Monetary Calculation
Capitalism : Profits : Labour Theory of Value
Had an interesting discussion in the comments over at Kevin Carson's place regarding the market's capacity to regulate environmental efficiency (pollution and resource usage and the like).
Just two points to continue (rather than filling up room at mutualist blog). Large firms may prefer relatively expensive inputs because they may promote productivity - our old friend the organic composition of capital says that capitalism rewards capital, not efficiency. Profits would flow to the firm using the capital intensive methods of production away from more eco-friendly firms (possibly). This could be further exacerbated by the possibility of capital using productivity to turn over rapidly on a lower per unit profitability to achieve a higher annualised rate of profit.
The point is, is that money prices do not contain the full value of a good. In a misty past they may have once - when one person could produce a good from inputs and there was no doubt as to their contribution, they could receive the full value - the muythical table maker that people always bring up in conversations about abolishing money (as if table makers don't have mates and apprentices helping them out). However, once you reach social production, this isn't the case.
I'll take the classic example. Diamonds. They formed the bedrock of Adam Smith's case for the Labour theory of value (in short, Water - essential to life but cheap, diamonds, virtually useless but expensive, whole utility cannot be the source of their value, so we need to look elsewhere, eventually, to Labour).
Now, objectors to LTV oft times bring up diamonds to try and show how rarity is the cause of value - after all, it can't be labour because there's bugger all labour in picking up a diamond from some desert sand, yeah?
Supporters of LTV in fact find in diamonds (and gold) as a startling proof of the theory - the value of the diamond is not reflected merely in the labour of the one person (say) who finds it, but in the total social effort that goes into looking for and extracting diamonds. Many hours of fruitless search are needed to find one good diamond.
That is, the value of the diamond is not internalised to the agent who discovers it, but is spread across a whole system and concretised in one diamond. The lucky finder soaks up everyone elses hard labour.
posted by Bill at 08:05
1 Comments:
Very thought-provoking post.
On the greater overall profit from more capital-intensive forms of production, despite higher unit costs, that may be true in some cases. It's an empirical question.
But the organic composition of capital has a point of diminishing returns. And I suspect that for most forms of production, the point at which total costs outweigh total revenues is reached at a relatively low level of output. Economy of scale, likewise, levels off relatively quickly. I also suspect that most forms of large-scale production would be unprofitable without the state shifting costs to the taxpayer.
For example, there can't possibly be enough economies of scale in mechanized agribusiness to make it efficient to pipe water to California plantation farms, and ship the produce to Massachusetts, instead of growing the stuff close to the market. It's only profitable because so much of the real production cost is footed by the taxpayer.
On your diamond example, I wouldn't dismiss the influence of scarcity altogether. Even Marx and the Ricardian socialists acknowledged that the law of value only applied to reproducible commodities, and that scarcity rents could cause deviations. But even assuming that social labor can explain the full cost of a diamond, it's possible for the market price to reflect the total cost of bringing a commodity to market, even though the gains are distributed very unevenly because of the risk factor. Some cooperative distribution of risk might alleviate some of that.
I also doubt it's that difficult to determine individual contributions to value in social production. If we assume that labor creates exchange-value because of its disutility, and the need to persuade the laborer to contribute his labor, then the contribution of an individual laborer to exchange-value can be determined by what Smith and Hodgskin called the "higgling of the market." At the risk of sounding like an Austrian, this entails each laborer threatening to withold his efforts from the production process if his marginal contribution to exchange-value is not compensated. (Of course, all this assumes that the bargaining power of labor isn't impaired vis-a-vis capital, and that labor collectively receives its full product, which is not the case in a capitalist labor market.)
I know Marx rejected Smith's subjective cost, "toil and trouble" explanation of the LTV, but much of Marx's writing on the functioning of the law of value through market forces of supply and demand still seems to implicitly assume such subjective motivation, IMO.
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