Value and exploitation: a comment

Abstract

This paper comments on a recent paper by Ernesto Screpanti (2003), in this journal, on Marxian theories of value and exploitation. The paper argues, in opposition to Screpanti, that the labour theory of value is the most suitable foundation for a realistic and historically determined vision of society; that labour values provide a unique coherent conceptual framework for understanding the nature of profit; that the inconsistency of labour values is only apparent, as it disappears with a judicious choice of numéraire; and that prices of production explain much less than labour values and are therefore an inadequate substitute for the latter.

Acknowledgment

I gratefully acknowledge comments and suggestions from Luigi Pasinetti. The usual caveats apply.

Notes

¹‘Classical’ refers to the economists operating within the tradition of Smith, Ricardo, Malthus and Marx. See below for further specifications.

²It is interesting to note that this notion of profit as a residual corresponds exactly to the definition of net operating surplus that we find in national accounts.

³This idea that labour is the sole factor of production was shared by Keynes who, in an insufficiently noticed passage of Chapter 16 of the General Theory, wrote: ‘I sympathise … with the … doctrine that everything is produced by labour, aided by [the]…technique, by natural resources…and by the results of past labour, embodied in assets’ (Keynes, 1936, pp. 213–214).

⁴Park (2003), discussing Böhm-Bawerk's critique of the labour value principle, shows that the principle is a realistic rather than an arbitrary choice, and that the alternative paradigm of ‘use value’ is logically inconsistent in explaining why commodities are exchanged. At the empirical level Cockshott & Cottrell (1997) have shown that labour time serves much better as a value base than any other input.

⁵Workers are exploited when their productive contribution is higher than their wage.

⁶The productivity axiom, it will be recalled, states that the productive contribution of labour coincides with its average productivity.

⁷By equation (4), L =  λ y . This can also be derived algebraically on the basis of the definitions of λ and y . From equation (1), the vector of direct labour is: l  =  λ ( I – A ). Post-multiplying by the column vector x of gross physical outputs, lx  =  λ ( I – A ) x =  λ y , where y  = ( I – A ) x . Total employment L is then L =  lx  =  λ y .

⁸I.e. λ d  = w = ν, where d is the vector of the wage goods in physical terms.

⁹An alternative ‘temporal single system’ solution of the transformation problem has recently been put forth which aims to avoid Marx's well-known logical error of mixing value magnitudes with price magnitudes (see for example the papers collected in Carchedi & Freeman, 1996). I fully endorse Mongiovi's (2002) dismissal of this approach, which in fact reproduces the same kind of error.

¹⁰In view of the fact that market power and non-competitive market structures are structural features of modern economies, I have elsewhere suggested transforming labour values into non-competitive prices (Reati, 1986). It appears that the introduction of a range of differentiated profit and wage rates (owing to non-competitive market structures) changes the functioning of the system so profoundly as to reduce the importance of the factor that is usually considered the main determinants of deviations of prices from labour values—the organic composition of capital of the various sectors.