[p2p-research] [ox-en] Marx’ Theory of Value and Why Exchange Can Be “Equal” and Still Bad

Thu Mar 12 03:27:11 CET 2009

Hi Marc,

 you are right on in your blind spot remark, which impedes making sensible
differences between say a sweatshop and fair trade ...

The immense majority of the world population is not willing to engage in
generalized exchange at this stage, but would be interested in equitable
exchange, and for social change, it is necessary for peer production
advocates to engage with advocates of equitable exchange,

Michel

On Thu, Mar 12, 2009 at 12:17 AM, marc fawzi <marc.fawzi at gmail.com> wrote:

>
> <<
>> Quotes from Joseph Jackson are indented and printed in italics:
>>
>>    Economics has no coherent Theory of Value and we must solve this
>>    problem if we are to establish the field of Abundance. The Labor
>>    Theory of Value has advantages in that it is objective and normative
>>    —it states that price should tend toward the cost of production; it
>>    also allows us to determine what constitutes equitable exchange.
>>
> >>
>
> I first mentioned "equitable exchange" in the P2P Energy Economy which was
> due to Patrick Anderson's "at cost" trading evangelism. I did not realize
> that "equitable exchange" actually existed as a term, but I had also been
> posting that stuff to Joe Jackson's Abundance list, so his usage of it is
> encouraging given that I had no idea whether or not I was using the right
> term.
>
>
> Equitable is not necessarily equal. In fact, in most cases it's not equal,
> just fair.
>
> As to the idea that all "exchange" is bad even if it's equal or equitable,
> all I have to say is that such an opinion represents a huge blind spot.
>
> If I do something for someone for FREE (i.e. not as an exchange) then my
> act encourages them to do something for someone else for FREE then that
> represents an unconditional exchange of good will from every person in the
> chain and the universe (or community) at large. If you do something or give
> something to someone for FREE then they feel motivated to return the favor,
> but not necessarily to you (and that may not be possible or desired) but to
> the next person they meet.
>
> What I'm doing now is providing highly skilled niche software development
> service (mobile game development) "at cost" to those who are willing to
> learn mobile game development (from the examples and source I give them and
> my help along the way) in expectation that they turn around and offer the
> same help/service to the next qualified guy "at cost" too. This chain
> reaction embodies an unconditional exchange at every link in the chain. It's
> a "probabilistic exchange." The probability that the people I provide this
> service to will learn the skills and turn around and offer the same help I'm
> giving them to someone else (who is qualified) is partly determined by my
> ability to select the right people. So it's not a "generalized exchange" but
> a "probabilistic exchange" where my judgment and the judgment of every
> person in the chain partly determines the probability that the next person
> in the chain will continue the chain of 'forward exchange.'  I think it's
> commonly called "pay it forward" or something like that.  So I guess the
> right way to describe it is "probabilistic forward exchange.'
>
> I cannot see how you can have any movement or flow of anything in a system
> without an 'exchange' but the exchange does not have to be a reciprocal one
> or even a generalized one. It can be a probabilistic forward exchange or any
> type of exchange (and I'm sure all exchange models have been already tried
> throughout history)
>
> Finding ways to make exchanges of all types more efficient is what currency
> design is all about. In my case, I'd like to model a currency that sustains
> abundance and that is liberating and just. Such currency is not only
> possible, it's essential if we are to have a sustainable existence.
>
> No movement or flow can happen without an exchange between the thing
> moving/flowing and it's environment. For example, at the Lagrangian points
> around the earth's orbit, where in certain points the gravity completely
> cancels out, there is no exchange and there is no movement. In order to have
> any movement or flow there must be an exchange.
>
> :-)
>
>
>
>
>
>
>>
>> Actually, the Labor Theory of Value, as first formulated by Adam Smith
>> and Ricardo and later refined by Marx, is not normative, but
>> descriptive: it describes the basics of price formation in capitalism.
>> Of course, the value of goods is only their average price—actual prices
>> will usually be somewhat below or above the average because of
>> fluctuations in supply and demand etc.
>>
>> Also, what Smith and Ricardo didn’t know but Marx found out (described
>> in vol. 3 of Capital) that there is a further systematic distortion
>> between value and average price that assures that the average rate of
>> profit will be about the same in all sectors (assuming free
>> competition). However, that’s only a modification (which follows from
>> the fact that the ratio between present, living labor—performed by
>> workers—, and past labor—embodied in machines and such—differs from
>> sector to sector) of the price building mechanism, which is still
>> basically derived from the labor required to produce different goods.
>>
>>    Unfortunately, the LTV does not acknowledge that the amount of labor
>>    embodied in products is constantly diminishing with the advance of
>>    automation and improvements in capital.
>>
>> On the contrary, the main reason that drives capitalistic competition is
>> that you (as a capitalist/company) can outperform your competitors by
>> reducing the value of your products, which allows you to sell at a
>> lower price (thus enlarging your market share) and still make a higher
>> (or equally high) profit per product. The LTV explains why capitalism
>> relies so strongly on automation and technical innovations that reduce
>> the necessary labor.
>>
>> This seems to be a useful, very detailed discussion of the LTV:
>> dreamscape.com.
>>
>>    [Joseph Jackson replied:] I agree with most of the LTV and
>>    by “normative” I meant that the LTV provides an objective notion
>>    of “fair price” (if price exceeds the average cost of production it
>>    is a sign that some barrier prevents competitors from entering).
>>
>> That’s true, but if that’s your ideal, it’s not much different from what
>> things are now, since in most areas, the barriers of entry are
>> sufficiently weak to make the actual prices quite similar to the “fair
>> price,” as you call it.
>>
>> The problem with capitalism isn’t that prices are “unfair”—most prices
>> aren’t. There are other problems. First, production only takes place if
>> there is profit. The goal of all capitalist production is to make
>> profit, i.e. to turn money into more money. So, in order to get the
>> things you need, you have to convince some capitalist that they need
>> you, i.e. that employing you allows them to make more profit than they
>> would make otherwise. But capitalists only need a limited number of
>> personnel, much less than there are people on Earth, so that’s the big
>> hurdle which most people fail to overcome (when speaking on a global
>> scale).
>>
>> A second problem is that, as a worker, you don’t sell the results of
>> your labor, you sell your labor power (workers, or would-be workers,
>> are people who don’t have anything to sell than their labor power—most
>> people haven’t). The deal by selling your labor power is: you get paid
>> the value of your labor power (NOT the value of your labor—labor
>> doesn’t have value, it produces values), and the value of your labor
>> power is what you need in order to survive (according to your local
>> community standard of living). In return, you have to give your full
>> labor power (according to the local standard for the length of the work
>> day/week, say, 8 hours a day/40 hours a week). If the production of the
>> goods you need for your standard of living takes 20 hours a week, you
>> still have to work 40 hours—the other 20 hours are the “surplus”—they
>> go to the capitalist, become their profit and are, in fact, the only
>> reason why they employed you in the first place.
>>
>> So the problem isn’t unfair prices, it’s the fact that people have to
>> sell their labor power, because they don’t have anything else to sell.
>> And this situation will necessarily arise in a market system (even in a
>> fictitious scenario where initially everybody had some means to
>> production—inevitable, some people would go bankrupt and again have
>> only their labor power to sell).
>>
>>    In contrast, after classical economics was abandoned economists have
>>    simply said that subjective preference rules supreme—price is
>>    whatever consumers are willing to pay. (nothing wrong whatsoever
>>    with charging anything I can for a bottle of water in a desert
>>    regardless of what it actually cost me to produce and transport that
>>    good). The only problem I have with LTV is making labor the most
>>    important “source” of value. To me, capitalism would be great if we
>>    actually had univeral ownership of capital. Pretty much everybody
>>    would love to receive income without laboring!
>>
>> Capital doesn’t  create value, only labor does. Money doesn’t turn
>> itself into more money by itself (you could send a dollar to the moon
>> and leave it there for 100 years to find out whether money can multiply
>> by itself).
>>
>> Rather, capital only allows you to get “income without laboring” because
>> it gives you the means to employ other people’s work. It’s their
>> surplus labor which pays your income.
>>
>>    I find the theory of Binary Economics interesting in this respect
>>    because it emphasizes the ever increasing power of technology to
>>    actually “do work.” If we instead emphasize the role of technology
>>    as primary it leads to new perspectives. What happens with the
>>    advent of true personal manufacturing? There is no more average
>>    price when everything is a custom order. Do we have one theory of
>>    value for standardized commodities and another for custom goods? I
>>    don’t have answers to any of this now, I’m just not sure the
>>    classical LTV can function for these situations.
>>
>> LTV is only meant to work for situations where people trade their work,
>> or the results of their work. If everybody had a personal manufacturing
>> device catering for all her/his needs, trade would no longer be
>> necessary, and value would no longer exist. That’s a rather fancy
>> scenario, but there are other, more realistic scenarios that make
>> value, and trading, superfluous. For example, when people employ
>> commons-based peer production
>> [http://en.wikipedia.org/wiki/commons-based_peer_production] to jointly
>> produce what they need, so they don’t have to trade and sell their
>> labor power. I’ve written about that in my book, “From Exchange to
>> Contributions” [http://peerconomy.org/wiki/Main_Page].
>>
>>
>> --
>> Start here: www.meretz.de
>> _________________________________
>> Web-Site: http://www.oekonux.org/
>> Organization: http://www.oekonux.de/projekt/
>> Contact: projekt at oekonux.de
>>
>
>

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