What's special about labor? (concluded)
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1. Whose aphorism was it, that Marxian economics is the economics
of capitalism, while neoclassical economics is the economics of
socialism? You can see the general idea: Marxian categories are fine
for exposing the injustices of capitalism and diagnosing its tendencies
towards crisis, but if you can assume that the means of production are
in the hands of the associated producers and the distribution of income
is right, and you want to get down to some serious resource
allocation, then what you want are the neoclassical marginal
conditions. There may be a grain of truth in this. But there is more
than a grain of truth in a proposition that is close to an inversion of it:
One can see the rationale of the LTV most clearly by adopting the
standpoint of a socialist planner.
2. It is fairly standard practice in domains such as investment and
growth theory to frame the problem initially in terms of a 'command'
system, to work out the optimal solution from this perspective, and
then to claim that -- Hey, presto! -- a perfectly competitive system
will duplicate the command optimum. (Some of Solow's stuff is in this
vein; and for a more recent example, see Blanchard and Fischer's
"Lectures in Macroeconomics".) Now obviously Marxists are going
to be very skeptical (to say the least) about the last step here; but
nonetheless, perhaps one can say this: To the extent that capitalist
economies approximate (loosely, stochastically, in certain dimensions,
and relative to their peculiar distribution of income) to economic
rationality, theoretical results relating to a planned economy may
provide insights into the workings of capitalism. The LTV is, I think, a
case in point.
3. Labor-power is a scarce resource: it is also a universal, all-
purpose resource. And its scarcity is, unlike that of strongly
producible items, direct and not derived. (Ricardo: "By far the
greatest part of those goods which are the object of desire, are
procured by labour; and they may be multiplied... almost without any
assignable limit, if we are disposed to bestow the labour necessary to
obtain them.")
4. The reason for this is that while labor-power *is* clearly
reproducible, its reproduction takes place under "special" conditions
relative to the rest of the economic system. People can decide to put
more resources into producing labor-power: they can have more
children. But variations in the birth rate are, for the most part, not
driven by the sorts of forces that drive other production decisions. In
a capitalist economy, procreation is not a profit-oriented production
process (and the "output" is not the property of the possessors of the
relevant means of production!). Similarly, in a planned economy,
procreation does not fall within the sphere of planning of production.
Even though the state may wish to encourage or discourage the having
of children, and may have some impact on the birthrate, it can hardly
plan this sector in anything like the way it can plan industry. This
makes the production of labor-power the "exceptional" sector of the
economy, as Farjoun and Machover put it.
5. Furthermore, it is not just that the planners *can't* plan the
production of people like the production of steel: Why would they
*want* to augment the population (hence relaxing the "labor-power
constraint" on the plan)? There may be special instances where rapid
population growth is in the interests of a socialist state, but surely the
general object of the plan is to maximize per capita production, not
total production. (An over-simplification, of course: one wants to
maximize per capita production only to the extent that it is correlated
with wellbeing and happiness.) And this objective will not, in general,
be served by expanding the labor force via expansion of the
population.
6. Thus, the very general fact that the planned economy is being
planned for the benefit of human beings -- and not for the benefit of
oil, iron, electricity, or what have you -- is not merely an extraneous
"social" or "ideological" consideration, but rather connects directly
with the issue of rational economic calculus. The focus on labor-per-
unit-output as the appropriate measure of cost for each good is simply
the converse of one's focus on output-per-unit-labor (strictly, per
person, but if we assume that labor and number of people are
positively linearly correlated, this amounts to the same thing) as the
general maximand. Conservation of non-reproducible natural
resources, while it may well be important, is in general only a means of
ensuring that the maximization of output-per-unit-labor (minimization
of labor-per-unit-output) is sustainable for future generations. (I'm
thinking of 'productive' natural resources here: conservation of other
*species* is arguably a different matter -- a moral imperative.)
7. Further, consider the issue of full employment. Clearly, this is a
priority under socialism. The minimization of the labor time required
to produce things is also a priority. As a first approximation, the idea
might be: "Use all the labor-power there is, but spread the resulting
labor as thinly as possible over the things you are producing, so as to
be able to produce as many things as possible."
8. Of course when we say we want full employment, that we want to
use all the available labor power, this doesn't mean that we want to
have everyone working as many hours as they possibly can. We want
to have everyone working as many hours as they would like to. Let
me cut through the intricacies of this point with the assumption that we
have broad social agreement on a standard x-hour working day.
Then full employment means that all fit and able labor-powers should
be employed for x hours a day (naturally, with some flexibility for
part-time work around the edges).
9. This requirement creates another special feature of labor. Not only
is labor *scarce* (leading to the need to economize it in any particular
branch of production), but it should be *fully used* each period. This
feature does not carry over to other resources. A non-reproducible
natural resource such as oil may be scarce (in the sense that its
ultimate supply is finite), yet there is no requirement that it be "fully
used" each period. Indeed, what would that mean in the case of oil?
All we can say here is that there is no point in extracting more oil each
period than one wants to use during the period (unless one has a
specific reason for adding to stocks). In that sense the current flow
output of oil should be "fully used". But of course this current flow
output is endogenous: one produces just as much oil as one plans to
use, and the planned usage in turn is determined by technology (in the
form, let us say, of the oil-input to labor-input ratio in production), in
conjunction with the amount of labor one plans to perform.
10. Thus, while it would in principle be possible to construct an oil
theory of value in place of the LTV, there are several reasons why the
LTV is of special significance to human societies. One can imagine
circumstances in which the calculation of embodied oil-values might be
desirable in a planning context (scarcity of oil is the most pressing
constraint on the economy, and there is no possibility of substituting
some alternative, producible via the application of labor), but these do
not in fact obtain. Labor-content is clearly the best single, scalar
measure of the cost to society of producing each sort of good. To the
extent that relative prices under capitalism reflect, albeit in a highly
imperfect and distorted fashion, social cost of production, one would
expect to see the LTV borne out empirically -- as indeed one does.
11. Well, that is enough from me. I don't want to try people's
patience too far; and besides, I need to get on with other things that
I've been neglecting. I hope that I have laid down sufficient of a trail
so that those who think it might be headed in the right (or at least an
interesting) direction, can extrapolate for themselves. For anyone
interested, some of the points made above, concerning the role of
labor-values in a rational cost calculus for a planned system, are
developed more fully in a paper with Paul Cockshott in Review of
Political Economy, vol. 5, no. 1, 1993; an earlier paper, expanding on
different aspects of the issue, may be found in Economy and Society,
vol. 18, no. 1, 1989.
Thanks to everyone who offered encouragement along the way, and I
hope these postings have been of some use-value.
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Allin Cottrell
Department of Economics
Wake Forest University
[EMAIL PROTECTED]
(910) 759-5762
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