This is the third in a sporadic series on economic theory, prompted by questions and answers on earlier posts.
How is the Labour Theory of Value affected by the Economics of Robots ?
A discussion has been burbling away on my post about How is wealth destroyed and where does wealth come from written last October, in a month when the world financial systems were exposed as being hopelessly overstreched and fell into an unprecedented destructive cycle of collapse, bailouts, bankruptcy and state takeover.
In September I had asked “Where does money come from?” answering from the basics in terms of primitive barter systems and early trade. The October post explained the Labour Theory of Value, which states that the market value of a commodity is ultimately determined by the total amount of socially necessary labour time that went into it’s production and delivery.
The comments have been really great. Conrad Taylor provided insights about early coinage and banking systems in 9th century Arabia. We discussed the price of fish. And then in the big wide world this happened:
The argument between two strands of capitalist ideology has just shifted enormously in the past weeks from monetarist to Keynsian economic theory – AR
Peter Childs proposed that all the problems stem from an error in the way stock market valuations are calculated.
Then David N asked cunningly:
Suppose I have a shop that is completely robotic…my shop has created wealth without the use of labor, hasn’t it?
This is a good attempt at rebutting the labour theory, but in reality it doesn’t really matter if there is only one person left minding the shop and supervising the robots, or even nobody at all. The final product still embodies labour power from other parts of the overall process including the production and transport of raw materials and energy. Yes, there may even be some human accounting, management and marketing tasks which prove to be socially necessary to make the product worth bringing to market, or maybe not.

A robot at a TV Factory in Mexico CC pic by Avram Cheaney
Aurino explains that the newly equipped robot powered shop has only a temporary opportunity to make super profits.
as soon as your competitors discover the same thing, the market price of your widgets will be determined by the price of your raw materials plus the amount of labour required to design, manufacture, operate and maintain the robots.
Mark Rowe’s suggestion takes this line of reasoning further:
If labour is the key – with the robot scenario wouldn’t you need to consider all the labour that contributed to the design, manufacture, operation and powering of the machines
Yes indeed. We can also differentiate between the one-off efforts involved in design and manufacture of the robots, and the ongoing requirement for some labour to operate, power and maintain these machine tools. As far as the value of the items produced by this newly automated labour-efficient factory is concerned, the initial investment will sooner or later be disregarded, and both the perceived and actual value of the items once brought to market will drop to match the lower amount of human labour power involved in the production process.
Machine Labour Hours?
Now then, McDudeqq’s answer is so far away from any previously existing theory that it’s quite hard to take onboard, but worth making the extra effort to consider. All he says is
It is machine (labour) hours
As if machine running hours can be considered in the same way as, or perhaps on a par with human labour hours. Well the robots are consuming a certain amount of energy for each hour of production, and will require a scheduled maintenance after certain fixed periods which could be divided into the hourly rate, so why not.
Is there a fundamental difference between machine hours and human hours?
Well humans have certain needs which if not fulfilled will not make them very useful workers. Sleep for example! In order for your worker to be able to work at making profits for your on a regular basis, she also needs to be able to take a minimal amount of time off for rest and everything else necessary to keep body and soul together, as they say. Of course we all need to eat, just as the robots consume energy, so the provision of food, shelter, warmth and even the production of future generations of workers needs to be factored into the total labour costs of buying each human labour hour.
Driving down the cost of labour is what profitability is all about, which is why corporations will sometimes invest millions in order to lay off just a handful of workers. As long as it reduces the total wages bill, the profitability will be seen to have inreased, thus pushing up the stocks value which can then be used to borrow and invest in yet more labour reduction, as long as things are going well.
So let’s continue our discussion about wealth, labour and recession . How do you think new technologies such as robots fit in to existing economic theory such as the labour theory of value? Is this something that should benefit from national and international stimulus packages?
Karl Marx, part 1: Religion, the wrong answer to the right question
With the current phase of capitalist crisis posing extremely stark questions about the fundamental nature of the system, you would think all the mainstream media would be falling over each other to wheel out academics and reformed revolutionaries to explain in simple terms “Why Marx was right after all” or “We’re all dialectical materialists now” but apparently not. Earlier this year, 2011, The Guardian published a series of articles about Karl Marx. This is part 1, on the subject of religion.
Marx famously said that all criticism begins with the criticism of religion. This is often taken to be the starting point of a position that ends with the slogan that “religion is the opium of the people”. However, as with most thinkers, this reduction to slogans does not do the ideas behind them justice. The critique of religion as a social phenomenon did not connote a dismissal of the issues behind it. Marx precedes the famous line in his Critique of Hegel’s Philosophy of Right with the contention that religion was the “sigh of the oppressed creature in a hostile world, the heart of a heartless world and the soul of soulless conditions” and that an understanding of religion has to go hand in hand with an understanding of the social conditions that gave rise to it.
The description of religion as the heart of a heartless world thus becomes a critique not of religion per se but of the world as it exists. What this shows is that his consideration of religion, politics, economics and society as a whole was not merely a philosophical exercise, but an active attempt to change the world, to help it find a new heart. “The philosophers have only interpreted the world in various ways; the point is to change it,” he wrote in his famous 11th thesis on Feuerbach, the phrase carved on his gravestone in Highgate cemetery.
Even though understanding and action were tightly linked in Marx, we can trace his understanding back separately, through two German earlier philosophers, Hegel and Feuerbach.
In Hegel he finds the concept of the idealistic dialectic as a means of understanding historical change but he uses Feuerbach’s materialism as a tool for understanding it correctly. That’s why he called his system dialectical materialism.
Hegel’s dialectic is not at all materialistic. It is based on the existence and importance of ideas, which are conceived of as almost independent of the people who have them. We are merely their puppets. It was essentially an attempt to explain change in history during the period of revolutionary upheaval around the French revolution. Why do revolutions happen, he asks, and what happens to them? Why do things not stay the same and why is some world spirit (Weltgeist) constantly changing its mind about the way it wants the world to be and introducing a new “spirit of the age” (Zeitgeist)? Taking his cue from Kant, adding in some Spinoza and a dash of neo-Platonism, Hegel maintained that change happened in the world because it was immanent in a growing development towards something as yet incomplete but which had at its core the unfolding of the idea of human freedom. History thus became simply a vessel for this unfolding, a totality which was constantly changing and completing itself through a series of constructive negations.
The dialectic is a theory of motion which posits that within every given situation there exists its own negation. The tension and interplay between the situation and its negation, produce constantly new and emergent forms of social existence. Of course there are difficulties in deciding what exactly is the negation of any particular situation. I will deal with those later.
Marx took this Hegelian and idealistic dialectical approach and added in a materialist grounding from Feuerbach who was in many ways a sort of political Ditchkins of his day. For him religion “poisons, nay destroys, the most divine feeling in man, the sense of truth”. His insight was that all forms of religious expression were merely the abstracted vague longings of the human species translated into deities and their hangers-on, or in other words a god delusion.
Marx’s real synthesis of the debate between Hegel and Feuerbach is to agree with both of them but to turn them both upside down (or back on their feet as he would have it) and locate their ideas in concrete historical situations. Hegel’s idealism and Feuerbach’s materialism had one thing in common and that was their abstraction from real concrete conditions. Hegel’s dialectic was indeed a way of understanding change in the world but it failed to recognise that change emanated from prevailing material conditions rather than from the workings of the Weltgeist. On the other hand Feuerbach’s materialism dealt only in abstract form with the way people perceived religion and did not locate the form that abstraction took in the way that people, above all classes, interacted with each other historically.
By 1848 Marx was thus able to open the Communist Manifesto with the contention that “the history of all hitherto existing society is the history of class struggles”. This, for Marx, was the real motor of history; real struggles between real classes which produced real historical outcomes which in turn went on to become new struggles as the process of the negation of the negation – “the old mole” as Marx called it – carried on burrowing away, all the time throwing up new ways of thinking which themselves went on to negate and change the world.
What I shall do in coming weeks is to look at how all of this actually works, how Marxists took up the baton and what the consequences of it all were. I shall also ask whether Marxism still has any explanatory power today, in a new age of revolutionary upheaval, or whether we have, in Hegel’s and Fukuyama’s terms, reached The End of History.
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