Saturday, July 18, 2015

Marx on Slave-based Plantation Systems

From volume 3 of Capital in Marx’s discussion of ground rent:
“We need not dwell upon actual slave economy (which likewise passes through a development from the patriarchal system, working pre-eminently for home use, to the plantation system, working for the world market) nor upon that management of estates, under which the landlords carry on agriculture for their own account, own all the instruments of production, and exploit the labor of free or unfree servants, who are paid in kind or in money. In this case, the landlord and the owner of the instruments of production, and thus the direct exploiter of the laborers counted among these instruments of production, are one and the same person. Rent and profit likewise coincide then, there being no separation of the different forms of surplus-value. The entire surplus labor of the workers, which is here represented by the surplus product, is extracted from them directly by the owner of all the instruments of production, to which the land and, under the original form of slavery, the producers themselves, belong. Where capitalist conceptions predominate, as they did upon the American plantations, this entire surplus-value is regarded as profit. In places where the capitalist mode of production does not exist, nor the conceptions corresponding to it have been transferred from capitalist countries, it appears as rent. At any rate, this form does not present any difficulties. The income of the landlord, whatever may be the name given to it, the available surplus product appropriated by him, is here the normal and predominating form, under which the entire unpaid labor is directly appropriated, and the property in land forms the basis of this appropriation.” (Marx 1909: 934).
So here Marx says that slave-owners extract rent and profit which “coincide” since there is “no separation of the different forms of surplus-value” here.

The crucial passage is here:
“The entire surplus labor of the workers, which is here represented by the surplus product, is extracted from them directly by the owner of all the instruments of production, to which the land and, under the original form of slavery, the producers themselves, belong. Where capitalist conceptions predominate, as they did upon the American plantations, this entire surplus-value is regarded as profit. In places where the capitalist mode of production does not exist, nor the conceptions corresponding to it have been transferred from capitalist countries, it appears as rent.” (Marx 1909: 934).
If it is the case that Marx here thinks that slaves on a plantation in an economy where “capitalist conceptions predominate” produce surplus value of the same type as free wage labourers, then Marx’s labour theory of value as presented elsewhere in volume 1 is severely undermined in two respects as follows:
(1) in Chapter 6 of volume 1 Marx states explicitly that only free people – and not slaves – can sell the labour-power that creates surplus-value (Marx 1906: 186–187). Marx contradicts himself.

(2) Marx is adamant in other passages that slaves are fixed capital and thus constant capital (see here). But constant capital cannot create surplus value, and to be internally consistent Marx would have to admit that slaves on plantations within capitalist modes of production must count as variable capital. Marx has badly contradicted himself.
If Marx really thought that slaves can produce surplus value, it is but a short step to the whole labour theory of value unravelling as the nonsense it is.

Piero Sraffa hit the nail on the head over eighty years in his private note on Marxism:
“There appears to be no objective difference between the labour of a wage earner and that of a slave; of a slave and of a horse; of a horse and of a machine, of a machine and of an element of nature (?this does not eat). It is a purely mystical conception that attributes to human labour a special gift of determining value. Does the capitalist entrepreneur, who is the real ‘subject’ of valuation and exchange, make a great difference whether he employs men or animals? Does the slave-owner?” (Sraffa, unpublished note, D3/12/9: 89, quoted in Kurz and Salvadori 2010: 199).
If slaves produce surplus value, then why not animal labour? Why not machines? (more details here).

In short, the more one delves into Marx’s Capital the more and more we can see his theory is contradictory and incoherent.

BIBLIOGRAPHY
Kurz, Heinz D. and Neri Salvadori. 2010. “Sraffa and the Labour Theory of Value: A Few Observations,” in John Vint et al. (eds.), Economic Theory and Economic Thought: Essays in Honour of Ian Steedman. Routledge, London and New York. 189–215.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1909. Capital. A Critique of Political Economy (vol. 3; trans. Ernst Untermann from 1st German edn.). Charles H. Kerr & Co., Chicago.

22 comments:

  1. @ LK:

    "If slaves produce surplus value, then why not animal labour? Why not machines?"

    If so, then why only the capitalists are entitled to profits?

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  2. First of all, I do not think any such concept is empirically tenable.

    Secondly, even if it were, capitalists get profits because

    (1) they take risks in a world of uncertainty with their money which they would lose if the business were not profitable, and

    (2) they own the business and the capital goods.

    Workers, animals and machines do neither.

    Also, capitalist owners/managers certainty add crucial work to the production process, such as entrepreneurship, planning, risk-taking with capital (as in (1), so there is no doubt they would be entitled to some return anyway.

    ReplyDelete
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    1. "they own the business and the capital goods".

      That's not an explanation or a justification. That's like saying 'capitalists are entitled to profits because profits belong to them".

      "capitalist owners/managers certainty add crucial work to the production process"

      Profit isn't a payment for work though. It's a payment for ownership.

      "they take risks"

      'Do profits reflect a reward for risk?'
      http://www.infoshop.org/AnarchistFAQSectionC

      Delete
  3. And now I have answered your question: If slaves produce surplus value, then why not animal labour? Why not machines?

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  4. @LK:

    "(1) they take risks in a world of uncertainty with their money"

    Workers also run the risk, of even more than the capitalists. In the real world the relationship between risk and revenue is weak.

    "(2) they own the business and the capital goods."

    And who gave them such a privilege? And when? Why is the division into of those who have the capital (capitalist) and those without it (workers) ?

    "Also, capitalist owners/managers certainty add crucial work to the production process, such as entrepreneurship, planning, risk-taking with capital"

    But these actions in themselves don't make profits. For this they needs employees. So also they should have the right to profits.

    "so there is no doubt they would be entitled to some return anyway."

    Some ? But the capitalist take WHOLE profit.

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    1. "Workers also run the risk, of even more than the capitalists."

      Workers risk losing their future income if a business fails, but they don't risk lose wealth they have already acquired, unlike those who have invested their capital.

      "And who gave them such a privilege? And when?"

      No one gave them a privilege. They risked their savings by invested them in a business.

      "Why is the division into of those who have the capital (capitalist) and those without it (workers) ?"

      Increasingly this division is disappearing as more workers directly or indirectly own shares. It is a division of functions, not classes.

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    2. In general, the wealthier you are, the less risky investing becomes. Conversely, the poorer you are the more risk you face in the case of a business failure or loss of employment. The lowest-paid workers often also face the highest risks in terms of workplace safety.

      In reality capitalism just rewards you for owning capital, i.e. for being wealthy, and punishes you for being poor.

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    3. (1) "In general, the wealthier you are, the less risky investing becomes.

      I do not see that this is necessarily true -- unless you invest but a fraction of a vast fortune (when it would be).

      Nevertheless, very rich people can lose everything in business failures, and fundamental uncertainty for capitalists in relation to the investment decision is one of the foundations of Post Keynesian economics. This view is not, as the ignorant and absurd Hedlund tries to make it below, simply Austrian economics -- it is Post Keynesian economics too.

      (2) "Conversely, the poorer you are the more risk you face in the case of a business failure or loss of employment"

      They risk losing their jobs, but then capitalist-owners risking losing the money capital and may face bankruptcy. Surely you are reasonable enough to admit this?

      Also, real world capitalism in the developed world provides social security for the loss of employment fro workers (in some countries quite generous assistance).

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    4. This view is not, as the ignorant and absurd Hedlund tries to make it below, simply Austrian economics -- it is Post Keynesian economics too.

      And you think this a credit to Post Keynesian economics?

      There can be no denying the uncertainty of the business world and, consequently, investment decisions, but to say that risks are the *reason capitalists are entitled to profits* is sheer right-wing propaganda. Hence my surprised tone. It's the slightly more dignified cousin of the "job creators" rhetoric we hear from Republican candidates, in the states, and begs all the same questions, which Philippe and that other anonymous commenter have pointed out.

      As someone who's experienced long-term unemployment firsthand, I (and any number of people I know who've endured layoffs) can confirm their point that risks hardly fall solely (or even *first*) on the ones making the decisions. Similarly, if the risk itself is what entitles one to the returns, then are people who pursue less risky (or even nominally "riskless" investments, such as treasury securities) strategies not entitled to their returns? Obviously, they may receive less for the same advancement, but nobody says "nope, nope, you didn't justify that with risk" and takes it away.

      Now, obviously different risks correlate to different returns, but it's not in and of itself a qualitative, justificatory principle for non-labor incomes; ownership alone suffices to that end.

      So, again, I'd really appreciate if you could rein in the insults. You can make the same exact points without them.

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    5. "There can be no denying the uncertainty of the business world and, consequently, investment decisions, but to say that risks are the *reason capitalists are entitled to profits* is sheer right-wing propaganda."

      I did not say that it is the *only* reason why capitalists are entitled to profits after their tax obligations. I said they are entitled to profits: because

      (1) they take risks in a world of uncertainty with their money which they would lose if the business were not profitable, and

      (2) they own the business and the capital goods.

      This is right. Qualified but reasonably strong private property rights are justified, though circumscribed under consequentialist ethical principles. The property rights to ownership of capital and risk-taking in a world of uncertainty provide good reasons for why capitalist-owners-managers should be rewarded with profits after taxes for their work. (Like Keynes, I take a different view of pure rentiers and especially those like asset speculators whose behaviour is inimical to economic stability and prosperity, who should be heavily taxed and regulated).

      Firstly, in perhaps all but the US workers are protected from starvation or unemployment by social security systems, and as I have said in some countries in a generous way. In a Keynesian/MMT state, there would be full employment and a job guarantee, and this wouldn't be an issue at all.

      In contrast, the risks of workers in social democratic state are not as great as capitalist-owners. (With regard to the US, the issue is about the social security system, not about whether capitalist-managers should have profits).

      Secondly, under the social democratic system capitalists-owners DO actually share their profits with the community at large via taxation, and redistributive government spending, so the whole implied charge directed at me that I think capitalist-mangers should have an absolute right to all profits is an idiotic piece of dishonesty.

      And, finally, you live in a Marxist-communist fantasy world where you would want to abolish private property and introduce an authoritarian command economy state. All attempts to do this have ended in disastrous, repressive, murderous authoritarian states. Their economic history is mixed at best, and certainly not remotely good enough to justify the level of violence and coercion required to create them.

      Delete
    6. "I said they are entitled to profits: because...

      (2) they own the business and the capital goods."

      That doesn't explain why they are entitled to profits. It's circular. Capitalists are entitled to profits because they own capital. Wealthy owners are entitled to capital income because they are wealthy owners.

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    7. I said they are entitled to profits: because

      (1) they take risks in a world of uncertainty with their money which they would lose if the business were not profitable, and

      (2) they own the business and the capital goods.


      And I am saying that (1) is a non-sequitur. (1) does not imbue anyone with a qualitative right to anything. You may as well say "a man owns a house because (1) he was inside it during a hurricane and (2) the deed is in his name." Only one of those holds up in court.

      The property rights to ownership of capital and risk-taking in a world of uncertainty provide good reasons for why capitalist-owners-managers should be rewarded with profits after taxes for their work.

      Their "work," to borrow your generous term, involves shuffling around claims on the work of others, though. The casino principle is really attractive, don't get me wrong, but let's not lose sight of what the chips represent, and what this means for any sort of substantive democracy.

      Secondly, under the social democratic system capitalists-owners DO actually share their profits with the community at large via taxation, and redistributive government spending, so the whole implied charge directed at me that I think capitalist-mangers should have an absolute right to all profits is an idiotic piece of dishonesty.

      I wonder who's directed such a charge? Certainly not I. I'm merely saying that claiming risk as the foundation of property is nothing more than right-wing, owner-class-lionizing propaganda.

      Of course, as we've seen in the last 40 years, just as social democracies can win gains against the owner class, so too can the latter erode them over time. The working class needs to organize like crazy to make positive changes, while capitalists merely need to persist to undo them. The moment we slow down -- such as in this neoliberal era -- we regress. Better to just have done with the whole social pathology of capitalism, and move to a worker-run economy, eh?

      And, finally, you live in a Marxist-communist fantasy world where you would want to abolish private property and introduce an authoritarian command economy state.

      No, just a regular planned economy would be fine; you can keep the authoritarianism.

      All attempts to do this have ended in disastrous, repressive, murderous authoritarian states. Their economic history is mixed at best, and certainly not remotely good enough to justify the level of violence and coercion required to create them.

      I strongly disagree on a whole bunch of aspects of this claim, but that's a separate matter for a separate discussion; I don't have nearly enough space here to tackle it all in depth. And frankly, making the case to you looks like it'll be an uphill battle, since everything you've said about it so far seems to suggest that you've internalized a great deal of cold war propaganda. Maybe I'm wrong; I hope I am. But the last few months haven't given me much confidence to that end.

      For the time being, I'll sum by saying any claim of rank authoritarianism you can level at the socialist world, you can find the same and worse in the capitalist one. (Note: Not a tu quoque, but rather an argument for symmetry of evaluation & against double standards.)

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    8. "Their "work," to borrow your generous term, involves shuffling around claims on the work of others, though. "

      Describes you perfectly:

      http://socialdemocracy21stcentury.blogspot.com/2014/04/did-kalecki-accept-labour-theory-of.html?showComment=1397922979094#c4339174372015282065

      You think capitalist-owner-managers/entrepreneurs "add nothing to the production process." Apparently risk-taking, entrepreneurship, planning, investment, etc. all go down the memory hole.

      Delete
    9. That is not at all what I think. I think *capitalists-qua-capitalists* add nothing. Management is something else entirely, and your fixation on specifically capitalist management begs the question.

      For example, are you suggesting that worker-owned cooperatives don't plan? That they don't make decisions or take risks? What is it about a capitalist that makes his or her workplace autocracy preferable to a workplace democracy?

      If you actually look at management practices, you'll find that "whose name is on the door" is ultimately not a key factor in running a firm. So, wanna tell me again what I think?

      Delete
  5. "Some ? But the capitalist take WHOLE profit."

    This is a tautology. The profit is the return on capital, so it belongs to those who own the capital.

    Have you ever looked at the accounts of a blue chip company? For the majority of them, total wage costs far exceed the profit after tax.

    ReplyDelete
  6. I have a dream that one day, if it is explained patiently and often enough, that this blog will stop featuring the same category errors over and over.

    If it is the case that Marx here thinks that slaves on a plantation in an economy where “capitalist conceptions predominate” produce surplus value of the same type as free wage labourers, then Marx’s labour theory of value as presented elsewhere in volume 1 is severely undermined in two respects as follows:

    No, you're misquoting. He does not say slaves "produce surplus value." "Produce" is the word you tidily inserted after the closing quotation mark — i.e., more eisegesis.

    This is the danger of jumping two whole volumes ahead to find a single passage that you can try to shoehorn into contradiction without grasping the context. In this case, that context is one of the most fundamental concepts in this entire analysis, to which we now return: "value."

    Value, in the sense employed in Capital, is historically particular to a system dominated by capitalist relations, because it is a product of nothing else but capitalist relations. A different system of relations would result in different laws governing production and distribution. In other words, you're trying to unmoor historical materialist analysis from history. Stop that; that way lies idealist straw men.

    The quote you selected describes how the surplus product of slaves "is regarded" under different systems. If we make the unrealistic assumption that the slaves produced without being coerced, like perfect self-possessed automata, then you'd still have surplus product, albeit not surplus value except insofar as it is value transferred from other firms where the same commodities are produced by capitalist (and not slave) production. In this way, it would resemble any other profit.

    The economy of 100% slaves and slave owners shares the same complication as the economy of 100% machine and machine owners; it's not capitalism, and therefore it wouldn't function on the basis of capitalist social laws (in this case, the law of value), except to the extent that the legal system steps in to insist upon them -- and at that point you may as well just adopt socialism.

    You don't have to take my word for it (n.b.: "not that you ever do!" lol); for now, just keep reading and hopefully see for yourself. Also, work on understanding the categories, the context, etc.

    First of all, I do not think any such concept is empirically tenable.

    Not for nothing, but this would carry a lot more weight if you don't assiduously avoid any effort on your commenters' parts to introduce empirics into the discussion.

    (1) they take risks in a world of uncertainty with their money which they would lose if the business were not profitable

    Nice Austrian School rhetoric, Eugen, but no, that is not the reason; it's (2). Wowie.

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    1. "Value, in the sense employed in Capital, is historically particular to a system dominated by capitalist relations, because it is a product of nothing else but capitalist relations."

      Can you explain exactly what you mean by this?

      Delete
    2. "The quote you selected describes how the surplus product of slaves "is regarded" under different systems. "

      It is you who selectively quote the passage above. You simply ignore: "Rent and profit likewise coincide then, there being no separation of the different forms of surplus-value".

      Now I don't pretend to know actually what Marx was talking about (since he was often an incoherent theorist and poor writer), but clearly at least one Marxist does interpret him that way. That is why I said:

      "If it is the case that Marx here thinks that slaves on a plantation in an economy where “capitalist conceptions predominate produce surplus value"

      You're obviously so unreasonable that you cannot honestly evaluate a hypothetical on its own terms, and accept that this post is directed at those Marxists like the anonymous above who interpret Marx in the way you reject.

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    3. @ Philippe: Sure, no prob.

      Basically, there's a disconnect in the way that different economists employ the word "value," stemming from their different methodological starting points. Nowadays, you'll mostly see the word refer to subjective utility judgments and preference-rankings of individual actors, reflecting a starting point along the lines of "individual actors with particular endowments making purchasing decisions among N goods."

      The "classical" foundations of Marx take a different view, focusing not so much on individual actors as the social relations that they take up and reproduce, which exist independently of them. That is, we're focusing on the social "slots" that individual actors fill, which fit together and relate in particular ways roughly independently of which actor with which preference scale happens to fill them — cogs and wheels that turn just so, regardless of whether John Q. or John Z turns the crank or owns the factory.

      And once we start looking at the way they fit together, certain quantifiable aspects emerge. It is these emergent phenomena that we mostly wind up discussing — such as a concept of value that exists independently of individual preferences, the pursuit of which is the lifeblood of the emergent social organisms we call "firms" or "corporations" or the like.

      @LK:

      It is you who selectively quote the passage above. You simply ignore: "Rent and profit likewise coincide then, there being no separation of the different forms of surplus-value".

      No, you definitely misquoted, and I illustrated how. If you believe I also misquoted, then you'll need to connect that sentence you just dragged down here to what I've actually written. Since you didn't bother to do so, I'll take the first crack at it and point out that whereas that sentence does not refer to capitalist production (see the preceding sentences), it doesn't actually support the claim you're making.

      but clearly at least one Marxist does interpret him that way.

      Who? Could you give a name? Or link the claim you're referencing? I might have missed it, but I'm interested to see.

      You're obviously so unreasonable that you cannot honestly evaluate a hypothetical on its own terms

      Oh come on, can't we go one exchange without such unpleasantries? It's perfectly valid to read your "if" up there as a swing at the consistency of Marx, rather than a particular interpretation thereof. In fact, such a reading is consistent with your writings on Marx to date.

      Consequently, while I do apologize if I've misrepresented your argument, I don't think such a misunderstanding is "unreasonable," and I'll thank you not to lash out at me.

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    4. "It's perfectly valid to read your "if" up there as a swing at the consistency of Marx, rather than a particular interpretation thereof."

      Of course it is an attack on the consistency of Marx IF Marx really believed what anonymous thinks Marx believed. IF Marx really believed what anonymous thinks Marx believed, then Marx's theory is incoherent.

      Of course, you have not the basic reasonableness to admit this.

      Delete
    5. Read it and compare it to your "critique": http://www.sojournertruth.net/marxslavery.pdf (especially pg. 5-7)

      Delete
  7. You can't compare what Marx said about slaves and what he said in the first chapters of Capital, because these are completely different levels of his analysis of capitalism. If you don't understand why Marx believed there is a distinction between our world and animals', and why our labor is different, then read some Kant and Hegel. Marx was a German philosopher and he was commited to some basic assumptions they were commited to.

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