Using Labor Values: Labor Productivity and Technical Change

Abstract

In this chapter we provide theoretical and empirical examples for the usefulness of the Marxian Dual System Approach (MDSA) to the LTV, here from a very pragmatic perspective, namely concerning their role to serve (in reciprocal form) as measures of labor productivity which allow to discuss the sectoral implications of technological change as we observe it happening now in more and more rapid terms. Already Marx supplied such an interpretation of his measure of labor values, see for example Marx’s (1954, p. 48), where he discusses the reciprocal relationship between labor values (total labor costs) and the measurement of labor productivity in the production of commodities by means of commodities and labor. Moreover, there are theoretical links between cost-reducing (profitable) technical changes and decreases in the labor content of commodities that assume various forms, depending on the type of technical change that is occurring. We show in the next section of the chapter that conventional measures of labor productivity, see United Nations (1993), can be very misleading in grasping what is going on in the production side of the economy.1 Compared to these measures the Marxian view to use labor values for this purpose in reciprocal form is shown to be well-defined and superior. This indicates again that the strength of the labor theory of value lies in its use as a system of national accounts and not as a means to understand price formation in a capitalist economy (though total labor costs are clearly an important – if not the central – component in prices as measured by Keynes (1936) wage-units. In addition we will consider in Sect. 3.3 theorems that reveal the consequences of cost-reducing technical change for labor values as well as their interpretation as indexes of labor productivity. These propositions provide theoretical explanations for the law of decreasing labor content, in addition to what has been shown by Farjoun and Machover (1983) from a probabilistic point of view. In this section we also provide some empirical applications of these propositions and show that this law has much wider applicability then is suggested on the purely theoretical level.