[PEN-L:27179] RE: LTV and income disparity

["Devine, James" <jdevine@xxxxxxx>]

Title: RE: [PEN-L:27175] LTV and income disparity

(is the font on this missive readable? This is supposedly in "plain text.")

Nancy Brumback writes: >... a few months ago, i was discussing the gap between the rich and the poor in terms of the labor theory of value. to me, it seems self-evident that the richer the rich get, the poorer the poor will get. Since value is based on labor-power, there can be only a finite amount of it in the world, whether it is stored up as capital or circulating as money.<

In what Marx called "the law of value" (the LoV, what others call "the labor theory of value"), the total amount of commodity production by society depends on the total amount of labor done at any one point in time. (The labor done is an application of the labor-power employed, mostly by capitalists.) Though there _are_ gifts of nature, these have to be transformed by labor in order to satisfy human wants and needs. (Note that the LoV refers to an analysis of (world) society _as a whole_. Unlike neoclassical economics and much of so-called "analytical Marxism," it is not first and foremost a reductionist theory about individual decisions, tastes, etc.)

In this view, a theory of relative poverty applies given Nancy's accurate premise: if the rich get richer -- i.e., benefit from more of society's total labor -- then the poor get poorer -- i.e., benefit from less of society's total labor. But a theory of absolute poverty may not apply: the poor may get the benefit of less of society's labor, but that labor may be producing more use-values, so that the mass of use-values that the poor receive may rise, even _per capita_. I think that the relative theory of poverty is the appropriate one, since as society "progresses," individual and social needs increase, so that in order for the poor to reproduce themselves over time as members of society, the mass of use-values _must_ rise.

>There were many and great objections to my statement -- too involved to summarize here, but mainly centered around the idea that value is created by the market dynamic of supply and demand -- the more demand, the more value; the less demand, the less value. Suffice it to say that I didn't know enough about the labor theory of value to be able to meet all their arguments. In the meantime, I have brushed up on the idea of the fetishism of commodities, and do understand a little bit more. <

Contrary to popular opinion, demand is crucial in Marx's LoV: if a commodity isn't demanded (because it isn't a use-value or because people don't have the purchasing power), it isn't a commodity and the labor that went into producing it was wasted (as judged by society, not by me). It is quite possible that labor is done that doesn't create value after the fact, as in a crisis of overproduction. The amount of labor done puts only an upper limit on the amount of value that can be realized. However, most of the time, capitalists and simple commodity producers won't produce unless there's demand, so that labor done corresponds (roughly) to value.

Jim Devine