5 Values, prices and exploitation
5.2 Synchronisation of labour
The simultaneous sale, at the same price, of commodities produced in different moments shows that individual concrete labours are synchronised across those that have produced the same kind of commodity at other times, or with distinct technologies. Because labours are normalised and synchronised, all commodities of a kind have the same value, regardless of how, when and by whom they are produced. Normalisation explains why the labour time necessary to produce a type of commodity is socially deter- mined, and includes that necessary to produce the inputs (see section 5.1).
Synchronisation implies that this labour time is indistinguishable from and, therefore, is equivalent to living labour:
All the labour contained in the yarn is past labour; and it is a matter of no importance that the labour expended to produce its constituent elements lies further back in the past than the labour expended on the final process, the spinning. The former stands, as it were, in the pluperfect, the latter in the perfect tense, but this does not matter. If a definite quantity of labour, say thirty days, is needed to build a house, the total amount of labour incorporated in the house is not altered by the fact that the work of the last day was done twenty-nine days later than that of the first. Therefore the labour contained in the raw material and instruments of labour can be treated just as if it were labour expended in an earlier stage of the spinning process, before the labour finally added in the form of actual spinning.34
The equivalence between labours producing the same commodities at different points in time or with distinct technologies is due to the fact that value is a social relation established by, and reproduced through, capitalist production, rather than a substance ahistorically embodied in the commodities by concrete labour (see section 2.1). The social reality of value implies that only living labour creates valueor, alternatively, that Marx’s value theory is based upon social reproduction costs. More specifically, values are determined by the current ability of society to reproduce each kind of commodity, or the reproduction socially necessary labour time(RSNLT). Values are not set in stone when the commodities are produced. Rather, they are socially deter- mined continuously, and they can shift because of technical change anywhere in the economy:
The value of any commodity . . . is determined not by the necessary labour time that it itself contains, but by the sociallynecessary labour- time required for its reproduction. This reproduction may differ from the conditions of its original production by taking place under easier or more difficult circumstances. If the changed circumstances mean that twice as much time, or alternatively only half as much, is required for 62 Values, prices and exploitation
the same physical capital to be reproduced, then given an unchanged value of money, this capital, if it was previously worth £100, would now be worth £200, or alternatively £50.35
The value of labour power provides the clearest example of reproduction SNLT. It was shown in section 4.2 that the value of labour power is deter- mined by the workers’ reproduction needs, rather than the concrete labour time embodied in the workers or in the goods that they consume, or have consumed in the past:
When Adam Smith is examining the “natural rate” of wages or the
“natural price” of wages, what guides his investigation? The natural price of the means of subsistence required for the reproduction of labour-power. But by what does he determine the natural price of these means of subsistence? In so far as he determines it at all, he comes back to the correct determination of value, namely, the labour-time required for the production of these means of subsistence.36
Carefully sifting through Marx’s works one can find passages where he seems to defend another view of value: for example, that the value of the inputs is embodied in the output and carried over through time. This has led some to defend distinct interpretations of value theory (see section 2.1), and others to complain of inconsistency.37However, these alleged textual discrepancies are often cited out of context, and they can be explained by the age of the texts (some older texts can seem closer to the embodied labour view), their level of abstraction (the more abstract they are, the more value resembles embodied labour) and the context of the analysis (for example, where Marx contrasts constant and variable capital).38
5.2.1 Value transfers
Commodity values have two parts: first, the abstract labour necessary to transform the inputs into the output, determined by RSNLT through the normalisation and synchronisation of labour (see above); second, the similarly determined value transferred from the inputs. The transfer of input values is a real process with two aspects. On the one hand, living labour transformsthe inputs into the output; this is the basis of the normalisation of labour.39 On the other hand, value expresses the conditions of social reproduction, including the ability of society to re-start production in the next period; this is the basis of synchronisation. The transfer of input values includes the circulating constant capital used up, and the physical and technical (‘moral’) depreciation of the fixed capital.40 Let us deal with each of them in turn.
The value transferred by the circulating constant capital is determined, as was explained above, by the abstract labour time currently necessary to Values, prices and exploitation 63
produce the inputs, while the socially necessary inputs are determined by the dominant technique of production of the output:
The values of the means of production . . . (the cotton and the spindle) are therefore constituent parts of the value of the yarn . . . Two con- ditions must nevertheless be fulfilled. First, the cotton and spindle must genuinely have served to produce a use-value; they must in the present case become yarn . . . Secondly, the labour-time expended must not exceed what is necessary under the given social conditions of pro- duction. Therefore, if no more than 1 lb. of cotton is needed to spin 1 lb.
of yarn, no more than this weight of cotton may be consumed in the production of 1 lb. of yarn. The same is true of the spindle. If the capitalist has a foible for using golden spindles instead of steel ones, the only labour that counts for anything in the value of the yarn remains that which would be required to produce a steel spindle, because no more is necessary under the given social conditions.41
Consequently, and somewhat counter-intuitively, the original value of the inputs used up, and the money-capital spent buying them, are irrelevantfor the determination of the output value:
the values of the material and means of labour only re-appear in the product of the labour process to the extent that they were preposited to the latter as values, i.e. they were values before they entered into the process. Their value is equal to the . . . labour time necessary to produce them under given general social conditions of production. If later on more or less labour time were to be required to manufacture these particular use values . . . their value would have risen in the first case and fallen in the second . . . Hence although they entered the labour process with a definite value, they may come out of it with a value that is larger or smaller . . . These changes in their value, however, always arise from changes in the productivity of the labour of which they are the products, and have nothing to do with the labour process into which they enter as finished products with a given value.42
It is similar with fixed capital. To the extent that production physically con- sumes the elements of fixed capital, value is added to the output such that when the machines are finally scrapped (or when new tools or buildings are necessary), enough money is available for their replacement.43
5.2.2 Technical change, value and crisis
Technical change in the production of the elements of fixed capital, e.g., machines, brings into existence a new generation of machines that is, in general, cheaper to run per unit of output. When new machines are intro- 64 Values, prices and exploitation
duced, the value transferred by the old machines (and the unit value of the output) declines.44Two important implications follow. First, technical change in different sectors of the economy can shift the value of the elements of fixed capital suddenly and unpredictably:
According to simple value theory, capital goods unrealistically depreciate according to predetermined patterns just as they do in neoclassical production theory. Once we go beyond the analysis of semistatic, expanded reproduction, we require knowledge about future economic conditions before we can calculate the amount of abstract labour embodied in a commodity. For example, if unpredictable technical change can make a tool obsolete in the near future, how do we develop an appropriate rule to allocate the movement of value from the tool to the final product?45
These capital losses are potentially large, and they may be distributed un- evenly because of the distinct technologies employed by each firm.46Firms may bear these costs in different ways, depending on their choices and relationship with the financial markets and the accounting conventions, and the costs may even be ignored temporarily. However, they cannot be avoided indefinitely because discrepancies between the technologies employed in each firm and the socially dominant techniques affect their profitability:
When large divergences [between prices and reproduction values] become typical throughout the economy, the price system will become in- creasingly incapable of coordinating the economy. Malinvestment will become common . . . Eventually, forces of competition will compel prices to fall in line with reproduction values . . . Marx repeatedly explained how, over and above changes in reproduction values, value can appear to take on a more or less independent existence until a crisis brings values back in line with reproduction values . . . [I]n a real economy, actual prices tend to drift away from underlying labor values.
As the linkage between prices and values becomes looser, the price system gives increasingly misleading signals, making speculation more profitable than earning profits by producing goods and services for the market.47
Second, the possibility of technical change introduces an unavoidable indeter- minacyin the output values. This indeterminacy is due to the unknowable
‘true’ value transferred by the fixed capital, which depends upon the implica- tions of future technical change for the current value of the machines.
Moreover, the potentially different ways in which technical depreciation is incorporated by each firm (in spite of the uniformity of output values), and the impact of the bursts of spending that accompany the replacement of fixed capital, open the possibility of bankruptcy and financial crisis:48
Values, prices and exploitation 65
Reproduction costs shift in unpredictable patterns. Because we cannot predict what future technologies will be available at any given time in the future, we have no way of knowing in advance how long a particular capital good will be used before it will be replaced . . . We cannot calculate the values of goods produced today, because knowing the appropriate values of the constant capital being transferred today is impossible without advanced knowledge of future reproduction values . . . Alternatively, we could calculate the value of goods based on capitalists’ estimates of future depreciation patterns. Once we embark on the path of taking subjective estimates of future depreciation into consideration, we open a new can of worms . . . To begin with, we have no way of knowing the capitalists’ subjective opinions. In addition, Marx’s assertion about bankruptcies suggests that these subjective opinions are grossly mistaken.49
Uncertainty with respect to the output values has a knock-on effect on the calculation of surplus value, the residual left after the reproduction costs are subtracted from the output value and, consequently, upon the distribution of surplus value as profit, interest and rent. These difficulties are due to real contradictions in the process of economic reproduction, and they do not affect the meaning and significance of the concept of surplus value or the theoretical stature of value. However, they need to be accommodated into an analytical framework that is sufficiently flexible to allow them room to move, yet sufficiently robust to represent the structures of determination of reality, including the equivalence between labours performed in competing firms within each sector (normalisation), and in different firms across time or in firms employing distinct technologies (synchronisation).