Wrestling with Sraffa I
This is an old article I wrote in middle 2024. It can not stay in my drafts.
Prelude: The Negativity of Reason
I have recently seen the Italian economist Pierro Sraffa being described as something along the lines of a “Marx without the revolutionary fervor”. In other words, a sober, cold, “objective” Marx. A Marx without his political enthusiasm, his crazy philosophy and his exegerrated predictions.
-Instead of Marx’s supposed “labor theory of value”, Sraffa analyzes all the “inputs” of production and not only labor-time products.
-Instead of Marx’s theory of exploitation, Sraffa analyzes all the exploited “commodities” and not only labor-power.
-Instead of meticulously tracking down labor values, Sraffa only utilizes prices of production and profits - or in physical terms; the product before and after.
It seems Sraffa is here much more “universal” and thus more “scientific” than Marx. But is this really the case? What if a certain “particularity” is inscribed in reality itself? That reality is itself not “generalisable” but that it is a specific form of production, wealth and mediation?
Ignoring Sraffa’s involvement with the Italian Communist Party and Gramsci, Sraffa is seen as a “pacifier” of Marx - while also utilizing many similar concepts. But one notices something interesting in Sraffa (and the majority of the ones who responded and dealt with him): the disappearance of the “property question” as a defining factor in the form of wealth of capitalist economy and the subsequent disappearance of “time” from the economy. Indeed, in the input-output system, there is no talk of the division between labor-product and labor-power as a determinant of the mode of profit and the organization of the economy. Hence, there can be no analysis of time’s relevance in the determination of value. What is analyzed is simply the “physical surplus”. But physical surplus is not necessarily wealth for the capitalist.
This article will then deal with two works: one from Sraffa himself and the other from interpreters of Sraffa: The Production of Commodities by Means of Commodities by Sraffa and Sraffa versus Marx by Hahnel.
Sraffa is Ricardo re-discovered through physiocracy.
Here are three challenges to Sraffa:
-Why is corn valued differently dependant on the technical composition of Capital or in other words: why do less developped countries have certain commodities at higher prices than higher developped countries?
-Why doesn’t the rate of profit absolutely equalize and why is it lower in higher Capital intensive industries?
-Why haven’t we reached a 10 hour workweek?
I propose that only Marxism can answer these three questions.
Private Property & Production Prices
-No talk of private property’s determination of the economy
-Everyone accepts temporality as a determinant - although only Marxists affirm labor’s privilege in temporality.
-The example of corn has no temporal aspect - hence no exchange is possible.
-The only other determinant with a temporal aspect would be machinery, i.e dead labor, (this is why Marx says the rate of profit falls…).
-Extra-goods =/= surplus-value
"Sraffian economics identifies and analyzes what happens to the physical surplus of goods created in production without resort to labor values. In other words, Sraffian theory simply explains where the extra goods came from. The fact that we can identify and quantitatively measure a physical surplus from production in a multi-good economy without recourse to values demonstrates that values are redundant for identifying the surplus which does, indeed, emerge from the production process."
-Okishio: Accepting the TPRF while criticizing the TPRF?:
"In other words, Adam Smith’s second invisible hand works perfectly when the rate of profit is zero but cannot be relied on when the rate of profit is greater than zero. Moreover, as the rate of profit rises (and consequently the wage rate falls), the likelihood that socially efficient capitalusing, labor-saving technologies will be rejected, and the likelihood that socially counterproductive capital-saving, labor-using technologies will be adopted by profit maximizing capitalists increases."
The “nominal” versus the “real” rate of profit. The “nominal” rate of profit rises, the “real” rate of profit falls.
Okishio’s first principle presupposes what he is supposed to prove.
An equal “distribution of profit” is the condition upon which the rate of profit would always increase. If profit (rate) is divided among all equally at the level of the rate, then every sector can get a positive increase every year without decrease. But this assumes this is already a collective economy - that profit is already collectively owned. This assumes there is no private exchange (or expropriation) between the capital sectors. This assumes full communism!
The reason the “rate of profit” does not fall in communism is that what “profit” would designate is precisely the collective need for the specific labor product and not production based on labor-time. Hence, the more machinery advances, the more products can be produced, the more labor hours are reduced and the more consumption advances. In “physical terms”, which is what the Sraffian system analyzes, the rate of growth would be increasing absolutely.
But profit in capitalism does not designate the share in production, as Okishio and Sraffa sometimes presuppose, but the private accumulation of labor time. The capitalist always needs a different rate of profit from the other industries (and buyers in general) to win over them.
Hence, there is a relation between the differentiation and equalization of the rate of profit. Assume an absolute privilege of one over the other and we lose the capitalist dynamic. The higher Capital-intensive industries (higher revenue) differentiate the rate of profit while the lower Capital-intensive industries equalize the rate of profit. Since the tendency is for the growth of constant capital, the Capital-intensive industries win over the lower ones.
Since one capital kills many, then the bigger capital who has a lower rate of profit (but more revenue) buys out the smaller ones. Why would it divide its revenue with it? Thus, the tendency is to produce more and more of these Capital-intensive industries… until crisis. If this relation did not exist, then the capitalist would have no need to increase his composition of Capital and would be content with equalizing his rate of profit along all the other sectors. His rate of profit would not change, even for a limited period of growth.
Hypothetical example under Okishio’s assumptions:
Sector 1
Constant: 50%
Variable: 30%
Rate of Profit: 20%
Sector 2
Constant: 30%
Variable: 50%
Rate of Profit: 20%
If rate of profit is equalized, then rate of growth =~ rate of profit. After 1 cycle:
Sector 1
Constant: 60%
Variable: 20%
Rate of Profit: 20%
Sector 2
Constant: 30%
Variable: 50%
Rate of Profit: 20%
But in reality, under the proper Marxist parameters, the total variable Capital is correlate to the total surplus produced and hence the rate of profit. Hence, what would happen is:
Sector 1
Constant: 50%
Variable: 30%
Rate of Profit: 20%
Sector 2
Constant: 30%
Variable: 50%
Rate of Profit: 20%
Here 30% + 50% = 80/200 V gets us a correlation to the 40/200 rate of profit. The relation of exploitation is then 50%. After 1 cycle:
Sector 1
Constant: 60%
Variable: 30%
Rate of Profit: 10%
Sector 2
Constant: 30%
Variable: 50%
Rate of Profit: 20%
Making the same calculation with the same relation of exploitation, the 30% + 50% must hold to retain the same rate of surplus value. This is more in line with what occurs empirically and in reality: higher Capital-intensive industries have lower rates of profit. We see here that an assumption of an equal rate of profit absolutely, or at all times, is what leads to the error.
What is “surprising” here from the Sraffian perspective is why Sector 1 would keep the “same” variable Capital even though it now has better machinery? Shouldn’t it reduce costs with better machinery to have more profits? Well, no, since it is trying to extract as much as possible from the workers with the new machinery - and hence invests in *more* (or the same) amount of workers because of the new availability of machinery. In short, it extends total hours of labor absolutely.
-Assuming constant “real wages” - which doesn’t deal with “value” proper but only physical goods - then you get Okishio’s result. But the wage stays “constant” in terms of value - not in terms of physical goods and services.
Can you exploit machinery or natural ressources?
-Example with machine input. Takes 1 corn → transforms it into 2 corns. It takes 1 hour. Does this create a surplus? No, the surplus can only be the difference in the *activity* of men - in temporal terms.
Where is profit made? It is made in production and realized in exchange. For the owners of this machine, they must realize this profit in exchange. But the only way they could make a profit is if there is a difference between other people’s activity and the people’s activity contained within the commodity they are selling.
But since there is no human activity in this production process - there is no wealth. Wealth is a specific human relation.
Everyone in the given society will try to procure the specific new machinery. Hence, the machinery is always mediated by human activity. Competition will make the capitalists compete at acquiring this machinery and reproducing it *in the shortest time possible*. This is the aspect which generates wealth - the difference in different magnitudes of human activity.
If everyone in society simply had a machine which duplicated corn - corn would have no value. There would be no reason for its exchange as a way to make profit. It would be a simple exchange of equal temporal magnitudes.
Hence, machinery can not produce surplus-value and can not be “exploited”. Capitalist wealth is necessarily a difference betwen the different types of human activity - measured in temporal terms. If no human activity is involved, the product becomes a presupposition (such as natural ressources) and not a component of wealth production.
Further, machine “time” has no value since it can be (and will be by capitalists) doubled over by labor-time. Labor-time acquires higher productivity when combined with “machine-time” - which is why “machine-time” can not be the determinant of wealth in capitalist society - since wealth takes the form in the difference between human activities. Hence, labor-time invades every single productive act in capitalist society.
The Curse of Wealth (or the Tragedy of the Commons)
Ex: Each guy works 1 hour to provide for himself. Let us say each guy works to make (wage) 2 labor hours of grain. They convert 1 hour of grain to 1 hour of corn each.
Machine: 4 hours → 4 corns → 4 guys
Capitalist: needs to make profit → 4 hour
Goes to market, uses the 4 hours
The 4 guys do not own their 4 hours anymore - they can not buy the corn again.
Corn is reduced to Zero!
The only way capitalist exploitation works: work for me, eat from me.
Work: 4 hour - 4 corns → 4 guys (each guy needs 0.5 corns)
Capitalist: 2 corn surplus
Uses 2 corns in market, 4 guys have 0.5 each.
Assume the workers work in the “machine” factory:
Corn Machine: 4 hours → 4 corns → 4 guys
Capitalist: needs to make profit → 2 hour
Uses 2 corns in market, 4 guys have 0.5 each.
Market has another machine for grain - mutual exchange for machine factories:
Grain Machine: 4 hours → 4 corns → 4 guys
Capitalist: needs to make profit → 2 hour
Uses 2 corns in market, 4 guys have 0.5 each.
Notice, this is a return to feudalism. “Machine” can be replaced with “Land”. It is a rent extraction over something which is already common. But it is also a curious “reversal” of feudalism where the “workers” or “non-owners” rather are totally unproductive to the industry - they in fact become a *cost*. Whereas in feudalism the owner was the *cost*, in this “techno”-feudalism; the “worker” is the cost.
So, what is the surplus value here? Simply put, there is none. Having more of a single product, in a physical sense, is not wealth. Since wealth also relates to universal human activity and hence *consumption*. Having 2 corns a day yet having no use for them is not wealth. But this is what is produced by this hypothetical machine in this hypothetical techno-feudalist society. The second the 2 extra corns are traded into society, the deficit is once again asserted. This is the real “tragedy of the commons”.
Let use analyze this closer.
Wealth is a relation of human activities - without such activity, wealth becomes a curse.
Extra goods =/= surplus value. You can keep producing “extra goods” while every single bundle of these goods stays the same value.
Next: Sraffa as Constructing Socialism (To Be Continued…)