My article, published in Cosmonaut magazine, explains why human labour, and human labour alone, is the cause of profit.
Follow-ups: my response (here) to two letters (here and here) in Cosmonaut.
Why machines don’t create value (in Cosmonaut magazine)
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Reblogged this on virtual capital & political economy.
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Hi,
As Marxism evolves from criticism, I would like to share a criticism with you.
The idea that value is only created by human work because only humans can innovate, carries its dangers and contradictions, and I consider that it is not really correct.
If we affirm that the origin of value is in the ability to innovate, then we are affirming that unproductive labor (which does not create any mercantile capital) is the real source of value.
But the truth is that all the value of society is in the mercantile capital that has created productive labor.
Value is an abstraction. It does not exist because it is a physical/intrinsic quality of objects, but it exists because we behave as if it were a physical/intrinsic quality of objects. So that’s what Marx identified/called as spectral objectivity. So, when we talk of value and the social process of valorization, we are talking, therefore, about a social behavior. But this social behavior is not really free. Rather, it is totally subjected to the rules/laws of the capital circulation.
That is why, when we try to prove that value is only created by human work, we must do so based on the study of the limits in which this social behavior is trapped. That is, it must be demonstrated based on the laws of the capital circulation. And to do so, we must present the scheme of the circulation cycle of capital (for example) from the perspective of money capital
(sorry for using the Spanish letters in the cycle, my English is not very good):
D – M(Mp,T) … P … M’ – D’
This cycle shows us how capital circulates schematically, as well as the different transfigured forms that capital takes during circulation. The cycle begins with capital in the form of money capital (D). Later, when the capitalist acquires the means of production (Mp) and labor power (T), capital changes its form from monetary capital (D) to productive capital (M), where in terms of value D = M (the magnitude of capital has not changed, only its form).
To carry out this movement, the capitalist must spend a constant capital (c) to acquire the means of production and a variable capital (v) to acquire labor power. From which it follows that productive capital is broken down into: M=c+v.
Subsequently, the circulation itself stops (moment represented with … in the cycle), production is carried out (represented in P) and, once production has ended, circulation can be resumed (moment represented again with … ).
At the end of the production process, the capitalist owns the mercantile capital (M’) that the working class has created, where in terms of value M’=M+m. Capital has changed its form to mercantile capital and, in addition, it has done so by acquiring an increase in value.
Where m represents a surplus product, a magnitude of new value that, unlike the magnitude of value of M, did not previously exist. This surplus product is the one that will materialize in surplus value at the last moment of the cycle, when the capital takes again the form of money capital (D ‘), where in terms of value we have that D’=M’, D’=D+d and d=m. At this point, the capitalist will possess D to restart the cycle of circulation and d to make demand on society.
This d with which he will make his personal consumption, is the surplus value (p), where it is satisfied that p=m. From all these considerations, given that M’=M+m, M=c+v and m=p, it follows that we can decompose the mercantile capital M’ into the following value components: M’=c+v+p.
That is, the productive capital M=c+v will have transferred its value to the mercantile capital M’=c+v+p and, furthermore, the mercantile capital contains a new value, which did not previously exist (p). Constant capital (c) has therefore been consumed and its value has been transferred. And the variable capital (v) was given to the working class in order to create demand at the market (so it also transferred its value to the mercantile capital).
And this is where the interesting begins. Since if we aggregate all the circulation cycles of capital into a single aggregate cycle (something we can do simply by applying a certain degree of abstraction), we see that M’=c+v+p represents the entire aggregate supply of the market.
And, if we analyze just the moment in which M’=c+v+p has just been created (and, therefore, a moment in which no sale has yet been made and M’ has not yet been transformed into D’) , we see the following. At this moment, the constant capital (c) has been consumed and incorporated into the mercantile capital M’. We see, therefore, that constant capital (c) is not a quantity of value that is available to generate demand in the market. No one can use c to consume, because c no longer exists as a separate value: it has been incorporated into M’. On the other hand, at this moment the capitalist has not made any sale and, therefore, has not valued any fraction of the surplus value (p). Thus, the capitalist does not yet possess any fraction of the added surplus value (p) to be able to make demand in the market.
We see, then, that the market demand cannot start, in any way, with movements of c and p. Because in the initial instant in which the mercantile capital (M’) exists, c has been totally consumed and p has not yet materialized/valorized through circulation. How will all the market demand start, then? With movements of variable capital (v). As the working class spends the variable capital (v), the bourgeois class will valorize a part of the surplus value (p) with which to make a new demand.
If we assume, for example, that the working class makes X purchases, then each purchase will sell (c+v+p)/X value. Where the capitalist will recover (c+v)/X to replace the productive capital in the future and will materialize p/X to make more demand in the market.
In this way, thanks to the initial movement of the variable capital (v), the entire total supply can be consumed. But, what happens in a 100% automated scenario, where there is no salaried work? What happens is that there is no variable capital: v=0.
And if there is no variable capital, that is, if the magnitude of the variable capital is such that v=0, how then will the consumption of the aggregate supply begin? How will the social demand start? It will not be able to start. Since at that moment neither c nor p can be used to make demand. Mercantile capital can not circulate to be valued.
Thus, this is the limit of the capital circulation process which shows that, without human labor, there simply cannot be value creation. Because the use values ββcreated cannot be valued through circulation if there is no human labor (v>0).
It is not that only human work can create value “because of the physical and intellectual abilities of human beings.” It is that the rules of the circulation of capital requires the human labor so that capital can circulate. This is why capitalism will always be based on the exploitation of man by man.
So, in summary: the social behavior that gives rise to the existence of value is not a free behavior, but is dominated by the laws of the capital circulation; these laws of circulation necessarily require the existence of human labor (v> 0) so that capital can circulate; and, therefore, it is the laws of the capital circulation which imply, by definition, that all value is created by human labor.
Hope it is of your interest,
Regards.
PS: sorry for my bad english, I did it my best.
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Hi Daniel,
I agree there must be sufficient effective demand to purchase produced commodities in order to realise their value in the market. However, total effective demand is not only comprised by workers’ wages, as you suggest, but also the luxury consumption of capitalists and new capital investments. In addition, the question of precisely why human labour, and human labour alone, creates surplus-value must be answered in the context of a capitalist economy that is not fully automated, and has waged labour. Your recapitulation of Marx’s analysis of the circuit of money-capital is fine, as far as it goes, but simply does not address this question. For example, you write that “At the end of the production process, the capitalist owns the mercantile capital (Mβ) that the working class has created” — which simply assumes the answer we’re trying to establish. I think it’s important to understand the specificity of Marx’s theory of surplus-value, which he presents in Volume 1, particularly his emphasis that the value added by workers varies due to variations in the length and intensity of the working day, and also variations in the technical conditions of production that reduce the labour-value of the real wage. Marx does not claim, as you suggest, that human labour creates surplus-value because workers spend their wages on purchasing the surplus product. My “causal powers thesis” is intended to elaborate upon Marx’s theory of the production of surplus-value in the “hidden abode of production” (prior to its conditional realisation in the market).
Best wishes,
Ian.
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Hi,
I think you didn’t fully understand my argument.
At the moment when the mercantile capital (M’=c+v+p) has been created, the capitalist cannot use the surplus value (p) to generate demand, because nothing was solt so the surplus value still didn’t change its form to the “monetary form”.
Also, the magnitude of constant capital (c) still wasn’t recovered for the same reason: nothing was still solt.
So all the demand of the society, must start with the variable capital (v), which was given to the working class to create demand. And if there’s no human labour (v=0) then the social demand cannot start. If the demand cannot start, then no goods will be exchanged. If no exchange is done, then there’s no value circulation: the social behaviour that gives rise to the existence of value does not exist. So the value does not exist at all.
That’s how you prove that all the value is created by human labour: the laws of capital circulation forces it to be truth, because without human llabour (v=0) the social behaviour that gives rise to the existence of value cannot exist. An if that social behaviour does not exist, then the value does no exist at all.
That only human labor creates value, is something that is derived from the laws of the capital circulation. It’s a property of those laws.
Regards.
PS: sorry again for my bad english.
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Hi Daniel,
Your argument is of the form (a) economic value wouldn’t exist without humans, hence (b) human labour is the only cause of surplus-value. But this is a non sequitur. (a) is true, but it doesn’t imply (b). As I mention in the article: “Without human industry and commerce, there wouldnβt even be economic phenomena to puzzle over. But it doesnβt follow that the origin of profit is human labour alone.”
Best wishes,
Ian.
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My argument is that if there’s no variable capital (v=0) because the human labour is not bought, then the mercantile capital cannot circulate. Then, the commerce itself cannot exist. So the conditions that are needed for the value to exist, are not satisfied.
Conclusion: in a capitalist context (it could be different in another kind of economies) if the human labour is not bought the value does not exist because it cannot exist. The laws of capital circulation forces that the human labour has to be bought.
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“And this means that only labour-power has the capability to work harder and smarter,Β in every production process, to cause changes in the level of profits”
I’d argue machines can also work harder, increasing the intensity of their “work” would also cause an increase in the profit level. In your example, just make the robot driver faster.
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Hi Jane
Yes, all machines and animals can “work harder”. But who makes the robot or animal work harder?
Today, only human labour has the power to causes such changes in every production process (e.g. by re-configuring the robot, or giving it new commands, or by whipping the oxen’s back etc.)
Of course, with technological progress, we will produce robots that may themselves, autonomously, decide to “work harder” in response to economic conditions. But given these new conditions of production (which now include robots with more sophisticated powers) the question arises again: what factor of production will cause changes in these (more highly automated) conditions of production? These more sophisticated machines are still unable to work harder or smarter in every production process. They can only do so in specific, particular production processes. As I mention in the “causal powers” thesis: “Humans have universal causal powers. Machines have particular causal powers.” So, once again, human-labour will create *new* surplus-value by re-programming, upgrading, or scrapping the machines and replacing them with more sophisticated versions.
I discuss the historical process of increasingly sophisticated automation at the close of my article. We will alienate and automate more and more of our powers over time. Hence, the conditions of production (e.g. the mass of constant capital) will include machines that can do all kinds of wonderful things with increasing levels of autonomy. But machines will not produce *new* absolute and relative surplus-value until (in some hypothetical limit) they replicate our causal powers to progressively change the conditions of production in any and every production process.
Hope this helps,
Ian.
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Do machines transfer the value they contain as commodities (i.e. the labor time it took to produce them) or do they transfer a value that, by design, they are capable of transferring during the production process? That is, there seems to be an ambiguity or maybe it is my misunderstanding, but when we say that machines simply transfer their value, what value are we talking about? If it is just the labor time they contain, irrespective of how good/innovative they are as machines in the technical sense, then this doesn’t make sense.
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Hi Saigon, thanks for your question.
The value of a commodity is not a physical property of an individual commodity but a property of the social conditions of production of all commodities of that type. As Marx says, “Each individual commodity … is to be considered as an average sample of its class”. Think of the value of a commodity as the answer to the following question: “How much labour time must be supplied, on average, to produce an instance of this commodity type given the conditions of production that prevail right now?”. (The value of an individual commodity, after it has been produced, can therefore alter if the conditions of production change.)
I suggest you read the following to get a deeper understanding of Marx’s talk of “transfer” of value and its relation to coexisting labour and vertically-integrated labour coefficients: https://ianwrightsite.wordpress.com/2020/12/08/why-machines-dont-create-value-audio-of-talk/#comment-1449
But, in summary, machines transfer their value (and there is no distinction to be drawn between their value “as commodities” and the value “they are capable of transferring”).
More “good/innovative” machines increase the productivity of labour; in other words, more outputs can be produced with fewer labour inputs. Hence the use of machinery typically reduces the value of commodities. Early adopters of such machinery will have lower input costs than their competitors and therefore realise higher profits. But higher profits for an individual firm are entirely compatible with a reduction in the value of the commodities they supply to the market.
Hope this answers your question,
Ian.
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Hi Ian
It is an interesting theory and defence of the view that machines do not produce value but itβs right for the wrong reason.
Humans, like all other animals, survive by taking what they need from the rest of nature. What distinguishes us in this respect from other animals is the extent to which we employ tools, fashioned from nature, to help transform materials from nature into what we need.
One simple definition of wealth is that it is what humans fashion from the rest of nature to use. In this βproductionβ it is not human work alone that creates wealth but human wealth transforming materials supplied by nature. The materials humans work on cost them nothing in terms of work; there are already there for them to take and use. The same applies to natural forces like the wind, the sunβs rays, and running water The human work involved is that of constructing machines to harness these forces.
From this aspect, the βlabourβ in the Labour Theory of Values is human labour, βvalueβ being a measure, in a society where wealth is produced to be sold, precisely of how much humans have to work to produce particular items of wealth. A more accurate description of such theories would be the Human Work Theory of Value. Thus, by definition, other work β expenditure of energy β involved in production is excluded, such as that of natural forces, animals β and machines when harnessing natural forces. While humans and nature produce βuse valuesβ, only humans create βvalueβ.
I donβt think anybody challenges the view that the work performed (energy expended) by natural forces (wind, water, the sun, the heat of the Earth, electricity, radio and other waves, nuclear fission, etc) adds no βvalueβ to an exchangeable use-value.
As to animals, this short article explains why animal power doesnβt either:
Animal power is also a natural force. The cost to humans in terms of human work is the cost of rearing, training and maintaining the animals. Humans do not have to βpay forβ the work the animals do; that is provided free by nature. Animals, therefore, produce no value and so no surplus value.
As to machines, they are like animals. They are a cost to humans in terms of the work humans have to expend to construct them, but the work they do costs humans nothing. Their work is free like a force of nature. Marx himself made this point in section 2 (on βThe Value Transferred by Machinery to the Productβ) of Chapter 16 (on βMachinery and Modern Industryβ) of Volume I of Capital. He wrote that it is only the value of the wear and tear of machines that is transferred to the product, but not the work they do:
βAfter making allowance, both in the case of the machine and of the tool, for their average daily cost, that is for the value they transmit to the product by their average daily wear and tear, and for their consumption of auxiliary substance, such as oil, coal, and so on, they each do their work gratuitously, just like the forces furnished by Nature without the help of man. The greater the productive power of the machinery compared with that of the tool, the greater is the extent of its gratuitous service compared with that of the tool. In modern industry man succeeded for the first time in making the product of his past labour work on a large scale gratuitously, like the forces of Nature.β
No more than working animals, then, do machines produce value.
As stated, the Labour Theory of Value is a Human Work Theory of Value as it is only human work that is a cost to humans and it is this that is being measured.
You also seem to be regarding βvalueβ as something physical that exists in any human society and would continue to exist in a post-capitalist society. This was not Marxβs view (for him βvalueβ was a βsocial relationβ in the sense that it is a form wealth assumes only where it is produced for sale). But I donβt want to go into this point at the moment.
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Hi Adam,
Thanks for your comments, much appreciated.
You wrote:
> From this aspect, the βlabourβ in the Labour Theory of Values is human labour,
> βvalueβ being a measure, in a society where wealth is produced to be sold,
> precisely of how much humans have to work to produce particular items of
> wealth. A more accurate description of such theories would be the Human
> Work Theory of Value. Thus, by definition, other work β expenditure of energy
> β involved in production is excluded, such as that of natural forces, animals
> β and machines when harnessing natural forces. While humans and nature
> produce βuse valuesβ, only humans create βvalueβ.
I address this “definitional” approach in my article under the heading “social relations”. We all agree that Marx defines value in terms of human labour alone. However, Marx claims that the substance of profit is human labour-time, and the cause of profit is human labour alone. But monetary profit is not value. Hence simply restating Marx’s definition of value doesn’t cut it. We need to understand the causal links between value and monetary profits. We need to explain why Marx’s concept of value is the right concept to understand the origin of profit. This is why I focus on causality in my article (rather than dogmatically restating Marx’s definition of value).
> You also seem to be regarding βvalueβ as something physical that exists
> in any human society and would continue to exist in a post-capitalist society.
> This was not Marxβs view (for him βvalueβ was a βsocial relationβ in the sense
> that it is a form wealth assumes only where it is produced for sale).
Value, as a “social form”, only exists in generalised commodity production. And I do not think value is “something physical”. On the other hand, the labour process, and machinery, will continue to exist in a post-capitalist society. And it will still take time to make things …
Best wishes,
Ian.
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Here is the missing link to the article about animals not producing surplus value;
https://www.worldsocialism.org/spgb/socialist-standard/2020/2020s/no-1394-october-2020/cooking-the-books-2/
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