Anarcho-environmentalism allegorised

The name Anaarkali in the present context has many meanings - Anaar symbolises the anarchism of the Bhils and kali which means flower bud in Hindi stands for their traditional environmentalism. Anaar in Hindi can also mean the fruit pomegranate which is said to be a panacea for many ills as in the Hindi idiom - "Ek anar sou bimar - One pomegranate for a hundred ill people"! - which describes a situation in which there is only one remedy available for giving to a hundred ill people and so the problem is who to give it to. Thus this name indicates that anarcho-environmentalism is the only cure for the many diseases of modern development! Similarly kali can also imply a budding anarcho-environmentalist movement. Finally according to a legend that is considered to be apocryphal by historians Anarkali was the lover of Prince Salim who was later to become the Mughal emperor Jehangir. Emperor Akbar did not approve of this romance of his son and ordered Anarkali to be bricked in alive into a wall in Lahore in Pakistan but she escaped. Allegorically this means that anarcho-environmentalists can succeed in bringing about the escape of humankind from the self-destructive love of modern development that it is enamoured of at the moment and they will do this by simultaneously supporting women's struggles for their rights.

Wednesday, May 9, 2018

Discussion on Marx's Theory of Value

Recently a long time friend, Depinder Kapur, posted on his Facebook wall an article by Amartya Sen on Karl Marx's continuing relevance in the present context on the occasion of his birth bicentenary. Amartya Sen singled out the concept of "false consciousness" which prevents the working class from forming into a class for itself actively organising against the exploitation of capitalism as an important contribution of Marx that has not been paid much attention to. This is indeed an unexplored area, especially so since capitalism has used mass media subsequently to push consumerism, films, professional sports, reality shows and the like to distract the suffering people from organising to overthrow it. But the discussion that ensued on Depinder's FB wall revolved around the validity of Marx's Value Theory, regarding how things that are bought and sold in the market gain their economic value and its usefulness in the present context of global late capitalist domination. In this discussion Apart from Depinder (DK) himself, Rajesh Ramakrishnan (RR) and I (RB) too participated. I am presenting an edited version of the discussion here because it presents a comprehensive idea of Marx's Value Theory and its main drawback.




RB - A basic understanding of Marx's schema of capitalist production and some common sense is enough to show that Marx's Value Theory does not have any practical validity. Marx's schema of capitalism is MCM' where the capitalist employs capital M in the form of money to purchase land, raw materials, machines and wage labour to produce a commodity C which is then sold in the market to realise capital again in the form of M' in enhanced quantity. M is enhanced to M' because in the process of production value has been added by the land, machines, labour and the capitalist to make the commodity. The production process is from market to market, that is, it begins with the procurement of the raw materials, land, capital goods and labour power from the market and ends with the sale of the finished product in the market.  Now, according to Marx, the exchange values at which the land, raw materials, machinery and wage labour are purchased and the produced commodity sold are determined by the socially necessary labour that is embedded in them. By socially necessary Marx meant that the labour expended must be of use to society and so for instance labour expended in jumping up and down in one place is not socially necessary if society has no use for it. Also even though society may have an use for a particular type of labour it might not value it enough economically - the home care work put in by women and the sewer cleaning work put in by Dalits. Thus, to what extent a particular type of labour is necessary is also socially determined. Therefore, to determine the value one has to know the quantity of socially necessary labour that is embedded in each commodity. It is not difficult to see that it is impossible to objectively determine which labour is socially necessary and to what extent in a complex capitalist economy producing millions of goods and services and influenced by various kinds of ideologies. Who is to determine what is socially necessary? Marx? Obviously not and so Marx cleverly avoided mentioning this problem with his elaborate schema in Das Kapital and generations of Marxists thereafter have not seen it fit to exclaim that the emperor Marx isn't wearing any clothes!!! Moreover, Marx goes on to say that wage labour is paid less than the value it produces and this leads to the generation of surplus value which is appropriated by the capitalist to enhance both his capital and the level of production. Once again how is one to determine this surplus value if one does not know the exchange value of the wage labour purchased and that expended by the labourer in the production process? So while it is all very well to say that socially necessary labour is the bedrock of value and that surplus is generated by underpaying wage labour, unless one can quantify this, it is just so much balderdash, that does little to enhance our understanding of price determination in a capitalist market economy. So Marx put forward a theoretical schema which could not be practically determined because in a modern capitalist economy it is impossible to calculate the socially necessary labour embedded in any commodity. Indeed how does one go about objectively defining what is socially necessary when this will always be normatively determined and vary from place to place and culture to culture and depend on relations between classes, in the Indian case castes also, genders, races, ethnicities, occupations and the like. It is self evident that value is created during production, defined as the processes taking place beginning with the procurement of inputs from the market and ending with the sale of the finished product in the market and that it is then unequally distributed among various actors in the production process. But Marx gives the impression through all his formulae that he had quantified this creation and distribution of value. Actually he did nothing of the sort as all his formulae depend on the quantification of socially necessary labour which is a normative rather than an objective parameter and so unquantifiable. Thus, his value theory is basically flawed.

RR -  What happens in the production process and in the distribution process is not self-evident. Today's economics talks about factors of production and incomes accruing to them. The classical economists looked beyond the ebb and flow of supply and demand and posited `natural prices' as a centre of gravity around which fluctuations took place. Ricardo went beyond this and showed that the total quantity of labour-time needed to produce a commodity was the regulator of its price. But Ricardo had no theory of where profit came from, though he attempted to analyse the impact of profit on prices. Marx stood on the shoulders of these giants to start his analysis of `the laws of motion' of capital. The challenge that Marx set for himself was to explain the conversion of money into capital on the basis of laws that regulate the exchange of commodities in such a way that the starting point is the exchange of equivalents. This is what he did in the first two volumes of Capital. This is where he went beyond Ricardo's use of concrete labour and introduced concepts of abstract labour, socially necessary labour time, use-value and exchange-value of commodities, and surplus value. But Marx had finished writing all three volumes of Capital and an elaborate study of theories of surplus value before he published the first volume. His attempt was to properly understand the dominance of production over circulation and show that profit does not originate out of circulation. In the third volume, he turned to the prices of production, at which commodities are sold in the capitalist market. Prices of production reflect an average rate of profit, this leads back to the question of profit, the source of profit, surplus value and socially necessary labour time, and exchange-value. To move from exchange value to prices of production, Marx explains how the average rate of profit is formed from individual rates of profit in each commodity sector and the equalisation of the rates of profit in capitalist production. In the simple case of a single commodity market, the capitalist gets a profit proportional to the surplus value contained in the commodities he sells. In the case of prices of production, the form of value has changed, the proportionality of the simple case does not hold, since surplus value gets re-distributed from one sphere of commodity production to another.
The quantification of socially-necessary labour time in an empirically observable way is not necessary for the operation of Marx's theory of the formation of prices of production. It is through capitalist competition that it is discovered whether the amount of labour embedded in a commodity is socially necessary or not. A part of the surplus value produced in sectors with a low organic composition of capital is drained off towards sectors with a higher organic composition of capital, implying that the human labour spent in the former was wasted. The equalisation of the rate of profit shares out surplus value previously created, the magnitude of which is explained by Marx's labour theory of value. It is the axis around which prices fluctuate. The total sum of prices equals the total sum of values. Without this, one is left with the neo-classical theory of supply and demand determining prices, which is purely empirical and not a theory. Empirical studies in Western countries have shown the correspondence between the labour content of the output of each industrial sector and the money value of sales from the sector. Criticism of Marx's labour theory of value has been a priori. A more elegant competing theory has not been advanced.

RB - The neoclassical theory of value is not the matter of discussion here and neither have I said that it is flawless and an alternative to Marx's theory. No doubt Marx did a lot of hard work to set up his theory but I still maintain that it has not added much to the empirically evident fact that human labour is required to create value as this has been happening ever since human beings began to produce and accumulate surpluses all of ten thousand years ago following on the Neolithic Revolution with the discovery of agriculture. Therefore, it is not surprising that modern day studies have shown that the sales value in an industry is proportional to the labour expended in that industry. However proportionality alone cannot form the basis of a calculation of the value of a product from the labour time expended in it because what is necessary is socially necessary labour time. To argue that the capitalist market decides what is socially necessary is to admit that it is a normative quantity because the capitalist market is not a freely competitive one but is in reality controlled by capitalists who then use their economic and political power to determine what is or isn't socially necessary. Right from the time of initial state formation about 6000 years ago, surpluses have been extracted from the labour of people and this process has just got intensified in capitalism. Even in the actually existing socialist states this was true. A theory to explain this must also be able to quantify it objectively as otherwise it does not achieve much if its mathematical formulae do not yield quantitative results. The basic problem is that the determination of which labour is socially necessary and to what extent, which is crucial to the determination of value, is normative and not objective. If it is left to the market then as is happening now, the economically and politically powerful will distort this determination in their favour. Marx, despite his elaborate mathematical analysis has not been able to circumvent this fundamental problem and has dealt only in the abstract and not with real world examples. Therefore, throughout history the distribution of the surplus generated has been decided by political struggle and that will continue to be so with the capitalists calling the shots currently. Consequently Marx's theory of value is fundamentally flawed. That a more elegant theory of value has not been advanced yet does not in anyway absolve Marx from having set up an unworkable theory himself.

DK - Surplus value is generated from labour power in all historical epochs but in capitalism surplus value and money transforming into capital, would still need to be theorised. We cannot determine the price of socially useful production in a given capitalist or socialist economy where several other factors will play out - the priorities of the state in a socialist economy to transfer surplus from one sector of production to another and for state expenditure on itself. Like asking what is the price of a commodity produced in a free capitalist market, where no free exchange is possible. So laws of Capital are as useful as laws of Physics, the laws don't tell you the price or the speed of a falling object, they do tell you why a phenomenon happens the way you see it happening and that this is governed by objective laws and not human fantasy. Marx's Capital showed that as capital increases over time, with more surplus value generated converting itself into capital, the amount of Capital or dead labour increases in an economy. This leads over time to the fall in the average rate of profit in the economy because now lesser live labour is employed in production in a closed capitalist economy with no foreign markets. This will only generate lesser surplus value and hence a lower average profit over time. Ultimately leading to the crisis of capital arising from a lack of market for goods - with its need to suck more surplus value from the reduced labour power proportion of production. The speeding up of labour and its lack of control of the means of production, Marx was able to show, led to alienation. Unless you apply Marx's theoretical framework, you cannot reach this conclusion by simply saying the labour power was always exploited in history.

RB - I have said that since it can't compute value, Marx's theory is not only useless but by claiming to be able to compute value it is misleading. In physics on the other hand it is possible to compute velocity of an object because it is possible to objectively measure the parameters necessary to do so. This is true even in the case of such complex equations as those of gravitation and relativity which have mostly been later verified through experimentation. The Nobel prize in physics is given only when a theory has been practically validated a number of times. In Marx's labour theory, the problem is that all his brilliant theorisation hinges on measuring the socially necessary labour embedded in a commodity and this is not objectively determinable but is primarily the result of class, gender, ethnic, race, in the Indian case, caste and many other diverse struggles and never through just the play of supply and demand in markets which are themselves always politically and economically controlled. So the labour theory of value doesn't really add anything in concrete terms to our understanding of the creation and expropriation of value, despite its grand and detailed mathematical architecture.
Capitalism faced with the problem of the increasing preponderance of dead labour has found various means to increase the exploitation of live labour mainly through casualisation of employment and outsourcing which have also broken the back of trade unionism. Similarly the problem of falling demand due to the immiserisation of the masses has been sought to be countered through state spending in defence and other industries, state regulation of production and markets and state funded social safety nets. Finally, mass media have been used to spread consumerism and the power of the market and deepen the hold of "false consciousness" on the minds of the masses and provide a sop to drown their alienation. It is more important in my opinion to evolve strategies to counter these retrograde policies of capitalism that have made it so powerful and helped it to nullify the dire Marxist prognosis of its demise than wax eloquent about the theoretical beauty of Marx's analysis of the capitalist system, which is neither here nor there in the present context. Whatever relevance he might have had in his era and up to the early decades of the 20th century, currently in the age of late capitalism emperor Marx is without any clothes.

DK -  I was trying to show that what you think is "self evident" in the theory that value is created and unequally distributed, is what Marx tried to show through the laws of capital accumulation and the decline in average rate of profit. Marx never claimed to quantify for a country the surplus value produced by that economy. And you blame him for not doing that and reduce his theory to bunkum. I tried to explain that you cannot quantify surplus value for the economy of a country based on pricing. You ignore this point. So I think we are arguing at cross purposes.

RB - You did say that prices are determined in the market and instead of ignoring this i said that prices are not what we are concerned with while discussing the labour theory of value but socially necessary labour. Marx never calculated this because it is not calculable being a normative parameter that is not measurable. What is the point in setting up elaborate mathematical formulae to calculate value and surplus value if they cannot yield results in the real world because socially necessary labour is a normative rather than an objective parameter. A waste of time and energy as far as I can see, apart from misleading people into thinking that the theory will yield concrete data regarding how much surplus value is being extracted from the working class. If you agree as you do that value is unquantifiable in Marx's theory then whether you like it of not the theory is indeed bunkum.
The declining average rate of profit is a historical tendency arising from technological innovation not specific to capitalism and manifests itself only if there is a fully competitive market. In feudal societies also there were markets and financial and industrial capital from the 14th century onwards. Capitalism didn't suddenly come on the scene but evolved over a few centuries. The process of primitive accumulation, the description of which happens to be the only aspect of Das Kapital that is still valid, led to the initial build up of capital that then spurred the industrial revolution. As i said earlier capitalism has found many ways to get round this problem of declining rate of profit by manipulating markets, outsourcing production and creating monopolies with State support. Anyway you don't need Marx's theory to see that in a fully competitive market economy, technological innovation will lead to redundance of labour and so both a falling rate of profit and a contraction of demand relative to supply. Marx predicted that this would lead to a revolution and the demise of capitalism. But capitalism has worked its way around this problem in ways which i have already described earlier and instead Marxism is on its deathbed. 

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