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NEWS & LETTERS, March 2004Review Essay'Marx’s Concept of Intrinsic Value'by David Mizuno’Oto Marx's Concept of Intrinsic Value: on the unity of value, fetishism and capitalist production in CAPITAL, by Andrew Kliman. A News and Letters Publication, 2003. 32 pp. $2 Recently I watched a PBS program that likened ecosystems to the economy. A series of field guides would show a natural process taking place, then compare it to a corresponding category in "human society." The first guide asked, "What is an economy?" She answered that it’s a system for producing, distributing and consuming goods or wealth. Wealth for a plant or animal in the natural world, she continued, depends on two basic currencies: energy and nutrients. But they have to be put into usable form. Luckily an immense workforce is on hand to perform the needed tasks. As each creature does its job, goods and services are exchanged throughout the system. Although this all goes on with great stability the natural economy, like the "human economy," she said, is dynamic and subject to change. Whole species can be "swept aside" by a competitor just as whole industries can be swept aside by competitive forces and market situations. Another guide remarked that there is no more job security in the natural world than there is in "human society." To make sure viewers didn’t miss the not-so-subtle subtext, CAPITALISM IS NATURAL, the script was replete with terminology like "boom and bust years" to describe cycles of heavy rainfall and drought, and "capital reinvestment" to name the process by which bunch grass stores solar energy in its roots. Not surprisingly, during the segment in which a researcher showed that plants grow faster and larger the greater the biodiversity, no mention was made of the fact that the capitalist economic system, considered by the program to be such a wonderful homology of the natural world, is the very system that drives agribusiness to replace rainforests and other biodiverse systems with monocrops. In capitalism goods and services are commodities with a dual character: they are use-values but they are also bearers of VALUE. That’s one reason the analogy between natural economy and "human economy" broke down fairly early in that program--right about when the first guide compared "swept aside" species with permanently laid off workers. VALUE AND EXCHANGE VALUE IN MARX Why does value make such a big difference between the "natural" economies and capitalist economies? To answer that let’s take a look at Andrew Kliman’s pamphet, MARX'S CONCEPT OF INTRINSIC VALUE. The key quote from CAPITAL, Vol. I is right on the cover: "[E]xchange-value appears to be something accidental and purely relative, and consequently intrinsic value, i.e. exchange-value that is inseparably connected with the commodity, inherent in it, seems a contradiction in terms. Let us consider the matter more closely." By this passage we may excuse some readers for concluding that exchange-value is intrinsic value--I confess I was one such reader--and yet admonish them for stopping short. Indeed it does appear that Marx intends to demonstrate that the contradiction in terms is illusory and that we will find that exchange-value is in fact intrinsic to the commodity. Kliman shows that Marx does nothing of the sort, because Marx shows that value, not exchange value, is intrinsic to the commodity. A good portion of the pamphlet is devoted to showing that despite the extensive discussion of exchange ratios in chapter 1 of CAPITAL, Marx is actually conducting an investigation into what it is that makes two commodities equivalent. The question is not about what commodity one trader is willing to accept in return for his commodity, i.e. what some commodity is worth to him personally. The question is, what is it that makes this commodity OBJECTIVELY equivalent to that commodity? Perhaps one is prompted to reply: what makes them equivalent is that each would get you the same amount of money. But that only makes me wonder what it is about this $20 bill that allows me to exchange it for two bottles of wine or ten toothbrushes or a pair of pants. The money doesn’t make the commodities equivalent, but it does show that they are equivalent. We still don’t know WHY they are equivalent. Is it worth the trouble to find out why? We have a working knowledge of use-value and exchange-value. Isn’t that enough? Kliman shows that it is just such a limited view that led many economists to attack Marx on the mistaken grounds that his value theory contained a fatal flaw: the so-called transformation problem in his account of the relationship between commodities’ values and their prices. Where the former expresses value, measured in labor-time, the latter expresses price at the market. What is the perceived problem? The quote Kliman selected from the economist Ladislaus von Bortkiewicz’s critique of Marx provides a clue: "value is merely the index of an exchange relationship and must not be confused with...'absolute value.’" He therefore argued that the value invested in production must be transformed into the "price invested" when prices differ from values, which Marx did not. Because Bortkiewicz reduced "value" to exchange-value, however, he felt the need to "salvage" Marx’s theory by developing two isolated systems: one for value, one for price. This duality is more striking and consequential in Nobuo Okishio’s argument against Marx’s law of the tendential falling profit rate because price turns out to be irrelevant in Okishio’s mathematical formulations. Kliman showed in his critique of Okishio in NEWS & LETTERS (April 1996) that price cancels out of Okishio’s profit rate equation because input and output prices are of the same magnitude. Kliman went on to argue that due to the labor process involved in production, input and output prices are not necessarily the same. The intrinsic value that forms an objective part of the product is not taken into account in the equations, or else it is somehow suppressed. At any rate, what remains is a ratio of material output to material input. In other words, the material profit rate is identical to the price/value profit rate in Okishio’s system. But how can this be? Something must be wrong here For only a society of pure use-value can obtain such a "physicalist" rate of profit. Okishio never lived in that world and neither do we. Let us return to the pamphlet to "consider the matter more closely." AS WHAT DO COMMODITIES EXCHANGE? We were in the process of finding out what makes two commodities equivalent. We know it isn’t exchange-value--the exchange-value of one commodity is simply the other commodity. It does no good to say that what makes this pair of pants equivalent to that bottle of wine is the bottle of wine. It can’t be use-value except perhaps under totally contingent circumstances, like using a shoe to pound a nail. We’ve pretty much ruled out money, although we may suspect it’s a lot like money. Marx gives us a clue in CAPITAL, Vol. I: "[A] common element of identical magnitude exists in two different things...Both are therefore equal to a third thing, which in itself is neither the one nor the other." By a process of elimination Marx finally gets to the one property left to the commodities, that they are products of labor. What makes them qualitatively equal is that they are congealed quantities of an identical "social substance," "human labor in the abstract." Marx here equates the commodity to its intrinsic value in the same way he called it a use-value or exchange-value when it assumed those value-forms. Thus value is abstract human labor in its "coagulated form." As an objective property of a commodity it is DEAD labor. Marx uses the expression "dead labor," to emphasize that he regards intrinsic commodity value not as something that imbues a product with warm, human qualities, but rather just the opposite. Any love, skill, sweat and toil poured into it has been transformed into something dead and utterly characterless. Even when abstract labor is in its "living" form, that is, when the worker is on the clock and doing her job, it’s already dead labor. It never has anything more than a "phantom-like objectivity." But that’s just the problem--it has objectivity. Value really exists whether a worker feels exploited or not. I once chided a friend for playing chess during working hours. He retorted, "The point is, I’m putting in the time." He was right to suspect that in some sense he was still "on the job" and that, despite the leisure of the moment, he was being forced to participate in a system inherently hostile to workers. But even if he were chronically overworked and underpaid, he would have to go beyond his experience and dig into Marx to see how the system flows from value production. PRODUCTIVITY AND PROFIT In his paper "A Value-theoretic Critique of the Okishio Theorem" (which appeared in a book entitled, MARX AND NON-EQUILIBRIUM ECONOMICS), Kliman expressed Okishio’s theorem as follows: "[G]iven constant real wages, new techniques adopted by profit-maximizing firms to raise their own profitability are so productive that they cannot, in the end, lower the profit rate." Techniques "so productive" that the profit rate cannot fall practically guarantee work speedup and suppression of wages. Okishio’s neglect or dismissal of the commodity’s intrinsic value allowed him to show mathematically that profit rate and productivity are one and the same. But where in productivity is the essential "something for nothing" element of profit? If output is doubled in a given amount of time, inputs, wear and tear, etc. are doubled as well. Innovations that improve efficiency cost extra and the boost in profits only lasts as long as it takes competitors to catch up. In short, the "something for nothing" derives not from the quantity of goods but from each individual commodity, and only because value is created in production. How economists who reject Marx in favor of Okishio can even believe in the concept that profit is ultimately reducible to a physical or quasi-physical magnitude defies rationality. Equally disturbing are scholars who arrogate to themselves wisdom born of "advancements" in economic theory that the unfortunate 19th century Marx presumably could not have envisioned. When Okishio or one his followers says, in effect, that the capitalists’ own self-interest insures that the (value/price) profit rate will not fall, they sound as if Marx hadn’t thought about that. But Marx wrote in chapter 15 of CAPITAL, Vol. III, "No capitalist voluntarily introduces a new method of production, no matter how much more productive it may be, and how much it may increase the rate of surplus-value, so long as it reduces the rate of profit. Yet every such new method of production cheapens the commodities." Marx knew way ahead of Okishio how capitalists think. Moreover he knew they would mistake rising productivity for rising profit rates. It is beyond me how 20th and now 21st century Okishiophiles could think like 19th-century capitalists and believe they have left Marx in the dustbin of history. Those Marxists who think they have refuted Marx by intoning, "The falling profit rate is a TENDENCY, not a law," should read in chapter 14 of CAPITAL, Vol. III where Marx wrote, "There must be some counteracting influences at work, which cross and annul the effect of the general law, and which give it merely the characteristic of a tendency, for which reason we have referred to the fall of the general rate of profit as a tendency to fall." Marx was well aware of the various tactics used to defray that "tendency to fall," e.g. intensifying exploitation and cutting wages. It is precisely the existence of such counteracting influences, and the fact that they have had to become increasingly sophisticated, violent, and prone to produce crises, that, far from refuting Marx, lends him even more credence. Yet it didn’t really matter to Marx whether the falling profit rate had the status of law or tendency. What mattered was the horrendous damage being done to workers, poor folks, even to capitalists themselves. The point was not to figure out ways to counteract a numerical result, but to change the system that gave rise to those results in the first place. Kliman has shown that thinkers who fancy they have gone far beyond Marx’s value theory have only managed to leave in its place some dangerous "pieces of cleverness," if I may take a phrase from Hegel’s PHENOMENOLOGY OF SPIRIT slightly out of context. For them value theory is all about object-to-object relations. On the other hand, those who stay with Marx on his journey into the commodity can see a perverted and alienated subject-object relationship between laborers and their products. A worker who grasps that relationship and the intrinsic value it generates is on his way to forming the subject-to-subject relationships that can lead to the fundamental changes we sorely need. This pamphlet may be of assistance in working such relations out. |
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