Saturday, March 13, 2004


Dear readers, I have just found that we have been noticed. When googling for information on Samuel Edward Konkin III and New Libertarian, when I found this post at Samizdata.net's blog.

The other week I went into university to see my Phd supervisor and discuss my work. Naturally an hour of this put my in a philosophical mind such that, whereas normally I may have said "no thanks," when a member of the Christian Union approached me to give out literature and convert me, I stopped and talked.

He asked me if I believed in God. I said "no." He then asked where my position came from. This could have been interpretted as "why?" or it could have been interpretted as "does that belief come from your upbringing, or what?" So I asked, "what do you mean?"

"I mean, how would you set about persuading me that God doesn't exist."

Now, I think that theists go to a lot of trouble over empirical concerns. The most common atheist position is that there is no physical evidence for God. The theist then responds that there is no physical evidence for his non-existence either, so... This debate is wrong to me. Or weak, at least. The simple reason I feel this is that it assumes that empiricism is the only source for knowledge. It is not. We don't need empirical evidence to know that 2+2=4. It is a matter of logical necessity, given the validity of the premises.

If a theist could prove that God existed as a matter of logical necessity, then we would know that Gid existed, regardless of the absence of empirical evidence. The same works the other way - if God can be shown to be a logical impossibility, then God does not exist, and we don't need to try and find empirical evidence to prove this claim (although it is a law of logic that only those making positive claims need to prove them, so atheists don't need to prove their position - it is the default).

"I would first ask you what you meant by the word 'God,' and then procede deductively from that. How would you defend your position?"

The Christian Union dude then said that he tell people about Jesus, his life, the things he said, and how he said that he was God, and what he did, and that would show that God existed. (Interestingly, Jesus may never have said, at least according to the scriptures, that he was God)

My response was to point out that a guy simply saying that he was God proved nothing. It didn't prove that he was God, and so didn't prove that God existed. The Christian Union dude conceded this point, but then referred back to Jesus' actions, "the miracles and such."

Now, one possible response to this would have been to point out that the "miraculous" is actually not that great a deal. You know the example: People say, "you know, I think people have something in the way of psychic powers: You ever been thinking about someone, and then they walk into a room? Premonition, man."

The response to this is plain: The real miracle would have been if this had never happened! Imagine thinking about someone and then they never happened to come through the door! The reason we remember the time when they actually do happen to turn up when we think of them is that the times when they don't are so mundane and common they do not lodge in our minds.

However, I didn't use this argument, mainly because jesus' miracles are repordedly of a different order than this. I simply said,

"Well, suppose that I conceded that the miracles actually occurred, so what? Why does that prove that God existed? If miracles occurred, all we would know is that the miraculous had just occurred, not that God existed. There is no logical reason to deduce from the occurance of miraculous things that God exists, unless we also accept that God could be the only possible cause of the miraculous, and you have not argued this premise"

He conceded this argument. Then I decided to go on the attack:

"The idea of God is meant to bring us hope, right?"

"Right," replied the eager CU dude, desperate show how much hope God could bring.

"But, surely that is flawed? I mean, God can't do everything, right? There are limits to what God can do, right? He isn't all powerful."

"Oh no," cried the eager CU dude, "I think that God certainly has no limits - there are no bounds to bwhat he can do - he certainly is all powerful."

"So," I said, seizing my chance, "can God create a rock that God can't lift?"

"A rock that God can't lift?..." The CU dude now seemed perplexed and a bit worried.

"Cause if God can't create this rock, then there would be something he can't do, and you just said that God can do anything by definition. However, if he could create that rock, then there would be something he couldn't do, namely lift that rock. And God, by definition can do anything.

"So being all powerful, then, is self-contradictory. A contradiction is terms, and so a logical impossibility. So God, by the definition you just gave, is logically impossible, and therefore couldn't exist."

"Well, in human terms..." The CU Dude resorted to arguments from faith, thereby losing the argument, as well as misunderstanding the nature of logic.

I walked off, happy.

I recently used this argument again. The response I got was that I am asking whether God can do the logically impossible. But this puts God beyond the bounds of rational discussion, and so beyond meaningful debate.

I can't see why this is meant as a refutation. Firstly, proving that the idea of God is complete and utter nonsense is surely a triumph for the atheist, so saying that you can't do this is simply rigging the rules of the debate.

Secondly, I don't see why asking whather God could create a rock he can't lift is tantamount to asking whether he can do the impossible. The only way it could be is if the idea of something God can't do is meaningless. But this is what the example is meant to prove cannot be the case.

So, I win. God don't exist.

A fellow over at Liberty Forum made the following post:

My argument is that to move from our current system of capitalism to anarcho-capitalism in the way that I perceive the Libertarian party wanting to do would almost certainly result in a backslide to the bad old days of workers with no health care, no safety regulations, etc., because capital is already in the hands of the ruling class. Think of Dick Cheney with all his cash and absolutely no law to stop him...... Well, you know what I mean. Not even pretend laws to stop him like the ones we have now. This is why I believe it's time for us to look beyond capitalism, to try and find something new and better. I don't claim to have the solution, but the solution isn't going to be something that just one person can come up with, anyway. It's going to take everyone working together, if it's to happen at all. You see, the key to giving an evasive answer is to stretch it out, fillibuster a little. That was where Trupp made his mistake. I stand by my evasive answer, though.

My response was to refute the concern that big business is taking over, and to show how economic freedom will lead to the break down of a capitalist (as in owners of capital) hegemony, by showing how it has already happened. I also cast doubts on the worry of inequality in the US and the concern that so many people in the US live below the poverty line by showing how countries with relative economic freedom have greater social mobility.

But the interesting thing was that I didn't use economics to prove this, but statistics - cold, hard facts culled from Johan Norberg's wonderful book In Defense of Global Capitalism:

The question Trupp had to answer was whether capitalist acts between consenting adults would be illegal under anarchist-communism. Your "evasive" answer is no answer to this question at all.

I think that the question of how we move to anarcho-capitalism is important, but is irrelevant to this question. It is worth noting, though, that between 1980 and 1993 America's 500 biggest firms saw their share of the nation's total employment fall from 16 to 11.3%. The most important indicater of the weight of 500 biggest firms in the US is their sales in relation to total GDP. Between '80 and '93 this figure fell from 59.3 to 36.1, a fall of almost a half in only thirteen years. The proportion of the population working for companies that employ over 250 people in those years also fell from 37 to 39 per cent, and the average personnel strength fell from 16.5 to 14.8 persons. Half the firms operating globally today employ less than 250 people.

Of the companies that apperared on the 1980 list of America's 500 biggest companies one-third had gone by 1990, and another forty per cent had gone in the next five years.

The "dominance" of big business is largely, then, illusory. Sure, the biggest brands stick in our minds, and sure, big mergers are easily seen, but what we see easily often obsures the rest of the picture, and we also forget that big brands are joined by others. Few people remember that Nokia was a small Finnish tyre and boot company a few years ago, and Starbucks, that bastion of globalisation and target for so many objections, where were they ten years ago. New companies achieve dominance, old ones fall, and the cycle goes on.

The above reflects the fact of greater social mobility in relatively freer economies, like that of the US. In absence of fixed privileges and taxes, there is greater opportunity for people to better themselves by their own efforts, through work, education, and thrift. Critics of capitalism often point to "inequalities" in real economies. One example is the fact that the poorest one-fifth of the US population earn only 3.6% of the GDP, and this figure never seems to change much.

However, only 5.1% of those in the poorest one-fifth of the population in 1975 still belonged to the poorest one-fifth in 1991. Meanwhile, 30% of them had moved up to the wealthiest one-fifth, and altogether 60% had moved up to the wealthiest two fifths. By 1991 the people belonging to the poorest one-fifth in 1975 had increased their anual income (which was only $1,263 in 1997 prices) by no less than $27,754, which, in absolute figures, is more than six times the increase of that obtained by the wealthiest one-fifth. On average people living below the poverty line in the US do so for only four months, and only 4% of the population are long term poor. Meanwhile, the poorest fifth of the population is replenished, generally with immigrants and students, ready to start climbing the social ladder.

All this shows that increasing the economic freedom of the population of a country actually breaks up and weakens augmented wealth and status, especially that of big business. Sure, there are strong elements of monopoly in the US economy. These, however, are products of state intervention and so those holding them will find their power diminishing gradually in a free economy. Or even rapidly.

Then, on a different thread, a discussion arose around the issue of the GM crop testing. Someone suggested that Third World Farmers would benefit from the development of GM crops. Someone else said,

"By dumping our surplus grain in Africa, we are undermining the local markets, making it impossible for farmers to earn a living.

If you are so concerned about their plight, why not send them CASH rather than surplus grain. That way you can actually help third world farmers, rather than put them out of business by dumping unwanted surplusses into their market."

My response, again drawing on the afore mentioned text, was

A better solution would be free trade. Western duties on imports from the thrid world are 30% above the world average. the European Union's Common Agricultural Policy has tariffs of several hundred percent on meat imports. In addition, through export subsidies, the EU dumps its surpluses on third world markets, undermining their competition. The Common Agricultural Policy is estimiated to cause a welfare less to developing countries something in the region of 20 billion dollars per year, which is twice Kenya's GDP.

The response was protectionist worries:

That would certainly be better for third world farmers, but what about us in the west? Our whole agricultural economy would collapse as our markets are flooded with cheap imports.

Obviously, these protectionist concerns had to be assayed. Unfortunately, I do not have much cander! (I later suggested that the loss of our agricultural industry would not necessarily be a consequence of free trade with the Tird World)

Maybe our agricultural economy should collapse? Maybe we are better off buying agricultural goods from the third world? Rich countries flood their farmers with money through protectionism, subsidies, and export grants. But where do you think this money comes from? The only way that a government can subsidise an industry is by taxing another one. Taxing that other one reduces income available in that other one and so reduces the incentive to produce in it. So subsidising means diminishing an industry for which there is revealed consumer demand, and benefitting an industry for which there is not revealed consumer demand. Imposing tariffs means penalising competitive producers for the benefit of those that cannot compete to give consumers the best product for the lowest price. Both these interventions, then, mean benefiting the inefficient at the expense of the efficient.

The total agricultural policy of the 29 affluent OECD countries burdens their taxpayers and consumers with a massive 360 billion dollars. For that money we could, with change left over, send all the 56 million cows in these countries around the world on first class air tickets once a year!

The Swedish government's calculations estimated that a Swedish household with two children would gain $250 a year by being spared EU duties on garmets, and no less than $1,200 a year if all agricultural policy were abolished

On the Basis of statistics from the European Commission, the French economist Patrick Messerlin estimated the cost of all EU barriers, which included tariffs, quotas, export subsidies, anti-dumping measures (that forbid "dumping" goods on EU markets), and so on. His findings indicate a total loss of not less than 5 to 7 percent of the EU's GDP. The interesting thing is that 5 to 7 percent of the EU's GDP is the equivalent of two or three Swedens. So completely free trade would add almost three Swedens to EU GDP a year!

Messerlin maintained that nearly 3 percent of jobs in sectors he investigated have been saved by protectionism. Each job costs about 200 thousand dollars per year, which is roughly ten times the average wage in those industries. This is the equivalent of buying every tariff protected worker a Rolls Royce.

Either a branch of enterprise is profitable, or it is unprofitable. If it is profitable, then it needs no tariff, and if it is unprofitable, it deserves no tariff. Imposing tariff protection and subsidies makes sure that the EU's capital and manpower, which could have been used developing the EU's competitive strength, is wasted in sectors in which we have no comparitive advantage.

Restrictions on free trade harm us and they harm the developing world.

The discussion then turned to a theoretical discussion on free trade with much analogising. It was fun, and you can follow it if you want - my general point was to observe that EU tariffs harm the Third World industries by preventing them from accessing markets, but tariffs also protect domestic industries at the expense of other domestic industries, and so aren't protectionist at all. I just thought this part of the debate was interesting because of the statistical evidence I used.


In a recent discussion, a socialist anarchist said that Liberty Forum had wakened him to the fact that there were anarchists who were not socialists. He announced that he had then dedicated his life to bringing these non-socialist anarchists back into the fold. I told him, "Give it your best shot. Try this from the free-market anarchist John Henry MacKay:

Two anarchists are debating: On one side, Otto Trupp, the Kropotkinian anarchist communist; on the other, the Tuckerite market anarchist Auban":

The discussion between Auban and Trupp seemed to have come to an end, and threatened to entirely break up. Then Auban made a last attempt to force back upon the ground of reality what vague wishes had raised into the empty spaces of phantasy.

"One last question, Otto," sounded his loud and hard voice, - "only this one: -

"Would you, in the system of society which you call 'free Communism,' prevent individuals from exchanging their labor among themselves by means of their own medium of exchange? And further: Would you prevent them from occupying land for the purpose of personal use?"

Trupp faltered.

Like Auban, everybody was anxious to hear his answer.

Auban's question was not to be escaped. If he answered "Yes!" he admitted that society had the right of control over the individual and threw overboard the autonomy of the individual which he had always zealously defended; if, on the other hand, he answered "No!" he admitted the right of private property which he had just denied so emphatically.

He said, therefore: -

"You view everything with the eyes of the man of to-day. In the future society, where everything will be at the free disposal of all, where there can be no trade consequently in the present sense, every member, I am deeply convinced, will voluntarily abandon all claim to sole and exclusive occupation of land."

Auban had again risen. He had become somewhat paler, as he said: -

"We have never been dishonest towards each other, Otto. Let us not become so to-day. You know as well as I do that this answer is an evasion. But I will not let go of you now: answer my question, and answer it with yes or no, if you wish me ever again to discuss a question with you."

Trupp was evidently struggling with himself. Then he answered—and it was a look at his comrade who had just attacked him, and against whom he would never have violated the principle of personal liberty, that impelled him to say: -

"In Anarchy any number of men must have the right of forming a voluntary association, and so realizing their ideas in practice. Nor can I understand how any one could justly be driven from the land and house which he uses and occupies."...

"Thus I hold you and will not let go of you!" exclaimed Auban. "By what you have just said you have placed yourself in sharp opposition to the fundamental principles of Communism, which you have hitherto championed.

"You have admitted private property, in raw materials and in land. You have squarely advocated the right to the product of labor. That is Anarchy.

"The phrase - everything belongs to all - has disappeared, destroyed by your own hands.

"A single example only, to avoid all further misunderstanding: I own a piece of land. I capitalize its product.

"The Communist says: That is robbery committed against the common property.

"But the Anarchist Trupp - for the first time now I call him so - says: No. No earthly power has any other right, except that of force, to drive me from my possessions, to lessen the product of my labor by even a penny.

"I close. My purpose is accomplished."

Its a great, classic argument.

Many socialists have regaled against the market economy as inherently exploitative. One of the most well known examples and influential examples of this is in the writings of Karl Marx. This theory was developed most completely in his massive three volume economics treatise Capital, but is neatly summarised here by Arthur P. Mendel:

“The entire argument in Capital rests on the labor theory of value. As was the case with virtually all the parts that Marx fused into his system, this concept was borrowed from earlier writers, in this case from the ‘classical’ economists such as Adam Smith and, especially, David Ricardo. It is primarily a price theory, according to which ‘commodities’ should exchange on the basis of the ‘socially necessary’ labor time devoted to their production. In other words, the amount of time a laborer works to produce a particular item determines its "exchange value": two products of equal labor value would thus be exchanged for one another.

“Having incorporated the labor theory of value, Marx derived from it a second step in his demonstration: the theory of ‘surplus’ labor value. According to this theory, the worker does not receive in wages an amount equal to tile value of the goods he produces. We must keep in mind that the influence of tile "pessimistic economists" still prevailed, as did the conditions promoting their pessimism. Drawing their conclusions from their own observations and from official government reports on working-class conditions in England during the industrial revolution, economists like Malthus and Ricardo argued that an "iron law of wages" existed that would keep wages down to a minimum necessary to meet the workers' basic needs. Marx accepted this and drew the conclusions he desired: on the one hand, the labor theory of value argued that labor created all the value of the goods sold by the capitalist; on the other hand, an ‘iron law of wages’ kept the laborer's income down to a subsistence minimum consequently, it must follow that the workers were not receiving the full value of their labor, that there was a ‘surplus’ kept by the capitalist owner of the means of production.”

Our first response to this argument is to look at the “Iron Law of Wages.” This theory is clearly false, for numerous reasons. The theory is, basically, that if wages rise for a time above enough to pay for mere subsistence then population will increase, resulting in increased competition for jobs amongst workers, resulting in lower wages. If, on the other hand, wages are lower than subsistence, fewer children are born, malnutrition kills off a certain percentage of the population, so competition for wages falls, and wages rise. Thus, it is argued, wages will always tend to a mere subsistence level.

However, Malthus, Ricardo, and Marx held the theory of the Iron Law of Wages in the nineteenth century, but in that century wages doubled, population increased over two and a half times. Rising real wages after 1850 did not lead to a rise in the birth rate, but the exact opposite – the birth rate fell from 35 per thousand in 1850 to 28.7 per thousand in 1900. (See JL Hanson, A Textbook of Economics, pp 311). So empirical evidence doesn’t back up the Malthusian argument. Secondly, the Iron Law of Wages only approaches the question of what determines the price of labour from the perspective of supply and not demand (and then only crudely, for it doesn’t recognise that the worker is buying a wage at the same time as selling their time, and thus take in the relative value they place on their uses of it). For instance, it is likely that a rise in population will result in a rise in demand for labour, so if population were to rise as a result of higher wages (as the Iron Law says it would), there is not necessarily a reason to expect a fall in wages as a result, because of an increase in demand for labour. This is, in fact, why an increased population as a result of free immigration or an absence of state control of reproduction will actually be likely to increase wages in the long term – increased population means more mouths to feed, means more demand for workers to feed them, means higher wages. Indeed, the Iron Law of Wages doesn’t even take account of how productive a worker is – surely an employer would offer more to a skilled and dedicated worker than a talentless lay about, because the former will get more work done than the latter? If so, then, at least to that degree, wages will reflect productivity.

Thirdly, the phrase “subsistence level” is so ambiguous as to be almost useless. Cave men subsisted on a lot less than the average UK worker – or even the least paid UK worker – so why haven’t UK wages fallen to the level needed to provide subsistence to a cave man. Workers in today’s Britain live a lifestyle many would have thought luxurious by the standards of one hundred years ago.

So the “Iron Law of Wages” fails to hold any water. Given this, Marx’s presumption that wages will always tend to be less than the true value of the labour spent producing becomes untenable, and, if this is the case, his claim that capitalism is exploitative looks shaky too.

However, we may go further – having disposed of the theory about what determines how much value a capitalist gives a worker, lets turn to the theory about how much value a worker gives the capitalist. This theory, as stated above, is “…primarily a price theory, according to which ‘commodities’ should exchange on the basis of the ‘socially necessary’ labor time devoted to their production. In other words, the amount of time a laborer works to produce a particular item determines its ‘exchange value’: two products of equal labor value would thus be exchanged for one another.” In short, the exchange rate, or price, of one hour of socially necessary labour time, in a free market economy, would be another hour of socially necessary labour time – an hour of work from a farmer will buy an hour of work from the builder. Hence the belief, also iterated above, that “labor created all the value of the goods sold by the capitalist.”

However, it is obvious that labour doesn’t create all the value of the goods (remember that the argument isn’t that only labour creates goods, but that only labour creates the value of those goods, or, in other words, only labour gives those goods value). Surely if a group of identical workers spent an identical amount of time building an identical house next to a land fill site or a sewage works as they did building one next to a site of great natural beauty, the latter would fetch a higher price than the former. Isn’t this obvious? If so, then it must also be obvious that the exchange value, the price, of each house is not solely determined by the labour put into producing it, but by the geographical position too – and by the attractiveness of that position to those who would live in the house. Hence it is the utility, the preference satisfaction derived from owning that house, which determines its price.

An old complaint against the traditional labour theory of value (as stated by Adam Smith and David Ricardo) was that it implied that useless labour would fetch an equal price as useful labour. For example, an hour’s worth of delicate and life saving brain surgery would buy an hours worth of digging holes and filling them in again. Or, more crudely, that if I spent the same amount of time making a shit sandwich as I did making a cheese sandwich, consumers would happily spend as much on each of them! This is obviously not the case, so the price of a good cannot be determined by the amount of time spent working on it.

However, this was not Marx’s claim. As Robert Nozick points out, “Marxist theory does not hold that the value of an object is proportional to the number of simple undifferentiated labour hours that went into its production; rather, the theory holds that the value of an object is proportional to the number of simple undifferentiated socially necessary labour hours that went into its production.” This claim is backed by reference to page 46 of Marx’s Capital. The point is that Marx qualifies the traditional labour theory of value by also requiring that labour hours be socially necessary, and this, he believes, saves him from the above argument.

Marx writes that “Nothing can have value without being an object of utility. If a thing is useless so is the labour embodied in it; the labour does not count as labour, and therefore creates no value.” (Capital pp48) However, even accepting the condition that an object has to be of some utility, there still remain some problems. For instance, what if a worker works for 893 hours on something that is of only very slight utility. This satisfies the condition that it must be of some utility, so should we now believe that here on in only the time spent making it matters, that only the amount of labour matters, so that, now that it is of some utility it will buy a 893 products that are of incredible utility but only took an hour to make. Nope, because, as Marx says “…the labour spent on them (commodities) counts effectively only insofar as it is spent in a form that is useful to others.” (Capital pp97-98) In other words, the 893 hours of labour are only valuable insofar as they are of utility to those that consume them, as is the hour of the other goods mentioned, which implies that the value of a good depends on its degree of utility to its consumer, that the labour embodied in it is only as valuable as it is of utility to its consumer. Marx even claims that “Whether that labour is useful for others, and its product consequently capable of satisfying the wants of others, can be proved only by the act of exchange.” In other words, the only way to tell if a commodity is valuable or not, or even if it has value, is by observing the action of the market process – the act of exchange. This is a hell of a concession! But what becomes clear is that, by tacking on the qualifying condition that labour need be socially necessary in order to have value, Marx has in fact ended up with something much different from a labour theory of value. He has claimed, in effect, that the value of a product is determined insofar as it is useful in satisfying the preferences of the consumer and not by the amount of labour time spent producing it at all!

But we can approach this from a different direction. Imagine that things are being produced as efficiently as they can be, but that too many of them are produced to sell at a certain price. The price at which the market clears is lower than the apparent labour values of the products; a greater number of efficient hours went into producing them than people were willing to pay for. Does this show that the number of average hours spent making an item of sufficient utility doesn’t determine its value? Marx’s answer to this question is to say that if such overproduction occurs that the market won’t clear at a certain price, then the labour devoted to making an object was inefficiently used – less of the thing should have been made – even though the labour itself was efficient. Thus, not all those efficient labour hours constituted socially necessary labour time. The product does not have less value than the number of socially necessary labour hours expended on it, because there were simply fewer socially necessary labour hours expended on it than meets the eye.

“Suppose that every piece of linen in the market contains no more labour than is socially necessary. In spite of this, all the pieces taken as a whole may have had superfluous labour-time spent on them. If the market cannot stomach the whole quantity at the normal price of 2 shillings a yard, this proves too great a portion of the total labour of the community has been expended in the form of weaving. The effect is the same as if each weaver had expended more labour-time upon his particular product than is socially necessary.”

(Marx, Capital, p 120)

Robert Nozick neatly sums up the consequences of this view: “Thus Marx holds that this labour isn’t all socially necessary. What is socially necessary, and how much of it is, will be determined by what happens on the market!! There is no longer any labour theory of value; the central notion of socially necessary labour time is itself defined in terms of the processes and exchange ratios of a competitive market.” So on one hand Marx concocts a theory about prices that actually tells us that prices are not determined by labour, and then on the other he tells us that workers are exploited because all the value of the product they create is determined by labour! This is simply intellectual dishonesty!

The classic labour theory of value is clearly wrong because it cannot explain why a shit sandwich won’t buy a cheese sandwich when they both take the same amount of time to make. In fact, the labour theory of value is not even useful in economics because it cannot explain what goes on in an economy. For instance, I can buy cola in one-litre-bottles, and I can also buy it in two-litre-bottles. However, the price of a two-litre-bottle is not twice that of the one-litre-bottle even though it holds twice the contents. Why is that? Modern economics, abandoning anything approaching a labour theory of value, can answer this, but the labour theory of value cannot.

In terms of modern economics, it is easy to explain: It is less important to me that I get a second litre of cola than it is that I get a first. Once I have one litre, I care less about getting the second; the marginal utility of a second litre is lower than the first. Thus, if the company wanted to sell me a second litre, they have to make it cost me less than the first, because it is less important to me than the first. This is why the two litres of cola in a two-litre bottle will not be the same price as the two litres in two one-litre bottles.

But the amount of labour time spent producing the second litre was exactly the same as that spent producing the first litre. Therefore the labour theory of value cannot explain why two-litre bottles of cola are cheaper than two one-litre bottles. Marx’s changes to the labour theory of value lead us further and further away from an account of exploitation, because he would have to say that the labour embodied in the second litre in the two-litre bottle was less “socially necessary” than that of the first, but can only do so on the grounds that the market for cola wouldn’t clear if it was twice the price, which moves us into a position of saying “price of a good on the market tells us how much of the labour was socially necessary,” and into one that says “the price of a good on the market is determined by the amount of socially necessary labour time spent producing it.”

However, we can reject the Marxist theory of exploitation without even rejecting the labour theory of value. David Gauthier sums up the Marxist argument:

“Marxism offers a direct challenge to our account of the Market which, if sustained, would refute the claim that market interaction is impartial. For the Marxist insists that private ownership of the means of production, a fundamental presupposition of the market, is necessarily exploitative. The argument is simple. Under private ownership, nothing can prevent the emergence of a situation in which some individuals (capitalists) own the means that others (workers) need if they are to engage in productive activity. These others are then compelled to sell their labour power to the owners of the material means that production requires. This sale is exploitative. For the essential and distinctive characteristic of labour is that it produces more than the cost of its own production; labour thus reproduces itself and in addition produces what in Marxist thought is called surplus value. Now labour power is bought and sold, as any other commodity, at a price sufficient to cover its cost of production. Hence the buyer of labour necessarily receives the surplus value, since he pays the worker a wage equal to the cost of producing the labour power sold, and receives a price equal to the value of what that labour power produces. The market systematically favours the buyer of labour power over the seller; hence its operation is in principle partial to the capitalist.”

Gauthier begins studying this position from the claim that the market price of what labour produces is greater than the cost of its own production. Imagine that the price of labour power was equal to the cost of producing it. It is obvious that under these conditions there would be a demand for more labour, because buyers (capitalist employers) profit from the difference between the price they pay for labour power and what they receive in exchange for its product, which, under these conditions, would be nothing (because price equals cost). This demand for more labour power would continue until the marginal product of an additional unit of labour power is equal to the marginal cost of producing that additional unit. However, at this point the price of labour – the wage paid – is equal to the price that is received for its product. There can be no surplus value when the supply of labour is brought into equilibrium with the demand for it. “The worker receives a wage equal to the marginal difference her labour power adds to the total product” – workers are paid according to their marginal productivity.

Marxists attempt to escape from this conclusion by denying that supply and demand come into equilibrium. The claim is that the buyer of labour power is able to keep its price, the wage, below the price he receives for its product, because the supply of labour will always exceed demand for it because of what Engels called “The reserve army of the unemployed.” However, we have just seen that if the wage is below the price received for the product of labour, then there will be an effective demand for more labour – demand will be greater than supply. So the Marxist is trapped in a contradiction: The buyer of labour power is able to derive surplus value from labour – to pay the worker less than he receives for the product of labour – only if labour exceeds demand. But if there is a surplus to extract then this creates amongst capitalists a demand for labour in excess of the existing supply. As Gauthier says,

“Or, to put it another way, if the supply of labour exceeds the demand for it, this can only be because the cost of producing labour exceeds the price that can be received for it’s product. So there can only be surplus value if supply exceeds demand if supply exceeds demand there can be no surplus value.”

So, if, as Marxists suppose, labour power is a commodity, then the operation of a competitive market must bring the supply of labour into equilibrium with the demand for it. Thus, at equilibrium, there can’t be any surplus value for the buyer of labour power to extract, and so there can be no exploitation of the seller of labour power – the worker. Thus, in a competitive market, there can be no exploitation of workers, at least in the Marxist sense.

Wednesday, March 03, 2004


As I said, I saw two movies. The second was chosen entirely for the libertarian interest (well, nearly entirely!).

House of Sand and Fog is about the "dark side of America's IRS," according to UGC's voice over.

The first endearing thing about this film is that it stars the stunning and talented Oscar winner, Jennifer Connelly as Kathy. Kathy is a recovering alcoholic, out of wrok, abandoned by her husband, who, in her self pity, isolates herself from her family and the outside world. This has the rather unfortunate consequence that she doesn't open her mail, and so misses a warning about unpaid business taxes. She is disturbed one morning by a knock at the door by an IRS officer and the local deputy sheriff and his squad, who confiscate her house, the only thing left to her by her father when he died. She is determined to get the house back.

Unfortunately, somebody else has designs on it. The IRS has advertised that the house will be auctioned, and a prospective buyer is a refugee from Iran, Colonel Behrani, who escaped to San Francisco when fleeing the Iranian revolution and rise of the Ayotollah. Behrani, played by Ben Kingsley (sorry, couldn't find any pictures of Kingsley that matched the beauty of Connelly's!), was once a high ranking member of Iranian society, but fled to America with nothing. His family, especially his wife, though is used to luxury and finds it hard not to live the wealthy life style they previously enjoyed. Behrani works night and day, tarring roads by day, and running a gas station at night, frugally keeping the accounts, so that he can raise the money needed to buy the house that he sees advertised in the local paper.

Consequently, when Kathy gets to her lawyer's office, she finds that the house has already been sold. Here life goes even further down hill when her credit card is cancelled, meaning that she cannot live in a motel room she had renting, but must live in her car. However, she is spotted, in her misery, by the deputy sheriff that help evict her, Lester. We first saw this guy when Kathy was served the eviction notice, and I was struck by how he helped her move out. Does he give this sort of treatment to all people he serves, or is he just excited by the sight of a helpless woman in need? He advises Kathy not to go out and meet Behrani, but to deal with him through her lawyer.

Naturally, this is advice that she decides not to take. She camps outside her olod house with her car, and is awoken by the shocking site of workmen altering what she thinks of as her house! She stroms in, and stands on a nail in the process. This leads to her meeting Behrani's wife, Nadi, and son, Esmail.

The story develops, and what is great about it is seeing the interaction of the characters and how they develop - the frightening dominance of Behrani, for instance, that makes us afraid and opposed to him, and yet his desperation to keep what he has worked for, that leads us to sympathise with him. Lester and Kathy's affair, which is challenged by Lester's wife, and which we the viewers shake our heads at, as Lester grows to be a darket and darker character. The story drags in places, and other plot areas, to an extent, detract, leaving us sometimes saying, "but what about her house," but it is definitely a character lead movie. And the actors pull off performances to match this - especially Ben Kingsley as Behrani. Why, I swear almost anybody would be moved to tears by his performance when... well, i won't spoil it for you!

Caught a couple of damn fine movies last weekend: The Missing, and House of Sand and Fog.

The Missing was probably the better of the two. Directed by Richie Cunningham himself, Ron Howard, it is about Maggie Gilkeson, a single lady strugling to raise her two daughters in the harsh isolation of New Mexico, 1886. She runs a small ranch, which she inherited, along with her eldest daughter Lily, from a husband who abandoned her. She also works as a Healer.

It is her services in this department that we first see, as she pulls an old Mexican lady's last rotten tooth out of her mouth! It is also these services that attract a stranger into the area. Taking the stranger for an apache, Maggie's boyfriend treats him with suspiscion. However, it turns out that this fellow is actually Samuel Jones, Maggie's estranged father, who left her and her mother when she was little, when he "turned Indian."

Maggie is naturally resentful of the idea of her father returning to the family fold, but is bound by her Christian ethics to heal her father's torn muscles. having done so, however, she turns him away. Only the youngest daughter, Dot, is welcoming of her grandfather, excited by the idea that she might be an indian!

However, life is turned upside-down when Maggie waives good-bye to her daughters as they ride off with her boyfriend and his assistance to round up their herd... and don't return. Maggie rides out the next morning to look find them and finds her boyfriend's assistant's corpse, naked and stuck with arrows. Its even grosser, though, when she looks at what she thinks is a hunk of beef roasting over the fire, but it turns out to be her boyfriend, bent double and stuffed in cow hide to slowly roast alive! Cringe moment.

She finds Dot, but they discover that Lily is missing, and Dot, between repeatedly bubbering "He was screaming. I wished he would stop; and then he did," says, "it was indians." This immediately raises suspicions towards Maggie's father. It turns out that he has a prison shaped alibi, though.

After he is released from the drunk tank, Samual Jones pledges to help his daughter find Lily, and they hit the trail. It turns out that Lily has been abducted by a gang of indians and white men, capturing young women and girls to sell as slaves in Mexico. The gang is led by Chidin, a clump footed, scarred indian witch doctor of terrifying power and evil.

The performances in this film a great, especially from the youngest daughter, Dot, and Tommy Lee Jones, playing Samuel Jones. I am glad that he turned out to be a white man turned indian, because it would have been terrible for us to be expected to believe that he was actually an indian (One of the most shocking examples of this was the relatively recent film Windriders, which was supposed to raise awareness of the forgotten role of Native Americans in the Second World war - and did this by casting Nicholas Cage as a native American! Raise awareness of American Indians, but don't give them leading roles, for god's sake!)

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