I shall first attempt to answer Steve Keen's questions.
1. Steve asks whether I would accept that what I have defended
is really a Labor Measure of Value (LMV) rather than a Labor
Theory of Value (LTV). No, I wouldn't. An LMV, as I understand
it, is what you find in Smith's advocacy of labor *commanded*
as the proper measure of price, and in Keynes's use of the wage-
unit in The General Theory. The LMV in itself says nothing
whatever about how prices are *determined*, only about how they
are most usefully expressed. Smith, famously, argued that
that the labor-content theory of value (LTV) didn't apply
outside of the "early and rude state of society": for capitalism,
he advanced the theory that "natural price" is determined by
summing the natural recompense of the three factors of
production (natural wage, natural profit and natural rent) --
a doctrine that both Ricardo and Marx vehemently opposed. But
even when he thus ditched the LTV, Smith continued to advocate
labor commanded as te best *measure* of the three components of
natural price. Ricardo and Marx upheld the much more substantive
proposition that relative prices are *determined* by socially
necessary labor-content (or more confidently, that changes in
relative prices are determined by changes in labor-content).
I have defended a version of this thesis. Steve talks about
using labor as a numeraire; but the choice of a numeraire is
basically just a matter of theoretical convenience, and my
claims on behalf of labor go far beyond that. Barkley Rosser,
though he is a bit skeptical, has caught my meaning more clearly.
2. Steve asks if I believe that "labor is the only source of (new)
value, and therefore that machinery etc. do not add new value".
I am inclined to refuse the terms of this catechism. Talk of
labor "creating value" and machines "passing it on" is useful
heuristically and valid up to a point, but I wouldn't want to
push it too far, since it suggests a conception of "value" as
a sort of metaphysical substance exuded by human beings but not
machines. Let me re-phrase and answer his question in two different
ways. (1) Do I believe that in a rational calculus of social cost,
machines should be accounted as so much embodied labor time?
Basically, Yes. (2) Do I believe that the (real) profit income
of capitalists (and the real interest-income of rentiers, and the
real rental income of landlords) is properly conceived as the
proceeds of the exploitation of (extraction of surplus labor from)
productive labor? Yes, I do. The arguments in the last several
"LTV Defense" postings were supposed to bear on these points.
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Allin Cottrell
Department of Economics
Wake Forest University
[EMAIL PROTECTED]
(910) 759-5762
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