In reply to:
OPE-L:[3432] Re: "Debunking Economics" and Marx's value theory

Steve Keen wrote:

He [Marx] then emphasises that it is vital to properly identify what 
is the exchange value of a commodity and what is its use-value, at 
least in the case of the commodity labour power:

"Labour capacity is not = to the living labour which it can do, = to 
the quantity of labour which it can get done - this is its 
*use-value*. It is equal to the quantity of labour by means of which 
*it must itself be produced*. The product is thus in fact exchanged 
not for living labour, but for objectified labour, labour objectified 
in labour capacity. Living labour itself is a use-value possessed by 
the exchange value [,labour capacity,] which the possessor of the 
product [,the capitalist,] has acquired in trade". (Grundrisse p. 
576) [emphasisand interpolation in original - PD]

Steve Keen argues, here and elsewhere, that, starting from 1857, Marx 
employed this dialectic of use-value and exchange-value extensively. 
I agree that he did but he should not have done.   Apart from smoking 
all those cigars, it was the worst mistake he ever made.   What I 
want to get at here, therefore, is why Marx did this.

In ch. 15 of "Debunking Economics" Steve Keen quotes the first 
paragraph of Capital I, ch. 6:

"The change of value that occurs in the case of money intended to be 
converted into capital... must ... take place in he commodity bought 
by the first act, M-C, but not in its value, for equivalents are 
exchanged, and the commodity is paid for at his full value.   *We 
are, therefore, forced to the conclusion that the change originates 
in the use-value, as such, of the commodity, i.e. its consumption.* 
In order to be able to extract value from the consumption of a 
commodity, our friend, *Moneybags, must be so lucky as to find,* 
within the sphere of circulation, in the market, *a commodity, whose 
use-value possesses the peculiar property of being a source of 
value.*" [emphasis added by SK]

Why are we *forced* to the above conclusion?   The answer is to be 
found within the Grundrisse passage above which Steve Keen quotes:

"The product is thus in fact exchanged not for living labour, but for 
objectified labour, labour objectified in labour capacity."

Since, here, both labour-power and the products making up the wage 
bundle are objectified labour, equal exchange between them is 
possible.   The source of value then has to be something else, the 
use-value of labour-power.

This is strange.   The use-value of a product commodity is the useful 
article.   By analogy, one might reasonably expect that the use-value 
of labour-power to be skill, the capacity to make useful articles, 
either alone or in co-operation.   To say that the use-value of 
labour-power is the source of value is an intrusion of the material 
into the domain of the value-form and is deeply suspect.

The root of the problem is that Marx treats labour-power as a 
product, with labour objectified in it.   Only then can there be 
equal exchange between labour-power and normal product-commodities. 
This is Marx's monolithic value-form.   Everything with a value must 
be objectified labour.

The way out is simple, though disorientating.   The commodity 
labour-power is not a product, i.e. not the result of the expenditure 
of labour-power.   There is no labour objectified in it. 
Consequently, there cannot  be equal exchange between the 
commodity-product and labour-power.   There cannot be unequal 
exchange either.   Equal exchange is possible between 
product-commodity and product-commodity, and, separately, between 
labour-power and labour-power.   There are two separate systems of 
exchange equalisation

The value-form must be seen, not as monolithic, but as complex, 
having parts with distinct functions.   The product we can allow to 
be objectified labour.   The role of labour-power is to add to 
objectified labour.   It is the power to create new objectified 
labour.

This turns the problem around.   It is no longer a question of what 
is the source of value.   That is labour, the expenditure of labour-power. 
It is now a question of what is the value of labour-power.

I consider this to be the central problem in Marxian value theory.

These ideas are more fully discussed in a paper I gave to the IWGVT 
2000 conference.   It is available at the IWGVT website:

http://www.gre.ac.uk/~fa03/iwgvt/2000/

A later version with some corrections is available at:

http://www.users.dircon.co.uk/~pscumnud/