Letter: Comment on “Why Machines Don’t Create Value”

Date: 2021-10-19T04:00:24+00:00

Location: cosmonautmag.com

Ian Wright’s analysis of Marx’s value theory begins with Marx’s simple model of production in which there is no mismatch between value and price because the proportion of constant to variable capital is uniform throughout the economy and there are no new productivity enhancing machines being introduced into the production process.  In this simple model, any profit must come from the owners of the means of production paying the workers less than they produce.  Simple, but this model is not yet capitalism.  It could just as easily be a description of the extraction of surplus production from a peasant class by a landlord class.  Capitalism is not the only economic system that exploits labor.  The unique characteristic of capitalist exploitation is the extraction of relative, not absolute, surplus-value.  Wright recognizes this difference between Marx’s original simple model of production and how capitalism actually operates later in his article when he states that “Marx’s theory of surplus-value is fundamentally not about what determines the level of profit, but what determines changes in the level of profit….  So Marx’s theory is about the cause of change in the level of profit due to a change in the conditions of production.  And in this respect, Marx’s theory is irreducibly and fundamentally a dynamic theory of changes in profit over historical time.” (Emphases in original) In the search for new sources of profit, capitalists constantly revolutionize the means and conditions of production by the introduction of cost-saving machinery.  

Wright has this to say about the production of relative surplus-value: “Workers produce relative surplus-value when they develop new techniques of production that reduce the value of the real wage….  In this scenario, workers work the same hours at the same intensity….  This has the effect of reducing input costs for capitalists because the value of labor-power decreases.”  This is the heart of the matter.  The introduction of machines lowers the cost of production, which gives innovating capitalists a competitive edge and increases their profits; but Marx’s value theory claims that machines can’t be the source of profit, only human labor can produce profit.  How does Marx (and Wright) make sense of this paradox?  Marx’s claim is that:

We have seen that the means of production transfer value to the new product, so far only as during the labour process they lose value in the shape of their old use value.  The maximum loss of value that they can suffer in the process, is plainly limited by the amount of the original value with which they came into the process, or in other words, by the labour-time necessary for their production.  Therefore, the means of production can never add more value to the product than they themselves possess independently of the process in which they assist.  However useful a given kind of raw material, or a machine, or other means of production may be, though it may cost 150 pounds or, say, 500 days’ labour, yet it cannot, under any circumstances, add to the value of the product more than 150 pounds. (Capital, vol. I, p. 145, marxists.org)

It is otherwise with the subjective factor of the labour-process, with labour-power in action.  While the labourer…preserves and transfers to the product the value of the means of production, he at the same time, by the mere act of working, creates each instant an additional or new value….  The action of labour-power, therefore, not only reproduces its own value, but produces value over and above it.  This surplus-value is the difference between the value of the product and the value of the elements consumed in the formation of that product, in other words, of the means of production and the labour-power.  (p. 146)

Wright doesn’t actually spend much time defending the specific theory of value in these passages.  Rather, he chooses to combine Marx’s above argument with the additional statement that “Workers produce relative surplus-value when they develop new techniques of production that reduce the value of the real wage.”  This statement that relative surplus-value is produced when workers develop a new technology is different than Marx’s argument that workers only add value in the course of the production of commodities.  Marx took it for granted that it was the capitalist who introduced new technology, not workers. We will get to why Wright adds this twist to Marx’s original value theory shortly, but first we have to dispose of Marx’s specific technical economic argument.

The flaw in Marx’s theory is that he keeps two sets of accounting books, one for machines and one for labor.  When accounting for machines, Marx says that a machine can only transfer its cost of production to the value of the commodities it helps produce.  In his example, if a machine costs 500 days of socially necessary labor time to produce, it can only transfer that amount of value over its useful life.  If it helps to produce 500,000 commodities over that time, then 500,000 ÷ 500 days of socially necessary labor time equals 1.44 minutes of value for each commodity.  Nothing else is added.  But if we apply the same accounting procedure to labor, we will get the same result.  Say the socially necessary labor time required to sustain a worker over a lifetime is 500 days.  Then suppose that worker engages in the production of 500,000 commodities over that lifetime.  The value of sustaining the worker is simply transferred to the commodities, 1.44 minutes of labor time per commodity.  No additional value is added.  Of course, Marx tried to get around this problem by claiming that only living labor power, unlike the dead labor embodied in machines, can work for a period of time in excess of its cost of production; but this claim just isn’t true.  No capitalist would ever buy a new machine if it didn’t add more to production than the cost of the time and materials embodied in it.  The machine has to add to the productivity of existing labor over and above its cost for it to be worthwhile to the capitalist to invest in it.  When a capitalist in the machine producing sector makes a pitch to a capitalist in the consumer goods sector that they have a new machine that can lower production costs, the consumer goods producer calculates how much future profit can be expected.  Based on that calculation, the consumer goods capitalist makes an offer to the producer goods capitalist that includes enough of that future expected profit so that it is in the interest of the producer goods capitalist to produce the machine.  They split the future expected profit between them, and some of that future expected profit gets included in the price of the machine paid by the consumer goods producer.  So, in addition to the cost of the labor time (at the old price of socially necessary labor time) and the cost of raw materials, the price of the new machine also embodies a portion of the profit that the new machine is expected to produce (at a new, lower level of socially necessary labor time).  Apart from the notorious difficulties involved in trying to account for changing levels of socially necessary labor time across different time periods, the necessary inclusion of part of expected future profits in the cost of the machine makes Marx’s theory of value as embodied labor time untenable.  (This criticism of Marx’s theory of value comes from Gavin Kitching, Karl Marx and the Philosophy of Praxis, pp. 95-101)

Now, Wright discussed some of these problems with Marx’s value theory in a previous article, “The Genesis of the Transformation Problem,” and suggested there that Marx’s theory of value needed to be generalized in order to transcend the transformation problem.  I assume that Wright’s statement that “Workers produce relative surplus-value when they develop new techniques of production that reduce the value of the real wage” is that generalization, a generalization that he terms the “universal causal powers” thesis.  Unfortunately, Wright takes a roundabout route through a robot taxi thought experiment before getting to his causal powers thesis, a route that adds nothing to his argument and actually undermines Marx’s specific value theory, because Wright grants at a later point that it is quite possible that robot taxis could replace human drivers at a lower cost and generate surplus-value.  So much for Marx’s specific theory.  What about the universal causal powers thesis?

As Wright puts it, the causal powers thesis boils down to “Humans have universal causal powers.  Machines have particular causal powers” and “Labour-power is the ‘universal value-creating’ element because, in every production process, it can work harder or smarter to change the conditions of production causing changes in the level of profit.”  Two points.  One, this isn’t Marx’s value theory, and, two, whoever said that humans don’t create machines?  The question isn’t whether humans have creative powers that machines don’t, but who controls and directs that creativity and for what purposes.  Wright finally gets around to this question of power over and control of the invention and production processes in his section on “The ideological inversion.”  Wright’s main beef is that workers don’t get credit for their creativity because capitalist ideologues befog peoples’ minds and take all the credit and profit for themselves.  In this reiteration of the “dominant ideology thesis” (see The Dominant Ideology Thesis by Abercrombie, Hill, and Turner, 1980), the capitalists’ hold on power is maintained through thought control.  Wright says in his transformation article that this confusion over who is responsible for creativity and profit “had to be resolved because the proletariat needed to be armed with a correct and true theory of the objective dynamics of capitalist society.”  Certain Marxists have clung unnecessarily to this conviction for more than 150 years.  But do workers really need to know complex economic theories in order to be convinced that the capitalists hold state power, write and enforce the laws of property to their own benefit, and call on the police to enforce their rule in case it is challenged?  In the political class struggle, the capitalist class relies mainly on its legal and police powers and only secondarily on ideological obfuscation.  Wright reverses this relationship.

So, what are the consequences of Wright’s treatment of value theory.  In his introduction, Wright charges that left-leaning critics of capitalism who reject Marx’s value theory are dupes of capitalist ideology, “serve the claims of capital,” and are “inherently reactionary.”  My response is that this snotty intellectual arrogance and empty economic scientism, which has a long and sorry history in Marxism, is blind to and a substitute for developing the class political struggle.  I was drawn to Cosmonaut because of its articles on the need for a political program, the democratic republic, and its recognition of the importance of Lenin’s theory of political agitation and consciousness in Iskra and What Is to Be Done?  Wright’s and Lenin’s theory of what the working class most needs to know in order to struggle for its liberation conflict.  Our time, resources, and energy are limited.  The less time spent churning over Marx’s fatally flawed value theory the better. 

Gil Schaeffer 

Liked it? Take a second to support Cosmonaut on Patreon! At Cosmonaut Magazine we strive to create a culture of open debate and discussion. Please write to us at CosmonautMagazine@gmail.com if you have any criticism or commentary you would like to have published in our letters section.