On the Cambridge “Capital Critique”

This is an edited version of a message that I wrote in reply to a question posed by Michael Lebowitz on Michael Perelman’s listserve (on 1/15/2006) with regards to the Cambridge UK “capital critique.”  While I was at the New School (1994-1996), I took the course with Anwar Shaikh titled “Ricardo, Sraffa, and Marx.”  As a result, with a little help from Shaikh’s excellent lectures, I forced myself to read Piero Sraffa’s esoteric Production of Commodities by Means of Commodities (as well as his less well known 1926’s paper,  “Laws of Returns under Competitive Conditions”) and Luigi Passinetti’s  superb Lectures on the Theory of Production–and to almost read Piero Garegnani’s “Quantity of Capital” entry in The New Palgrave.

As I remember, the “capital critique” immediately struck me as a massive but fatally misguided effort.  It clashed frontally with my own understanding of political economy and, although Anwar Shaikh didn’t appear to note it, it implied a devastating critique of Marx’s own reproduction story.  This was because, in Marx’s rendition in Capital, volume 2, production is broken down into departments by using use value as the criterion: means of production in one bucket, consumption goods in the other bucket.  In other words, Marx assumed a (capitalist) department 1 that produced quantities of an implied homogeneous use value, namely “means of production.”  And by this Marx meant exactly the same use value that standard economic theory conceptualizes as “capital” in their specification of “technology” or “production possibilities.”

For years, I’ve been resenting myself for “allowing” so many young critical minds favorably inclined towards Marxism to be exposed to the unchallenged belief that the Cambridge “capital critique” is a quasi- if not philo-Marxist rejection of bourgeois economics.  Well, if I can help it, no longer so.  I haven’t had a chance to go over all that material in due form since I posted the message on PEN-L (I just cannot envision myself re-reading Sraffa or Garegnani’s writings), and I’ll probably not have that chance any time soon.  But at least these thoughts will be out there exposed to public scrutiny, for whatever they may be worth.  Hey, I got tenure since early this year, a degree of job security that I wish all of my class brethren also enjoyed.  So, what am I afraid of?  🙂

*  *  *

In standard theory, the notion of physical marginal productivity is a technical relation between inputs and outputs.  There’s no (of necessity, at least) “economics” or political economy there.  So, when standard theory speaks of the “marginal productivity of capital,” it means the marginal productivity of specific capital inputs (means of production).  Or if one thinks that the term “productivity” should be reserved to the relation between outputs and concrete labor inputs, then call it “effectiveness of the means of production” as Marx called it.  It is the same thing: a relation between physical outputs and physical inputs.

Essentially, the “capital critique” says that at an aggregate level you cannot map the technical relation from inputs to outputs, because in aggregating means of production (so-called “capital”) the weights are value notions.  In standard theory, the input-output technical relation is conceptualized as the “production possibilities set” (PPS).  In applications, the PPS is usually specified as a “production function” and sometimes a “well-behaved” one.  In some abstract analyses, one doesn’t even need it to be a function or to be well-behaved.

But, in any case, the PPS is the technical piece of the analysis.  The economic piece of the analysis is the prices and quantities of inputs and outputs.  And for those who can keep in their heads the notion of technical or physical elements as content and the economic or social ones as forms, the rest is not problematic.  Under partial equilibrium, one adds the utility function, assume exogenously all other prices and quantities, add a supply=demand consistency condition, and use maximization in consumption and production to pin down the equilibrium price/quantity of the item of interest.  Under general equilibrium, to the production functions one adds utility functions,  n-1 supplies=demands conditions plus Walras law, and uses maximization in consumption and production to simultaneously determine the equilibrium price and quantity vectors.

Now, input aggregation (implicit or explicit) is a necessity in any type of society.  In a conceivable full-fledged communist society, with no markets whatsoever, given needs, people would still have to allocate their productive force of labor (stock) or their labor time (flow, “living” and “materialized”) to different uses.  To avoid wasting labor, they would have to allocate it according to proportions determined by the (expected marginal) productivity of labor time in each of its different “useful, concrete” (Marx) applications.  These proportions are necessarily comparisons (or ratios) of quantifiable “useful effects,” as Engels put it in Anti-Dühring in referring to socialist-planning “shadow prices,” thus prefiguring the modern conventional notions of “marginal rate of substitution” (in consumption) and “marginal rate of transformation” (in production).

What do we mean above by “useful, concrete”?  Do we mean, for example, the labor required to produce shoes?  Shoes seem to be pretty concrete and the labor spent producing them certainly appears concrete at first sight.  But, in practice, we require all sorts of labor (“living” and “materialized”) to produce shoes?  When one looks carefully, they all are very different types of labor executed by very different concrete workers.  Even the labor of the “same” worker (thanks Heraclitus!) will be different from instant to instant.  Narrow this down to “living” labor types and keep it simple: which labor in particular is “useful, concrete”?  The labor required to glue leather pieces together?  Then by “useful, concrete” we really mean only the labor that produces a particular outcome (glued leather pieces) among the many other outcomes required to produce finished shoes.  The fact is that one can apply this reasoning recursively ad infinitum.  But, depending on the task, communists would not want to waste much labor time splitting hairs.  For various purposes, they would have to stop somewhere and deal with aggregates; say, deal with shoe-producing labor as if all the types of labor involved in shoe production were homogeneous.

How would these communists add up “useful, concrete” labors that are so dissimilar in practice (sewing, gluing, painting, operating different machines, etc.) into one single measure of “useful, concrete” shoe-producing labor?  They would have to use an index, an average.  And the weights?  The weights would have to be some measure of the “relative importance” that society assigns to each type of detailed “useful, concrete” labor.  But, in a chicken-and-egg manner, under full communism (no markets here), that “relative importance” would be dictated precisely by those “definite proportions”!

In a market society, the “relative importance” concretely assigned to each labor input is given by its price (ultimately, value).  But here we must distinguish the value form from its content: the technical factors that determine it.  I.e., definite proportions of allocated labor, proportions that, given the concrete needs of a society, reflect the shadow “prices” of the labor inputs (i.e., the expected marginal productivity of labor in each concrete application).  The Cambridge critics conflate here form and content.  They say that, if one introduces “definite proportions” (shadow “prices”), then she is introducing values, in the sense of specific social relations.  But, this is simply not true.

If this seems complicated when dealing with “living” labor, the complication is greater with “past” labor “embodied” in means of production (MP).  In aggregating different kinds of MP (“capital inputs”), the “relative importance” of each individual input depends on its expected marginal productivity multiplied by a measure of the “relative importance” of the outputs it helps produce.  But, again, one thing is that every society needs to measure the “relative importance” of different kinds of stuff and a different thing is that in some societies this “relative importance” takes the form of value and price.  In a market setting, these are values indeed, but they enter here not because they are values (social forms, specific social relations), but because they are “definite proportions,” shadow “prices,” or measures of “relative importance.”  And these are common to all types of society.

The neoclassicals — it is argued in ways that many Marxists have found convincing — postulate a production function relating physical inputs to physical outputs.  So, clearly, “capital” here means “a physical set of MP.”  Yet their aggregation of the “physical set of MP” is not merely “physical” because the weights used are the values of specific marginal productivities (e.g., Q_inputs  × P_outputs), which in an ideal competitive context, equalize to the rental rates on the “capital” inputs.  Then changes in “capital” can be due to changes in the composition of the individual physical inputs, which is okay.  But, alternatively, they may result from changes in their marginal productivities in money terms (i.e., marginal productivities times the price of the output the inputs help produce), which is not okay because the “physical” measure is then buffeted by changes in prices (values).  The effect on the measure of “capital” may not be a big deal when the two types of changes concord.  But if they don’t, the neoclassicals wind up with changes in their measure of “physical capital” completely dominated by changes in the rental rates of the different types of MP.  How, then, can they map one-to-one changes in the amount of individual physical inputs and their aggregate measure?  They can’t!  In other words, they have “reswitching”!  (Or, as Michael Lebowitz puts it, the neoclassicals assume the profit rate here to determine the profit rate there and that’s tautological!)

But change the context to see through the argument:  Communist plans presume that physical inputs can be mapped to physical outputs at different levels of aggregation.  (I mean, let’s be Marxists here: Ultimately, the wealth we produce (say, if we take the broad view and see human history as production) is ourselves and the productive wealth with which we produce ourselves is… well, ourselves!  We produce humanity by means of humanity, or productive power by means of productive power, or freedom by means of freedom!  And what would be communist about it is that we’d be producing ourselves consciously, deliberately, and with a measure of social unity and mutual solidarity.)  Yet their aggregation of a “physical set of MP” is not merely “physical” because the weights used are marginal productivities times other weights: measures of the “relative importance” assigned to particular outputs.  But then changes in their “physical” aggregate measure of MP can result from changes in the composition of individual MP, which is okay.  Or from changes in the “relative importance” of the inputs, in turn due to changes in the “relative importance” of the use values each given MP helps produce, which — according to the “capital critique” is not okay.  Why?  Because then the measure of “physical MP” is exposed to changes in the “relative importances.”  That would not be a big deal if the two types of changes agreed.  But if they don’t, the communists wind up with changes in their measure of “physical MP” completely dominated by changes in the “relative importance” of the different types of MP.  Communist planners cannot map one-to-one changes in the amount of individual physical inputs and their aggregate measure.  They face “reswitching”!

There you have it: reswitching plagues neoclassical economics and communist planning alike.  That is because, in principle, reswitching affects any conceivable economic theory that requires aggregation (of labor power and/or means of production).  Since aggregation is inescapable in making economic choices in small or large economic units under all conceivable economic arrangements, then the possibility of reswitching is practically inescapable.  What any reasonable decision maker would say is, “Okay, what’s the chance of reswitching and how large is the cost involved so that I can compute an expected loss (in social labor time terms) to the best of my knowledge?”  If the expected loss is large, then she’ll want to disaggregate things a little and pose the question again.  Eventually, she’d reach a level of disaggregation where the expected loss involved equals the resources required to prevent it and reswitching effectively vanishes as a practical problem.  “What do I care about reswitching if there are bigger fish to fry?” — she’ll think.

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12 Comments

  1. Julio, this is very interesting. I have one comment. You write that >As I remember, the “capital critique” … implied a devastating critique of Marx’s own reproduction story. This was because, in Marx’s rendition in Capital, volume 2, production is broken down into departments by using use value as the criterion: means of production in one bucket, consumption goods in the other bucket. In other words, Marx assumed a (capitalist) department 1 that produced quantities of an implied homogeneous use value, namely “means of production.” <

    I don't think Marx implied the existence of a homogeneous use-value called "means of production" or another one called "means of subsistence" (consumption goods) in his volume II reproduction schemes. Instead, those schemes were stated in terms of flows of value (which corresponded to flow of revenues under his assumption there that price = value). As part of his march from the abstract (at the start of volume I) to the concrete, he introduced the distinction between means of production and means of subsistence, something that he had abstracted from before. But, just like in volume I, he doesn't assume that use-values can be added up except using prices (which equal values in volume II).

    His reproduction schemes are not like the story Sraffa or Ian Steedman presents as much as they're like models in Keynesian macroeconomics: for the simple reproduction case with only two sectors, total value-added in the machine-producing sector (total value net of the value of the costs of machines and other material inputs used there) = the sum of the value of the costs of machines and other material inputs used in the other sector. Or in symbols V1 + S1 = C2. Dropping the value = price assumption, this equation can be stated instead in terms of nominal revenues instead or (if you insist) as real revenues by dividing by some measure of the aggregate average price level.

    This kind of reproduction equation is also not an equilibrium condition as much as a "harmony" condition, showing how the sectors relate to each other when everything is going well. Marx didn't think that accumulation would proceed with these conditions always be met. Instead, his vision of the capitalist economies involved continual disequilibrium sometimes broken by equilibration (crises). — Jim

  2. Jim wrote:

    “I don’t think Marx implied the existence of a homogeneous use-value called “means of production” or another one called “means of subsistence” (consumption goods) in his volume II reproduction schemes. Instead, those schemes were stated in terms of flows of value (which corresponded to flow of revenues under his assumption there that price = value). As part of his march from the abstract (at the start of volume I) to the concrete, he introduced the distinction between means of production and means of subsistence, something that he had abstracted from before. But, just like in volume I, he doesn’t assume that use-values can be added up except using prices (which equal values in volume II).”

    How can you meaningfully speak of the value of “means of production” without multiplying a quantity times a price? A quantity of which “use value”? Which price?

    1. >How can you meaningfully speak of the value of “means of production” without multiplying a quantity times a price? A quantity of which “use value”? Which price?<

      In volume II, price is assumed equal to value, but that really doesn't matter: Marx's simple math could be done in money terms or "real" terms, i.e., deflated by the aggregate average price level. At the volume II level of abstraction, Marx isn't dealing with quantities of use-values (Q1, Q2) or prices (P1, P2). Instead, he starts with the _total revenues_ in the two sectors (what we'd call P1*Q1, P2*Q2), i.e., aggregated flows of value. P1*Q1 should equal C1 + V1 + S1, a sum of three numbers which also sums of money (and value). Like P1*Q1, these three do not correspond to specific amounts of use-values or specific prices but instead to specific products of quantities and prices. The only role that use-values play in the volume II story is to split the economy into two sectors.

      It's important to remember that, unlike NC economics, Marx starts with the whole and only later goes to the parts (disaggregating). It's only in volume III that he considers price theory. Instead, he assumes price/value equality, which in essence assumes that the production process is the same for all use-values (or rather, abstracts from differences between use-values). The story in volume I is a bit like the neoclassical story of the aggregate production function (though Marx disaggregated away from that story in later volumes). – Jim

  3. Jim,

    Regarding “equilibrium,” why the fear of using the term? Why replace a well-established term with an euphemism (“harmony”)? This splitting of hairs reminds me of Hibben’s rendition of Hegel’s Logic. To paraphrase him, the level of (superficial) understanding consists of taking the concrete as it comes, in its differentiated appearance. The level of (negative) reason consists of pushing back on the results of the understanding by exposing the limits and self-contradictions of this differentiated phenomena. The highest level, that of the (synthetic) reason consists of overcoming the differences by exposing them as expressions of some underlying common substance, as manifestations of one and the same organic thing.

    I recently got into an exchange on equilibrium. Here, FWIW.

    * * *

    My $.02:

    There are n ways in which a society—and most definitely, a *capitalist* society—might disintegrate. Societies are fragile historical constructions. They exist when/if people cooperate and find ways to allocate their aggregate labor in very specific proportions to provide for their needs. They unravel otherwise. Social conflict—e.g. class struggle—has that effect. That a society, in spite of intra-class competition and class struggle, exists and has a measure of stability and robustness is—of course—something that requires explanation. And even before you explain these things, you have to show the conditions that must be met for social life to flow. In reference to a capitalist society, this is more or less what I gather from Marx’s discussion on reproduction in Capital’s volume 1, part 7, and in virtually the entire volume 2.

    If a capitalist society is to sustain itself, if capital is to go through its cycle M-C-M’, then it must be the case that, one way or the other, the basic proportions in the allocation of the productive force of labor are kept. Otherwise, this capitalist society would not be observed. It would not exist. This does not mean that you believe that this capitalist society is natural or eternal (I’m not responding to X here, but re-stating Marx’s argument against bourgeois economics). It is simply to take into consideration that it has a degree of stability and robustness, in spite of its overall historical fragility.

    (Obviously, accounting for that stability and robustness is a step in the study of capitalist societies. It is one of the first steps, before you go into showing how it gets all unhinged by competition (volume 3) and, ultimately, by the class struggle, which in volumes 1-3 appears one-sided in favor of capital.)

    That is what the notion of “steady state” (dynamic equilibrium) captures. And that is, in my words, what Y is referring to. Yes, there’s a big problem denying that such steady state exists and it’s a legitimate object of inquiry and critique: If the subject of your critique cannot keep itself together over any significant historical period of time, then you really have no subject to critique!

    For people who are familiar with the classical Marxist arguments but without math, a cogent statement of the need to account for equilibrium or steady state or the proportionality in reproduction can be found in Roman Rosdolsky’s book, The Making of Capital (http://fckvrso.wordpress.com/2012/04/03/roman-rosdolsky-the-making-of-marxs-capital-complete-2/), as well as Anwar Shaikh’s paper linked below:

    http://homepage.newschool.edu/~AShaikh/Shaikh%20-%20History%20of%20Crisis%20Theories.pdf

    Rosdolsky summarized nicely Lenin’s argument against the Russian populists and Luxemburg, which Lenin took from Marx’s own critique of Sismondi and Malthus (who emphasized disequilibrium contra Ricardo and Smith, who emphasized equilibrium). (Now Lenin was similarly critical of the legal Marxists (e.g. Tugan-Baranowski), like Marx was of Ricardo and Smith, for exaggerating the robustness of capitalism, turning it into some sort of juggernaut akin to a natural phenomenon. But Y is not saying that equilibrium is all there is. Y is just saying that equilibrium is one step in the study of the system. So, I think Y is on solid ground here.)

    As for stating the story with mathematics, think of mathematical symbols as abbreviations for words. What is stated in mathematics could—in principle—be stated in words, but it would be a much bulkier and harder to manage thing. That’s why couching it in mathematical language helps (admittedly, at some cost).

    1. I don’t think equilibrium is a useful way to think about capitalist societies. I especially don’t think it is useful to describe what you want to describe. you are talking about the basic institutions of capitalism being created and recreated by individual action and reaction. a basic cyclical growth model akin to goodwin’s seems fine to me. Given the proper mathematical training, I see no reason to waste a significant amount of time talking about something as absurd as a socioeconomic system in equilibrium.

      1. Nathan,

        The steady state in a dynamic system is an “equilibrium” or fixed point. These terms do not denote “fixity” in the colloquial sense of the term. Here, “fixed” means that it is only buffeted by changes in the parameters of the system. Now, what is a parameter in the system and what is an endogenous variable is, of course, dictated by the temporal/spatial frame of your analysis. If you are studying a capitalist society, then your time frame has to be an historical period/geographical area in which capitalism exists and reproduces itself. That doesn’t mean that you think capitalism is eternal or is viable everywhere. If you include the political class struggle to overthrow capitalism (or any other lethal antidote to capitalism) as a parameter in your theory, then the steady state of that system doesn’t allow for capitalism to reproduce itself. You need to specify (provisionally, within the frame of your analysis) that workers are pliant. This is exactly what Marx had to do in most of Capital. (And Marx definitely didn’t believe that workers conformed passively to the status quo and spent his life making sure they didn’t.) Why? Because he wanted to study the properties of the system–its laws of motion.

  4. Jim,

    “I don’t think Marx implied the existence of a homogeneous use-value called “means of production”

    What do you mean by “existence”? Did Marx imply the “existence” of a homogeneous use value called “hammer” (or “cotton” or “wine”)? What did he mean by “hammer”? The handle or the head? Both? How could he aggregate two pieces so different into a single homogeneous thing called “hammer”? Which part of the handle? Which part of the head–the part used to hammer or the part used to remove nails? What is homogeneous about the handle? Etc.

    Aggregation in economic practice is the counter-part of abstraction in theory. We cannot be humans without them. The same nihilistic arguments have been raised endlessly against abstraction by people who abstract without pausing to notice, like Moliere’s gentilhomme spoke prose unwittingly.

    In one direction: “How can you separate the productive forces from the relations of production when they are intertwined?” “How can you separate use value from value?” Etc. And, in the other direction: “How can you speak of ‘capitalism’ when there’s U.S. capitalism and German capitalism and Japanese capitalism, etc.?” “How can you speak of means of production in general, when there are n different means of production?”

    There’s no there there.

    1. Julio writes: >Aggregation in economic practice is the counter-part of abstraction in theory. We cannot be humans without them. The same nihilistic arguments have been raised endlessly against abstraction by people who abstract without pausing to notice…Did Marx imply the “existence” of a homogeneous use value called “hammer” (or “cotton” or “wine”)? What did he mean by “hammer”? The handle or the head? Both? How could he aggregate two pieces so different into a single homogeneous thing called “hammer”? Which part of the handle? Which part of the head–the part used to hammer or the part used to remove nails? What is homogeneous about the handle? <

      in CAPITAL, Marx wasn't talking about specific use-values (such as hammers). After chapter 3 of volume I, he abstracts from differences among use-values. The key for him was that for a commodity to have Value ("labor value"), it had to have a use-value to someone (i.e., use-value in general). The differences among commodities aren't in the product market in volume I; instead, it's only labor-power (the unique commodity) vs. other commodities, but he assumed that all of these things sold at value; he doesn't deal with the heterogeneity of the real world at all.

      It's only in volume II that he starts bringing in the different types of use-values (2 or three broad sectors). But his concern is totally with flows of value, not flows of use-values. In volume III, at a lower level of abstraction, there are a large number of different types of use-values. So he has to confront the unreal nature of the assumption he made in earlier volumes (price = value), an assumption that he knew was unrealistic from the start.
      — Jim

  5. Jim,

    It seems like we are not communicating.

    I wrote that the notion of “capital,” regarded as an abstract input in the specification of production possibilities in the neoclassical framework, is completely physical or technical. If all output, means of production and consumption goods, were produced by a single capitalist, then there would absolutely be no economics in the notion of “capital” (again, regarded as an abstract input, i.e. an aggregate of means of production). Why? Because the means of production would not have market prices. They would have “internal prices” (or shadow prices), but not market prices. These are the material proportions I talk about.

    Now, whether you refer to that as flow or stock matters not, since stock or flow only means that you look at one and the same thing at a point in time or over a period of time.

    In any case, you cannot allege that the capital critique doesn’t apply to Marx, because he didn’t differentiate at that point, but abstracted from the differences among the different means of production. Because the issue is whether such abstraction from the differences in specific use values was legit or not. If it’s legit in Marx, then it’s legit in the neoclassical framework as well. Why not?

    Now, this is not about Marx or the neoclassicals. It’s about whether it makes sense to abstract from the differences, which in practical terms translates as whether it makes sense to aggregate the means of production into a single department. My answer is this: Not only it makes all the sense, it is impossible not to aggregate in economic practice as it is impossible not to abstract from differences in theory. Impossible.

    The quest for the holy grail of the invariable measure of value, whether as a Sraffian “standard commodity,” eigenvalue vector, or general-equilibrium fixed point is just another way of couching one and the same thing–socially necessary labor time. If one pauses to think about it, producing and consuming is “transforming” or “substituting” or “transferring” (unilaterally transferring or reciprocally exchanging) input for input, input for output, and output for output. What integrates all those different things in the human experience is the “material factors or determinations of value” (Marx). That is the answer to the question: “What does that (input, output, or whatever) mean to me/us?” The specific social form (e.g. “value,” “political power,” etc.) in which such substitution, transformation, and transfer are embedded is a separate issue.

    1. >It seems like we are not communicating. In any case, you cannot allege that the capital critique doesn’t apply to Marx, because he didn’t differentiate at that point, but abstracted from the differences among the different means of production. Because the issue is whether such abstraction from the differences in specific use values was legit or not. If it’s legit in Marx, then it’s legit in the neoclassical framework as well. Why not? … this is not about Marx or the neoclassicals. It’s about whether it makes sense to abstract from the differences …The quest for the holy grail of the invariable measure of value, whether as a Sraffian “standard commodity,” eigenvalue vector, or general-equilibrium fixed point is just another way of couching one and the same thing–socially necessary labor time. <

      I was not talking about that subject at all. I don't know why it's relevant to my point.
      Jim

  6. As a reminder, Marx would say something like this about the establishment of communist social relations:

    “Let us now picture to ourselves, by way of change, a community of free individuals, carrying on their work with the means of production in common, in which the labour power of all the different individuals is consciously applied as the combined labour power of the community. All the characteristics of Robinson’s labour are here repeated, but with this difference, that they are social, instead of individual. Everything produced by him was exclusively the result of his own personal labour, and therefore simply an object of use for himself. The total product of our community is a social product. One portion serves as fresh means of production and remains social. But another portion is consumed by the members as means of subsistence. A distribution of this portion amongst them is consequently necessary. The mode of this distribution will vary with the productive organisation of the community, and the degree of historical development attained by the producers. We will assume, but merely for the sake of a parallel with the production of commodities, that the share of each individual producer in the means of subsistence is determined by his labour time. Labour time would, in that case, play a double part. Its apportionment in accordance with a definite social plan maintains the proper proportion between the different kinds of work to be done and the various wants of the community. On the other hand, it also serves as a measure of the portion of the common labour borne by each individual, and of his share in the part of the total product destined for individual consumption. The social relations of the individual producers, with regard both to their labour and to its products, are in this case perfectly simple and intelligible, and that with regard not only to production but also to distribution.”

    from CAPITAL volume I, chapter one

    “Within the co-operative society based on common ownership of the means of production, the producers do not exchange their products; just as little does the labor employed on the products appear here as the value of these products, as a material quality possessed by them, since now, in contrast to capitalist society, individual labor no longer exists in an indirect fashion but directly as a component part of total labor. The phrase “proceeds of labor”, objectionable also today on account of its ambiguity, thus loses all meaning.

    “What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges. Accordingly, the individual producer receives back from society — after the deductions have been made — exactly what he gives to it. What he has given to it is his individual quantum of labor. For example, the social working day consists of the sum of the individual hours of work; the individual labor time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labor (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as
    much as the same amount of labor cost. The same amount of labor which he has given to society in one form, he receives back in another.

    “Here, obviously, the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values. Content and form are changed, because under the altered circumstances no one can give anything except his labor, and because, on the other hand, nothing can pass to the ownership of individuals, except individual means of consumption. But as far as the distribution of the latter among the individual producers is concerned, the same principle prevails as in the exchange of commodity equivalents: a given amount of labor in one form is exchanged for an equal amount of labor in another form.

    “Hence, equal right here is still in principle — bourgeois right, although principle and practice are no longer at loggerheads, while the exchange of equivalents in commodity exchange exists only on the average and not in the individual case.

    “In spite of this advance, this equal right is still constantly stigmatized by a bourgeois limitation. The right of the producers is proportional to the labor they supply; the equality consists in the fact that measurement is made with an equal standard, labor.

    “But these defects are inevitable in the first phase of communist society as it is when it has just emerged after prolonged birth pangs from capitalist society. Right can never be higher than the economic structure of society and its cultural development conditioned thereby.

    “In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life’s prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly — only then then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!”

    from the Critique of the Gotha Programme

    On the basis of socialised production the scale must be ascertained on which those operations — which withdraw labour-power and means of production for a long time without supplying any product as a useful effect in the interim — can be carried on without injuring branches of production which not only withdraw labour-power and means of production continually, or several times a year, but also supply means of subsistence and of production. Under socialised as well as capitalist production, the labourers in branches of business with shorter working periods will as before withdraw products only for a short time without giving any products in return; while branches of business with long working periods continually withdraw products for a longer time before they return anything. This circumstance, then, arises from the material character of the particular labour-process, not from its social form. In the case of socialised production the money-capital is eliminated. Society distributes labour-power and means of production to the different branches of production. The producers may, for all it matters, receive paper vouchers entitling them to withdraw from the social supplies of consumer goods a quantity corresponding to their labour-time. These vouchers are not money. They do not circulate.

    CAPITAL Volume II, chapter 18, page 358

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