WHAT HAVE I BEEN DOING -- PART TWELVE

My success at downloading the 1981 article, "A Critique and Reinterpretation of Marx's Labor Theory of Value" has made it possible for me to incorporate portions of it into this narrative, rather than trying to recreate its argument de novo.  I will omit completely the mathematics, relying on interested readers to find their way to that article for the hairy details.  [I am pretty thrilled by the fact that forty-five of you have already done so!]

 

The problem, just to repeat myself, is to find some way of modeling the anomalous condition of the workers in a capitalist economy so that this anomaly makes its way into the mathematics rather than serving merely as an extraneous story that Marx tells while doing his economic analysis.  My strategy is to ask what happens in our model if the producers of one of the inputs into production have imposed on them quite arbitrarily the constraint that they, unlike their fellow capitalists, are unable to shift their investment from sector to sector in search of the highest available rate of return.  After analyzing mathematically what happens to prices in that peculiar case, I then give Marx's reasons for believing that labor producers, which is to say workers, do indeed suffer under that constraint.  We shall see that everything Marx wants to say about exploitation can be captured by this maneuver, and can be demonstrated to be what in fact happens in a capitalist economy, all without invoking a supposed distinction between labor and labor power.

 

Here is what I say in my 1981 article:

 

We have been looking at the consequences that flow, in our model, from the imposition of some exogenous constraint on the ability of producers in one sector to earn the going rate of return on the value of capital invested. Since the mechanism that insures a uniform rate of return is the free flow of capital from sector to sector -- capitalists shifting their capital out of sectors yielding a relatively low return and into sectors yielding a relatively high return -- our exogenous constraint must consist of some impediment to the flow of capital into or out of the industry in question.

 

Now, I should like to suggest that this is precisely the proper way to construe labor in a capitalist economy. This is not, of course, the way in which labor is treated either by Ricardo and the neo-Ricardians or by the neo-classical school. Sraffa and his followers treat labor as a non-reproduced resource, the amount of which is given for a given economic system. Indeed, the total quantity of labor available to the system is one of the normalizing constraints on the system, in Sraffa's analysis. But this is clearly not the way in which Marx thinks of the matter. Labor power is described by him as a commodity, and a commodity, technically speaking, is a good produced for the purpose of exchange on the market in such a manner as to be characterizable as having been produced by abstract, socially necessary labor. (What this means, among other things, is that there is a competitive market for the commodity that drives out inefficient means of production, and so on.) Like all other commodities, labor power has a natural price, toward which its market price tends.

 

So we must render labor power, in a model of a capitalist economy, as a produced commodity, and insofar as we restrict ourselves to the simplification of single-product industries, we must identify one of the industries in our model as the labor industry -- that is, the industry producing labor power for ex-change on the market. Precisely at this point, as Marx is at great pains to make clear, the whole superstructure of liberal bourgeois philosophy and political theory and law is introduced to justify the treatment of labor power as a commodity. Workers are treated in law, in ideology, and in philosophy as small producers, petty entrepreneurs who bring their product, like any other capitalists, to the market and exchange it for the products of other capitalists' enterprises. Their fixed capital is their bodies, which --according to classical liberal philosophy and jurisprudence -- they own. Their circulating capital is the fund they spend for food and clothing. Assuming that they live at the level of bare subsistence, the worker-capitalists are not likely to hire labor services (although they may be forced to go to a doctor from time to time). Hence, all their capital will be constant capital, none of it will be variable capital, to use Marx's terminology.

 

Why are the workers unable to move their capital freely to sectors paying a higher rate of return? The simple answer, of course, is that their fixed capital is their bodies and their circulating capital is the food they eat to stay alive. A steel producer who finds the return in steel declining can, given a long enough period of time, cash in his investment and shift his capital to clothing, rental housing, or luxury appliances. The worker who notices the absence of any significant rate of return on her capital investment, and who, like any prudent capitalist, wishes to shift to a more profitable line, will find it necessary to separate herself ("alienate herself," to use the technical legal term) from her body. And by a quite unfortunate metaphysical accident -- which, however, can scarcely be blamed on capitalism itself! -- she is unable to survive that particular liquidation of her investment!

 

It will be objected that workers are not really petty capitalists. Just so. But the objection entirely misses the point of Marx's analysis. The workers must be made to appear as petty capitalists, in law, in political philosophy, and in the formal theory of political economy. A political economy that fails to model the essential mystification and ideological self-deception of capitalist economic, political, and legal relationships will be an inadequate theory of capitalism. An adequate political economy must capture that feature as false, in order to be true to the reality and to the appearance of capitalism.

 

We have here a very strange requirement indeed. We need a formal model of an ironic, dialectical relationship between appearance and reality. The trouble with other attempts to capture Marx's meaning is that they are either literary renderings, which preserve the irony and the intricate interrelation between appearance and reality, but without the formal structure that will allow us to calculate the magnitudes of the relevant variables; or else they are formal models, like the Sraffa model, that lose entirely the element of mystification and self-deception. If we agree with Marx that capitalism has its own mad logic, then we will search for a model that embodies both the logic and the madness of capitalism. I suggest that the correct way to begin this process is to treat the workers as though they were petty entrepreneurs, producers, producing a commodity-labor power-for the market, and then capture the inner madness of this way of thinking of them by stipulating that they, alone among all capitalists, are unable to shift their capital about from sector to sector.

MY NEW TOY

Emboldened by my success in locating my Marx article and uploading it to box.net, I went looking for my 1987 review of Allan Bloom's The Closing of the American Mind, which achieved a certain cult fame in some circles [the late Christopher Hitchens was a fan.]  It is, I think, the funniest thing I have ever written, an absolutely perfect send-up.  It is now on box.net, and is worth a read.  It is only two printed pages long.

THE WONDERS OF THE WEB

Box.net tells me that since I posted my 1981 Marx essay there this morning, twelve people have looked at it.  That is probably seven more people than read it when I published it thirty-two years ago.  Extraordinary.  Seth, you are mathematically clued up in a major way.  I would be curious what you think of it, should you be moved to look at it.  I had high hopes for the piede when I wrote it, but publishing it in a Philosophy journal was probably a major error.  Oh well.

MORE STUFF FOR YOU TO READ

I have reached the point in my current many part exposition when I am going to try to summarize some of the conclusions from my 1981 journal article, "A Critique and Reinterpretation of Marx's Labor Theory of Value."  I re-read the article this morning, and realized that it is extremely rich and complex -- far too complex for me to summarize all of the conclusions in this current exposition.  So, using the library privileges that Duke extended to me several years ago, I went to JStor and managed to download the article.  I have now posted it in PDF format on box.net.  I warn you that it is a trifle hairy mathematically [well, not really that hairy -- I mean, linear algebra is basically undergraduate math, even including Perron-Frobenius theorems about maximal eigenvalues and all], but to at least some of you this will be quite manageable, and the non-mathematical parts are really quite interesting, so if you are following all of this Marx stuff with bated breath [dare I hope?], you might want to take a look at it.

SIC TRANSIT

I have just learned that Ronald Dworkin died in England today, or yesterday, of leukemia.  Ronnie and I were at Harvard together.  I think we graduated in the same year, but I may be wrong about that.  Since we were both studying philosophy, we got to know one another.  I liked Ronnie a good deal, even though he was manifestly a classier guy than I was.  He had a quizzical and puckish sense of humor, besides being, needless to say, super bright.  That was a pretty good little group of philosophy students, including among others my friend and later apartment mate and colleague Charles Parsons.

Ronnie was eighty-one when he died.  Back in those days, that would have seemed unimaginably ancient.  Now, alas, it seems all too young.

WHAT I HAVE BEEN DOING -- PART ELEVEN

Before turning to Marx's real explanation for capitalist exploitation of labor, let me spend a few minutes talking about what has just happened, for it may not yet be entirely clear.  Marx undertook to explain the exploitation of the working class by drawing a distinction between labor and labor power, a distinction he claimed was unique to the labor inputs into the production process.  But as I showed in the journal article to which I referred, the same calculations by means of which one shows that the surplus labor extracted from the workers ends up being appropriated by the capitalist in the form of surplus labor value can be duplicated for any basic input simply by computing the quantity of that input directly and indirectly required for the production of each of the other commodities in the system, and then comparing the quantity of surplus A-value [for the chosen commodity A] with the A value of the physical surplus.

 

To put the point succinctly:  the story Marx tells is not reflected in the model he [implicitly] constructs.  I am reminded of a famous remark made in 1957 by Paul Samuelson, the first person ever to win the newly established Nobel prize in Economics, and widely considered the greatest living economist.  Samuelson observed that in a General Equilibrium system with perfect competition, it does not matter whether capital hires labor or labor hires capital.  He was quite correct about his model, as we would expect him to be, and generally speaking, folks who heard or read this remark took it as evidence of the irrelevance to economic theory of any moral condemnations of exploitation or of the tyranny of capital over labor.

 

But I read the remark quite differently.  That capital hires labor is the simplest, most obvious, most universal, most indubitable fact about capitalism.  Any model that purports to reveal the structure of capitalism and yet fails to capture that elementary fact is obviously completely inadequate!  One might as well offer a model of American politics that has no place in it for the fact that periodically Americans hold elections.

 

Well, it is time to take a look at Marx's real explanation of the fact of exploitation.  After I have reviewed it [briefly, since I am sure you all familiar with it, whether you realize it or not], I shall suggest an alternative little model of a capitalist economy that does actually identify formally, not merely anecdotally, the distinctive feature of labor that distinguishes it from all other inputs.

 

Marx begins by observing that in every known economic order, a small group of people take legal, military, and ideological control of the means of production, excluding others from what they need to live unless they yield up some tribute, be it in the form of a share of the crop, or taxes, or labor services, or money.  Land is the first and most important productive force to be thus seized and controlled, but eventually all of the means of production, and of their monetary representation, comes to be controlled by one class, which is thereby enabled to rule the society.  Using military force when they must and law when they can, and always appealing to theology, philosophy, or ideology to justify what they have done, the takers, as Mitt Romney likes to call them [even though he misidentifies them] force the makers -- the farm laborers, the miners, the machine operatives -- to turn over much, if not most, of what they have produced by their labor, allowing the workers to keep barely enough to survive so that they can continue to labor.

 

Marx was the first great economic historian, and he gave a classic account of the centuries long process by which farmers, miners, and craftspeople were reduced to a propertyless proletariat, forced to sell their one remaining possession, their labor, to those who had monopolized the means of production.  In Marx's day, even the specialized skills of the traditional crafts -- weaving, spinning, metalworking, and the like -- were being embodied in machines, so that over time workers ceased passing them on through apprenticeships.  Skilled craftspeople were reduced to machine operatives, and then replaced by their own children, who could run the machines just as well and do it for a good deal less money.

 

It is this fact -- the complete separation of the workers from effective access to or control over any means of production at all save brute labor -- that is the condition and explanation of their exploitation.

 

Thus we must ask:  How can this fact be represented formally in the equations that capture what happens in the spheres of production and market exchange [or circulation, as Marx calls it?]  To find an answer to that question, we need to be very clear about just how the worker's divorce from the means of production affects his or her economic position.

 

Let us start by looking more closely at the situation of the capitalist, the entrepreneur.  He possesses or can lay his hands on capital in the form either of money or of land, tools, machinery, patents, raw materials, and so forth.  His economic activity is regulated solely by a search for the highest rate of return, and it is his fact, which leads him to transfer his capital from one sphere of production to another, when he sees that he can improve his rate of return, that equilibrates the economy wide profit rate.  As he shifts into a more profitable line, the total output in his old line drops, because he is no longer producing.  That drives up prices, and raises the profit rate a bit in that industry.  Meanwhile, he starts producing in the industry with the higher rate of return [remember that we have assumed perfect information], and by doing so he increases the quantity in the market of the commodity he is now producing, and that has the effect of lowering prices and thereby reducing the rate of return.  Thus, by the "higgling and jiggling" in the market, in Smith's lovely phrase, a single economy wide profit rate emerges.

 

Now the worker is conceived, in the economic theories that are out forward to rationalize capitalism, as a small businessman or woman who produces a commodity -- labor power -- and sells or rents it out in the market, just like any other capitalist.  When there is a shortage of this commodity, labor power, the price, or wage, goes up.  When there is a glut [as is usually the case -- see once again Marx's reference to the "reserve army of the unemployed"], the price falls.

 

But the worker, along among all the capitalists in this system, is unable to shift his capital into a more profitable line of production, for his capital is his body, and the only way he can cash that in is -- by cashing it in, which is to say, by dying.

 

This is what it means to be a propertyless prole.  The maker of buggy whips can shift to carburetors when the horseless carriage replaces the horse.  The owner of Sears Roebuck stock can sell as it starts to fall on the exchange and buy Gap stock instead.  But the worker is, by a mere metaphysical accident, tied to her capital, and forced therefore to continue production in a line that is earning little or no rate of return over and above mere replacement costs.

 

Now, is there some way to capture this central fact of capitalism in a set of equations?  Indeed there is, and tomorrow I will indicate how I attempted to do just that in the article to which I have several times referred.

MR TOAD OF TOAD HALL

I have on several occasions observed that I seem to exhibit a degree of self-absorption that might lead me to be compared to Mr Toad of Toad Hall in The Wind in the Willows.  I have now conceived a new project to occupy me in my declining years, and I am afraid it will simply confirm this diagnosis.  It has occurred to me to create a searcheable CD of everything I have ever published, together with all of the tutorials, mini-tutorials, and appreciations I have posted here, my three volume memoir, and a selection from the file drawer full of unpublished lectures, essays, and drafts, plus perhaps a selection of correspondence from notable or interesting people, all to be accompanied by brief introductions or explanations newly written.  Once this task was complete [and it is rather daunting to think about it], I could offer it to anyone who was interested in having it for roughly the cost of reproduction and mailing, which is to say maybe five dollars.

The biggest challenge would be scanning into a first rate OCR program all of the materials that exist only on the page and not in electronic form.

I mean, how many more series are there like Alias and House of Cards with which I can wile away the hours?