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Some Marxist objections answered

This recent comment in the Guardian’s “Comment is Free” section recently raises some Marxist objections which are answered below.

Ricardo could only analy se capitalism in the limited context of bourgeois categories. He saw no fundamental contradictions within the capitalist system only competition between capitalists and workers and between workers themselves. He saw no need to transform values into prices of production since they could be simply worked out in the actual setting up of production.

Unfortunately this fundamental mistake in analysis has led to the present confusion where labour power is simply seen as one of the factors of production alongside capital and land, all with an equal claim to returns on investment. This resulted in the mistaken assumption that profits, (value), income etc were produced by all the FACTORS OF PRODUCTION. Now any accountant can tell you that the elements in a company balance sheet in the final analysis have the cost of man hours as their basic measurement. In other words all capital is crystalised, or dead labour, as Marx called it. Even land’s value depends upon the amount of labour expended upon it in the past, it’s natural value is residual until it is put to use. What most people cannot grasp is that only labour power in general can add value. Even capitalists acknowledge this in an unconscious manner when they speak of ADDED VALUE.

Marx paid great tribute to the work of Ricardo in seeing him as the most far sighted economist of his time. But Ricardo wrote at time when capitalism was in it’s infancy before the struggles between capital and labour became the major issue.

It’s the struggle in general between capital and labour which is the basis of capitalist reproduction and the limits to surplus value extraction. Ricardo got as far as the distributional struggle over wages and profits but he did not comprehend the fundamental nature of the conflict between capital and labour in abstract terms. Without an understanding of the role of labour power as a commodity to be bought and sold which belongs to a class in struggle which has to fight for its daily existence there can be no proper examination of the living process of capitalist reproduction.

The concept of value in economics allows us to understand the historical phases that capitalism is going through in its constant battle with living labour. Monopoly Capitalism has reached the stage where relative surplus value is becoming increasingly difficult to maintain. With each new phase of technological development comes the need for the reduction of the labour force in order to make profits on the capital invested. Competition at this phase requires the destruction of massive quantities of existing capital. Witness GM Ford in theUS.

At the same time it has become increasing apparent that the world could produce enough for everybody to have a good quality of life on a fraction of the working week that most people have to put up with now. Where’s the profit in that!

Ricardo never resolved the contradiction between use value and exchange value in the capitalist cycle. Hence his inability to link value in the spheres of production, distribution and exchange except in a purely mechanical way in a world of petty producers. The Neo- Classicists have been stuck in this ahistorical time warp ever since.

The response was as follows

The concept of labour power is an unnecessary and confusing complication. Possibly due to Marx having German as his mother tongue – it does not seem to lend itself to clarity of thought. Human labour ie work, is a sufficient descriptor.

It is mistaken to identify capital and labour as being in conflict. The true divide is between land on one side and capital and labour on the other. That owners of land and owners of capital are often the same individual or corporate body does not change this. Owners of capital are beholden to owners of land.

The underlying monopoly is in landowning. When there is no free land available, the landless have no option but to accept whatever terms a landowner will offer – or starve. That is the mechanism of exploitation. But an owner of capital is in the same take-it-or-leave-it situation if he does not also own land. Whilst there is a “natural” rental value that arises when land is freely available, due to its advantages over the marginal site, when all land is enclosed then the rental value rises to include a surplus.

Much confusion arises from using book-keeping terms such as “profit” and “cost of labour”, the latter being equated with wages plus other costs. Labour is not a cost of production. It is a cause of production. Wages are a share of production. But where all land is enclosed, wage levels are driven down to the least that men will accept. It is land enclosure that allows exploitation to occur. Profit is a nebulous concept comprising wages, interest on credit and rent of land.

The value of something is the labour that someone is willing to give in order to acquire it. It is as simple as that.

There is indeed a major problem with the present system of economic organisation. Cyclic boombusts are due primarily to the speculative purchase of land titles using borrowed money, with the land titles being used as security for the loans. This leads to a self-fuelled bubble which grows to the point of instability. There appears to be a reliable 18 year cycle running. This encourages over investment in manufacturing industry, it also creates an imperative for growth which is unsustainable. General Motors and others like it had invested on the assumption of demand that does not exist. Real physical capital has been created which is now nearly worthless.