Does the LTV have a mechanism?
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1. I want to get on to Roemer, Elster and exploitation, but first I think
I need to address a concern that I suspect may be building in some
quarters. I have stressed the empirical validity of the LTV, but I
suspect that will not cut much ice in itself.
2. David Hume famously argued that we can never discover any
*necessity* in causal connections between matters of fact. Necessity
resides solely in the realm of mathematics and logic; among matters of
fact there can at best be "constant conjunctions", brute empirical
associations. Hume's argument is notoriously difficult to refute, yet
surely most scientists feel that there *must* be something wrong with
it. We expect of a "good" theory that it does more than produce
predictions that happen to come out right most of the time. We
expect the theory to specify some underlying *mechanism*
responsible for the production of the effect in question. So: Empirical
success apart, what is the mechanism of the LTV supposed to be?
3. Of the classical proponents of the LTV -- Smith, Ricardo and
Marx -- only Adam Smith (whose version of the LTV was of course
considered confused by the latter two) actually specified a mechanism.
In Smith, the pressure towards the exchange of commodity bundles
containing equal quantitites of labor time resided in the *subjective
reckoning* of the parties to the exchange. The beaver-hunter,
*seeing* that his "output" took twice as much labor to produce as that
of the deer-hunter, refuses to part with the beaver for less than two
deer. But unfortunately this mechanism would seem to operate, at
best, only in the "early and rude state of society which precedes both
the accumulation of stock and the appropriation of land". Capitalists
don't calculate the labor-content of their products, or of the
commodities they purchase. (Plus, even if they wanted to, it's much
more difficult to calculate the labor-content of a commodity produced
via a complex division of labor.)
4. Neither Ricardo nor Marx specified an alternative mechanism.
Ricardo was perfectly confident that the LTV was right, but if you
look for a definite mechanism in the Principles you will be
disappointed. What purports to be an argument for the LTV appears
on p. 25 of the Sraffa edition, but it is actually no more than an
account of what will happen under certain circumstances *on the
maintained hypothesis of the LTV*.
5. Marx, though he doesn't give a *mechanism* as such, does offer
an argument, in chapter 1 of Capital, I. It goes roughly like this. (a)
Commodity exchange should be conceived as an equation. To make
sense of the "exchange of equivalents" we must suppose that there is
*something* present in equal quantities on both sides of the exchange.
(b) Labor time is the only acceptable candidate for this "something"
(since the use-values of commodities are incommensurable).
6. This argument has not persuaded many people. At least on the
face of it, it seems to be full of holes. For instance: (1) Why do we
*have* to conceive of exchange as an equation (other than, trivially, of
equal monetary magnitudes)? There doesn't seem to be anything
compelling about this "picture". (2) Even if we do think of exchange in
that way, and if we accept Marx's point about the incommensurability
of disparate use-values, is labor time really the only candidate for the
thing that is equated? What about, say, energy-content? (3) Besides,
when we get to volume III of Capital, Marx admits that embodied
labor time is *not* actually equated in commodity exchange under
capitalism, even in "long-run equilibrium," so to speak.
7. There would seem to be two possibilities here. (1) The confidence
of Ricardo and Marx concerning the LTV was just misplaced. Their
failure to come up with a convincing mechanism is fatal. (2) The
*intuition* of Ricardo and Marx was sound, but outran their capacity
to articulate a proper justification of the LTV: the job can, however,
be done. I think the second interpretation is the right one. More later.
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Allin Cottrell
Department of Economics
Wake Forest University
[EMAIL PROTECTED]
(910) 759-5762
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