Part 2
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Quote:
Transformation problem:
Now, I’ve already said that the act of exchange (by which I mean the act of buying and selling commodities in the market via money) obscures the underlying labor value of commodities. Let’s explore this point further…
I’ll start by referring back to my opening example of a mother and son having an argument. Even though there may be all of these underlying psychological motives behind their conversation, the words they are using and the topic of the argument still have relevance. Though the topic may not have long term relevance to their relationship, right there, in the moment, in the present that topic and those words are important to them. As we move between these different perspectives, we see two distinct layers of meaning. Both are important.
So to with money and value. Though the labor value of a commodity may be the underlying substance to an economic interaction, it is the way this value is expressed through a money price that really effects the economic decisions people make. When you go to a store to buy something you want to know how much money it costs, not how much labor went into it. But the act of buying something with money implies the existence of value, whether or not you are aware of it.
Specific money prices are determined by supply and demand. I’ll assume that that concept is simple enough that I don’t need to explain it here. Money prices fluctuate- clothes and entertainment commodities come in and out of style, supplies of food temporarily change due to droughts, etc. But underneath this day to day fluctuation lies a general equilibrium price- a price related to the amount of labor embodied in commodities.
Money prices are mathematical, quantifiable, observable things. We see dollar signs hanging off of price tags and they have a real effect on us. Not so with labor value: We don’t see the people who make those commodities. Even if we could see them, quantifying the amount of labor time in a commodity is next to impossible: we’d have to figure out not just how much work went into a specific commodity in each stage of its making (and some commodities go through a lot of stages, through many firms, contain parts from all over the world, etc,) but also the labor behind each tool and machine used in the making of the commodity. (and divide the labor value of the machines by the amount of commodities produced over the life of the machine, etc.) It’s virtually impossible. (we could, however, measure the total # of hours worked by society, which is a better measure of labor time anyway, since value is a social concept.)
Though there have been countless attempts to quantify this theory, labor value will never be as quantifiable as price is. This is because labor value only really find its expression in money. It would be impossible to have a capitalist economy where goods were traded according to exact measurements of labor time. Capitalist economies require flexibility, and they require liquidity. Money provides this. (I hope to have a video on money at some point.) But in providing this flexibility money also deviates from being an exact measurement of labor time. It is, at best, an approximation.
A quick note on money: Money fundamentally acts as a measure of value. It represents work people have done. When you work you are paid money. You are more or less frugal with this money depending on how much of it you have and how hard it would be to get more of it. (You are more or less frugal depending on how much work you have been paid for and saved up and how easy it would be to make more money working.) The commodities you buy all cost money because someone had to be paid to make them. If a commodity didn’t take any labor to make it would be free. (this is what I mean when I say that the act of exchange “implies” labor value.)
But commodities are constantly fluctuating in price as capitalists find cheaper ways to make commodities, better ways to exploit workers, etc. The supply of money is changing too- money itself is a commodity related to labor time. It has a supply and a demand. Money is also called upon to perform other social functions other than measure value: it lubricates exchange, it can become credit, etc. So money is needed to be much more flexible- to be sensitive to rapid economic changes. We say, though its fundamental role in society is a measure of value, its relationship to this value is a loose one as supply and demand force it to fluctuate above and below the equilibrium values of embodied labor time.
Simplification problem:
Here’s another important angle: We said that commodities appear heterogeneous until we see that they have a common substance: labor. But isn’t labor heterogeneous? People work at different speeds, with different skills, with more or less competency. How can these heterogeneous acts be a common substance?
This question makes important the concept of “socially necessary labor time”. Just as in a capitalist society the process of exchange and competition tends to bring prices to a general equilibrium (gas or milk or CD’s -these prices are basically the same amount everywhere) so to the process of exchange and competition create a social average of how much labor it takes to complete a task. Remember- value is a concept that only makes sense from a macro level. It doesn’t matter if you go into work drunk and work really slow and sloppy at making cars. That doesn’t destroy value. The labor value of a car corresponds to the socially necessary time that it takes to make it. In this way we say that exchange exerts a homogenizing influence on labor.
This homogenizing influence is very strong in society. Capitalist want work to be standardized and reliable so that workers can be as productive as possible. Capitalists are constantly seeking ways to mechanize work in order to make it unskilled and uniform. Perhaps you can think of many examples of this in your own life… The service industry and the industrial sector are almost entirely made up of this uniform, low-skilled work. This increases the potential supply of labor (because anyone could do the job) thus driving down wages.
But how strong is this homogenizing influence? We still have a lot of skilled labor which fetches a much higher price than unskilled labor. And we have union jobs which pay better than non-union jobs even though both groups of workers may do the same type of work. We could dismiss this as supply and demand casting its usual distorting influence over the law of value. And we would be justified to some degree. But we also might say that the need for skilled labor in society is indeed a countervailing influence against the homogenizing influence of capitalism on the labor process. We might even say that capitalism has a tendency to deskill/ homogenize most work, while making other work highly skilled. [get this right]
Again, the homogenization of labor time (or as the problem is usually referred to- the “simplification” of labor) is not a quantifiable phenomena. We can observe it qualitatively as a tendency under capitalism. But there really isn’t an objective way of measuring it.
Thus the labor theory of value has two “problems”: 1.value is the underlying context behind prices, yet its relationship to prices can’t be quantified. 2. value is made possible by the simplification/homogenization of labor, yet this simplification is not quantifiable.
These two “problems” have caused a ridiculous amount of debate among proponents and critics of the labor theory of value. After all, how do you prove that a theory is true if you can’t quantify it and test it? We claim that it is the underlying substance behind exchange yet it can’t be seen…. so how do we know it’s there? Is it just a matter of faith? Is the labor theory of value just a metaphysical concept?
Well… no. The labor theory of value is proven by asking the questions: “what does it help us explain?” The law of value helps us explain all sorts of things that bourgeois economic theory- with its narrow focus on supply and demand and personal utility- can’t. An analysis of economic issues using the labor theory of value starts to lead us in all sorts of directions not approached by any other theory. Pretty soon we find we have a much wider, systemic understanding of capitalism- and understanding that no other theory of exchange gives us.
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“The goal of an Obama Presidency is to make sure we have bottom-up economic growth instead of just the old, tired, worn-out trickle-down ideologies that we have been seeing for so many years.”
Barack Obama
Last edited by Metrophobe; 06-26-2008 at 07:25 AM.
Reason: Citation added, post shortened.
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06-16-2008, 04:02 PM
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