any more than you can subtract apples from oranges. They are completely different concepts. To greatly simplify, the use-value is the purpose of a product, by which it satisfies a human need. The use value of a pair of shoes is that you can walk around in them, and, if they are fashionable enough, impress your friends!

In a lovely example Marx gives in Capital vol. 1, a man goes to the market, sells some linen, and purchases a bible. The use-value of the bible, to the man who has purchased it, is the edification of himself and his family. And with the proceeds of the sale, the 'bible-pusher' (in Marx's wonderfully poetic language) buys a bottle of brandy; the use-value of which is that he can... get drunk!

The exchange value (more often referred to using the single word, value) is the proportion by which one kind of product exchanges, in the market, for another. Through barter, the cobbler might exchange a pair of shoes for twenty loaves of bread from the baker; thus the value of one pair of shoes is 20x that of one loaf of bread. Marx argues that underlying this relationship is the different amounts of necessary labour which have gone into the creation of these products.

I don't want to go any further into this, because it is explained very nicely in the first few pages of Capital vol. 1, which you can get from a bookshop or a library, or read online at: [www.marxists.org]

I am sure you mean well, Servicesocialist, but if you want to find out whether Marx's economic concepts can be useful in helping us understand the world of today (and thereby, assist is to try & change it) then you need to read what Marx actually wrote. You might find that much of Marx's analysis is still very relevant, and even that it challenges your opinion that the concept of the 'class struggle' is useless or harmful.

On the latter issue- I invoked Venezuela not to suggest that you should visit that country (though that might do you no harm, and I'm sure that Capital vol. 1 would be good airport reading). I'm suggesting that you take a look at Venezuela as an example of how those who benefit most by capitalism are engaging in a struggle against the socialist government.

In an earlier post you mention privatisation. Privatisation, along with the rest of the neo-liberal agenda, was imposed not because it increases 'efficiency', but because (among other reasons) it re-distributes income from the poor to the rich. The imposition of neo-liberalism was part of the capitalist class struggle against the majority of people on our planet. If socialists abandon the class struggle, it doesn't stop the pro-capitalist forces from engaging in their class struggle and pressing home their advantage.

Firstly, a correction; then a point, on which I'd be interested in Paul Cockshott's views.

In my post above, I used the example of a cobbler exchanging, by barter, a pair of shoes for twenty loaves of bread, and added, "thus the value of one pair of shoes is 20x that of one loaf of bread. Marx argues that underlying this relationship is the different amounts of necessary labour which have gone into the creation of these products."

Having checked Chapter 2 of Capital vol. 1, I must point out that Marx's view was that products did not begin to be exchanged according to their labour-time based values until a 'universal equivalent' commodity, against which the values of other products could be rated, emerged. The commodities which eventually became the dominant universal equivalents were gold and silver.

Now, skipping forward a couple of thousand years-

Paul states:

"One has to ask how was the money that is paid to the City of London for financial services originally acquired?

It comes from the surplus value, the proceeds of exploitation, in other countries. Millionaires abroad, who have made a packet exploiting workers in their own country, invest some of the proceeds via the City of London, a cut from which then goes to the City institutions."

Thus the City of London acts as a means of capturing wealth which is created elsewhere, rather than creating wealth; also, the different financial instruments, eg puts, calls, derivatives etc, are all variants of interest on debt; which can be traced back to surplus value from the productive sectors of the global economy?

This is a hugely important issue, especially for people in Britain. I'd be grateful if Paul, or anyone else, could point to any articles or books which go into a bit more detail on this.

I agree that it is a hugely important issue, I hesitate before suggesting a book on it.
You could try the 'Political Economy of Money and Finance', by the eminent Japanese Marxist Economist Itoh, and his collaborator Lapavistas.

But in my view a really thorough analysis of how this relates to the City of London remains to be done - perhaps a group of readers of this web site could be brought together to collaborate on it.

I totally agree with this post and I think that the economy passes through a difficult period in this period, but certainly there will be good moments too. Cazare Rasnov