Friday, April 18, 2014

Theory of Abstinence Reconsidered

"Exactly a year before Nassau W. Senior discovered at Manchester, that the profit (including interest) of capital is the product of the last hour of the twelve, he had announced to the world another discovery. 'I substitute,' he proudly says, 'for the word capital, considered as an instrument of production, the word abstinence.'"
[In a footnote:] "It has never occurred to the vulgar economist to make the simple reflexion, that every human action may be viewed, as 'abstinence' from its opposite. Eating is abstinence from fasting, walking, abstinence from standing still, working, abstinence from idling, idling, abstinence from working, &c." -- K. Marx, Capital
Marx's footnote casually suggests a fertile potential that he didn't follow up on. I propose to use Veblen's notion of "conscientious withdrawal of efficiency" (or sabotage) and Robert Hale's "coercion" to outline what might be termed a "labour/abstinence theory of value" that avoids the pitfalls both of the misplaced concreteness of "embodied" labour and the unreal passivity of the equilibrium view of supply and demand.

Living labour-power is the consummate numéraire good because it is definitively limited by population and physiology at any given time while still being flexibly expandable. Keynes suggested as much in arguing that "we have been able to take the unit of labour as the sole physical unit which we require in our economic system, apart from units of money and of time."

By contrast, there are no such limits on the quantity of labour "embodied" in commodities, including physical capital. However, the value of such embodied labour is subject to depreciation due to obsolescence, wear and tear and over-accumulation (or excess capacity). So the first contrast between living labour power and labour embodied in capital goods is that the former is relatively fixed and the latter is indefinitely expandable -- at least in principle.

But there is also a second contrast, having to do with the perishability of living labour power. The worker who is unable to dispose of his or her capacity to work today can't put "yesterday's labour power" on the market tomorrow. It's gone. The penalty for not being able to immediately sell goods is not as final and can even sometimes result in a windfall. The same distinction applies equally to the conscientious withdrawal from the market.

Thus living labour power is a more or less definitive quantity that is disciplined by its perishability for a temporary withdrawal from the market, while labour embodied in capital goods is, in principle, indefinitely expandable and potentially rewarded by temporary withdrawal (abstinence) from the market. "Abstinence," then, makes its re-entry not in the form of a pious moral justification for profit but of a strategy for leveraging profitability by regulating the "scarcity" of capital relative to labour power.

"Value," in this account is not some mechanical adding up of units of labour power expended and/or embodied. Nor is it the passive intersection of complementary subjective utility functions. Instead it is the outcome of a "higgling of the market," to use Thornton's phrase, constrained by the properties of the labour-power numéraire. Thus it is constituted, in part, by labour-power and embodied labour but alternatively by the withholding of labour-power and embodied labour -- that is by abstinence of production, not in consumption.

The case for such a labour/abstinence theory of value can best be explained by arguing against competing interpretations that address elements of this argument but come to different conclusions. My foils will be Ludwig von Mises and John Roemer, for reasons which should become readily apparent.


JW Mason said...

I love the starting point here. But I would depart from it in a slightly different direction.

First, productive activity is inherently social -- it involves the coordinated activity of the entire community. In any production process that is extended over time, there are many different points at which it could be disrupted. Yes, having a crop next requires that whoever is in possession of the seed corn abstain from eating it. But just as much it requires that everyone in possession of a match abstain from setting the silo on fire. The capitalist is no different from any of us in abstaining from any of the billion possible things we could do to interrupt the production process. What makes the "abstinence" of the capitalist special is that he is socially recognized as having the right to engage in sabotage, not that he is uniquely capable of it.

That's where I thought you were going with this.

But instead you link labor to physical facts like population and physiology, which seems like a wrong turn. There's nothing physiological about labor. There's no basis in biology for distinguishing any particular set of human activities as work, or comparing their magnitudes. Labor is a social category, not a physiological one. And the homogeneity of labor that makes it suitable as a numeraire is not something that is true in general, but is a specific sociological consequence of the development of capitalism. In a world in which each person had their own kind of work, which was tied up with their social identity and the particular use-values they could claim from the product, it would not make any sense to link particular use-values to quantities of abstract labor. That has been the world the majority of people have lived in. Commodity production is a new way of organizing human productive activity, which has only become general in the last couple hundred years. It's only because the actual capitalist labor process separates people from the means of production and from claims on any particular use-values, and because it standardizes and deskills work and renders it socially meaningless, that we can think of labor as a quantity.

As for Keynes, what he was doing was postulating a similar homogenization of workers' consumption. The usefulness of the wage-unit depends on the assumptions that (1) the number of people whose claim on the social product takes the form of wages varies in a regular way with aggregate expenditure and (2) each person exercising such a claim receives a standard set of use-values. Physiology has nothing to do with it, I don't think.

Sandwichman said...

You may turn out to be right. This is very exploratory and I'm working it out as I go along. The reason I referred at the outset to physiology has to do with fatigue rather than muscle power. We'll see how that goes but it is good to be on notice that the argument there has to be explicitly worked out.

Your point about the social sanction for some kinds of sabotage (but not for others) is crucial and I'll need to incorporate it. Obviously, I've also glossed over the "socially necessary" and "abstract" aspect of labour power/time as the numeraire.

allis said...

“'Abstinence,” then makes its re-entry not in the form of a pious moral justification for profit but for a strategy for leveraging profitability by regulating the 'scarcity' of capital relative to labor value.” Sandwichman.

Capital requires labor to actualize its potential value; labor requires capital (or property) to actualize its potential value. The value realized by capital must at least reach its threshold costs. If these costs (interest payments, maintenance, amortization, etc.) are not met, the capital will cease being productive and the owner will lose his income from it. Similarly, the value realized by a worker must at least reach his threshold costs, or he will cease being productive. As Hale noted, even slaves require “incomes” of food and shelter.

When capital and labor actualize each others' potential value, the actual value realized normally exceeds the sum of the threshold values, and can be viewed as a firm's “income” or “surplus” or “profits.” Various outside claimants, like creditors and landlords and governments, normally take their cut first, and what is left over is distributed between the workers and capitalists (although the workers full share may be paid out before revenues are received.) The workers' ability to get any share above their threshold cost depends, as Hale noted, on their ability to withhold their labor (“coercion”) or, possibly, on outside coercion such as legally enforced minimum wages, which force the workers' price (wages) above the workers threshold cost (“subsistence' or slave rates).

Unfortunately for workers, without legal support for their efforts to withhold labor (union strikes) or without laws to raise their price (wages) above their threshold costs, the bulk of the surplus will be taken by the capital owners, who have an advantage over workers in the practice of abstinence.

Sandwichman said...

Yes, allis, it is precisely that "abstinence advantage" that I'm hoping to explore in this series of posts. One important aspect of that is clearly "the law" -- or, as some would argue -- an arbitrary and class-biased interpretation of law by judges.

JW Mason said...

" It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate."

Sandwichman said...

Adam Smith Wealth of Nations, Book 1, Chapter 8, "Of the Wages of Labour"

Not to mention The Master and Servant Act.

allis said...

Years ago, while taking a LaSalle law course, my father would say that when he got stuck regarding the judge's verdict, he decided in favor of the stronger party. His answers were rarely wrong.

Reading the economists, one might think there were no laws influencing economic power relationships.
Where are the studies showing otherwise?

I'm approaching the problem from a different angle, trying to show how “economic” theories conceal power relationships, focusing at the moment on the economists' supply and demand stories.

A note about utility. Economists embed the concept of scarcity into that of utility, making it seem to be an aspect of “satisfaction” rather than of power. Scarcity (absence) is not usually necessary for satisfaction; it is usually necessary for economic power.