Monetary Calculation II

Labour Theory of Value : Labour Power : Capitalism

Thanks to Kevin for his reply below. Just some additional thoughts.

The thrust of my arg8ment is that teh market is not an efficient resource allocator. My point about comparative market advantage and organic composition was solely to show that over a given period a capital may find it profitable to use relatively expensive and inefficient methods.

Market efficiency, especially with the Labour Theory of Value, merely reflects how well current productive practices are geared up to attaining certain ends. For example, if we were to sit down and design an energy distribution system from scratch, we could discover that - and we're pretending here - solar power is more efficient on all points than coal. At the moment though, there are not enough solar pannel production plants and power production is geared towards coal-fire stations, so on a cost basis, coal comes out as by far cheaper.

I'd add, further, that Kevin provides me with another example of how the market may be counter-intuitive. See, when someone has built a mass transport system it becomes more efficient from a market perspective to carry goods over long distances - because the train or boat is going there anyway, so we might as well fill the bugger up. We might not, as a point of logic, start from that sort of practice, but once it's there, the market will use it.

Finally, on knowing your contribution. I have a regular example - Bill's Cricket Ball Factory. One worker cuts and dyes leather. One worker sews the leather, another shapes the cork, another embosses with gold leaf and anotehr shoves the ball in the box. All of these jobs are essential to the productive process, we cannot have the process without any one of them. Together, they add the marketable value. How can any one of them - given their mutual essential roles - be said to add more value than the others. Some of them will certainly command higher wages, but that reflects the cost of their type of skill on the market - not their specific contribution to the process. How available is their labour?

Now, Marx's great discovery was that in fact we do get the full value of our product. Our product, though, is not the thing we make, but our labour power, our skill, our ability to work. We are paid that full market price for that. We are not paid at all for the things we produce, and our wages do not relate to the things we produce.

Tomorrow - Tories!