McCarthy-Bur 1

AMIDST THE WONDERS WE HAVE MADE?

On Some Reworkings of Marx’s Labor Theory of Value in the 20th

Century and Their Political Implications

By

Griffin Joseph McCarthy-Bur

A thesis submitted in partial fulfillment of the requirements for graduation

with honors from the Department of

GLOBAL STUDIES

Examining Committee:

Lawrence Grossberg, Thesis Advisor

Communication Studies

John Pickles, Member

Geography

The University of North Carolina at Chapel Hill

23 March 2014

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CHAPTER ONE: Introduction

I. Introduction, Background and the Transformation Problem

Adam Smith, David Ricardo and Karl Marx are usually invoked as the founders of the

classical school of political economy, which laid the foundation for contemporary, mainstream

economics.1 At the same time, one theory that was central to all three thinkers—albeit to varying

degrees—has largely disappeared from contemporary economic thought: the labor theory of

value (LTV). The LTV has come under fire for many different reasons, and from a wide variety

of positions, since it was first propounded; yet, as this thesis argues, the existence of these

arguments does not in itself damn the LTV. In fact, the LTV persists in several heterodox

economics traditions, most of which fall under the broadly-defined Marxian tradition.

In this thesis, I will assess the claims and political relevance of two major schools of

thought on the LTV. I have selected what I call the “mathematical remodeling” tendency and the

“value-form” tendency for analysis. I chose these two traditions because they arguably have the

strongest responses to the analytical issues that critics have raised against the “traditional” LTV.

They may also be more broadly accessible than other currents of thought (e.g. the post-

operaismo tradition) which rely on certain theoretical presuppositions that my selected schools

do not (although value-form theory’s debt to Hegel is certainly not easy going, either.)

In the first part of my thesis, I will perform an analysis of each of these traditions in turn

and assess the validity of their claims. In the second part of my thesis, I will assess the

ramifications of each version of the LTV for political practice. I am interested in this question for

1 Incidentally, Marx himself was the one who invented the periodization “Classical Political Economy” to

conceptually mark off Smith and Ricardo from some of their early utilitarian-influenced detractors,

especially John Stuart Mill. However, Marx’s inclusion of his own work as the conclusion, as it were, of

the Classical school is not merely self-estimation—the eminent Austrian School economist Joseph

Schumpeter refers to him as “Ricardo’s only great follower.” Both the tidbit about Marx’s coinage and

Schumpeter’s quote can be found in Maurice Dobb, Theories of Value and Distribution since Adam Smith

(New York: Cambridge University Press, 1973), 142.

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a couple of reasons. Most important is the fact that academic research on social issues does not

go on in a vacuum apart from those issues, and I think that there is an obligation for critique and

social thought in particular to be self-reflexive regarding their implications for praxis. The

Marxian tradition, in particular, has been especially concerned with the relationship of social

analysis and political practice, and so this seems like a particularly salient question when

considering theories from that tradition. Therefore, drawing some political conclusions from my

analysis seems appropriate, even warranted.

II. A Brief Overview of Marx’s LTV

Now, I will give a concise account of Marx’s version of the LTV. Though I will spare the

reader a complete recapitulation of Marx’s economics, a basic summary highlighting certain

important features will help clarify the logic of my argument.2

The Marxist LTV in its simplest form claims that labor is the source of all new value

created in the production process.3 Of course, such a general statement has to be immediately

qualified. To say that labor is the source of all value, for Marx, means that all of the exchange-

value of commodities is created by, caused by and/or determined by labor.4 More specifically,

the amount of “labour-time socially necessary for a [commodity’s] production” is what

2 Much of this section is necessarily a summation of others’ work—either of Marx himself or various

interpreters. As in any influential and dense work, there are varying interpretations of Das Kapital. I will

indicate if I am following certain interpreters in presenting an argument in a particular, contestable

manner. I will generally present commonly agreed upon elements of Marx’s thought without citation

since they are obviously unoriginal but also not controversial. E.g., the fact that Marx has a concept of

both abstract and concrete labor is uncontested and available in any introduction to his thought. But since

those terms themselves are tricky to pin down, I will cite different interlocutors when presenting

interpretations of those concepts. 3 This will become more salient later in the thesis but it is worth noting now that Marx claims that capital

can add value as well, but only the value stored up in it, so to speak, from previous processes of

production. This is not the addition of new value but only the transfer of old value. See Chapter Eight of

Capital, “Constant Capital and Variable Capital,” trans. Ben Fowkes, (London: Penguin, 1976), 307-319. 4 The sense in which we mean “cause” here has been debated by many Marxists and will be discussed

throughout the thesis.

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“exclusively determines the magnitude of value” of that commodity.5 In other words, the price of

a commodity is essentially a direct function of the average amount of time needed to produce it

at a given point in human history. Crucially, for Marx, this means that the other factors of

production—land and capital—do not add new exchange-value in the production of

commodities. To avoid misinterpretation we should note that for Marx, labor is not the sole

source of all material wealth or of all “use-value.” On the contrary, for Marx, natural resources

are just as much the source of material wealth and we should be careful to avoid the related,

common misinterpretation along Lockean lines of Marx’s work wherein workers are supposed to

ipso facto add value to raw materials simply by virtue of laboring upon them—thus giving them

a natural right to all of the increased material output.6

Rather, Marx starts from the question of profit, i.e., the empirical fact that, under

capitalism, successful capitalists pay less for the use of the inputs into the production process—

labor, capital and land—than they receive in return for selling the outputs of that production

process.7 As Ronald Meek notes, the traditional reading of Marx is that he essentially frames the

LTV as an answer to where profit comes from. The crucial piece of the LTV that purports to

explain profit, which I now mention for the first time, is the idea of “surplus-value”—the notion

that workers produce value above and beyond what they are paid in wages, value which is

captured by capitalists in the form of profit. For Marx, although labor is the “substance, and the

5 Marx, Capital, 129.

6 Indeed, Marx often quarreled with other socialists who were wont to claim that labor is the source of all

wealth. See, for example, his now-famous critique of a German socialist party’s statement to that effect.

Part I of the Critique of the Gotha Programme, (Moscow: Progress, 1970),

http://www.marxists.org/archive/marx/works/1875/gotha/. 7 The claim that Marx’s theoretical object is certainly a contestable one but it is also perhaps the most

traditional one. See Ronald Meek, a student of Dobb’s, in his own history of the LTV. See Ronald L.

Meek, Studies in the Labour Theory of Value, (New York: Monthly Review Books, 1956), 126-127.

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immanent measure of value [...] it has no value itself.”8 What workers sell on the labor-market is

not an act of labor but labor-power, or one’s biological capacity to work. This labor-power,

unlike labor itself, does have a value—whatever level of wages allow workers to reproduce

themselves biologically—but because of the massively increased productivity of labor under

capitalism, the value created by labor is much greater than the value of labor-power. The

difference between these two values is what Marx calls surplus-value, which is for him the

fundamental source of all profit.

Now we can start to see why, despite Marx’s general presentation of the theory as a

scientific attempt to understand the laws of motion of capitalism, for most readers the LTV

seems to have certain political implications for how we understand capitalism, what we might

find objectionable or progressive about it and even, on a very practical level, what ways of

challenging or transforming it might look like. So, I’d like to make some strides towards

answering those sorts of political questions, though (as I will show) precisely which political

questions one asks is in part determined by how one reads the LTV. I will be less interested in

how the LTV intersects with formal theories of justice, especially since Marx’s relationship to

political or ethical philosophy per se is complicated by the way that he historicizes (and so, to

some extent, spurns) the concept of “justice.”9 I will focus more on evaluating reasons that

capitalism does or does not provide certain basic social goods rather than debate the nature of

those goods themselves too extensively.

8 Marx, Capital, 677.

9 E.g, Allen Wood says that “Marx never tried to give any philosophical account of why these [negative]

features [of capitalism] would constitute good reasons for condemning a system that possesses them. He

was doubtless convinced that [...] no special appeal to philosophical principles, moral imperatives, or

evaluative modes of consciousness would be needed to show that his own reasons for condemning

capitalism were good and sufficient ones.” Allen Wood, “The Marxian Critique of Justice,” Philosophy &

Public Affairs 1, no.3 (Spring 1972): 282. I interpret Wood to be saying that Marx is not interested in

moral philosophy per se and operates with some basic humanist and utilitarian notions of “the good life”

that are not unique to him.

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Given its striking political implications, the LTV has oft been condemned for its use by

various “working-class organisations [...] to support their various measures for social and

economic reform,” but it has faced legitimate criticism on logical grounds as well.10

In fact, the

two tendencies I wish to discuss both emerged in part as responses to those valid critiques. So, in

order to explain more fully some of these critiques, as well as to simply give a fuller

understanding of the LTV, I will now present a brief history of the concept, loosely following

some of the classic intellectual histories of it.

i. Adam Smith’s “rude society” and rudimentary LTV

The attempt to link market prices and labor-time is sometimes said to begin with Adam

Smith but in fact, it did not; similar concepts can be found as early as Aristotle11

and recent

scholarship suggests that it was formulated independently at different times and in different

places around the world.12

In fact, to paraphrase David Hume, in some ways Marx’s treatment of

the LTV resembles Smith’s in what it claims but not at all in how it arrives at that claim.

Nevertheless, Smith is considered to be the first exponent of the theory in the modern era as well

as the first to ask the question of “to what extent, if at all, the quantity of labor used to produce a

commodity [is] instrumental in regulating its value.”13

At the same time, his theory was not borne of the same questions as Marx; he was

primarily concerned “not with the cause or ‘rule’ [...] of value but with the standard of

measurement” of value, having eliminated money as a measure of value since money’s own

10

Meek, op. cit., 124. 11

Spencer J. Pack, Aristotle, Adam Smith and Karl Marx: On Some Fundamental Issues in the 21st

Century Political Economy, (Northampton: Edward Elgar Publishing, 2010), see throughout. 12

The Tunisian philosopher Idn Khaldūn put forth this idea in the 14th century, for example. See Jairus

Banaji’s essay “Islam, the Mediterranean and the Rise of Capitalism,” in Theory as History: Essays on

Modes of Production and Exploitation, (Boston: Brill, 2010), 263. 13

Meek, op. cit., 81.

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value is unstable given the possibility of inflation or deflation.14

Smith, as the reader might

guess, instead eventually settled on labor-time as an unchanging unit by which value could

always be measured.15

This problematic, the search for an absolute standard of value, might

seem anachronistic, more of a metaphysical than an economic question, although Maurice Dobb

points out that the search for a way to measure value and the search for its cause were “closely

connected in the thought of the time.”16

Indeed, Smith justified his use of labor-time as a

measure because it was to him, in some sense, the ultimate cost, as it were, of producing a good,

since it is equally burdensome to the worker “[a]t all times and places.”17

So, although his problematic is different than Marx’s, Smith is already here gesturing at a

key Marxian idea: labor-time is the ultimate causal factor in a good’s value (in addition to being

a handy unit for measuring that value.) In fact, Smith argued that in “rude society,” where goods

were produced without the aid of capital, the market values of commodities would simply reflect

the amount of time needed to make them since labor-time was the primary cost in producing

goods.18

Importantly, however, Smith hedged the idea that labor was the sole producer of value

when considering capitalism. Here, we note that Smith’s theory of price formation under

capitalism is a sort of crude version of the cost-price theory of value later given by one of the

founders of neoclassical economics, Alfred Marshall.19

According to Smith, because a capitalist

not only pays for labor but must also pay for the capital and land involved in a production

14

Dobb, Theories of Value, 47. My italics. 15

This is not the place to go into Smith’s reasoning for choosing labor-time as an absolute measure,

although it is worth noting that this reasoning is very different than Marx’s reasoning in making the

assumption that a unit of labor-time is a relatively standard thing, though both do make this assumption to

some degree. 16

Dobb, Theories of Value, 47. 17

ibid., 48. Note that Smith is assuming some sort of homogeneous quality to “labor” here. 18

Meek, op. cit., 81. N.b. that, as historians and anthropologists from Karl Polanyi to Maurice Bloch to

David Graeber have noted, this is a patently ahistorical view, and most such societies without capital also

did not have extensive markets in the modern sense. 19

Dobb, Theories of Value, 185.

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process, these factors must by definition also contribute to a good’s value since they make up

part of the cost of production.20

Smith’s LTV thus ends up being a sort of rough thesis about

hunter-gatherer societies at best, but it is worth noting for its historical and importance in

“Western” intellectual history.

Moreover, despite its limitations, Smith’s LTV grasps at subtle distinctions that Marx

would later grapple with as well. Perhaps most importantly, Smith seems to have realized the

tension between his claim that the labor-time necessary to produce a good could serve as a stable

measure of “true” value and the fact that the value of labor-time itself seems to fluctuate on the

market (since the average wage rises and falls at different times.) Smith dealt with this by at

times referring to the number of hours of labor which a given commodity can purchase as the

real measure of a good’s value and at other times referring to the amount of labor-time used up in

production as the measure of value, even though (as Ricardo pointed out) these are very different

concepts.21

Interestingly, though neither Dobb nor Meek draws this connection explicitly (so far

as I can tell), Smith is pointing at a paradox Marx would later seize upon—the difference

between “price of labour-power and the value which its function creates,” i.e. the distinction

between labor and labor-power.22

In Smith’s terms, we would say workers’ wages for a given

quantity of labor-time do not always or usually allow them to purchase that much worth of labor-

time in wage-goods. So, I might work eight hours in a cellphone factory but my wages from that

will not necessarily allow me to buy eight hours of labor-time’s worth of food and shelter.

However, despite this clear difference in magnitude between these two measures of value, Smith

left these two versions of the LTV unsynthesized and ultimately his contribution to the LTV lies

20

ibid., 47. As we might note, this would seem to evade the question of where those three factors acquire

their prices, except perhaps through the interaction of supply and demand for those factors. 21

ibid., 49. 22

Marx, Capital, 682.

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in suggesting the basic concept of labor as the primary source of value.

Additionally, Smith left an important dilemma unresolved: he did not attempt to reconcile

the idea that the cost of different factors of production reflects their unique contribution to a

good’s value with the implicit and contradictory idea that price is a function of labor-time alone,

leaving these spheres (of distribution and production respectively) “contradicting one another

and not causally connected.”23

In contrast to Marx and Ricardo (to some extent), Smith only

allows a “hint” that profit is a “[deduction] from what is ‘naturally’ or ‘originally’ the product of

labor.”24

ii. Ricardo’s systematization of Smith

Ricardo, on the other hand, took up the questions of value and profit in a systematic

fashion. Ricardo’s theory of value comes after his theory of profit, which I will now explain. The

Ricardian theory of profit is a function of several basic assumptions25

—that profits oscillate

around an average rate in a capitalist economy, that land has diminishing marginal returns26

and

that, in order for the labor force to survive and reproduce itself, there is a “floor” on wages below

which wages cannot sink. From there, he derives the idea that profits will be determined by “the

relation between product and wages at the margin of agriculture.”27

In other words, the least

productive parcel of land in use at any given moment sets a cap on the rate of profit because

wages cannot sink below a certain level but the output of this land will be comparatively low in

23

Meek, op. cit., 118. 24

Dobb, Theories, 45. 25

N.b. that Dobb’s text, though deeply insightful, is also quite telegraphic--this sentence alone is the

summary of a logic that is developed, with many digressions, over pages 64-75. So the presentation of

Ricardo here is to some extent my own, attempting to reconstruct his (and Dobb’s) often implied logic. 26

It is important to note, as Dobb does on the second footnote of p. 72 of Theories, that Ricardo and many

other political economists of the time period were very skeptical of how much the productivity of land

could be improved, both in the short and long run, thus providing a sort of natural limit on productivity

(and suggesting a long-run tendency for the rate of profit to fall.) 27

Dobb, Theories, 71.

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relation to other parcels of land or industries. And because of the tendency for there to be a

uniform rate of profit in the economy (and because, presumably, a certain amount of land has to

be used to produce essential foodstuffs), the rate of profit on the least productive piece of land

that must be used at a given moment thus determines the rate of profit for the rest of the

economy. Ricardo initially conceived of profit in terms of the difference between total grain

produced and grain given in wages, but importantly, he later generalized profit to be the

difference between the hours of labor required to produce wage-goods and the total hours of

labor performed in an economy.28

This, of course, is already sounding quite a bit more similar to

Marx’s theory of profit based on his version of the LTV.

At the same time, Ricardo still did not fully investigate or resolve the difference between

the idea of labor-time as the sole determinant of value and the fact that the relative prices of

goods are obviously not always proportional to the relative amounts of labor-time contained in

them. Ricardo recognized what neoclassical critics of the LTV would later seize upon, i.e. that

goods that required more capital (relative to labor) seemed to command price that reflected a

premium for this capital (which suggests that capital produces value as well.)29

In simpler terms,

it seems like common sense that goods which require expensive machinery cost more on the

market. But rather than fully investigating the ways that values and prices can diverge, which

Marx saw as a necessary part of the LTV, rather than a contradiction,30

Ricardo simply allowed

that there were other influences on price which he could not solve but he did not attempt to work

28

Dobb, Theories, 74. 29

Meek, op. cit., 116. 30

E.g., “The mere existence of a general rate of profit necessitates cost-prices that differ from values.”

Karl Marx, Chapter Ten, “Ricardo’s and Adam Smith’s Theory of Cost-Price (Refutation),” Theories of

Surplus-Value, (Amherst: Prometheus Books, 2000),

http://www.marxists.org/archive/marx/works/1863/theories-surplus-value/

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out the ways that value and price systematically diverge.31

iii. Marx’s intervention

I will now present a traditional interpretation of Marx’s LTV. It is worth noting from the

outset that some of the readings that I will present in later chapters are so different as to be

incompatible with this reading of Marx. To take one significant example, I will present Marx

here as basically having a notion of value that consists of two parts, use-value and exchange-

value, with the latter being the primary object of investigation. Many in the value-form school,

especially Rubin, will argue that Marx is actually investigating an overall notion of value, which

can be divided into its form (the value-form or social form that labor takes in capitalism), its

“content” in a Hegelian sense (i.e. abstract universal labor)32

and its magnitude (exchange-

value), all of which are separate from use-value.33

But to understand that reading, I think it is

important to first present a more traditional reading of Marx, which will follow Dobb and Meek.

I will continue my presentation along the lines I’ve already laid down: both focusing on

the change in content Marx brought to the LTV but also making some notes about his theoretical

object and his methodology, as I have done for Smith and Ricardo. These considerations will

become even more important later in the thesis since I argue (rather uncontroversially) that the

most useful way of situating the radically-different Marxist interpretations in relation to each

other and to Marx is to think of the theorists as posing different versions of the LTV as different

31

Marx, Chapter Fifteen, “Ricardo’s Theory of Surplus-Value,” Theories of Surplus-Value. 32

I will define this term below since it takes a rather long time to explain. 33

A quick note on use-value: I have avoided discussing the “use-value vs. exchange-value” dichotomy

until now because it is, strictly speaking, not necessary for explaining Marxian economics since they

concern only exchange-value. Further, this distinction is not new to Marx but actually perseveres

relatively-unchanged from Smith (who formulated it in the famous “diamonds and water” paradox.)

Essentially, the only thing we need to say is that for Marx, this dichotomy expresses the idea that under

capitalism, the actual social worth of things (their use-value) is separate from and often diverges from

their market-value as commodities (i.e. their exchange-value or price, setting aside the fact that exchange-

value and price are not always identical either.)

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answers to different questions (rather than as different answers to the same question.)

a. Marx’s problematic

On the traditional interpretation of Marx, we first note that the question of profit remains

paramount for Marx as it was for Ricardo. We have seen already that Ronald Meek interprets

Marx as being fundamentally interested in the question of profit. According to Meek, Marx does

not use the LTV to prove that surplus-value exists (because many human societies produce

surpluses) but instead asks how this surplus is manifested under capitalism.34

As Dobb says, the

challenge Marx tackled was to explain how the kind of parasitical appropriation of surplus by

one class, so naked under feudal relations, persisted under capitalism where it appears that there

is an exchange of equivalents between workers and capitalists (labor-time is freely exchanged for

a wage which is generally supposed to be “equivalent” to the value of the workers’ contribution

to the product.)35

On a similar note, this view suggests that another, related task of the LTV is to

explain the persistence and indeed the necessity of distinct income classes under capitalism.36

There is an underlying sense, here, that that there are certain natural tendencies (of human beings

to produce a surplus, for example) which are transhistorical and which simply change the form in

which they manifest themselves, the LTV being an attempt to explain one of those forms

(capitalist profit.) Indeed, Dobb’s Marx rather infamously posits labor as the determinant of

value in a transhistorical theory akin to Smith’s reasoning which we explored above—because it

constitutes a “unique cost” among others.37

34

Meek, op. cit., 126. 35

Dobb, Theories, 146. 36

Maurice Dobb, “Requirements of a Theory of Value,” in Political Economy and Capitalism: Some

Essays in Economic Tradition, (London: Routledge, 1937), 22-23. 37

Dobb, “Requirements,” 20. N.b. that in Capital, for instance, Marx introduces the concept of “value” in

a controversial and logical-deductive manner, which has been held—by both orthodox and heterodox

Marxists—to not be a very comprehensive or accurate statement of his methodology but rather a hasty

and poorly-worded method of presentation that resulted from an attempt to make Capital more accessible.

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So far, we note that this is similar to Ricardo’s problematic; the primary questions being

asked are about the source and manifestation of surplus and especially about “the laws of this

distribution [of income],” the latter being what Ricardo termed the “principal problem of

Political Economy.”38

There is also a conviction that there is some kind of systematic connection

between values and prices which must be explained. There is even, in Dobb, a sense that not only

was Marx convinced that the existence of exploitation was reconcilable with the existence of

competitive markets but that Marx also believed that the LTV was necessary as a purely

analytical tool for explaining the overall price level (so he says that Marx viewed labor as the

determinant of “the equilibrium or movement of the system as a whole.”)39

So, then, for Dobb and Meek, Marx appears as an advance on Ricardo for his attention to

the historically specific features of capitalism, i.e. to the way that relations of production change

throughout history (whereas Ricardo naturalized them) in addition to the constant change in the

forces of production (which Ricardo obviously did recognize as a salient feature of capitalism.)

This reading of Marx as basically an historicist Ricardian is supported by much of the language

in Capital. So, we still find in Marx the fundamental idea that “the value of each commodity is

determined by the quantity of labour expended on and materialised in it, by the working-time

necessary, under given social conditions, for its production,” an idea that on a casual read

perhaps appears identical to Ricardo.40

But a close reading of this phrase alerts us to the two most important advances that Marx

made on Ricardo, at least in the eyes of traditional Marxists: the concepts of abstract labor and,

relatedly, socially necessary labor-time (SNLT.) It should first be noted that even these two steps

38

David Ricardo, “Preface,” On the Principles of Political Economy and Taxation, (London: John

Murray, 1821), http://www.econlib.org/library/Ricardo/ricP1.html. 39

Maurice Dobb, “Requirements,” 5. 40

Marx, Capital, 293.

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Marx made towards an historicist41

reading of the LTV raise questions about how to understand

the LTV; for example, the phrase “abstract labor” never occurs in either of the Dobb texts I’ve

been engaging with. Meek, too, will read abstract labor in a different sense than the value-form

theorists I look at in Chapter Three. For now, I will present what I take to be an orthodox

presentation of abstract labor and why Marx considered it “crucial to an understanding of

political economy.”42

In short for Marx, it is only abstract labor that is productive of exchange-

value, and only the minimum average amount of abstract labor-time which is necessary to

produce a good (i.e., the SNLT) that counts as producing value.43

a. Abstract labor and socially necessary labor-time

Abstract labor, on Meek’s account, refers to the fact that with the rise and maturation of

capitalism, we see a trend towards an increasing level of mechanization and standardization of

different kinds of work, making different acts of human labor more and more similar. So while

two artisans in a feudal society producing shields may have differed widely in quality, technique

and the amount of time needed to produce a given shield, under capitalism these variables tend to

become standardized. This becomes even more pronounced with the introduction of machines:

the labor of two workers operating machines—even machines producing different goods—will

look much more similar in terms of energy expenditure, technique, etc. than two artisans

producing even the same good under feudalism. So, any given act of labor, in addition to being

“concrete” labor (i.e., an act of labor producing a specific material product) also takes on a

41

I have used this term several times now and am aware that it is a problematic term to apply to Marxist

thought (Althusser, for example, titles a chapter in Reading Capital “Marxism is not a Historicism,”

though his use of the term is open to question there). Here, I don’t use it in a very specific sense—only as

a convenient shorthand for a body of thought that takes categories of analysis to be specific to particular

social formations and not necessarily applicable to all epochs of history. See Louis Althusser, Reading

Capital, trans. Ben Brewster, (London: New Left Books, 1970), Chapter Five. 42

Marx, Capital, 132. 43

ibid., 129.

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simultaneously “abstract” character, meaning that it is simply one “crystallization of this social

substance,” i.e. of the total capacity of a given society to perform human labor.44

This might

appear a somewhat gnostic or vague concept, so I will again illustrate with reference to

feudalism, showing how “abstract labor” is conceptualized not as a metaphysical distinction but

as a specific historical development. I will explain how this standardization and homogenization

of labor— “an abstraction which is made every day in the social process of production”—allows

labor to take on a new, simultaneously private and social character under capitalism, and how

this leads to the genesis of abstract labor.45

Perhaps it will be easiest to explain abstract labor if we consider it as an answer to a

particular question Marx is asking, i.e. how is it that labor which seems private under capitalism

is in fact also social? To understand why this is a salient question, we must consider Marx’s

characterization of pre-capitalist societies, where he considered labor to usually be “directly

social”: the division of labor was consciously carried out by societies according to explicit social

and cultural rules (Marx uses the example of gender as one such norm when he provides the

example of a family where a man weaves and a woman spins in Chapter One of the Critique.)46

This means that labor was then social precisely because of “the particular features of [one’s]

labour.”47

So, in a peasant community, I might be the blacksmith and my labor is social precisely

because I am socially recognized as the person specifically trained as a blacksmith in the

community. My labor is social because there are explicit social traditions that structure the place

of my individual labor in the broader social economy. We should take note here that Marx is also

44

ibid., 128. 45

Karl Marx, Chapter One, “The Commodity,” A Contribution to the Critique of Political Economy,

(Moscow: Progress Publishers, 1977), http://www.marxists.org/archive/marx/works/1859/critique-pol-

economy/index.htm. This argument is made more explicitly in David Gleicher, “A Historical Approach to

the Question of Abstract Labor,” Capital and Class 7, no. 97(1983): 97-122. 46

Marx, “The Commodity,” Contribution to the Critique. 47

ibid.

McCarthy-Bur 16

working off the (valid, so far as I can tell) assumption that in pre-capitalist societies, workers are

usually only trained to and thus only able to perform at most a few “skilled professions.”

A crucial change, however, occurs with capitalism through the process of the

standardization and mechanization of the labor process. This essentially historical process that

creates the conditions for abstract labor is highlighted less in Capital than other writings48

but it

is clear that abstract labor is an historical phenomenon that comes about because of the

development of productive forces that make it possible to employ unskilled labor in a wide

variety of tasks. Thus, when Marx refers to individual acts of abstract labor49

as being part of a

total labor power of society, he is not making a mental abstraction from different kinds of labor

and coming up with a general notion of “labor power.” Rather, this idea of labor power in

general is a conceptual reflection of the material fact that under capitalism, labor-power really

can be allocated (through the labor market) in whatever proportions to whatever industries

because the technological development of capitalism means that an “average” human being can

perform a wide range of different jobs with little or no training. As Marx notes in the

“Introduction to the Contribution,” it is in fact this development that makes it possible for

economists to speak of a “labor force” as a homogeneous mass of people that can change form at

will (i.e. the actual distribution of labor into different industries can change very rapidly.)50

So,

48

See Marx, “Introduction,” Contribution to the Critique for a more historically-oriented reading. 49

A phrase such as this should not imply that labor can ever be simply “abstract”—it must always also be

concrete and it is only sometimes both concrete and abstract, such as under capitalism. 50

N.b. that one of the schools of rereading I present, the value-form readings, will challenge this notion of

abstract labor as being more complex than this orthodox presentation (as does I.I. Rubin) or as being

inadequate in the form Marx presents it (Geert Reuten, Chris Arthur.) Rubin, in particular, will

characterize the interpretation I have presented as confusing abstract labor with “physiologically equal”

labor. Rubin charges that the interpretation I have given amounts to a more-or-less mental abstraction that

isolates a transhistorical property common to all human labor (i.e. its being the product of physiological

expenditure by a particular species of animal) and calls that “abstract labor,” thus missing the historical

specificity and social (rather than physiological) character of abstract labor. Rubin’s critique appears not

to have been written before any theorists, such as Ronald Meek or David Gleicher, made the claim (which

Marx’s text in places supports) that abstract labor is indeed an historically-specific phenomenon but also a

McCarthy-Bur 17

under capitalism, it is not the particular features of one’s labor that make it count as social but

precisely the opposite: labor is social to the extent which it can be considered homogeneous, as

an indistinguishable part of the total social labor that can go where it is needed, so to speak.

For Marx, it is this abstract labor (and not labor in general) which is the only source of

value, since value itself is a category specific to capitalism, a claim which sets him apart from

Ricardo (who had thought labor in general was productive of value.)51

Marx’s difference with Ricardo on the point of which kind of labor creates value goes

further, because Marx claims that the value of a commodity is not a mere function of the actual

labor-time embedded in it. Marx’s claim, on the traditional view, is what we could even call a

supply-side theory of the long-run equilibrium value of goods rather than a claim about every

specific good. Here I will use a quick example and then explain further. Take, for example, the

case of a slower-than-average worker who takes 20 hours to produce a good that only takes 10

hours. Marx would, sensibly, not claim that the slower worker produces a good that will be twice

as valuable on the market as the average worker. Rather, Marx’s claim is that the good’s

exchange-value is a function of the average amount of time that is required to produce that good

by a worker of “average skill.” So this means that Marx’s LTV is not a theory of the price of

every commodity produced by every worker, but rather of the average commodity produced by

the average worker.

Here, we can introduce Marx’s notion of socially-necessary labor-time (SNLT), which is

simply the average amount of time a good takes to produce under given conditions of production.

Marx’s LTV, then, is a sort of tendential theory: it does not deny the role of demand or supply

physiological one. So the reduction of all types of labor to “simple human labor” takes place not in the

mind of the theorist but via the standardization of labor processes and the tendential reduction of craft

labor to more homogeneous processes requiring fewer skills that is characteristic of capitalism. 51

N.b. again that this point is downplayed in Dobb and of some but not paramount importance in Meek

though it plays a crucial role in Chapter One of Capital.

McCarthy-Bur 18

shocks in moving prices temporarily; it does not deny that there must be demand for goods for

them to have value, as some critics have charged it does, and so on. Rather, the traditional

understanding of Marx simply puts forth the idea that over long periods of time, the average

value of goods is fundamentally determined by the average labor-time necessary for their

production. We now have a basic account of Marx’s LTV and can move on to the problems it

faced, particularly the transformation problem.

III. The transformation problem: stumbling block and stimulus

The transformation problem, put very simply, is that if labor-time (measured in hours)

determines exchange-value or price (measured in money terms, such as dollars), then there

should be a mathematical function that can show this link. Along similar lines, certain

macroeconomic equivalencies should hold—in short, macroeconomic terms denominated in

hours of labor-time should equal terms denominated in price. For reasons that will be explained

more fully below, most of the initial attempts to model that function failed.52

There are two basic schools of response on the issue, broadly defined, which I will

elucidate in this thesis. This categorization is somewhat subjective given that many

interpretations of Marx claim a distinct intellectual heritage or cluster around certain key figures.

I am offering these broad categories in order to make different interpretations of Marx around the

question of the LTV intelligible.

One school of thought accepts the basic premise that Marx’s theory was meant to explain

the determination of price by labor-time and attempts to respond directly to the transformation

problem by reworking some of the ways of modelling the LTV or by modifying some of the

assumptions built into Marx’s system. I refer to this school as the “remodeling” tendency.

52

Ladislaus von Bortkiewicz’s “Value and Price in the Marxian System,” International Economic Papers

2 (1952): 5-60 is still widely regarded as the clearest statement of this critique.

McCarthy-Bur 19

The second school of thought rejects the idea that Marx’s theory is meant to explain

prices. It claims that Marx has been misread or (more realistically) that Marx’s thought is

characterized by multiple projects. One of these was a doomed attempt to explain prices by

labor-time but there is another aspect to the LTV which is worth keeping. The “rational kernel”

of the LTV, then is that it is an attempt to explain “why labour takes the forms it does” under

capitalism.53

This school of thought can be described as “value-form” theory. It does not have a

central thesis but, rather, proffers several theses about how the very form of value itself

structures labor relations under capitalism. One of the first Anglophone value-form theorists,

Diane Elson, snappily rephrases the LTV as being, rather, a “value theory of labor.” On this

reading, “value” is a category meant to explain the way that labor is “governed” under a

capitalist society rather than an attempt to explain how values are governed by labor-time.

i. What exactly is the transformation problem?

There are two parts to the transformation problem: the initial problem (which was solved

by Marx) and an additional problem with that solution (which he left unsolved.) The first

problem is a result of the fact that goods obviously do not exchange at their values all the time.54

In other words, commodities that require different amounts of labor-time sometimes seem to be

exchanged as if they require equal amounts of labor-time and sometimes commodities that

require similar amount of labor-time seem to exchange as if they require different amounts of

labor-time.

One important implication of this claim is that capital and not just labor adds value to

53

Diane Elson, “The Value Theory of Labour,” in Value: The Representation of Labour in Capitalism,

ed. Diane Elson, (London: CSE Books, 1979), 123. 54

This explanation is best found in Chris Harman, Zombie Capitalism: Global Crisis and the Relevance

of Marx. (Chicago: Haymarket Books, 2010), 46-50. Any introduction to Marx’s economics will address

this issue but this presentation is particularly succinct and readable.

McCarthy-Bur 20

good.55

This can be seen in the fact that goods that require more complicated or expensive

machinery to produce generally cost more than goods that require the same labor-time but which

require less expensive machinery. This throws a wrench into another part of Marx’s theory,

namely the tendency for there to exist a uniform rate of profit throughout economies. If different

industries have different capital-labor ratios, and if labor alone produces value, it would seem

like industries would have permanently different rates of profit based on the relative amount of

labor they use.56

Marx gave a provisional reply to this objection by way of a theory known as the

“redistribution of surplus-value within the capitalist class.” Marx’s answer to this paradox is that

surplus-value is created in production and so “[w]hat happens on the market [...] is a distribution

(or redistribution) of what already has been created.”57

For Marx, price is a mechanism that

redistributes surplus-value so that capitalists receive an average rate of money profit on their

investment while receiving different amounts of surplus-value than what their workers originally

produced, an argument known as the “redistribution of surplus-value within the capitalist class.”

In other words, the logic of competition tends to force rates of profit to equalize in

capitalist economies across a period of time, with obvious exceptions for monopolistic industries

and so on. Capitalists consciously move their money to the place where the profit they get

relative to what they invest in both physical capital and labor will be highest, even though

(according to this reading of Marx) only the capital that is paid out as wages will actually induce

the creation of new value. This is because value relationships are concealed by money

55

ibid. for the following paragraph. 56

To clarify: again, according to Marx, value can only come from labor, and profit can only come from

surplus-value. If that is true, then in theory, industries with low capital-labor ratios will have higher rates

of profit because capitalists will spend less money purchasing machinery (which does not produce value)

vis-à-vis labor (which does.) The reverse would be true for industries with high capital-labor ratios. 57

Ernest Mandel, “Karl Marx,” in Marxian Economics, ed. John Eatwell, Murray Milgate and Peter

Newman, (Palgrave: London, 1990), 20.

McCarthy-Bur 21

relationships under capitalism; capitalists invest in both physical equipment and wages and they

receive a profit, making it seem as if both capital and labor produce new value. Since capitalists

do not consciously look for the highest rate of profit in terms of value, i.e., the difference

between how much labor-time the wages they pay is worth versus how much labor-time is

performed, there is not a similar tendency for value rates of profit to equalize. As Marx had it, it

is “purely accidental if the surplus-value actually produced in a particular sphere of production,

and therefore the profit, coincides with the profit contained in the commodity’s sale price [in that

sphere.]”58

It is easy to see how rare the coincidence of the value and money rate of profits is in

contemporary capitalism. Take, for example, an IT firm and a large capitalist farm (i.e. one that

does not merely produce food for subsistence.) If both firms survive over time, they will tend to

have similar money rates of profit because of the logic of competitive capital markets. Yet in

value terms, they will have very different rates of profit. The IT firm will have much lower value

profits because it employs much less labor relative to what it spends on capital equipment, and

the agribusiness will have much higher value profits because such industries usually do not

employ much capital. But as long as we assume that the total amount of surplus-value in hours is

proportional to the total amount of profit in money, we can see that the different rates of surplus-

value in each workplace are simply redistributed into the average rate of money profit that

capitalists tend to receive. Thus Marx solves the first part of the transformation problem.

But there remains another problem in transforming values into prices. This came when

Marx demonstrated this transformation of value into price with a simple input-output table model

for different commodities, each with different capital-labor ratios. Certain macroeconomic

58

Karl Marx, Capital Vol. III, trans. David Fernbach, (London: Pelican, 1981), 267.

McCarthy-Bur 22

identities in the table59

must hold for Marx’s theory to be true (this will be explained much

further in Chapter Two) and do hold when no commodity is required as an input for another

commodity.60

However, as Ladislaus von Bortkiewicz showed, this model does not work when

some commodities are required as inputs into other commodities.61

I provide a fuller explanation

of this critique in my second chapter but for now, outlining the contours of the critique will

suffice. Insofar as this mathematical critique held sway, many prominent Marxian economists

dropped the LTV from their analysis.

IV. The Revitalization of the LTV

i. Remodeling Approaches

Some of the re-readings of Marx attempt to solve the transformation problem by

proposing different ways of mathematically modeling Marx’s formulation of the LTV. These

include the “New Interpretation” (among the first of the mathematical modeling rereadings,

proposed independently by Gérard Duménil and Duncan Foley), the Temporal Single-System

Interpretation (proposed by Andrew Kliman and Alan Freeman, among others), the Rethinking

Marxism approach (suggested by the editors of that journal, Rick Wolff and Stephen Resnick),

the so-called econophysics approach (Paul Cockshott) and the macromonetary approach

(proposed by Fred Moseley.) Without getting too deep into these debates, it will suffice to say

that all of them propose different ways of formally modelling Marx’s explication of the labor

theory of value.

ii. Value-form approaches

As mentioned above, there exists another broad range of thought on the issue. I will refer

59

Surplus value (hours) = profit (price); total value (hours) = total value (price); value rate of profit

(derived from hours) = price rate of profit (derived from price). 60

See Meek, op. cit., 191 for a demonstration. 61

ibid. Meek quotes Paul Sweezy’s Theory of Capitalist Development (London: D. Dobson, 1946), where

Sweezy popularized von Bortkiewicz’s critique.

McCarthy-Bur 23

to this broad range of interpretations as “value-form theory,” though versions of it have been

referred to by a myriad of names such as “Kapitallogik,”62

the “value theory of labor,”63

and the

“Neue Marx-Lektüre (New Reading of Marx).”64

In fact, the tradition arguably starts with I.I.

Rubin,65

who was a rather idiosyncratic Soviet dissident attached to no particular school at all.66

There are, of course, different positions in the field, as reflected in the broad range of

terms that different interpreters choose. That said, it is possible and useful to give a quick

summary of these positions: they interpret Marx’s LTV as being more useful as a qualitative

account of how labor is organized under capitalism.67

More specifically, they focus on Marx’s

claims about the value-form,68

which is often interpreted (e.g. by Rubin and Moishe Postone

whose works I look at in depth in Chapter Three) as an account of the necessary form of

appearance of labor under capitalism. Yet, we can still draw some broad claims from this body of

work. The most important is that value is understood as being an object in itself, and not simply

reducible to use-value and exchange-value. An important component of this theoretical object of

value is the value-form, which is the form of appearance of labor in capitalism (the commodity-

form) and which connects private labors via their money-mediated exchange in the market, thus

making those private labors into abstract labor.

62

See “Communisation and Value-form Theory,” Endnotes 2, http://endnotes.org.uk/articles/4 63

See the previously referenced Diane Elson volume by that name or, in a seemingly-unrelated and earlier

usage, C.L.R. James’ work. See C.L.R. James, Modern Politics, (Oakland: PM Press, 2013), 83. 64

This term properly refers to an entire re-evaluation of Marx’s work and in post-Nazi Germany and

Eastern Europe which had a complicated but tight link with the well-known student movements in

Germany during the 1960s. So it’s somewhat reductive to reduce it to a simple school of thought on value

but their reevaluation of that concept was an important and defining feature. Again see “Communisation

and Value-form Theory.” 65

See I.I. Rubin, Essays on Marx’s Theory of Value, (Detroit: Black and Red, 1972). 66

Rubin’s debt to Hegel is sometimes mentioned but his work seems to largely be novel in the way it

approaches Marx, especially since he wrote in a language (Russian) and in an era (1886-1937) where he

would not have had access to many other sources besides Marx. 67

Either in addition to or as opposed to a qualitative account, depending on the theorist one reads. 68

See especially Karl Marx, “The Value-Form, Appendix to the First German Edition of Capital,”

Capital and Class 4, (Spring 1978):130-150.

McCarthy-Bur 24

IV. Political Implications

In my final chapter, I assess whether or not these theories have any political valence

today. I conclude that though the mathematical remod

elling tendency can make Marx coherent through the definition of certain key

macroeconomic terms, it remains politically unattractive and tied to a mechanistic politics that

poses the problem of capitalism as simply one of distribution (workers should get all the

proceeds from the sale of commodities but do not) and ignores the importance of changing the

structure of workplace relations themselves. I argue that though value-form theory is in some

ways less satisfying theoretically and perhaps even gnostic, it points us towards a more vital kind

of politics that is attuned to the problem with work itself, rather than simply with the distribution

of income under capitalism (as problematic as that is.)

McCarthy-Bur 25

CHAPTER TWO: Mathematical re-readings of the LTV

I. A brief overview

Now, I will make an attempt to analyze the efforts of various mathematically-oriented

Marxist economists to answer the charge that Marx’s economics inevitably confront the well-

known “transformation problem.” In order to do so, I will give a longer explanation of the

transformation problem by reproducing an input-output table similar to the one Marx uses and

showing how the transformation problem arises. I will also discuss some of the broader

methodological underpinnings common to Ladislaus von Bortkiewicz69

and critics of Marx who

took up von Bortkiewicz’s critique.70

This will be useful in order to fully explain the Marxist

response to that critique which emerged in the late 1970s and early 1980s in a number of

different countries. Much of the literature in this area can reach a level of technicality that is

beyond my mathematical capabilities to analyze. Fortunately, a good deal of the debate focuses

more on methodological and logical questions than narrowly mathematical ones. And

conveniently, no one challenges the algebraic difficulty posed by modelling, with matrices, the

traditional interpretation of the LTV.71

So, it will be sufficient for my purposes to give a simple

demonstration of how the transformation problem arises and to then explain some of the

methodological presuppositions that lead one to discover such a problem. In this chapter, I will

rely especially on Fred Moseley’s contributions to an issue of Rethinking Marxism focused on

the transformation problem and Duncan Foley’s review of developments in the LTV in the

69

Again, von Bortkiewicz was the first to publish a critique of Marx based on a supposed “transformation

problem” and his critique was taken at face value by many Marxists and non-Marxists alike for decades. 70

Interestingly, many of those critics who contributed to the literature on the transformation problem

were bona fide left-wing thinkers who stood outside of the economic mainstream (such as Sraffa). So,

part of the task in explaining the transformation problem is assessing exactly how and why these thinkers

differ from Marx methodologically and what exactly is at stake in defending Marx’s economics. 71

“[...] the mathematical correctness [of that critique] is unquestioned [...]” Duncan K. Foley, “Recent

Developments in the Labor Theory of Value,” Review of Radical Political Economics, 32, no. 1 (2000):

18.

McCarthy-Bur 26

Review of Radical Political Economics, published in 2011 and 2000 respectively.72

These papers

will provide broad overviews of the different ways that Marxist economists challenged von

Bortkiewicz, inter alia, on his own terms.

Moseley provides a schema of three major currents of response to the transformation

problem. I will provide a brief account of each, following Moseley but also referring to original

sources from those schools in places where Moseley’s account of them is somewhat telegraphic.

The three interpretations Moseley covers are: 1) the New Interpretation, 2) the macromonetary

interpretation and 3) the Rethinking Marxism school. But before I explain what each of those

schools are, I think it will make the most sense to present a “traditional interpretation” of how the

transformation problem arises, which I will do using a basic input-output model of a capitalist

economy.

II. The “Transformation Problem” explained

Now I will present an input-output table73

of the sort Marx uses to demonstrate the basic

functioning of a capitalist economy undergoing simple reproduction.74

The traditional

interpretation of such a table is that it allows Marx to show the connection between the value

labor adds to goods (measured in labor-time) and the prices those goods receive on the market.

As discussed in the first chapter of my thesis, Marx is trying deal with the tension between the

idea that the value of a good is directly equal to the socially-necessary labor-time (SNLT) needed

72

See ibid. and Fred Moseley, “Recent Interpretations of the ‘Transformation Problem’,” Rethinking

Marxism 23, no. 2 (April 2011): 186-197. 73

My presentation here follows that of Brendan Cooney who is a non-academic but has co-authored

papers with the major theorists in the TSSI school and whose demonstration follows Andrew Kliman.

Brendan Cooney, “Transformation?- Math Supplemen,” Kapitalism101, 16 November 2008,

http://kapitalism101.wordpress.com/transformation-math-supplement/. 74

This is Marx’s term for an economy that produces enough to sustain itself but which does not undergo

economic growth in the contemporary sense of increasing the overall level of production of goods over

time. Of course, this underplays one of capitalism’s most salient features--its dynamism and its

instability--which Marx was well aware of. As I will explain shortly, some of the “economic” re-readings

of Marx will argue that his model, far from bracketing capitalism’s turbulent growth, actually allows us to

understand it more fully than any other approach.

McCarthy-Bur 27

to produce it, independent of how much capital is used in producing the good, and the

empirically-observed tendency for there to exist an average rate of profit based on the sum of

both capital and wages invested in producing a good. So on the one hand, the rate of profit

should theoretically be higher or lower based on whether there is relatively more or less labor

invested in the production function of a good. And on the other hand, the rate of profit seems to

not be affected by that ratio (since there is an average rate of profit throughout an economy but

the production of all those different goods obviously involves many different ratios of capital-

labor.)

Now, Marx still claims that, fundamentally, profit only arises from surplus-value created

in the process of production. When capitalists sell the goods produced in their factories, they are

only realizing the value that has already been created by labor. The process of selling these

goods and the realization of profit by capitalists is just a further (re)distribution of already-

existing value. On a microeconomic scale, a capitalist will not necessarily—indeed, almost never

will—receive a money profit exactly proportional to the surplus-value s/he receives. But on a

macroeconomic level, the total amount of money profit still must be a direct function of the total

amount of surplus-value in terms of labor-time. The total rate of money profit still must be the

same as the total rate of value profit. The total sum of commodity prices of an economy must be

a direct function of the total sum of the values of commodities.

The traditional interpretation of the input-output table that I am presenting is that it

allows Marx to show schematically how this “redistribution of surplus-value” happens and in

turn, the transformation problem is supposed to show why Marx’s table still does not, in fact,

resolve that tension.

C(o

nstan

t

capital ad

ded

)

V(ariab

le

capital ad

ded

)

S(u

rplu

s valu

e

created)

W (to

tal

valu

e add

ed,

C +

V +

S)

Co

st of

pro

du

ction

(C +

V)

New

valu

e

add

ed (V

+

S)

Valu

e rate

of p

rofit

(S/[C

+V

])

Mo

ney

pro

fit

([C+

V]x

Av

g. R

OP

)

Price o

f

pro

du

ction

(cost o

f

pro

du

ction

+ m

on

ey

pro

fit)

Price rate o

f pro

fit

(Price o

f

pro

du

ction

/[C+

V])

Cap

ital

go

od

s (D1)

30

10

10

50

40

20

25

20

60

50

Wo

rkers'

go

od

s (D2)

10

20

20

50

30

40

66

.67

1

5

45

50

Lux

ury

go

od

s (D3)

10

20

20

50

30

40

66

.67

1

5

45

50

Total

50

50

50

15

0

10

0

10

0

50

(averag

e

RO

P)

50

15

0

50

(averag

e

mo

ney

RO

P)

McCarthy-Bur 28

C(o

nsta

nt c

apita

l added)

V(a

riable

capita

l added)

S(u

rplu

s va

lue c

reate

d)

W (to

tal va

lue a

dded,

Cost o

f pro

ductio

n

New

valu

e a

dded (V

Valu

e ra

te o

f pro

fit M

oney p

rofit

Pric

e o

f pro

ductio

n

Pric

e ra

te o

f pro

fit

Capita

l goods (D

1)

30

10

10

50

40

20

25

20

60

50

Work

ers

' goods (D

2)

10

20

20

50

30

40

66.6

715

45

50

Luxury

goods (D

3)

10

20

20

50

30

40

66.6

715

45

50

Tota

l50

50

50

150

100

100

50 (a

vera

ge R

OP

)50

150

50 (a

vera

ge m

oney

McCarthy-Bur 29

Cost o

f pro

ductio

n

New

valu

e a

dded (V

V

alu

e ra

te o

f pro

fit M

oney p

rofit

Pric

e o

f pro

ductio

n

Pric

e ra

te o

f pro

fit

40

20

25

20

60

50

30

40

66.6

715

45

50

30

40

66.6

715

45

50

100

100

50 (a

vera

ge R

OP

)50

150

50 (a

vera

ge m

oney

McCarthy-Bur 30

In the model displayed on the previous two pages, the capitalist economy is organized into three

industries which produce three different goods: the capital goods industry (which [re]produces

the means of production themselves and is labeled “D1” on the table); the wage goods industry

(which is labelled “D2” and produces all the goods that workers and only workers consume); and

the luxury goods industry (which is labelled “D3” and produces all the goods that capitalists and

only capitalists consume.) For the sake of simplicity, Marx assumes an economy undergoing

simple reproduction for his demonstration. N.b. that when I refer to columns here that these

columns are only visible in the supplementary document but that the table can be read without

reference to the columns.

Because this fictional economy is assumed to be in equilibrium, the total value produced

in each department (W for Wert, German for “value”)75

must equal the total value of that factor

needed by every department. So, the total amount of value produced in D1 must equal the

amount of capital needed by D1 + D2 + D3; the same goes for D2 and wages (or V) and D3 and

profits (or S). The choice of numbers here is arbitrary and I have simply used the numbers that

Brendan Cooney (whose demonstration I am following, see fn. 73) uses in his presentation since

they are specifically chosen so that all the results of the table appear in relatively manageable

numbers.

We can now move to explaining how Marx was thought to be transforming values into

prices. First, we note that the value rate of profit is defined as surplus-value (S) divided by the

sum of constant and variable capital (C and V respectively) and also note that this rate varies

based on the capital-labor ratio of each industry. Additionally, we note that from those different

rates of profit we can find an average rate for the economy as a whole (50 percent, in this case.)

75

Readers might note that constant capital (which simply means capital in the contemporary sense of the

term) adds value in this table. As noted before, Marx claims that capital could transfer its value to goods,

using it up in the process, but that it could not create new value.

McCarthy-Bur 31

Next, we will want to look at the price rate of profit, which is already filled in on the

table but the process for deriving it should be clarified for the coherence of the argument. The

price rate of profit is defined as “the price of production divided by C+V.” “The price of

production” is the term Marx uses to denote the price at which a good must sell in order for a

capitalist to realize an average rate of profit on his or her investment. It is defined algebraically

as the cost of production (C+V) plus the money profit. So now, we must also know the money

profit on each good and to know that, we must know the average rate of profit throughout the

economy. Conveniently, we already have derived that in value terms. So, we can then calculate

the money profit for each good by multiplying each good’s total cost in price terms by that rate,

giving us the figures in Column I which, added up, give us the total amount of money profit. We

can next add that money profit to the cost of producing the good (C + V) in order to arrive at the

price of production (Column J.) Finally, we now derive the price rate of profit for each good by

dividing the prices of production for each good by the cost of production and we note that each

good’s price rate of profit is equal to the average rate of profit.

Now that we have explained all of the columns, we can note that all three macroeconomic

equalities detailed on page 28 of this thesis hold, thus demonstrating that labor is the source of all

new value. Total surplus value (Column D) is equal to total money profit (Column I); total price

(Column E) is equal to total value (Column J); the price rate of profit (Column K) and the rate of

surplus-value profit (Column H) are equal. So far, it appears that Marx is indeed able to

transform values into prices.

But now we move on to von Bortkiewicz’s critique. First, we recall that in the table

above, there are a few implicit equivalences. First, variable capital (Column C) is here defined as

being equal to the wages that workers are paid. Since we assumed that workers only buy goods

McCarthy-Bur 32

made in Department 2, theoretically the total value of goods produced by D2 should equal the

total amount of wages paid to workers. And we see this is true: the total value produced in D2 is

shown in Cell E2 (50) and this is equal to the sum of variable capital of all departments, i.e. the

total wages for workers (Cell C5). What this means is that wages for workers are denominated in

value terms rather than price terms.

Von Bortkiewicz reasoned that workers are paid in price-denominated units (money)

rather than value-denominated units and so the total amount of variable capital should be

equivalent to the total price of D2 goods, rather than the total value of D2 goods. A quick look at

the table shows that this is not true: if we assume that workers’ wages are equal to the price of

their means of subsistence (Cell J2) rather than the value of those goods, we see a discrepancy

since the price of workers’ goods is 45 and the value of workers’ goods is 50. We can still plug

the prices of workers’ goods back into the variable capital column, replacing the values that are

currently there, but if we do this (I will spare the reader the math since it is tedious), the table is

thrown off such that only one of Marx’s aggregate equalities (aggregate price = aggregate value

and aggregate profit = aggregate surplus-value) can ever be true at once.

This critique was accepted as damning almost immediately after von Bortkiewicz’s

article was published in 1907, with many Marxist economists coming to accept it. Consequently,

as Foley notes, when Marxists did use the LTV as an analytical tool, they often accepted that it

was logically inconsistent but maintained that calculating prices based on labor-time still gave a

close empirical approximation to real prices, regardless of the lack of logical rigor.76

Similarly,

Alain Lipietz notes that before the New Interpretation (the earliest of the responses I’m

considering to appear), “the mostly widely accepted [solution]” to the von Bortkiewicz critique

76

See Foley, “Recent Developments,” subheading 6: “The Empirical Approach to Embodied Labor,” p.

18-20.

McCarthy-Bur 33

was Michio Morishima’s Fundamental Marxian Theorem which “reduces the theory [...] to a

rough and approximate expression of the idea that workers do not receive the whole fruits of

their labor in the wage.”77

In other words, the Marxian economists who kept a form of the LTV

did not challenge von Bortkiewicz’s critique on its logical or methodological terms, but rather

maintained that by using the LTV one could make a useful approximation of actual prices

despite its logical flaws.

III. The New Interpretation

The New Interpretation (NI) arose in the late 1970s, primarily out of the independent

work of Gérard Duménil and Duncan Foley.78

Its primary thrust is to argue that von Bortkiewicz

was right insofar as wages should be computed with reference to price terms and not in terms of

values. But rather than claiming that Marx’s method was to first compute wages in terms of

values and to then derive prices of production of wage-goods and to plug those prices back in for

wages (which, as we saw, throws the input-output table off), the NI claims that wages can be

considered in monetary terms from the outset. As Foley notes, this stems from the simple idea

that for Marx, “money represents social labor time,” which incidentally is a theme that the NI

shares with many value-form approaches (C.f. my third chapter.)79

Since money is, on Marx’s

theory, a representation of abstract labor time, it not only is an acceptable substitute for

measuring variable capital, it actually ends up being a preferable one (since, after all, workers are

paid in money terms, rather than in commodities.) As Moseley puts it, under the NI,

variable capital is not derived from a given quantity of means of subsistence, but is

instead taken as given directly, as the actual quantity of money capital advanced to

purchase labor power in the real capitalist economy, which is equal to the price of

77

Alain Lipietz, “The So-Called ‘Transformation Problem’ Revisited,” Journal of Economic Theory 26,

no. 1 (February 1982): 59-88. 78

Foley, op. cit., 17. 79

Foley, op. cit., 17.

McCarthy-Bur 34

production of the means of subsistence, not the value of the means of subsistence.80

Foley himself proposes to redefine variable capital slightly more complexly,81

as the money

wage divided by the monetary expression of labor-time (MEL or MELT) but this does not

fundamentally change the point that labor-time is now measured in money wages rather than the

values.82

The NI also makes a slight change to the way that the traditional price-equality equation

is understood, redefining total price as the net product rather than the gross product of a given

cycle of production (which is assumed in the input-output table above.)83

This simply means that

the capital depreciation (or the amount of capital used up in production) is taken into account

when looking at total price. That is, the net product is the amount of money value added to an

economy minus the amount of capital used in the process. This, too, is consistent with Marx’s

method since he thought that constant capital was capable of transferring its value to a finished

product but only by being used up in the process—it cannot create more value than is needed to

reproduce itself, unlike human labor.

So, then, the “payoff” of the NI is that “the problem of the identification of surplus value

in the capitalist system as a whole with the unpaid labor of productive workers simply

80

Moseley, “Recent Interpretations,” 188. C.f. Foley, op. cit., 19. “[...] in general the ‘value of labor-

power’ should be measured as the ratio of the money wage to the monetary expression of labor, not as the

labor embodied in the commodities workers consume.” 81

Foley, op. cit., 19. 82

The MELT is defined by Moseley as “the multiplicative factor which determines how much money

value is produced per hour of socially necessary labor time.” Fred Moseley, “The Determination of the

‘Monetary Expression of Labor Time’ in the Case of Non-Commodity Money”, Review of Radical

Political Economics 43, no. 1 (March 2011): 95-105. MELT was defined during the gold standard era as

the amount of gold that could be produced during a single hour of labor-time, which then sets “the

absolute price level of [other] commodities.” Since in the era of fiat money, money is not produced like

other commodities but its volume is determined by central banks and currency markets, there have been

debates about how to reformulate the MELT. As of now they are inconclusive so I will leave this debate a

footnote for now. 83

Moseley, “Recent Interpretations,”188.

McCarthy-Bur 35

vanishes.”84

This is because surplus-value is defined as the difference between value created by

labor and the wages paid to labor. If we look at the net product of (in other words, the money

value added to) an economy over a given period of time, we notice that the number is always

greater than the amount of variable capital added (now being measured in wage terms.) Since net

product explicitly ignores the value transferred by capital and we have now subtracted out paid

labor, the only other source for that increase in value must be unpaid labor. This is convenient

because, as Foley points out, any income that does not accrue to labor in the form of wages is by

definition profit. So unpaid labor, under the NI, is by definition equal to profit.

Yet, as Moseley notes, the NI does not carry this logic (considering inputs in terms of

money) over to constant capital, instead continuing to treat it in value terms initially and to then

attempt to transform it into price terms. This means that neither the total price=total value85

nor

the value rate of profit=price rate of profit will always hold true.86

This is because the same

problem—the transformation of values into prices—arises again precisely because constant

capital in the NI is still considered in value terms.

To further explain why the New Interpretation retains this interpretation of constant

capital in value terms, it is worth explaining the methodological presupposition that von

Bortkiewicz and many critics in the same vein are working with, which can be termed

“physicalism.” Though Moseley does not say so outright, it is clear that on his view, the New

Interpretation is retaining certain physicalist assumptions by considering constant capital in

terms of values rather than the prices paid for it. Physicalism is a term often used pejoratively to

describe von Bortkiwiecz, Sraffa, Ian Steedman and others critics of Marx. What all of these

84

Foley, op. cit., 19. 85

Note that this does hold true when total price is defined as net product but not when it is defined as

gross product. 86

Fred Moseley, “The new solution to the transformation problem: A sympathetic critique,” Review of

Radical Political Economics 32, no. 2 (2000): 282-316.

McCarthy-Bur 36

critics have in common is that they criticize Marx not from the dominant mainstream paradigm

of economics (viz., neoclassical economics) but from a position that can be described as “neo-

Ricardian.”87

Though Sraffa and other neo-Ricardians are perhaps as spurned by mainstream

economists88

as are Marxists, their critique of Marxist economic thought seems to merit more

consideration, perhaps because such thinkers are usually on the Left politically.89

Such a

physicalism attempts to

dra[w] conclusions about the workings of capitalist economies [from...] ‘physical

quantities’ or, more precisely, technology and real wages [....] Their point is that one

needs no information other than the physical data in order to determine value, relative

prices and the rate of profit90

Physicalism is thus methodologically opposed to both certain strands of Marxist and neoclassical

economics (particularly the Keynesian variety), which emphasize the role of money91

among

other “non-physical” factors, as the economist Roman Rosdolsky pointed out in a commentary

87

von Bortkiewicz was explicitly a neo-Ricardian and Sraffa’s debt to Ricardo is well-known. Steedman,

a New Left economist and author of the very influential Marx after Sraffa, deliberately takes after Sraffa. 88

The influential neoclassical economist Tyler Cowen, for example, praises some of Sraffa’s work but

describes his major work, The Production of Commodities by Means of Commodities (1960), as a “neo-

Ricardian cult tract.” See Tyler Cowen, “The Contributions of Piero Sraffa,” Marginal Revolution, 1 June

2007, http://marginalrevolution.com/marginalrevolution/2007/06/the_contributio.html 89

Sraffa, it should be noted, had a rather fascinating friendship with one of the most influential Marxists

of the 20th century, Antonio Gramsci, who hardly touched economics and indeed, exerted a posthumous

influence on the cultural dimensions of Marxist thought via Stuart Hall and others. See Perry Anderson’s

Considerations on Western Marxism, (London: 1976, New Left Books), 75. 90

Andrew Kliman, Reclaiming Marx’s Capital: A Refutation of the Myth of Inconsistency, (Lanham:

Lexington Books, 2007), 76. 91

At the time that Marx wrote, the gold standard was still in use, of course, which is to say that

commodity money, rather than fiat money, was in use. This raises the question of whether Marx was

really emphasizing money as such, i.e. money considered as an abstract system of social account rather

than as a commodity. If we adopt the latter view, then Marx would seem to be a physicalist after all since

under commodity money regimes, the supply of money is regulated by how much gold is extracted from

the ground, i.e. it is simply a commodity, produced like any other, unlike modern money, the supply of

which is regulated by sociopolitical decisions through central banks. Moseley and others argue that Marx

understands or can be interpreted as understanding money as a representation of abstract labor, meaning

that it is understood as representing social relation rather than simply being a physical quantity. This puts

Marx in the camp of economic theories stressing the social dimensions of economic interaction.

McCarthy-Bur 37

on Joan Robinson’s appraisal of Marx.92

On Moseley’s view, one of the strengths of the NI is

that it in part breaks from this physicalism.

II. The Macromonetary Interpretation

Yet for Moseley, continuing to apply physicalist methods to capital, which the NI does, is

inconsistent with Marx’s method and moreover, internally inconsistent. He instead proposes to

consider capital in monetary terms, which he calls the “macromonetary interpretation.” Moseley

cites textual evidence to that end, especially the fact that one of the most famous formulas

associated with Marx is, after all, M--C--M’, which represents the circuit of capitalist production:

(M)oney is advanced to create (C)ommodities which create more (M’)oney. Thus, Moseley

argues, it doesn’t make much sense for capital to be considered in value terms. He quotes a

recently-discovered passage of a draft of Capital where Marx is much clearer about this than in

the published version. There, Marx claims that the only difference between the value of

commodities and their price is the difference between the magnitude of surplus-value added to

commodities (in the case of values) and the magnitude of profit that is included in the price of a

commodity (in the case of price). In other words, the cost-price component of both the value and

the price of a good (that is, the amount of capital and wages that a capitalist advances for

production) is the same and should be considered in monetary terms.93

As Moseley notes, this means that there is no need to “transform” values into prices

because only the discrepancy between the values and prices of goods is the surplus-value/price

difference. Conveniently, Marx already proposed the solution for this problem, which I detailed

in Chapter One—the “redistribution of surplus-value within the capitalist class.” In other words,

Moseley’s methodology (or rather, his interpretation of Marx’s methodology) holds that the total

92

Roman Rosdolsky, The Making of Marx’s Capital, (London: Pluto, 1977), 530-534. 93

Moseley, “Recent Interpretations,” 192.

McCarthy-Bur 38

amount of surplus value is determined at the point of production, before commodities are sold.

Their sale only divides this total amount of surplus-value into different forms of profit (including

rent and interest) but the aggregate amount always remains the same. Moseley only alludes to the

importance of this methodological point in the Rethinking Marxism article but it is elucidated

elsewhere. According to Moseley, Marx understands the rate of profit in general as being

determined prior to the determination of rates of profit for individual capitalists. This can be seen

in his understanding of how prices of production are determined—very simply, capitalists try to

price their products so that they realize the highest money profit possible. If this seems, perhaps,

unrealistic, we can simply remember that in practice, firms in a capitalist economy try to realize

(at least) an average rate of profit for their investors so that they will continue to receive capital

from them. So, in an important sense, an estimate of the general rate of profit is already “built

into” the price of a commodity, even though we commonly think of the average rate of profit as

being determined after the rate of profit of all of the individual commodities in a market are

aggregated and averaged out.

III. The Rethinking Marxism Interpretation

Finally, Moseley’s article goes on to explain what he calls the Rethinking Marxism

interpretation of the LTV. He does not cite a definitive paper or text elucidating this view, and

Stephen Resnick and Richard Wolff’s various introductory texts do not touch much on the issue.

So I will rely on Moseley’s description here.94

The RM interpretation also proceeds from the

assumption that the magnitudes of variable and constant capital are the same when determining

values and prices. These are valued at the prices of production of those inputs, rather than as

“values.” Interestingly, the RM school apparently calculates all of its figures in labor-time terms,

94

Rather than footnoting each assertion, which could be tedious, I will say that all of my summary in the

discussion of the RM school can be found in Moseley, “Recent Interpretations,” 192-195.

McCarthy-Bur 39

so even though it calculates inputs in terms of their prices of production, these are still

considered in the terms of their “labor-time” price of production rather than their monetary price

of production.

The RM interpretation, however, still differs in treating the rate of profit as determined by

these physical inputs, without reference to labor-time; here, there is a sharp contrast with

Moseley’s theory which attempts95

to explain profit and prices through Marx’s LTV, rather than

simply trying to make other methods of price and profit-rate analysis (such as Sraffian analysis)

and the LTV compatible (as both the NI and the RM interpretations do.)

IV. Some comparative considerations

Here, I will keep my analysis short since this I am not qualified to comment on these

issues in a very technical way. I think the first overarching thing to note about all three

reinterpretations is that they reconstruct Marx’s theory on the basis of redefinitions of the LTV.

Both the NI and RM versions of the LTV simply redefine the way that some of Marx’s major

equalities are measured such that they are true by definition (total value=total price and total

surplus value=total profit). In terms of the final equality, they both abandon a connection

between the value rate of profit and the price rate of profit, preferring instead to define the rate of

profit in physicalist terms. Both Foley and the RM school are explicit about this. As Foley notes,

the NI “is consistent with any theory of price formation,” which is simply a restatement of the

fact that under the NI view, values do not determine prices in the traditional independent-

dependent variable way that previous approaches to the transformation problem had assumed.96

In a seminal paper, three scholars associated with the RM school, Wolff, Callari and Roberts are

95

Fred Moseley, “Hostile Brothers: Marx’s theory of the distribution of surplus-value in Volume Three of

Capital,” in The Culmination of Capital: Essays on Volume Three of Marx’s Capital, ed. Martha

Campbell and Geert Reuten, (Palgrave Macmillan: Basingstoke, 2001), 82-83. 96

Foley, op. cit., 19.

McCarthy-Bur 40

clear about this as well. They make use of the Althusserian understanding of causality and his

concept of overdetermination, emphasizing the mutual constitution of value and price.97

So it is

clear that they, too, do not conceive of value and price in terms of linear causality—value does

not determine price but rather value and price are equal by definition. The two aggregate

equalities “hold as identities, as properties of the meanings of the concepts employed.”98

All of

this is to say that, as Fabio Petri notes in a sympathetic but sharp critique from a Sraffian

perspective, these versions of the LTV seem to amount to “purely definitional results [which]

add nothing to our understanding of what determines the existence or the magnitude of profits.

The labour theory of value becomes nothing more than a choice of pink lenses for one’s

spectacles.”99

At the same time, advocates of these two approaches recognize the criticism that their

redefinitions amount to a tautological understanding of the LTV. Foley, for example, concedes

that the “the New Interpretation is a set of definitions rather than an empirical hypothesis, but I

disagree with [the] claim that as a result the New Interpretation has no theoretical or scientific

content,” going on to suggest ways that the LTV can now operate as a “definitional framework”

for various research programs.100

At this point, I have reached the end of my ability to comment on these theories from the

point of view of economic theory. Insofar as they are simply starting with a different analytical

framework, where Marx’s basic equalities are assumed, this seems perfectly valid. If we

understand this move as being an attempt to discover some general principles underlying the

97

See throughout: Richard Wolff, Antonio Callari and Bruce Roberts, “A Marxian Alternative to the

‘Transformation Problem’,” Review of Radical Political Economics 16, no. 2 (1984): 115-135. 98

Wolff et al., “A Marxian Alternative,” 128. 99

Fabio Petri, “On recent reformulations of the labour theory of value,” Quaderni del Dipartimento di

Economia e Statistica, no. 643: 9. 100

Foley, op. cit., 23.

McCarthy-Bur 41

“laws of motion” of capitalism, rather than as a proof of exploitation or as a fundamental

explanation of long-run prices, then it seems like an interesting set of assumptions which can

produce interesting empirical work.101

I also think that Foley is correct to argue for theoretical

plurality here, noting the possibility of maintaining an historical materialist perspective which is

critical of capitalism while also not making use of the LTV102

(and it is worth noting,

furthermore, that explicitly Marxist research programs in economics are not ruled out if one

rejects the LTV.)103

To some extent, this is simply a matter of methodology and epistemology.

Here, I think some of the theorists associated with Rethinking Marxism have made very

compelling and interesting suggestions as to how to navigate those kinds of epistemological

choices from a materialist perspective in a postmodern world.104

Moseley’s interpretation, however, raises some important questions. It is not clear

whether he holds to an interpretation of value as a substance but the notion of the determination

of value prior to the sale of commodities would seem to assume this. While his theory is

logically consistent and allows for Marx’s three equalities to hold, it also would seem to invoke a

notion of value that is hard to defend. That is, even if Marx’s theory is internally consistent and

provides a convincing explanation of long-run price-formation, it would in that respect be no

more representative of reality than certain neoclassical theories which can explain to some

degree the same empirical phenomena.

101

These being the two “purposes” that the LTV was traditionally seen as fulfilling. 102

Foley, op. cit., 16. He mentions here John Roemer and Ian Steedman, representatives of the Analytical

Marxist and neo-Ricardian/Sraffian schools, respectively. I won’t make any general statements here about

either of those research programs other than that they seem to be adequate proof of Foley’s point. 103

Perry Anderson, for example, takes the movement beyond the difficulties posed by the transformation

problem—however one moves beyond it—to be a move towards strengthening Marx’s overall project,

rather than a sign of abandoning it. See his Considerations, 115. 104

For now, I think Antonio Callari and David Ruccio’s introduction to their edited volume on

“postmodern materialism” is very insightful here. See Callari and Ruccio, “Introduction,” in Postmodern

Materialism and the Future of Marxist Theory, ed. Antonio Callari and David Ruccio, (Hanover:

Wesleyan University Press, 1996), 1-50.

McCarthy-Bur 42

Moreover, it is not clear that the LTV is necessary to theorize exploitation in the Marxian

sense. As Diane Elson suggests (referencing Ian Steedman), “exploitation in capitalism can

perfectly well be understood in terms of the appropriation of surplus product, with no need to

bring in value at all.”105

The existence of exploitation can be framed as the difference between

the money that commodities sell for and the wages paid to workers. Even before Steedman and

the Sraffians made this point explicitly, Paul Sweezy and Paul Baran were performing Marxian

analyses of capitalism in The Political Economy of Growth and Monopoly Capital in terms of

“surplus product” rather than surplus-value, without this seeming to reduce their incisive

analyses of 20th

century capitalism.106

For this understanding of exploitation to be valid, I don’t think that a traditional

understanding of the LTV is necessary; instead, we only need to challenge the idea that workers’

wages under capitalism generally reflect their contribution to the total social output, an idea

known as the marginalist theory of distribution. If we take, for example, Joan Robinson’s

convincing knockdown of that theory, we can say that there is no way to systematically set apart

the “contributions” of various factors of production.107

As Moseley notes in a paper critiquing

marginal productivity theory, this point has slowly been accepted even from within mainstream

economics,108

although heterodox economists have been pointing it out since since the late 19th

century.109

From even the weak critique of mainstream economics—this idea that there is no way

105

Elson, “Value Theory of Labor,” 116. 106

John Bellamy Foster discusses this adeptly in his summary of Sweezy and Baran’s ideas in The Theory

of Monopoly Capitalism (New York: Monthly Review Press, 1986). 107

See her trenchant “Marginal Productivity”, Indian Economic Review, New Series 2, No. 1 (April

1967): 75-84. 108

Fred Moseley, “Mankiw’s attempted reconstruction of marginal productivity theory,” Real-World

Economics Review 61 (September 2012): 115-124. 109

See, for example, J. A. Hobson’s “Marginal Units in the Theory of Distribution”, The Journal of

Political Economy 12, no. 4 (September 1904): 449-472.

http://www.marxists.org/archive/hobson/1904/09/distribution.htm

McCarthy-Bur 43

of teasing out the actual contribution of each element to a good’s price—it is fairly easy to come

up with the same basic political outcome as that suggested by the LTV: that capitalist relations of

production are not the only possible relations of production and neither are they necessarily the

most efficient. Of course, to say that value is a social construct whose “creator” is unknown

leaves us a much less morally vehement critique than that of the idea that profit is by definition

the theft of alien labor-time. But we do not need to prove the mathematical identity between

profit and surplus-value to get what I consider the key Marxian insight regarding political

economy: that the capitalist structure of work relations is not the only possible or only efficient

way of organizing economic activity. All we need to do is prove that capitalism maintains

workplace hierarchies and an income distribution which are not strictly necessary for economic

efficiency, while at the same time creating important social problems.

As an exercise in this form of critique, we can consider, for example, Stephen Marglin’s

seminal paper “What Do Bosses Do?”110

which is broadly Marxian (by Marglin’s own admission

and also for the way he raises many themes around modern time and work-discipline that draw

on E.P. Thompson’s work.)111

At the same time, Marglin does not rely at all on the LTV in his

critical assessment of capitalist work relations but rather, an historical account of how both the

relations and even the very forces of production that characterize contemporary capitalism arose.

Marglin convincingly argues that “the discipline and supervision afforded by the factory had

nothing to do with efficiency” but rather with totally eliminating the already-negligible control

over the labor process that workers could exercise under the putting-out system.112

The thrust of

this argument is important because it demonstrates a way to critically evaluate capitalism from a

110

Stephen A. Marglin, “What Do Bosses Do?,” Review of Radical Political Economics 6, no. 1(Summer

1974): 60-112. 111

See E.P. Thompson, “Time, Work Discipline and Industrial Capitalism,” Past and Present 38, no. 1

(1967): 56-97. 112

Marglin, op. cit., 42.

McCarthy-Bur 44

Marxian angle without recourse to the LTV. As Marglin puts it, the Marxian question can simply

be framed as one of “whether or not [factory employment] was better than alternative forces of

productive organization.”113

For this reason, I leave the question of whether the LTV is an effective analytical tool up

to macroeconomists to determine empirically. The simple fact that the capitalist labor process

and income distribution are not logically necessary (as Robinson argues) and did not arise

historically for simple reasons of efficiency (as Marglin and Harry Braverman114

argue) provides

those concerned with the cause of labor an intellectual justification for struggling against current

relations of production without needing to fear that this effort is doomed to inefficiency or social

collapse (as mainstream economists tend to suggest.)

113

ibid., 43. 114

See Harry Braverman, Labor and Monopoly Capital, (New York: Monthly Review Press, 1974).

McCarthy-Bur 45

CHAPTER THREE: The “Value-form” Rereadings of Marx

I. An overview of value-form readings and some key themes

Value-form theorists can be distinguished from traditional Marxists in various ways.

Generally speaking, value-form theory often but not always exhibits a strong Hegelian influence,

especially from the Hegel of the Science of Logic.115

There is generally a strong emphasis on the

dialectical character of Marx’s LTV, especially the “inner connection” between the form and

content of value.116

These analyses also lay heavy stress on the historical specificity of Marx’s

LTV,117

drawing a distinction between a dialectic of history, typified by Hegel’s Phenomenology

of Spirit and various kinds of so-called vulgar Marxism (both of which value-form theorists

generally oppose) and a systematic dialectic.118

The former is generally seen as a subset of

various kinds of “orthodox Marxism” which value-form theorists also generally oppose. These

orthodox strands, variously referred to as “traditional Marxism,”119

“worldview

[Weltanschauung] Marxism,”120

inter alia, are often associated with the Second International

and/or Soviet state dogma. They are also associated with: the idea that there is a certain “logic”

to history as it unfolds; that capitalism is destined to collapse because of its internal

contradictions; that the presentation of different categories in Capital is supposed to mirror their

actual development in history. Even though the actual theoretical terrain of value-form theory

115

A quote from Lenin is often adduced to make this point: “It is impossible to completely understand

Marx’s Capital, and especially its first chapter, without having thoroughly studied and understood the

whole of Hegel’s Logic.” See, e.g., in Jairus Banaji, “From the Commodity to Capital: Hegel’s Dialectic

in Marx’s Capital,” in Value: The Representation of Labour in Capitalism (London: CSE Books, 1979),

14-45. 116

The “dialectic of form and content” is an important theme in Hegel 117

Banaji, “Commodity to Capital”; Ingo Elbe, “Between Marx, Marxism and Marxisms,” trans.

Alexander Locascio, Viewpoint, 21 October 2013, http://viewpointmag.com/2013/10/21/between-marx-

marxism-and-marxisms-ways-of-reading-marxs-theory/. 118

See Christopher J. Arthur, “Systematic Dialectic,” Science & Society 62, no. 3 (Fall 1998): 447-459. 119

The term used by Moishe Postone. 120

See Michael Heinrich, “Invaders from Marx: On the Uses of Marxian Theory, and the Difficulties of a

Contemporary Reading’,” Left Curve 31 (2007): 83–8.

McCarthy-Bur 46

itself is rather limited, it is intimately associated with a broader project that we might call

“critical Marxism,” as opposed to this orthodox, “scientific Marxism” (which the mathematical

tendency falls under.)121

Value-form theory, in contrast to such a teleological, positivist Marxism, generally

emphasizes the historical specificity of capitalism, especially the historically unique form of

value in which labor is “expressed” or “represented” under capitalism. Hans-Georg Backhaus, a

prominent exponent of the Neue Marx-Lektüre school in Germany, characterizes Marx’s break

with classical political economy in precisely those terms: while classical political economy

discovered the “secret” of relative values by locating the source of the magnitude of value in

labor-time, it did not discover the “thing-like” form of value that the product of labor under

capitalism (the commodity) takes.122

Statements to this effect can be found in Marx’s work, too,

but because the considerable ambiguity of his work, this emphasis not merely on the content of

value but also its form was often downplayed by subsequent interpreters. This was also

exacerbated by the fact that, as Michael Heinrich has convincingly argued, Marx’s work is

characterized by an “incomplete break with the field of political economy”—while Capital is in

some senses (as its oft-emphasized subtitle claims) a critique of political economy, there are also

elements of a positive project of political economy aimed at completing Ricardo’s system (and it

is these elements which provide the framework that theorists I discussed in Chapter Two draw

on.)123

Though the economist Rudolf Hilferding, otherwise a quite orthodox Marxist, raised

121

I borrow this distinction from Alvin Gouldner, The Two Marxisms, (New York: Oxford University

Press, 1980). 122

Hans-Georg Backhaus, “On the Dialectics of the Value-Form,” Thesis Eleven 1 (1980): 103. This

should be distinguished from Backhaus’ book-length work of the same name, Dialektik der Wertform

(1969), which is still yet to be translated into English. 123

Xiapoing Wei, “An Interview with Michael Heinrich: The Interpretation of Capital,” The North Star,

21 October 2013, http://www.thenorthstar.info/?p=10713.

McCarthy-Bur 47

some of these themes in the first decade of the 20th century, the first systematic exponent of

value-form theory is generally agreed to be Isaak Illich (I.I.) Rubin, a dissident Soviet economist

who wrote in the 1920s and 30s before being executed in 1937 during the Stalinist purges.124

Because value-form theory does not have a linear path of development or an easily-reducible set

of principles, however, it was difficult to decide which other theorists to look at closely besides

Rubin (whose work merits special attention for its historical novelty.) I eventually settled on

Moishe Postone’s much later work, 1993’s Time, Labor and Social Domination. Postone’s book

is notable for being perhaps the best-known value-form work written originally in English.

Postone himself studied in Germany under Iring Fetscher125

and comes out of the same general

Frankfurt School/critical Marxist milieu that produced the Neue Marx-Lektüre decades earlier

but which went unknown in English for a long time.126

Rubin’s major work is a collection of interconnected essays (Essays on Marx’s Theory of

Value) which I will now discuss, in addition to the transcription of a speech Rubin gave several

years later which became relatively influential in Anglophone circles thanks to its publication in

the journal Capital and Class in the late 1970s.127

I then discuss Postone’s work and draw some

124

See especially Chapter One, “Value as an Economic Category” in Rudolf Hilferding, Böhm-Bawerk’s

Criticism of Marx, (Glasgow: Socialist Labour Press, 1924),

http://www.marxists.org/archive/hilferding/1904/criticism/ 125

As Kevin Anderson notes, while earlier Frankfurt School theorists such as Theodor Adorno and Jürgen

Habermas are widely read in the English-speaking world, Fetscher and others with a tighter connection to

value-form theory are less known, making Postone an important bridge. See Kevin Anderson and Iring

Fetscher, “On Marx, Hegel, and Critical Theory in Postwar Germany: A Conversation with Iring

Fetscher,” Studies in East European Thought 50, No. 1 (March 1998): 1-18. 126

An important but little-known exception is Conference of Socialist Economists circle in England,

which published some translations of Rubin in its house journal, Capital and Class, in the early 1970s. I

discuss one important CSE figure, Diane Elson, later on, however.) The Ukrainian Trotskyist Roman

Rosdolsky, whom I reference in Chapter Two, is one other figure worth mentioning briefly. His work The

Making of Marx’s Capital was published posthumously in English in 1977 and it has been quite

influential but in a scattered and partial way. 127

I.I. Rubin, Essays on Marx’s Theory of Value, (Montreal: Black Rose Books, 1973), originally

published in Russian in 1928 and I.I. Rubin, “Abstract Labour and Value in Marx’s System,” in Debates

in Value Theory, ed. Simon Mohun, (London: Macmillan, 1994), originally published in 1927.

McCarthy-Bur 48

comparative themes between him and Rubin, as well as provide a critical analysis of both.

II. An overview of Rubin’s project

i. Value and labor

Rubin’s presentation of his interpretation of Marx is rather architectonic and has a fractal

quality: each category in his system is in some ways a reflection of the system as a whole, and

the interrelations between the categories are very precise. Since much of the work done by later

value-form theorists128

will take a less schematic approach and since reconstructing Rubin’s

system could take an entire chapter of its own, I will instead try to sound out some of the most

important themes in Rubin, while trying to preserve the most important structural elements of his

presentation.

Perhaps the most direct way to approach Rubin’s work is to say that it takes Marx’s

project to be an investigation of two theoretical objects—“value” and “labor”—rather than an

investigation into commodity prices or profit. The aim is to thus discover the “reciprocal

relationship between labour and value”—and to understand that connection as a necessary

one.129

For Rubin, it is important to understand value within the Hegelian framework of the

dialectic between the form and content of an object. Here, value’s form is what Marx simply

calls “the value-form,” which is the “necessary social form of the product of labor.”130

The

substance or content of value, then, is “socially equal labor.”131

Rubin at times speaks of the

magnitude of value as a third category that comprises value but at other times defines value only

in terms of form and content, a point which I will discuss later.

Value on the whole is then a sort of theoretical object whose ontological status is

128

Among others: Hans-Georg Backhaus, Geert Reuten, Michael Eldred, Helmut Reichelt, Michael

Heinrich, Diane Elson and Moishe Postone. I discuss Postone in the second half of this chapter. 129

Rubin, “Abstract Labour,” 37. 130

ibid., 40. 131

ibid., 39.

McCarthy-Bur 49

somewhat murky: Rubin is careful to distinguish value from labor throughout his work, but at the

same time, on the question of what value ultimately is, Rubin says that it is

social labour which has assumed the form of an ‘objectified’ property of the product of

labor, or as the property of the product to be able to be exchanged for any other product,

insofar as this property of the product depends on the quantity of social labour necessary

for its production.132

The relationship between labor and value is best described in Hegelian terms according to Rubin,

with labor being “the essence of value, and as its ground, its content, its substance and its cause”

but there is “in no way [...a] complete identity of the two.”133

For Rubin, the idea of value

expresses a connection between labor and the form it necessarily takes under capitalism: in

Diane Elson’s phrase, the LTV is now understood as a theory of the “representation” of labor

under capitalism.134

ii. The form of value

To better understand how Marx (according to Rubin) understands the concept “value-

form,” we should again remember that one thing that Marx and Rubin both assume is that labor

in precapitalist societies was “directly social,” i.e., its distribution into different activities was

consciously organized by societies (as opposed to being allocated by supply and demand in the

labor market), usually for the producers’ own use or use by people who were in their same small

society (as opposed to being produced for unknown consumers who may well live across the

world, as under capitalism.)

There are many important changes in the organization of labor concomitant with the rise

of capitalism but one of the most salient changes for Marx is that labor now takes on a “private”

132

ibid., 66. 133

ibidi., 58. 134

Rubin comments that some of the confusion surrounding Marx’s contention that value is merely a

representation of, rather than identical with, labor is due to the ambiguity of the Russian translation of the

German word for “represent” (darstellen.) See p. 57 of “Abstract Labour.”

McCarthy-Bur 50

dimension in addition to its pre-existing “social” dimension. Labor is private in that it is not

directly socially organized—society does not, for example, collectively and consciously decide

where I should have a job or what I should do at that job—and in that I am not producing goods

for the direct benefit of people in my family or my social circle. But it is still “social” in that I

continue to produce goods that correspond to the effective market demand of a given society,

which is a social (and not private) function. Under capitalism, unless one is engaging in

subsistence farming outside of society, one’s seemingly-private labor is almost surely carried out

for the benefit of some other person in society and is thus not truly private. And the way in which

this private labor becomes social, the “‘social form’ or ‘social function’” that connects these

private labors and validates them as social is the value-form.135

And the way that a product

acquires a value-form is simply that it is “equalized as a value with all other commodities,” i.e. if

it is exchanged on the market.136

So, put directly, the “social form of the commodity and the

form of value or form of exchangeability are therefore one and the same.”137

The commodity is

the social form that connects all of these kinds of private labors; and further, under capitalism,

for privately-produced goods to truly acquire their social character, they must be exchanged as

commodities. The commodity is then the “adequate and exact form of the expression” of labor

under capitalism.138

iii. The content of value

For Rubin, two crucial questions are: exactly what kind of labor is represented in the

commodity? which kind of labor is the content or substance of value? First, we should note that

he follows Marx here in defining only abstract labor as productive of value. But Rubin goes

135

Rubin, Essays, 68. 136

ibid., 70. 137

Marx quoted in Rubin, “Abstract Labour,” 64. 138

ibid., 65.

McCarthy-Bur 51

further, distinguishing three types of “equal labor,” only one of which is actually what is

properly called “abstract labor”—although, throughout Marxist intellectual history, all three

types have been understood at different times as being abstract labor (even though two of those

types are not, after all, abstract labor.) The three types of “equal labor” are: physiologically equal

labor, socially-equated labor and abstract (universal) labor.139

All of these “forms,” despite

perhaps sounding metaphysical, refer to real processes in the world. These are all, according to

Rubin, ways that qualitatively-different acts of concrete labor are made commensurable.

III. Abstract labor in Rubin’s system

However, the sense in which these kinds of labor are processes of commensuration is

different for each form of equal labor. Physiologically equal labor refers to a conception of

“human labor-power” as a basic biological capacity of humans to work, in the sense of

transforming a natural environment in predetermined ways.140

This is a relatively empty

abstraction, however, and as Rubin notes, it applies to all human societies—and thus is not really

of interest for an historically-specific theory of capitalist society like Marx’s.

There is also socially-equated labor, which, as the term suggests, refers to a social

process that equates human labors. Rubin is talking about any kind of conscious social regulation

of labor that serves to bring human labors into definite, quantitative relations with each other.

Since Rubin wrote in the early days of the Soviet Union, the question of economic planning was

the backdrop for his speech and planning serves here as an example of “socially equated labor,”

139

ibid., 43. 140

Note here that “labor-power” is of course a distinctively Marxian concept. The question here is not

whether “labor-power” is consistent with Marx’s thought, but how “thick” that concept is. So we could

choose to focus on a sort of biological notion of labor-power that is a natural property of the human

body—this would be a sort of classic humanist approach, replete with an essentialist, biologically-defined

concept of “humanity.” On this read, “labor-power” is relatively thick: we could even define it in terms of

the average output (measured in force x distance) of a human being per calorie used up in expenditure.

We could also choose to focus on a less essentialist approach, which might say that labor-power is just

what is sold on the labor market: the simple capacity to labor.

McCarthy-Bur 52

but it is not abstract universal labor.141

What, then, is abstract universal labor, which predominates in capitalist societies? First,

we should note that Rubin has added “universal” to the term here; there is a great deal of import

to this change in terminology. This addition of “universal” is a deliberate reference to Hegel’s

distinction between concrete and abstract universals, which Rubin claims Marx had in mind in

theorizing abstract labor. A concrete universal is a category which conceptually preserves the

differences between different particulars while locating common elements of those particulars;

an abstract universal does not preserve those differences. Rubin says that an example of concrete

universal labor occurs under conditions of direct state control of economic activity, where a labor

bureau consciously equates certain kinds of labor (say, by decreeing that an hour of data entry is

an equal to an hour of bricklaying.) Concrete universals are produced by a mental reduction,

either by a theorist (who mentally locates a common element in different kinds of things) or by a

social actor, such as the state (as in the example I just gave.) So, physiologically equal and

socially-equated labor both are different kinds of concrete universals.

This is in opposition to commodity-producing societies, where an abstraction from

various labors is carried out through “comparison and equation” of commodities with a

“phenomenal form of universal labour,” i.e., money, in the process of commodity exchange.142

The money-form is an “incarnation,” as it were, of abstract labor, analogous to concrete labors in

the way that “lions, tigers, hares and all the other real animals” would relate to a hypothetical

entity called “the Animal, the individual incarnation of the whole animal kingdom.”143

How, then, are commodities equated with the incarnation of the abstract universal? Rubin

claims that it is through exchange alone: “[...] only exchange reduces concrete labour to abstract

141

Rubin, “Abstract Labour,” 41-43. 142

ibid., 50. 143

Karl Marx, quoted in ibid.

McCarthy-Bur 53

labour.”144

So, then, abstract labor is not merely a physical capacity that is common to the human

species. It is also not a conscious equation of labor, either by a state body or by individuals. This

would seem to invalidate statements such as those made by Engels who claimed that the LTV

operated in “primitive society” by producers consciously comparing the labor-time needed to

produce their respective goods.145

On the contrary, the reduction of concrete to abstract labor

happens unconsciously through social operations, “behind their backs” in Marx’s phrase. This

reduction eliminates the differences between different acts of concrete labor and gives them the

character of being part of an abstract universal human labor.

So, finally, we can say that abstract labor, on Rubin’s read, is the way that qualitatively

different acts of human labor are brought into relation with one another under capitalism. It is a

process that takes place through exchange and specifically, through exchange with reference to

money, which is here understood as “representing” abstract labor.

III. Value’s relationship to labor in Rubin’s system

Rubin’s idea that value is a social form that arises only during the process of capitalist

exchange seems to pose a problem for the classic Marxian idea that value is already present or

“created” in production and it is the springboard for a larger discussion here about the

relationship between value and labor in Rubin’s system.146

To get around this apparent dilemma of whether value arises in production or exchange,

Rubin distinguishes between exchange as one “phase” of the process of social reproduction

144

ibid., 52. 145

Elbe, “Between Marx, Marxism and Marxisms.” No page number available but this quote provides a

good idea: “Accord­ing to Engels, the value of a commodity is determined consciously by the labor,

measured in time, of individual producers. In this theory of value, money does not play a constitutive

role.” 146

Rubin, “Abstract Labour,” 53.

McCarthy-Bur 54

among many, and exchange as a “social form” that characterizes the entire process.147

It is worth

noting that this distinction is somewhat strange, even arbitrary, and it is not one taken up by later

value-form theorists, but we shall stick with it for a minute to understand Rubin. For textual

support, Rubin quotes Marx to the effect that a society’s economic structure can be grasped as a

whole by understanding how workers acquire their means of subsistence.148

And because under

capitalism, workers acquire those means largely through the exchange of goods, exchange thus

counts as “a determined form of social labour.”149

The upshot of this very technical distinction is this: according to Rubin, it reconciles

Marx’s statement that abstract labor only arises in exchange with his statement that value is

already present in production; labor is only abstract and its products are only values if the

production process actually is “production based on exchange.”150

So, Rubin makes an

interesting and important, if subtle, move here. Even though Marxism is almost always

distinguished from classical political economy and neoclassical economics by virtue of its focus

on the sphere of production within the economy as a whole (whereas classical and neoclassical

economics are seen as focusing more on exchange), Rubin actually claims that what is really

characteristic of capitalism here is not its form of production (as Marxists usually do) but its

form of exchange. Since capitalism is unique in that it produces goods primarily for exchange (as

we have said before), “exchange as a social form” characterizes not only the actual act of

exchange but it influences and regulates the process of production.

At the same time, there is still a tension between Rubin’s reading and the traditional

“substantialist” reading of Marx, a term coined by the value-form theorist Michael Heinrich to

147

Interestingly, Theodor Adorno would later also discuss “exchange society”, as distinct from

capitalism, although it seems that the concepts are unrelated. 148

Rubin, “Abstract Labour,” 54. 149

ibid. 150

ibid.

McCarthy-Bur 55

describe traditional approaches to the LTV that say or imply that value is “a property of an

individual commodity […] determined, independent of the exchange process, by the quantity of

socially necessary labor-time expended in the production of the commodity.”151

Rubin is unclear:

on the one hand, he claims that this predominance of exchange means that there is no

contradiction between value being present in production and abstract labor (which produces

value) only arising in exchange because production is fundamentally oriented towards exchange.

Even though “the products of labour can already be regarded as values,” they are only “indirectly

or ‘latently’” social and abstract.152

So at this point, Rubin appears to be one of the first anti-

substantialist” Marxists—he cannot be accused of holding to any conception of value as a

detectable substance that labor puts into commodities. Value is present in the production process

but only really consummated in exchange, a theme that is important to many later value-form

theorists.

However, Rubin simultaneously holds a rather traditional “price determination” view of

the LTV. He does not, like some other value-form theorists, refute or simply pass over the

quantitative dimension of Marx’s LTV, even though it is (at least nominally) less prominent in

his system. For him, “the value of commodities is directly proportional to the quantity of labor

necessary for their production,” which is essentially the Ricardian Marxist version of the LTV

with which we are familiar. 153

In fact, the idea that value represents labor for Rubin is predicated

on the assumption that labor-time is directly related to the relative values of products. In other

words, Rubin takes the idea that there exists an essential relation between labor and the value-

form as a sort of corollary of the idea that labor-time determines the magnitude of value. He

151

Michael Heinrich, An Introduction to the Three Volumes of Marx’s Kapital, trans. Alexander Locascio,

(Chicago: Monthly Review Press, 2012), 54. Italics mine. 152

Rubin, ibid., 55. 153

Italics are Rubin’s. Essays, 66.

McCarthy-Bur 56

states this quite straightforwardly at various points, saying, for example, that labor-time is “the

basis for the regular movement of market prices.”154

Later value-form theorists will still be

interested in investigating the necessary connection, under capitalism, between labor and the

value-form but without also holding to the traditional analysis of the source of exchange-value

(as does Geert Reuten, for example)155

or by significantly hedging the relationship between

labor-time and exchange-value (as does Postone.)156

IV. Rubin’s system as a whole

Given the rather long exposition above, it seems appropriate to tie together some of the

themes Rubin goes over. Though his theoretical edifice is rather abstract (in the commonsense

meaning of the term), there are several key points that can be distilled. On Rubin’s view, the

primary object of Marx’s investigation should be understood as the relationship between value

and labor. Though the connection between those two categories is expressed in a way that has a

certain metaphysical ring to it, Rubin’s point is actually a sociological one (a term he associates

with his project several times in “Abstract Labour and Value.”) Under capitalism, the primary

form of social labor is abstract universal labor. This labor is made abstract and universal through

the process of the exchange of its products, and it is only this kind of abstract labor which is the

“source” of value. Those products, commodities, are what Marx calls the value-form. This value-

form connects disparate private labors and moreover, it is the necessary form of connection for

those labors. But this process cannot take place solely through barter; instead, there must be a

commodity that is effectively abstract labor incarnate, and that commodity is money. Rubin still

holds to the view that labor-time determines price. This is of some import to his system because,

154

ibid., 119. 155

See also Geert Reuten, “Value as Social Form,” in Value, Social Form and the State, ed. Michael

Williams, (New York: St. Martin’s, 1988), 57. 156

See Postone, Time, 197.

McCarthy-Bur 57

as Diane Elson points, for Rubin, the amount of socially-necessary labor-time needed to produce

various goods is what governs the distribution of social labor into different branches.157

At the

same time, however, the most important (and arguably most influential) theme of Rubin’s project

is the stress he lays on the necessary relationship between abstract labor and the value-form—

labor can only be made abstract through its representation in its finished product, the value-form,

and the commensuration of the body of that form, the commodity, with other commodities only

through their money-mediated exchange. Marx’s project is thus re-envisioned as a theory of the

way that labor is represented and governed by social structures under capitalism.

V. Moishe Postone’s Time, Labor and Social Domination and its implications for value-

theory

Moishe Postone is a critical theorist and historian whose influential rereading of Marx,

Time, Labor and Social Domination, has important implications for value theory although they

are somewhat indirect.158

Postone’s work overall is characterized by a heavy focus on the historically-specific

dimension of Marx’s work. He attempts to elucidate how Marx’s theories are both meant to

apply to specific social forms and are rooted in those social forms—i.e., how Marx’s critique is

an immanent one.159

For Postone, most of Marx’s work is meant as an explication of a particular,

contingent social formation (capitalism) rather than of an abstract concept of “society” that

persists, unchanged, throughout history.160

Along these lines, Postone does not hold to a

157

Elson, “Value Theory,” 124-127. Note that Elson’s reading seems inaccurate in other places; she

claims, for example, that Rubin does not distinguish between exchange-value and value, which seems

clearly wrong. See 127. 158

Moishe Postone, Time, Labor and Social Domination, (New York: Cambridge, 1993). 159

Postone, Time, 16, e.g. “Marx’s theory is thought to grasp the relationship of theory to society self-

reflexively, by seeking to analyze its context—capitalist society—in a way that locates itself historically

and accounts for the possibility of its own standpoint.” 160

We might contrast this to neoclassical economics, which often assumes an unchanging human nature

McCarthy-Bur 58

teleological or even linear notion of history; capitalism is not a “necessary” outgrowth of

societies which came before it and nor does it clearly point to a social formation that will come

after it. Nor Capitalism is simply a logically-necessary outcome of or a precursor to other social

formations but rather has an “immanent historical dynamic,” meaning that capitalism is

characterized by a nearly inescapable logic (the compulsion to produce value in the Marxian

sense) that does not push history in any particular direction, as capitalism has often been thought

to do.161

It might be useful to think of this in terms of the well-known debate in sociology/history

of whether to analytically privilege structure or agency; strangely, though Postone declares that

part of his project is to overcome this dichotomy,162

he also seems to very much see the former

as dominant.163

This dominance of structure over agency is not assumed to be some necessary

truth about human nature or social relations. Rather, structure usually trumps agency because the

“historical dynamic” of capitalism is a self-sustaining one. Capitalism has certain structural

features which tend to be self-reinforcing rather than to self-destabilizing (which is important

because much of traditional Marxist thought saw capitalism as “destined” to end.)164

These

themes will be important in both his understanding of the analytical use of the LTV and in

drawing out some political implications from his argument.

that persists across time, perpetually trying to solve the problem of “unlimited wants and limited

resources,” or scarcity. 161

Postone, Time, 96. 162

ibid., 3. 163

For example, in an interview in Platypus Review 3 Postone say that “the existence of an ongoing

historical dynamic signifies that people aren’t real agents. If people were real agents, there wouldn’t be a

dynamic. That you can plot an ongoing temporal pattern means that there are constraints on agency [...]

So right now humans make history, but, as it were, behind their own back, i.e., they make history by

creating structures that compel them to act in certain ways.” Interview with Benjamin Blumberg and Pam

C. Nogales. Platypus Review 3, (March 2008), http://platypus1917.org/2008/03/01/marx-after-marxism-

an-interview-with-moishe-postone/. 164

Or, at least, this is a common criticism of traditional Marxism. See for example the influential critique

by sociologist Anthony Giddens, A Contemporary Critique of Historical Materialism, Vol. I, Power,

Property and the State (Berkeley: UC Press, 1981).

McCarthy-Bur 59

This has certain implications for his take on Marx’s theory of value. Postone is keen to

point out the historical specificity of Marx’ LTV; this means that for Postone, Marx’s theory of

value is meant only to apply to capitalism. He argues against interpretations of the LTV which

suggest that it is applicable throughout time (he terms these interpretations “transhistorical.)”165

Postone identifies a broad range of interpretations which commit this error; among them are

Maurice Dobb, Ronald Meek, Paul Baran and Paul Sweezy, Rudolf Hilferding and Paul Mattick.

With this overview of Postone’s project in mind, I move on to discussing Postone’s

notion of value. Unlike many interpreters who do not discuss “value” as such, Postone takes

“value” to be a separate concept from use and exchange value.166

It is “a category expressing

both the determinate form of social relations and the particular form of wealth that characterize

[sic] capitalism”167

and it is “based on the expenditure of direct labor time.”168

This might initially seem to put Postone in the camp of traditional Marxism since it

identifies a concept called “value” with human labor measured in hours. Further, Postone at

times clarifies that he does believe there to be some kind of systematic relationship between

value (which he equates with labor-time) and price (measured in money terms), a notion which

other value-form theorists generally reject.169

165

E.g. Postone, Time, 7. “At the core of all forms of traditional Marxism is a transhistorical conception

of labor.” 166

E.g. Harman’s Zombie Capitalism which only discusses exchange-value and use-value. My

justification for using Harman’s text is that it is a recent and traditional interpretation (which draws on

recent “remodeling” work) written by a prominent member of one of the larger Marxist parties in the

English-speaking world (Socialist Workers Party UK). In other words, it is a good representation of an

attempt to popularize Marx’s economics (among other things) that draws on a long line of traditional

Marxist economics. 167

Postone, Time, 44. 168

ibid., 25. 169

E.g., ibid., 134. “The divergence of prices from values should, then, be understood as integral

to, rather than as a logical contradiction within, Marx's analysis: his intention is not to formulate a price

theory but to show how value induces a level of appearance that disguises it.” N.b. that Postone only says

that there is some kind of systematic relationship between value and price, not that price is determined by

labor-time. The nature of this relationship is unclear from the text.

McCarthy-Bur 60

But unlike traditional or remodeling versions of the LTV, Postone’s category of value

does not posit it as any sort of metaphysical substance (i.e. as something that a worker can “put

into” a commodity”) or as an “system of account” which bears a systematic enough relationship

to price that it can be mathematically modelled. Rather, it is a category whose primary purpose is

to allow for a critical analysis of society; one of Postone’s purposes in the book is to show that

“the basic Marxian categories developed on the initial logical level of his analysis are indeed

critical of capitalism.”170

That is, simply by definition, the category of value presents a critique

of capitalist society.

Again, according to Postone, value is the “form of wealth [...] that characterize[s]

capitalism,” which persists alongside other forms of wealth that were more prominent in

previous societies, primarily material wealth.171

Postone seems to intend this claim about value

to be an implicit comparison to the oft-quoted opening line of Capital, i.e. “The wealth of

societies in which the capitalist mode of production prevails appears as ‘an immense

accumulation of commodities,’[...]”172

While Marx was critical of capitalism in many respects,

he did not doubt its ability to pile up immense amounts of material wealth; Postone will argue,

however, that capitalism increasingly requires the expenditure of labor-time in a way that does

not even produce material wealth.

This is a somewhat tricky argument, however, and Postone’s phrasing here again might

lead one to think that he subscribes to a notion that value is a physical substance or at least one

that can be aggregated and stored (note that commodities are precisely such things; by comparing

value/labor-time with commodities, Postone runs the risk of suggesting that value is a physical

thing.) I will now make a brief detour into the parts of Postone’s book that put forth a more

170

ibid., 52. 171

ibid., 17. 172

Marx, Capital, 125.

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concrete critique of capitalist society, since it is only there that some of these apparent

contradictions are resolved.

Postone’s political argument is indirectly tied to one that we might call an “anti-work”

politics. This is a broad and increasingly popular tradition of thought which arguably goes back

to Marx himself and was also one which Keynes at times appears to have argued for.173

It is

present as a somewhat subterranean current within the Marxist tradition (Marx’s son-in-law, Paul

Lafargue, is often regarded as a key figure here, along with Andre Gorz, the Italian operaismo

movement and to some extent Herbert Marcuse).

To understand anti-work politics fully, it is important to look at them in contrast to

the “actually-existing” socialist economies of the 20th century. Such economies were often

organized according to the logic of what Postone calls “productivism.” This term refers to the

fact that despite the fact that many theoretical visions of communism involved a dramatic

reduction of working time,174

socialist economies (for a variety of contested reasons that I won’t

discuss here) generally focused on rapidly industrializing and competing with capitalist

economies in producing consumer goods.175

So in the case of the Soviet Union, instead of

translating the productivity gains of the Five-Year Plans into radically reduced workweeks (as

Marx and Keynes predicted), it was put into the production of industrial and then consumer

173

See John Maynard Keynes, “Economic Possibilities for our Grandchildren,” in John Maynard Keynes,

Essays in Persuasion, (New York: W.W. Norton & Co., 1963), 358-373. 174

Examples of this abound; this oft-cited quote is as good a representation as any: “In communist

society, where nobody has one exclusive sphere of activity but each can become accomplished in any

branch he wishes, society regulates the general production and thus makes it possible for me to do one

thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening,

criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.”

Karl Marx, Feurbach,” Chapter One, “The German Ideology, (Moscow: Progress Publishers, 1968),

http://www.marxists.org/archive/marx/works/1845/german-ideology/ch01a.htm 175

Rapid industrialization and competition in production of consumer goods are largely agreed to be

characteristic policies of Joseph Stalin and Nikita Khrushchev, respectively.

McCarthy-Bur 62

goods.176

This bears indirectly on Postone’s argument because, as I will explain below, he

argues that the apparently “free” choice to choose more goods over reduced working hours is

actually not free but is a sort of necessary outcome resulting from the internal dynamic of

capitalist modernity. His understanding of the category of “value” is deeply tied to his politics

and I will now fully explain that category, having explained the political context.

Again, for Postone, value is a category that expresses a particular kind of social relation.

When Postone refers to value as a form of wealth, he does not claim that value (or labor-time) is

a physical substance that is appropriated by capitalists. Rather, to say that value is a form of

“wealth” is actually meant as a sort of critique; Postone says that it is in fact what we might call a

“fake” form of wealth. This hinges on Postone’s belief that the “[t]he expenditure of direct

human labor time no longer stands in any meaningful relationship to the production of such

[material] wealth.”177

This is indeed as counterintuitive as it sounds; Marx’s LTV, according to Postone, is not

arguing that material wealth is tied to value but precisely the opposite. Essentially, Postone

claims, Marx’s LTV means the opposite of how it is normally read. Labor-time no longer has

anything to do with the production of value but yet, capitalist society continues to require people

to work because of what he calls, in an unusually direct moment, capitalism’s “treadmill

effect.”178

As Postone puts it:

Marx does not posit a necessary connection between direct human labor and social

wealth, regardless of technological developments. Rather, his immanent critique claims

that it is capitalism itself that does so [...] What underlies the central contradiction of

capitalism, according to Marx, is that value remains the determining form of wealth and

of social relations in capitalism, regardless of developments in productivity; however,

176

Despite their massive human cost, the rapid industrialization of Russia is generally taken to be one of

Stalin’s accomplishments, even by liberal economists. See Robert C. Allen, Farm to Factory, (Princeton:

Princeton University Press, 2003.) 177

Postone, Time, 197. 178

ibid., 289.

McCarthy-Bur 63

value also becomes increasingly anachronistic in terms of the material wealth-producing

potential of the productive forces to which it gives rise.179

So, we can summarize Postone’s view of the LTV as follow: The relationship between value and

price is not a quantitative one at all but a much more basic one between a fundamental social

relation (the treadmill effect that regulates labor under capitalism) and an epiphenomenon of that

relation (commodity prices.) Marx’s LTV is a building block in a theory that attempts to explain

why increased levels of productivity have not led to radical changes in the social organization of

labor.

VI. Some comparative considerations and a critical assessment of Postone

Briefly, I want to emphasize some of the important overlaps and distinctions between

Rubin and Postone; there are many other tendencies which I do not have space to discuss--and so

any attempt at a grand synthesis of value-form theory would necessarily be incomplete. But it

seems worthwhile to try to draw some common themes.

The major conceptual move that Rubin and Postone make is to focus on a concept called

“value” which is distinct from use- or exchange-value. For Rubin, this is the unity of form

(value-form) and content (abstract universal labor); for Postone, it is a category that expresses an

immanent critique of capitalism’s primary form of wealth. Rubin is concerned with showing the

necessary relationship between value and labor, although sometimes his presentation is unclear

on whether this is a logical or sociological connection. It appears to be the latter but Rubin’s

presentation is weak on which social structures account for this necessary relationship (and it

sometimes posed as a necessary logical relationship, albeit in terms of dialectical rather than an

“empty,” formal logic.) Postone, on the contrary, has a much less methodologically complex

answer: there is a certain dynamic immanent to capitalism that keeps human tethered to the

179

ibid., 197. My italics.

McCarthy-Bur 64

production of value without regard to whether the labor-time expended actually produces

anything.

Both readings of Marx also emphasize a certain sociological, rather than economic, focus

to Marx’s LTV. While Rubin and Postone, unlike most other value-form theorists, accept the

idea that Marx’s LTV is not a wholly-inadequate explanation of price, they do not see the

explanation of price as Marx’s primary project. Instead, both Postone and Rubin understand the

LTV as a theory of social mediation, of how social relations under capitalism are mediated by

labor and its objectification in the value-form. This emphasis is a useful contribution because it

emphasizes a dimension of Marx’s thought that is often downplayed in accounts of his LTV. The

point is a straightforward one that is nevertheless important: Marx’s project is aimed at

uncovering the ways in which “the working activity of people is regulated in a capitalist

economy,” as the anarchist writer Fredy Perlman put it in an essay on Rubin (one of the few in-

depth secondary sources on him, as a matter of fact.)180

Labor for both Postone and Rubin is

what links together different individuals under capitalism but only labor as it expresses itself in

the form of value, that is, only labor if it is congealed into a commodity that can be exchanged

for another commodity on the market. Abstract labor, rather than being an historical

development in capitalism that results from the increasingly homogeneous character of human

labor (C.f. my first chapter), is instead re-envisioned as the quality that labor takes on once the

product of that labor can be exchanged for another product of labor in the market through their

mutual denomination in money terms. This theme is important for many later value-form

theorists and Postone and Rubin provide influential, lucid accounts of it.181

It attunes us to an

180

Fredy Perlman, “Introduction: Commodity Fetishism,” in Essays on Marx’s Theory of Value, (New

York: Black Rose Books, 1973), xi. 181

See Susan Himmelweit and Simon Mohun, The Anomalies of Capital,” Capital and Class 2, vol. 67

(1978): 74. “The reduction of labour to abstract labour is something that can only be done by the market.”

McCarthy-Bur 65

important aspect of Marx’s project—the attempt to understand the ways in which labor mediates

social relationships in a historically-unique way under capitalism. It mediates these relationships

by connecting human beings performing formally-unlinked acts of labor through the exchange of

the products of that labor for each other (mediated by money) on the market.

Yet despite the fact that our own labor mediates our interactions under capitalism—

instead of traditional, explicit social rules, as under feudalism—both Postone and Rubin argue

that we are still not fully in control of our social interactions under capitalism. Rather, the

amount of socially-necessary labor-time in each industry determines where workers go or do not

go, and this changes with changes in productivity in each industry or with changes in demand for

that industry’s products.

I now want to turn to Postone’s theory about the increasing irrelevance of value to wealth

because Postone—despite his political cynicism—makes the political-critique dimension of his

theory clear, meaning that I will focus on his, rather than Rubin’s, theory in my final chapter. It

is possible that one could draw an implicit political critique out of Rubin’s work but since it is

more obvious in Postone’s work and I have limited space, I will not run the risk of

misinterpreting Rubin.

Postone’s argument is important because it highlights the Marxian critique of labor itself

and advances a thesis about the growing inadequacy of value as an accurate measure of material

wealth concomitant with a growing redundancy of human labor.

Yet, Postone’s explanation for why this form of value persists, despite its irrelevance to

human flourishing, is somewhat problematic and requires further attention. His analysis here is

split somewhat between, on the one hand, a desire to locate these seemingly “free” choices to

See also Reuten, “Value as Social Form,” 52. “In the exchange in the market, heterogeneous entities are

commensurated [...] [i]n this sense, particular labour actually takes the form of abstract labour.”

McCarthy-Bur 66

labor unnecessarily in a specific social structure but, on the other hand, a rejection or at least

downplaying of traditional Marxist ideas about which specific social structures reinforce the

compulsion to work (class and property relations.)182

We might then guess that Postone, like

Gramsci and Althusser, would invoke ideology as the explanation for the persistence of capitalist

forms of value: if capitalist property relations aren’t what ultimately reinforces this expenditure

of superfluous labor-time, is the problem then not simply that the culture generated by capitalist

society misunderstands the nature of true wealth, confusing it with value?

In fact, Postone explicitly rejects this argument (which he attributes to Daniel Bell) that

the problem is simply one of “a mind-set, which [Bell] called economistic, as opposed to

sociologistic, thinking” that keeps humanity mired in the logic of value.183

A simply focus on

ideology, he says, “can’t explain how what appeared to be a historical movement beyond

economism, entailing fulfilling labor and increased leisure time, was halted and reversed” after

the 1960s.184

But if the dynamic of capitalism is not explicable solely with reference to private

ownership of the means of production or to a combination of “economistic” ideology and social

structures, this seems to leave us without a decisive analytical factor to explain why the

historically-specific form of labor under capitalism is so difficult to overcome.185

This is where

Postone’s claim that capital is the real historical Subject in a Hegelian sense, rather than the

proletariat being Subject (as it is for Marx and Lukács, at least according to Postone), becomes

182

As Postone explicitly puts it, “[C]apitalism [...] cannot be understood sufficiently in terms of class

relations, rooted in property relations [...],” Time, 6. 183

Moishe Postone and Timothy Brennan, “Labor and the Logic of Abstraction: An Interview,” South

Atlantic Quarterly 108, no. 2 (Spring 2009): 321. 184

ibid. 185

Postone, Time, 53.

McCarthy-Bur 67

important.186

By identifying capital as the self-moving and self-grounding Subject, Postone

means that capitalism has an “intrinsic historical logic” which is rooted in the dual form of the

commodity (use-value and exchange-value) and categories.187

So, “[d]omination in capitalism,

then, is not ultimately rooted in institutions of property and/or the state—as important as they

are” but rather in the very structure of social mediation in capitalism (abstract labor) which is

itself made necessary by the dialectic of value and use-value inherent in the commodity form.188

In other words, capitalism has a kind of “logic,” or systematic tendency, to promote the

production of value in a way that is, for lack of a better term, irrational—it is a system of

production that increasingly requires the expenditure of labor-time without reference to whether

it actually serves human needs. This is not an historical logic in a teleological sense. The logic of

the commodity and capital does not push history towards some end or other; rather, its logicity

lies in how it constrains human behavior and subjects people to domination by “abstract

Newtonian time.”189

Ultimately, the dialectic between use-value and value at the heart of

commodity and capital create this logic, and this dialectic is neither simply reducible to relations

of production, social property relations or an economistic ideology.

Postone, however, never explains the genesis of this dynamic itself. Perhaps he would

argue that, once the process of primitive accumulation had been accomplished, the dynamic and

logic of capitalism was such that it such that it became self-reinforcing. Postone makes a stab at

this argument towards the end of Time, Labor and Social Domination but only gives a basic

outline of the idea—that the dynamic of capitalism is not ultimately rooted property relations

186

“Capitalism, as analyzed by Marx, is a form of social life with metaphysical attributes--those of the

absolute Subject.” Postone, ibid., 156. 187

Postone, “Rethinking Marx’s Critical Theory,” in History and Heteronomy: Critical Essays, (Tokyo:

The University of Tokyo Center for Philosophy, 2009), 43. 188

Postone and Brennan, “Labor,” 316. 189

Postone, “Rethinking Marx’s Critical Theory,” 43.

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once those property relations have set the dialectic of use-value and value in motion. While the

idea that social relations under capitalism take on a sort of metaphysical character is a

compelling one that probably all Marxists would accept, if one is to make an argument that runs

against the principles of historical materialism in the way that Postone does, it seems worth

explaining the mechanism by which those relations sustain themselves.

This assertion of capital as the totalizing, self-grounding Hegelian Subject would seem to

pose difficulties for any kind of political agency and in fact, as noted before, Postone explicitly

believes that the dynamic of capitalism is such that structures almost always dominate agency.190

While he does state in Time, Labor and Social Domination that his project is in part an attempt to

overcome the antinomy between structure and agency, his writing elsewhere suggests that this

attempt was not successful. Instead, Postone reverts to a relatively traditional Marxist view that

the dynamic of capitalism “generates the possibility of another organization of social life” but

with the pessimistic caveat that it more often than not “hinders that possibility from being

realized.”191

This is where I must part ways with Postone’s analysis, not for its pessimism per se but

because I think that pessimism is theoretically ungrounded. Postone posits the category of the

commodity itself as responsible for the persistence of value as the form of social mediation under

capitalism. But he does not ground the commodity form itself in a determinate form of social

relations, nor does he ground capital, which is basically determined by the contradictions within

the commodity according to him, in social relations.192

While I think Postone’s Hegelian reading of Marx has some advantages, especially its

focus on the systematicity and self-moving nature of capital, I think it also unhelpfully returns to

190

See the earlier-cited interview with Blumberg and Nogales in Platypus Review. 191

Postone, “Rethinking,” 42. 192

Postone, Time, 263.

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Hegel’s philosophical idealism. One of Marx’s advances on Hegel was that he was able to

ground the dynamic of history in the dialectic between the forces and relations of production,

whereas Hegel ultimately saw history as being moved by a kind of metaphysical entity (in his

case, Geist.) Postone simply substitutes in the commodity and capital for Geist and this is what

both weakens his analysis and accounts for his view of capitalism as a sort of inescapable vicious

circle.

We should remember that while Marx starts his investigation in Capital with the

commodity-form, this is for complex methodological reasons and not because Marx thought that

the commodity-form was the determining element of the structure of capitalist social relations;

on the contrary, it seems clear that Marx thought property relations determined social relations.

193 Perhaps Postone is closer to the mark in pointing out that Marx does seem to describe capital

in terms of a Hegelian Subject which is self-moving and thus determines social relations.

However, it seems clear in Marx’s own work that capital as a social relation can only exist so

long as the property relations that create capital are sustained—but Postone mysteriously denies

that those property relations can fully explain the dynamic of capitalism. Werner Bonefeld, a

prominent Marxian political economist in Germany who comes out of a similar intellectual

milieu as Postone (German critical theory in the 1970s), takes Postone to task for this in a

vociferous critique in Historical Materialism. Bonefeld’s position, which I share, is that without

the material conditions that sustain capital as a social relation—separation of workers from the

means of production—there is actually no such thing as capital according to Marx, by

definition.194

If working classes controlled the means of production, those means would still exist

as physical capital, of course, but capital as a social relation would not exist because Marx’s

193

On Marx’s method, see Banaji, “From the Commodity to Capital.” 194

Werner Bonefeld, “On Postone’s Courageous but Unsuccessful Attempt to Banish the Class

Antagonism from the Critique of Political Economy,” Historical Materialism 12, no. 3 (2004): 108.

McCarthy-Bur 70

theory is fundamentally premised on the assumption that a constitutive condition of capitalist

social relations is that most workers do not control the means of production. Postone instead, as I

have noted, argues that capital as a social relation cannot be reduced to social property relations.

Unfortunately, he gives no convincing argument for what, if not property relations, sustains

capital as a social relation. If it is indeed the dialectic of use-value and value in the commodity-

form, Postone’s theory still must (but does not) adequately specify the reasons for the emergence

of a mode of production which produces commodities nor a definition of that mode that explains

why it produces the dynamic of capitalism. Instead, Postone’s definition of capitalism itself—as

an “abstract form of social mediation that is constituted by labor […] that becomes quasi-

independent of the people engaged in those practices”—simply describes a fundamental feature

of capitalism (though not, as Postone says, the only fundamental feature) rather than explaining

it.

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CHAPTER FOUR: Political Implications

I. Overview and method

Now that I have analyzed the ways that Marx’s version of the LTV has been reworked, I

will try to look at some of the political implications of those theories. The relationship between

theory and practice is, of course, immensely complicated. I argue that rather than looking at it as

a problem to be transcended—which inevitably leads to an impasse—it instead can be fruitfully

viewed as an ongoing criterion for both theory and practice. That is, it is pointless to try to

“solve” theoretically the problem of the theory/practice gap but it might be useful to have as an

ideal as close a merger between the two as possible.

As a provisional method for this chapter, I will lay out what the two theories of value

suggest might be objectionable about capitalism. I will use the answers to that question to try to

then put forth some considerations about political strategy about the theory I find more

politically useful—Moishe Postone’s version of value-form theory. In this chapter, there will be

a good deal of interpretive work on my part. This is because, as noted before, Marx is sometimes

read, and can be convincingly read, as an amoral critic of capitalism.195

That is, he is often read

as a predictor of the collapse of capitalism due to its internal contradictions from which socialism

will necessary follow. This reading has largely lost favor with contemporary social democrats

and socialists, who now more often frame their arguments comparatively: capitalism will not

collapse of its own accord but it can still be tamed or transcended in ways that will overall

enhance human welfare.196

And while there are parts of Marx’s corpus that seem like they

contradict his own “scientific” stance, the LTV in particular seems fairly clearly intended by him

195

See Allen Wood, op. cit. 196

In some sense, this was a significant part of the project of analytical Marxism, particularly G.A.

Cohen’s work.

McCarthy-Bur 72

to be as much an analytical device to explain capitalism as a system as a moral critique of

capitalism. So, there will necessarily be some extrapolation to try to draw out the political

implications of Marx’s LTV given that I do not hold to anything like the inexorable collapse of

capitalism for structural reasons, the “Law of the Tendency of the Rate of Profit to Fall” and so

on.197

The fact that it can be hard to pin down precisely what Marx thinks is wrong with

capitalism is important for this chapter because the mathematical remodeling tendency is

substantially similar to the traditional notion of the LTV (it is a largely technical fix) and thus

any political implications of this “technically revised” LTV will be similar to those traditional

positions. So this raises the question of what, after all, the implications of the traditional reading

of the LTV are. I argue here that there is no clear answer for this in Marx’s own work. But I

argue that revolutionary socialist movements which took power in the 20th century likely did

base some of their political strategy on a traditional understanding of the LTV—and those

movements can give us some sense of where a revitalized version of the traditional LTV might

lead politically. This understanding of the political implications of the LTV was somewhat

historically-contingent but not entirely so; instead, the implications of the traditional LTV do

consistently lead us to a particular understanding of political strategies and goals. On my reading,

the traditional reading of the LTV suggests that the major problem with capitalism is the private

appropriation of surplus-value by capitalists and that the only satisfactory solutions are various

forms of eliminating profit as it is currently understood, through less (central planning) or more

197

It may be of interest to note that one of the value-form theorists I’ve mentioned, Michael Heinrich, has

argued in the pages of Monthly Review that Marx himself gave up on the falling rate of profit. See “Crisis

Theory, the Law of the Tendency of the Rate of Profit to Fall and Marx’s Studies in the 1870s,” Monthly

Review 64, no. 11, http://monthlyreview.org/2013/04/01/crisis-theory-the-law-of-the-tendency-of-the-

profit-rate-to-fall-and-marxs-studies-in-the-1870s

McCarthy-Bur 73

(market socialism) satisfactory means.198

I should briefly note that in this chapter, I make a careful distinction between three

historical actors: Marx, the “traditional LTV” camp and the value-form camp. I do this because

Marx’s original work is tricky to interpret here, and because I think that while Marx was to some

degree this “amoral critic” of capitalism, he was certainly interpreted in “moralistic” ways by

most proponents of a traditional LTV. Further, I argue that Marx’s own work, though at times

very complex and subtle in its notion of justice,199

ultimately must be reduced to either an

economistic account of capitalism’s inexorable path to ruin or to some kind of moral argument

about the merits of social democracy or socialism. Since I have already discounted economistic

arguments for the necessary collapse of capitalism, I will instead focus on what might be called

the “moral” argument associated with the traditional LTV. My analysis of the political

implications of the traditional form of the LTV proceeds from this understanding—that the

problem is unpaid labor-time—thus making the political goal is to rectify this.

I will also argue in this chapter that value-form theory, as understood by Moishe Postone,

198

I.e., as the difference between revenue and costs of production which accrues to the owner of the

capital being used in production. Elimination of profit, in the sense, does not mean to cease the production

of surplus-value but could merely to distribute it differently. Now, Marx may well have scoffed at the

idea that socialism and then communism are as simple as a change in the direction of revenue streams.

However, he himself notoriously refused to theorize socialism in great detail and in fact, when socialist

movements of the 20th century came to power, they did essentially hold this understanding (that

socialism is defined by state ownership of productive assets.) 199

The eminent liberal political philosopher John Rawls noted that “The utopian[s] [socialists] argued that

workers ought to be paid the value of their contribution to the firm. Since they are not, capitalism is

unjust. Marx rejects this view. It makes the appropriation of surplus value appear accidental -- as if the

capitalists could act differently.” He goes on to say that Marx as a concept of justice as adequacy to a

mode of productions; thus, capitalist social relations are just under capitalism. But this leaves us with the

question of why, then, move to socialism? It seems that Marx must either be appealing to a transhistorical

notion of justice (which would render capitalism unjust on a meta-moral scale, even if it is just according

to its own standards) or to a vision of socialism as an historical inevitability. Thus Marx either seems to

be predicting the internal, inevitable collapse of capitalism (an unsatisfactory answer) or to be, in some

sense, a moral thinker after all. See Daniel Little, “Rawls on Marx, December 1973”, Understanding

Society, 10 March 2010, http://understandingsociety.blogspot.com/2010/03/rawls-on-marx-december-

1973.html.

McCarthy-Bur 74

leads to a substantially different sort of politics. I will rely on Postone since most other value-

form thinkers are relatively apolitical.200

Here, I will argue that Postone’s analysis of capitalism

deepens our understanding of both what is wrong with capitalism (not merely systematic

underpayment of wages but also the compulsion to work itself.) Though Postone draws out very

pessimistic practical implications from his analysis, one can accept his critique of value without

accepting his almost-complete disavowal of human agency. In that section, I go somewhat out on

a limb and discuss the prospects for a universal basic income (UBI) as a sort of “non-reformist

reform,” in the words of André Gorz.

II. The rehabilitated concept of the LTV: traditional left politics?

The traditional conception of the LTV, as I have demonstrated, can be redefined in

macroeconomic terms so that it is true by definition. This may carry certain analytical

advantages, as suggested by Duncan Foley and Fred Moseley but there are not many new and

worthwhile political conclusions which flow from the various “mathematical reinterpretations”

of the LTV. This is because these presentations are only preserving “the key Marxian insight, the

qualitative equivalence between capitalist gross profit and unpaid labor.”201

That is, they are

rehabilitating the understanding of Marx’s LTV that was widely accepted by the Left movements

that were successful in taking power in the 20th century.202

While they make certain technical

changes to the understanding of the LTV, it does not fundamentally change the basic thrust of

the LTV as traditionally understood.

a. Some considerations on the 20th century socialist experience

I do not wish to make too tight a linkage here but we should consider that there were a

200

Diane Elson has written several interesting essays about market socialism (or rather, what she calls a

“socialization of the market”) but I think that her politics are relatively unlinked from her analytical

choices. That is, I do not think her political stance necessarily follows from her analytical position. 201

Foley, op. cit., 19. 202

Here I am referring to explicitly Marxist groups.

McCarthy-Bur 75

number of Marxist political movements throughout the 20th century which accepted a traditional

LTV and which also adhered to a striking degree to a similar kind of politics. In Cuba, Russia,

China and Vietnam, Left parties achieved power through armed struggle and identified socialism

with the establishment of centrally-planned economies. This runs the risk of being a gross

oversimplification, but I am merely saying that central planning was a key element of those

visions, not the sole constitutive one (anti-imperialism was surely a critical part of the latter three

and at least some part of the first.)

Of course, it would be simplistic to argue that those political strategies (armed struggle)

and goals (the establishment of a centrally-planned economy) directly flowed from a particular

reading of the LTV (in fact, a flaw of Postone’s book is that he often makes claims of that sort.)

On the contrary, there is a significant body of literature that argues that 20th century socialist

states developed the way that they did for pre-existing material and economic reasons as much as

(or more than) because of any theoretical inclinations of socialist leaders. Soviet development,

for example, arguably occurred the way that it did because Tsarist Russia was a materially poor

society and Soviet leaders arguably believed that a particular level of material development,

which Russia had not reached at that point in history, was necessary for a communist society.203

A market system would likely have led to a qualitatively different kind of economic development

than central planning; so, central planning arguably arose in part to make the Soviet economy

more industrially-oriented than it might have otherwise been, rather than in order to construct

socialism. At the same time, I argue that this association is worth taking seriously, even if the

exact nature of the connection is unclear, because those revolutions tended to lead to

203

This point—that Soviet development can be thought of as a kind of capitalism administered by the

state—was common to many Trotskyist analyses but can also be found in mainstream works of history

and that of non-aligned Marxists. Stephen Marglin, for example, considers this analysis favorably in

“What Do Bosses Do?”

McCarthy-Bur 76

undemocratic societies with limited potential for economic growth and significant state

repression. There is a clear correlation between traditional Marxist economic theory204

and 20th

century socialism; the question now is whether there is any kind of causal link to those politics.

One consideration for why many Marxist-Leninist parties outside of Russia (in Eastern

Europe, Southeast Asia and Latin America) also advocated armed struggle and central planning

is that Soviet funding was crucial for many subsequent revolutions and some of this funding was

contingent on the kinds of programs that those parties proposed. Whether or not Soviet leaders

insisted on the Soviet brand of central planning for nations it supported financially, it is worth

remembering that material links to the USSR might help explain the similarities that other 20th

centuries socialist states displayed to the Soviet states. And conversely, socialist states that

experimented with different kinds of economic systems, such as Hungary and Yugoslavia, often

had to struggle for a measure of political and economic independence from the Soviets in order

to do so. In other words, contra Postone’s argument, I argue that there are likely a number of

reasons that different socialist regimes of the 20th century seemed to hew to uniform and

unsatisfactory economic systems that have as much to do with their material linkages as any kind

of theoretical confusion about the nature of labor based on a misreading of the LTV.

b. The traditional LTV as limiting conceptions of socialism

Nevertheless, even if we cannot attribute the economic systems of those regimes solely to

a belief in the traditional concept of the LTV, we can note, as Postone does, how the traditional

LTV limits what the concept of socialism can look like in practice. Primarily, it does not

204

Of course, there is a great deal of variation between, say, the Bolshevik and the Maoist interpretation

of Marxist economic theory. I argue that they are, however, substantially similar when it comes to the

question of “what is wrong with capitalism”—namely, the distribution of income rather than the

organization of production and the need to gradually abolish labor. Maoist thought, for example, often

glorifies manual labor. This was no doubt a well-considered, realistic choice at the time, given the nature

of the Chinese economy then, but the fact remains that labor itself was praised rather than seen as a

necessary evil.

McCarthy-Bur 77

necessarily challenge either capitalist relations of production or the notion of “labor” as a

fundamental good (rather than something to be challenged.)205

Instead, its focus on the idea of

“theft” leads to an understanding of socialism as the elimination of this theft.

Both of these limitations can be seen in the way that arguments for central planning

typically focused on its economic superiority to capitalism (likely in an attempt to continue from

Marx’s claim that the social relations of capitalism at some point become a fetter on its

development) rather than on whether or not it could fundamentally reorganize the nature of

productive relations. 206

It seems likely that the assumption that central planning was necessarily

socialist—and that the “real question” of central planning is one of efficiency rather than social

relations—derives from the assumption that the difference between capitalism and socialism is

essentially to whom profit accrues (private capital or a “workers state.”) This, I argue, is one

logical outcome of the traditional conception of the LTV. If the primary problem is that workers

are not paid the full value of their product under capitalism, then it would seem that socialism is

as simple as redirecting profit towards workers or towards an agent ostensibly acting in their

interest.

This is a blow against any implications the traditional LTV might have for politics insofar

as it allows us to think that a particular, undesirable economic system (which does, however,

eliminate profit) is necessarily socialist. The concept of top-down central planning (as opposed to

205

Postone makes the second argument adeptly; numerous Marxist analyses of the Soviet Union made the

first point throughout the 20th century.Again, the analyses that Trotskyist parties developed of “state

capitalism” are reference points. This arose out of both non-academic groups (Tony Cliff and the UK

Socialist Workers Party, CLR James and the Johnson-Forest Tendency, and to some degree, from

“council communists” such as Anton Pannekoek and Cornelius Castoriadis) and academic analyses such

as that of Hillel Ticktin or Ernest Mandel. An overview of these theories can be found in Neil Fernandez,

Capitalism and Class Struggle in the USSR, (Aldershot: Ashgate, 1997.) 206

The famous debate between Abba Lerner/Oskar Lange and Friedrich Hayek/Ludwig von Mises, for

example, focuses solely on whether or not central planning could achieve efficient allocation of resources

on par with the price system.

McCarthy-Bur 78

democratic central planning) has no specifically socialist content; only if we assume an identity

between state control and socialism (a grave error, in my opinion) is central planning necessarily

socialist. Granted, if central planning were actually possible (though I agree with the consensus

here that Hayek’s point about local information deals a decisive blow to central planning), it has

certain elements that could be constitutive of a Left vision, primarily that there would be no

capitalists, in the sense of private owners of capital.

At the same time, I argue that what Marx saw as some of the worst elements of

capitalism—the way that relations of productions restrict the freedom of working people—are

fully compatible with central planning. There is no reason that central planning should eliminate

huge wage differentials, strict or abusive managers, distant executives or workplace alienation,

and indeed, the Soviet system was characterized by all of these things. The crucial point, I argue,

is that a simple focus on the traditional conception of the LTV is what allows for this simple

conflation of central planning—and the elimination of profit and capitalists as a class—with

socialism. To focus on the moral content of the LTV—that unpaid labor-time is theft—is to

ignore other, equally important things we might object to in capitalism. This excess focus on the

traditional notion of the LTV leads us to think that the problem with capitalism is simply the

private appropriation of the proceeds of social labor and to think that simply eliminating

capitalists as economic actors will thus eliminate the problem with capitalism.

c. Some considerations on producerism

I want to turn my attention to a related but separate issue: the difficulties of the politics of

producerism (N.b. that this is distinct from the idea of productivism discussed in Chapter Three.)

Producerism is not my term, but it is one which—though useful—I have not seen a concise and

satisfactory definition of in my research. So, here I will define it as referring to any theory of

McCarthy-Bur 79

distributive justice which says that the people who produce society’s wealth are the only ones

rightfully entitled to that wealth. It seems worthwhile to briefly look at producerism because the

idea that workers are rightfully owed all of the surplus-product that they produce appears to be a

certain left-leaning version of it.

The insufficiency of producerism is probably taken as given by most contemporary

readers. While a right-wing version of it (casting all participants of a given economy, or perhaps

even only owners of capital and executives, as the “real producers” instead of proletarians only)

has a certain common-sense resonance in American politics today, contemporary readers in the

political center and to the Left have good reason to reject it prima facie. This is despite the fact

that producerism may have some attractive elements for those sympathetic to the cause of labor--

chief among these is that if we accept a traditional LTV, it suggests that there is no justification

for the appropriation of profit by owners of capital.

I reject even a labor-friendly version of producerism, however, given that it has some

obvious shortcomings, the most obvious of which is that it leads to a politics that almost

inevitably casts non-workers as parasites. If we keep in mind that in the US, for example, the

employment-to-population ratio has never been higher than 65 percent since 1950, a producerist

politics is bound to cast a very substantial minority of the population as essentially non-

deserving.207

Even if we grant that if workers (defined here simply as people who are employed

for a wage) received all income, they could very well choose to redistribute some to the elderly,

the unemployed, the disabled, this would still have the negative effect of casting welfare

payments as privileges rather than rights. In that sense, while producerism overlaps to some

207 Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Civilian

Employment-Population Ratio (EMRATIO); U.S. Department of Labor: Bureau of Labor Statistics;

http://research.stlouisfed.org/fred2/series/EMRATIO; accessed 2 January, 2013.

McCarthy-Bur 80

degree with the goals of the labor left, it also junks one of the fundamental underlying principles

of the welfare state—that society is responsible (to various degrees) for ensuring the basic

wellbeing of all of its members, regardless of their individual characteristics (e.g. race, gender,

employment status, age, and so on.)

d. Does the traditional LTV have any political import?

I do want to argue, however, that there is yet some value in the LTV as an empirical

hypothesis. I believe that the relevance of the traditional concept of the LTV--that labor-time is

to some degree determinant of the price of goods--derives from its status as a sort of “tendential

law” of capitalism. From my investigations in this thesis, I believe that the LTV is most relevant

not as internally coherent theory—since it can only be made coherent by theoretical fiat—but,

ironically given Marx’s resistance to vulgar empiricism, precisely as a sort of vulgar empiricist

hypothesis about profits.208

We can admit that profits in the short-run sometimes are reflective of

entrepreneurial ingenuity and not merely unpaid labor-time and still maintain that in the long-

run, profits depends on uncompensated labor-time. Neoclassical economics itself produces this

result; any student enrolled in an introductory economics class is taught that in the long-run,

profits should be competed away to zero or something very close to it in competitive markets. If

profit really were a result of entrepreneurial ingenuity, in competitive markets without a great

deal of technological change, such as the market for staple grains, profits should not exist.

Further, the linkage between long-run prices and labor-time has been empirically confirmed by

208

I do not wish to enter a debate about method here, and I recognize the validity of Marx’s critique of

empiricism on an ontological level. Nevertheless, a simple empiricism can of course be provisionally

useful in certain cases, even if it cannot give us “deep truths” about the nature of the world. I believe this

is one such case: the orthodox price→value LTV irrefutably false in a narrow logical sense and yet it does

give a good approximation to reality.

McCarthy-Bur 81

Marxist and non-Marxist (or, more precisely, ex-Marxist) economists alike.209

Focusing on a sort of “vulgar” LTV that simply looks at empirical correlation has the

benefit of not depending on the remodeled LTV claiming epistemologically superiority to other

theories of profit. One important thing to note about at least the New Interpretation of the LTV is

that it is presented as one technique among many for analyzing capitalist economies, which is not

necessarily epistemologically superior. To come up with a view of profit as theft, not only should

a version of the LTV be internally coherent but it seems that it should also be clearly preferable

as a lens for viewing the world. If it is simply one technique among many, only one predisposed

to a Left worldview is likely to choose it among others. Of course, it should be noted that

neoclassical economics has notoriously had difficulty in constructing a coherent theory of

profit—as David Ruccio notes, the neoclassical theory has been disappearing from

undergraduate courses, replaced with a simple accounting definition of profit as “revenue minus

cost,” but without any theoretical explanation of why profits exist in the first place.210

That aside,

I still argue that because the remodeled LTV is unquestionably one technique among many—

unless we subscribe to a proletarian Weltanschauung of the sort that Michael Heinrich has ably

critiqued—any convincing implications from it will be the result of its empirical analyses rather

than the simple fact that the LTV can be made internally coherent. 211

The political implications here are perhaps not decisive but still worth noting. They

remind us that despite some of the logical difficulties with the traditional LTV and the somewhat

unsatisfactory way of resolving them, as an ad hoc picture of the capitalist economy, the LTV

209

Foley notes this in “Recent Developments” under Section Six, “The Empirical Approach to Embodied

Labor.” See also Meghnad Desai, Marx’s Revenge: The resurgence of capitalism and the death of statist

socialism, (London and New York: Verso, 2002), especially 64. 210

See David Ruccio, “A funny thing happened on the way to the teaching of neoclassical economics,”

Real-World Economics Review Blog, 27 September 2012, http://rwer.wordpress.com/2012/09/27/a-funny-

thing-happened-on-the-way-to-the-teaching-of-neoclassical-economics/. 211

See Heinrich, “Invaders from Marx,” for a quick and incisive critique.

McCarthy-Bur 82

provides a decent picture of what determines long-run prices. I do not have enough space here to

go into the prospects of something like market socialism or anything to the left of social

democracy—and the counterarguments against them. However, I do think that this linkage

between labor-time and prices provides support against different theoretical justifications that

suggest that wage-laborers in capitalist countries are paid the “accurate” value that they add to

products. Rather, the labor-time and price link, along with other empirical work on, e.g., the

startling wage-productivity gap over the past 40 years, suggests at the least that capitalism has

certain structural features which are biased in favor of capital and against workers. 212

This

should still not lead us to a politics of producerism or to an uncritical acceptance of non-capitalist

forms of organization. Rather, it simply does the work of opening a theoretical space when

discussing capitalism. Arguments for social democracy often focus on market failures and other

sorts of “deviations” from market efficiency.213

The LTV as an empirical hypothesis provides a

more robust critique of capitalism because it shows that, aside from clear failures to deal with,

say, anthropogenic climate change, capitalism also systematically pays lower wages than what its

proponents suggest it ought to.214

This does not lead to any clear implications about how to

rectify this state of affairs but it does provide support for a robust social democracy, at least—

rather than a milquetoast sort which provides public goods and nominally addresses externalities

but which does not actively act on behalf of labor. Since this kind of weak social democracy has

212

See, for example, Susan Fleck, John Glaser and Shawn Sprague, “The Compensation-Productivity

Gap: A Visual Essay,” Monthly Labor Review of the Bureau of Labor Statistics, January 2011, pp. 57-69,

available online at http://www.bls.gov/opub/mlr/2011/01/art3full.pdf. 213

For example, the eminent social-democratic economist Kenneth Arrow was somewhat paradoxically a

key contributor to general equilibrium theory. To simplify quite a bit, Arrow’s position--like many if not

most social democrats--was that in theory, unregulated capitalism is indeed the best of all possible worlds

and only messy reality can justify any deviation from it. 214

I.e., the theory of the marginal productivity of labor suggests that workers will be paid the value of

their contribution to the final value of a product. If labor-time is on average correlated with price to a

degree of 95 percent, as Andrew Kliman suggests, then we might start to rethink marginal productivity.

See Kliman, op. cit., 194.

McCarthy-Bur 83

become the norm for virtually all mainstream labor parties in the “First World,” it seems the

LTV as an empirical hypothesis might give us some space to argue for a return to the kind of

social democracy which characterized most Western governments during the Golden Age of

capitalism (usually periodized as 1945-1973.)

III. Value-form’s political import

Postone provides an important critique of capitalist labor relations that is often not

available from other Marxist/radical sources. His critique of the form of value and labor under

capitalism brings up a subterranean but important current of Marxist thought (anti-work politics)

and further, it attempts to grapple with the question of why ever-increasing levels of material

wealth have not translated into radically different social relations—basically, why 40-hour work

weeks are the norm for most American workers, why work continues to be alienating and

unengaging for the majority of American workers.215

This is a question that has puzzled or at

least drawn attention from a broad range of writers and thinkers (albeit of varying degrees of

seriousness) outside of a Marxist position. In other words, it is a question that is clearly on the

agenda. A seminal (though now roundly criticized) paper on the history economic development,

W.W. Rostow’s “The Stages of Economic Growth,” attempted to grapple with the question of

why workers had apparently chosen “enlarged private consumption” over “increased security,

welfare, and, perhaps, leisure to the working force” as American consumer society took deeper

root in the post-WWII era. 216

Even today, mainstream liberal commentators have continued to

raise questions about why predictions of a radically decreased work week and less alienating

215

A June 2013 Gallup poll caused a minor media stir when it showed that 70 percent of American

workers are “disengaged” from their workplace, though it reported similar results in 2011. See Susan

Sorenson and Kari Garman, “How to Tackle U.S. Employees’ Stagnating Engagement”, Gallup Business

Journal, 11 June 2013, online at http://businessjournal.gallup.com/content/162953/tackle-employees-

stagnating-engagement.aspx 216

W.W. Rostow, “The Stages of Economic Growth”, The Economic History Review, New Series 12, no.

1 (1959): 11.

McCarthy-Bur 84

workplace have not come true,217

attributing the “choice” to consume to an intrinsic human

jealousy and desire to compete with one’s wealthier neighbors (see Klein, op. cit.) or to the

“workaholic” American national character.218

Yet these kinds of answers only seem to raise more

questions.

Postone’s critique is useful because it does not map this persistent social trend as a

simple, voluntary trade-off between “increased income” and “increased leisure” (which is how

neoclassical economics, at least in its popularized form, tends to map that choice), but rather

grounds this dynamic in a specific social structure. Postone attributes it to capitalism’s “treadmill

dynamic,” which is a product of a very fundamental form of social relations, namely, value and

the form of labor that value compels us to perform.

Now I can summarize what I think the implications from Postone’s value-form analysis

have to offer from the perspective of a political critique. First, I think his analysis resurrects an

important and neglected tradition of Marxist thought that critiques the problems of capitalist

labor as such. This goes beyond more traditional radical critiques of economic inequality (not to

say that critique shouldn’t be levied at that) as well as left-liberal critiques of capitalism which

focus on externalities, market failure, the need for public goods and regulation, etc.

Second, I think his attempt to locate the reason for the persistence of intense work weeks

and capitalist labor relations more broadly in a social structure and dynamic, rather than simply

217

For a recent example, take a column by the popular liberal policy analyst Ezra Klein, “Keynes was,

incredibly, right about the future. He was wrong about how we’d be spending it”, The Washington Post,

10 May 2013, http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/10/keynes-was-incredibly-

right-about-the-future-he-was-wrong-about-how-wed-be-spending-it/. See also Lynn Parramore, “Why a

medieval peasant got more vacation time than you”, Reuters, 29 August 2013,

http://blogs.reuters.com/great-debate/2013/08/29/why-a-medieval-peasant-got-more-vacation-time-than-

you/ 218

As Derek Thompson glibly concludes, “We like working.” See “No-Vacation Nation: Why Don’t

Americans know how to take a break,” The Atlantic, 6 August 2012.

http://www.theatlantic.com/business/archive/2012/08/no-vacation-nation-why-dont-americans-know-

how-to-take-a-break/260759/

McCarthy-Bur 85

attributing it to individual rational choices is an important critical thrust.219

But third, I think

Postone’s explication of how that structure works is somewhat inadequate. While I find his

invocation of Hegel’s Subject a rich metaphor for the totalizing character of capitalism, it seems

to beg the question to some degree. Even though his notion of the “quasi-objective” domination

of structure seems to try to go beyond the structure/agency dichotomy, I have to agree with

Robert Albritton’s sentiment that Postone’s description of the dialectic of capital “seems to

completely subsume agency to structure.”220

However, I think Postone charts a clear territory for

where useful and more specific research along Gramscian lines could be done on the interactions

between economic structures and cultural norms that are mutually reinforcing.

Finally, it is clear from my discussion above that Postone’s political pessimism—his

assertion that agency is almost always subsumed to structure—is logically separable from his

critique of value and labor. Because Postone locates the dynamic of capitalism in an

insufficiently materialist cause, the dialectic of use-value and value rather than social structures,

his assessment of the prospects for changing social conditions is correspondingly too pessimistic.

I argue that if we substitute in “class relations rooted in property relations” for Postone’s

explanation for the persistence of value--which does change his argument significantly but I

think is still a distinct improvement on traditional Marxism--the problem of agency becomes

much less intractable. If we go a step further and see class relations as did E.P. Thompson in the

preface to his seminal Making of the English Working Class, the process—as part of “an active

process, which owes as much to agency as to conditioning”—we can appropriate useful parts of

219

Indeed, the American workweek is actually longer now than ever. See Patricia Laya, “American Now

Think a 40-Hour Work Week is Part Time”, Business Insider, 30 June 2011, available online at

http://www.businessinsider.com/americans-40-hour-work-week-not-enough-2011-6 220

Robert Albritton, “Theorising Capital’s Deep Structure and the Transformation of Capitalism”,

Historical Materialism 12, no. 3 (2004): 76.

McCarthy-Bur 86

Postone’s analysis without thereby accepting a political fatalism.221

a. Some provisional considerations on implications for political strategy

With all of that said, I want to turn briefly to Diane Elson’s analysis in order to venture

some fairly concrete thoughts about what a value-form analysis might suggest in terms of

political strategy. I think the most useful takeaways from Elson’s points are that value-form

analysis allows us to connect economic inequality with poor working conditions and the very

structure of capitalist labor itself, rather than being separate struggles--and that resistance to both

of these is an intrinsic part of capitalism rather than “enter[ing] analysis as a deus ex

machina.”222

I think the primary implication of Elson’s points and Postone’s analysis are that

traditional labor struggles are important to any Left political program but that a simple focus on

higher wages is insufficient to transform capitalism,223

does not respond to popular discontent

with the form of labor itself and may in fact reinforce the structure of capitalist labor by linking

the performance of capitalist labor with a more equitable distribution of income rather than

delinking them.

Yet at the same time, I think that there is good historical224

and theoretical reason to

suppose that a radical break with the form of capitalist labor cannot simply be conceived as “a

221

See E.P. Thompson, The Making of the English Working Class, (New York: Vintage Books, 1963), 9. 222

Elson, “Value Theory,” 173. 223

To be fair, Postone does not seem to emphasize enough that labor unions of the past and present do

struggle over the length of the working day and the conditions of labor itself, beyond simply working for

higher wages. Although on the other hand, it is possible that he would say that simply challenging the

conditions of labor is not enough to truly abolish capitalist labor. 224

As the economist Michał Kalecki suggested in his seminal essay, “Political Aspects of Full

Employment,” broader and more profound social changes (such as fundamental changes in the nature of

capitalist labor) are much easier to achieve when working class power is higher as a result of traditional

demands for full employment and high wages. Originally published 1943 but available in The Last Phase

of the Transformation of Capitalism (New York: Monthly Review Press, 1972).

McCarthy-Bur 87

leap between two fixed, pre-given structures” as Elson puts it.225

So it seems worthwhile to think

about some strategies that could function as what André Gorz called “non-reformist reforms”. I

think one way of interfering with the functioning of the value-form while also addressing the

traditional demand for better wages and a broader distribution of income could be something as

simple as an Unconditional Basic Income (UBI).226

As a strategy, it (indirectly) addresses

traditional demands for better pay for working people but it also delinks the ability to survive and

have basic comforts from the need to labor. Of course, a demand like this is transitional and is

unlikely to bring about an immediate end to the value-form. But it does have the advantage of

striking at labor itself rather than only at poor working conditions or poor pay, especially if one

considers Marx’s contention that capitalism requires a separation of workers from an

independent means of survival (what he called “primitive accumulation”) in order to compel

them to labor. By guaranteeing survival without the compulsion to labor, it has the potential to,

in Panitch and Gindin’s words, “corrupt the functioning of the capitalist labor market.”227

A struggle around a demand as broad as a UBI also circumvents some of the problems

with waging economic struggles strictly through labor unions. On that note, the US labor

movement, despite some heartening revivals in non-traditional industries such as fast food, is at

an historic low.228

This has puzzled many on the left, given ample evidence of widening income

inequality and general social discontent (as Occupy’s persistence suggests.) In fact, in various

analyses, the journalist Robert Fitch linked the decline of organized labor precisely to its lack of

225

Elson, “Value Theory,” 173. 226

As the economists Leo Panitch and Sam Gindin note, while a UBI is a reform that has been popular

even among figures of the libertarian right (such as Milton Friedman) for its economic efficiency, a

sufficiently high UBI could effectively disrupt the normal functioning of capitalist labor markets. See

their review of Michael Hardt and Toni Negri’s Empire: “Gems and Baubles in Empire”, Historical

Materialism 10, no. 2 (2002): 40. 227

Ibid. 228

Jim Efstathiou, “Government Workers Lead Drop in Union Rate,” Bloomberg, 23 January 2013,

http://www.bloomberg.com/news/2013-01-23/union-membership-falls-to-record-11-3-in-u-s-.html

McCarthy-Bur 88

a broader class perspective,229

instead limiting itself to the narrow interests of workers who work

in oligopolistic sectors that can afford to pay higher wages. In other words, the decline of

American labor doesn’t signify that the broad mass of people are happy about stagnating wages,

worsening inequality and deep political corruption.230

Rather, according to Fitch, it signifies that

traditional, American-style labor unions don’t seem an adequate vehicle for articulating that

critique or doing very much about it,231

which is the same problem that Elson identifies as the

fragmentation of broader social struggles into struggles over particular workplaces and

industries. A struggle for such a universal demand has the potential to overcome the problem

Elson identifies as the fragmentation of struggles into particular workplaces and particular

industries.

So, to bring together a rather long chain of logic, the political critique suggested by

value-form analysis (that the structure of and the compulsion to labor itself is “the problem with”

capitalism) suggests that reforms that speak to broad discontent with both income inequality and

the actual conditions of labor are the way to go. I have put forth a struggle for a concrete

demand, the UBI, as a way of addressing traditional demands of labor while avoiding subsuming

those demands to the official structures of the American labor movement, given the popular

229

Robert Fitch, “The Passive Revolution,” New Politics 12, no. 4 (Winter 2010). E.g. “The ‘new

unionism’ of the late 19th c. in Great Britain and on the continent -- where it was more successful --

represented a self-conscious attempt to transcend ‘mechanical solidarity’ and achieve a more organic

solidarity, based on common interests and the common good of the entire working class. It was a

transition that the U.S. labor movement never fully achieved [...]” Unfortunately, I am using the online

version of the essay which does not have page numbers. 230

Since I mention class conflict here, I think it’s worth noting that I still take it to be an important area of

political and social contestation while Postone see its importance as having declined somewhat. His

analysis explicitly downplays class as a central social struggle. I don’t disagree with the relevance of his

notion of “abstract domination”, which is rooted in a particular social dynamic that comes out of a

particular social structure, rather than being the product of the individuals. Yet, I think his framework

downplays the fact that there is a class that benefits, if only indirectly, from this abstract domination, this

indirect compulsion to endlessly labor and it is, in fact, people with access to the means of production.

Capitalists may be just as much subject to this sort of senseless imperative to work but they reap

differential rewards from that system nevertheless. 231

Fitch, “The Passive Revolution.”

McCarthy-Bur 89

perception that it is not an adequate institution for effecting a broad shift in class power and a

change in the form of capitalist labor (which popular sentiment seems to reflect, although not in

those terms.) This is one political payoff of the value-form reading of Marx’s LTV.

IV. Concluding Remarks

In this thesis, I have examined the prospects of different Marxian responses to the

challenges that the LTV faced in the 20th

century. I have argued that the mathematical

remodeling approaches provide a compelling starting point for empirical investigations into

macroeconomic phenomena that preserve Marx’s basic contentions about value and price. I have

also argued that politically, however, this tendency seems to inevitably lead to a politics centered

around the idea of profit as theft, which I argue is a sort of political dead-end in the 21st century,

even though we should continue to be skeptical at best of capital’s claim that profit is justified

for reasons of entrepreneurial ingenuity, the ability of machines to “add value” to a finished

product and so on. This skepticism, however, should not lead us to believe that the elimination of

profit by simply redirecting that income stream to the state will bring about socialism.

I also investigated value-form theory as a compelling attempt to reconstruct some of the

theoretical subtleties of Marx’s concepts of value and its relation to abstract labor. Value-form

reminds us that an important aspect of Marx’s theory is his attention to the way that labor is

privately regulated under capitalism by the market. By conceptualizing abstract labor as the way

that labor is socially validated when its product is exchanged for money on the market, value-

form theory attunes us to a reading of Marx that goes beyond theoretically unsatisfactory ideas

associated with traditional Marxian thought, which suggests that value is a kind of substance that

workers transfer to commodities. Value-form theory also presents a more politically-compelling

theory by encouraging us to think about the problems with the structure and governance of the

capitalist workplace itself, a structure that does not automatically disappear when the state

McCarthy-Bur 90

assumes ownership of productive assets—a lesson from many Trotskyist and council communist

thinkers of the 20th

century, whatever their theoretical shortcomings in other areas. Finally, I

conclude that from this basic thesis, the idea of a Universal Basic Income presents itself as the

most obvious and achievable political goal to struggle for in the meantime. It is an idea with a

particular currency in our present political conjuncture, where work hours seem to be on an

historical trend upwards, rather than downwards. Yet, this struggle does not have to go on

outside of the traditional workplace struggles through unions for higher pay and better conditions

in particular factories or industries—a struggle to which I am of course sympathetic as a part-

time labor organizer myself but one who often works outside of the traditional American union

system. With that said, I believe I have made a contribution to the analysis of two major

developments in the Marxian LTV in the 20th

century and their political prospects.

McCarthy-Bur 91

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Albritton, Robert. “Theorising Capital’s Deep Structure and the Transformation of Capitalism.”

Historical Materialism 12, no. 3 (2004): 73-92.

Allen, Robert C. Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution.

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