On the I m p l i c a t i o n s of R u b i n s
E x p o s i t i o n of A b s t r a c t L a b o u r
This paper extends the Marxian
extension is to review the recent
treatment of the subject. The
peripheral to the main thrust
The paper is divided into three
labour as elaborated by Rubin.
are examined. The implications
been worked out in section III
Introduction
THIS paper deals, primarily, with the theme
of abstract labour. As Marx's trenchant nine-
teenth century critic, Bohm-Bawerk, pointed
out, the fundamental problems of Marx's
theory of value arise right at the beginning
of volume I of "Capital", in the first few
pages of chapter I. The paper takes up this
question—the qualitative value problems—
the central issue of the debate in recent years.
Needless to say, the battle cannot be fought
within the terms of bourgeois economics,
without calling into question its defining
characteristics. There arc reasons to believe
that the defining characteristics inhere in a
particular problematic of Marxist discourse
itself that gained supremacy during the thir-
ties and gradually established its hegemony
the world over and which persists to this day
among all sections of Marxists, revisionists
as well as revolutionaries. The paper is a
modest endeavour to come out of this pro-
blematic and, thus, an attempt to resurrect
an yet older tradition of Marxist analysis,
rooted in the theoretical discourse of what
can be termed as the pre-Stalin period. In
particular, the paper extends the Marxian
concept of abstract labour on the line pro-
posed by Rubin. The object of the extension
is to review the recent debate on the issue,
and the related questions that follow, in the
light of Rubin's treatment of the subject.
I concentrate on the aspects of Rubin's
analysis that have a bearing on the recent
debate. The focus is on the qualitative value
problem; the quantitative aspects are peri-
pheral to the main thrust of this paper.
The paper is divided into three sections. Sec-
tion II outlines the essentials of the Marx-
ian concept of abstract labour as elaborated
by Rubin. In this context, the section points
out the limitations of Rubin's analysis and
possible modifications, A particular interest
of the section is to examine Diane Elson's
suggested modifications of Rubin's analysis.
The implications of Rubin's analysis, in the
context of the recent debate on value theory,
have been worked out in section I I I .
II
R u b i n on A b s t r a c t Labour
TVaditional Marxist discourse identifies
abstract labour with simple/unskilled labour.
PE-40
Ajit Kumar Chaudhury
concept of abstract labour on the
debate on the issue, and the related questions
author's focus is on the qualitative
of this paper
sections. Section II outlines the
The limitations of Rubin's analysis
of Rubin's analysis, in the context
Consequently, it considers the phenomenon
o f ' d e s k i l l i n g ' to be the central moment of
the abstraction. By contrast, Rubin em-
phasises the qualitative variation between the
'simple labour' employed in different bran-
ches of production. Simple labour, in other
words, is not considered homogeneous.
Rather, it is the equalisation of labour bet-
ween the different branches that emerges as
the key problem and the process of reduc-
tion in skill is subsumed with it. In this
connection, Rubin analysis the following
analytical categories of labour,
(i) Social labour (SL)
(ii) Socially homogeneous labour (SHL)
(iii) Abstract labour ( A L )
Social labour
Capitalism discards all principles of direct
social co-ordination of labour. Labour
undertaken on private account, becomes
social only through the mediation of ex-
change. This is in direct contrast to the
organisation of labour under various pre-
capitalist societies where the system of kin-
ship or caste hierarchy lays down rules of
immediate social supervision. Social labour
is universal, though it takes on different
forms in different societies. The purpose of
theoretical analysis is to lay bare the sepcific
form of social labour.
Socially Homogeneous labour
Socially homogeneous labour is the
specific form that social labour assumes
under specific social conditions. Not in all
societies is labour socially equalised. Of
course, socially homogeneous labour,
though not pertinent to all epochs, does
cross the analytical frontiers of capitalism.
Rubin, here, introduces a distinction between
the subjective and objective processes of
equalisation. In a socialist society, for ex-
ample, labour is equalised through the cen-
tralised planning programme undertaken by
the ruling party—usually a communist one.
The plan, here, realises the content of the
equality as defined by the party programme;
the direct social supervision of the planning
authority in order to realise such an equality
underlines the 'subjective' character of the
process. Alternatively, a formal equality, en-
dorsed by an impersonal civil law enforced
by the state constitutes the content of
Economic and Political Weekly, Vol XXI, No 4
Review of Political Economy, January 25, 1986
line proposed by Rubin. The object of the
that follow, in the light of Rubin's
value problem; the quantitative aspects are
essentials of the Marxian concept of abstract
are pointed out and possible modifications
of the recent debate on value theory, have
socially homogeneous labour under capita-
lism. Such a concept of bourgeois equality
is realised in the exchange of commodities
that the market deems to be of equal
value—i e, through an objective process. The
idea, thus, is realised in the act of exchange;
the realisation on the other hand presup-
poses the idea. Consequently, the idea of
equality in the ultimate analysis is epitomis-
ed in money. Money, paradoxically, is the
great equaliser in a capitalist society.
Abstract labour
Abstract labour, according to Rubin, is the
form assumed by socially homogeneous
labour in a capitalist society. The equalisa-
tion of labour under capitalism which, as
already indicated, is mediated by the equali-
sation of commodities in the market, stands
above all differences in caste, creed and oc-
cupation. The idea of equality extends on
a formal plane to the relation between the
labourer and the capitalist as the seller and
buyer of labour power. The idea of equality,
rooted in the pre-history of mankind and
resurrected by Christianity as equality in the
eyes of God, appears here as equality before
the state, as realised in the concrete process
of exchange. Philosophy is rewritten; God
is no longer the substance, neither is Reason.
The substance is abstract labour.
Abstract labour, consequently, is not a
physiological concept; equal labour, in this
case, does not necessarily imply expenditure
of an equal amount of physical energy.
Rather, it pertains to the standards of a
specific society as judged by the norm of the
market, i e, as determined by a specific social
process. Thus abstract labour is not a simpli-
fying assumption invoked to facilitate the
analysis of capitalism. It is, instead, a real
process, taking place in an exchange eco-
nomy where commodities have equal status
and therefore the labour that produces these
are treated as equal from the formal stand-
point. Further, the real process, as described
by Rubin, is distinct from the one outlined
by Sweezy et al The real process, in Sweezy's
case, equalises the physiological labour em-
bodied in a commodity through the develop-
ment of machinery. In manufacture there is
a difference between the skills of labour
employed in the different industries. As
machines gradually establish their imper-
ECONOMIC AND POLITICAL WEEKLY
sonal rules, the labour process becomes
devoid of skills and 'abstract labour' makes
its appearance in the form of the standar-
dised work done per clock-hour. Abstract
labour, in Rubin's sense, on the other hand,
does not have such a physico-empirical
measure that can be captured by a mechani-
cal clock and has to be graduated on a
socio-temporal scale. The issue, however, is
not elaborated any further.
PRIVATE L A B O U R A N D A B S T R A C T L A B O U R
Private labour is labour by private in-
dividuals in a double sehse. Individuality, in
the negative sense, is freedom from com-
munal or personal ties while its positive con-
tent is ownership of property. The former
establishes men as free subjects under an
unpersonal system of civil law. The latter
gives an objective content to the subjective
individuality. Labour of free subjects
abstracted from its objective content can
only be in the domain of heterogeneous
forms of concrete labour. Private labour
defined by the double aspect of individuality
is necessarily homogeneous and therefore
with an intrinsic cardinal measure. A l l
labour is then, by definition, labour of free
subjects producing property as the common
form of product. Stated alternatively, labour
is homogeneous from the double viewpoint
of origin and realisation. Such a notion of
private labour is also appropriate in the
sense that exchange involves only the pro-
perty, discussion of products.
Private labour contains the basis of
becoming social in the alienability aspect of
property. However, the definition is without
the actual becoming into social labour. The
concept of abstract labour incorporates this
actual becoming; it is defined as private
labour becoming social through equalisation
with money in the expression of exchange-
value. The character of private labour gives
abstract l a b o u r i t s intrinsic measure while
the process of socialisation supplies its real
measure in money. Private labour presup-
poses an impersonal system of civil law and
social labour presupposes exchange-value.
There cannot thus be any formal determina-
tion either of exchange-value by abstract
labour or of state by economy
RICARDO, SMITH AND M A R X ON
EQUAL LABOUR
Marx's concept of abstract labour/equal
labour is usually viewed as an extension of
the concept of equal labour in classical
political economy Ricdrdo, for example, was
aware of the implications of the hetero-
geneity of labour. He, however, viewed the
problem of equalisation of labour from the
standpoint of his theory of distribution. The
problem of distribution between capital and
labour cannot be posed, in terms of the
analytical tools available during Ricardo's
time, unless both are shown to be homo-
geneous on a theoretical plane. Equalisation
of the rate of p r o f i t simultaneously solves
the problem of heterogeneity of capital in
the context of distribution theory. The pro-
blem of heterogeneity of labour also does
not pose much of a problem in Ricardo's
model, inasmuch as Ricardo could assume,
on the basis of empirical observations,
relative wage to be fixed. Thus, according
to Ricardo, 1
The estimation in which different qualities
of labour are held comes soon to be adjusted
in the market with sufficient precision for all
practical purposes, and depends much on the
comparative skill of the labourer and inten-
sity of the labour performed. The scale, when
once formed, is liable to little variation. If
a day's labour of a working jeweller be more
valuable than a day's labour of a common
labourer, it has long ago been adjusted and
placed In its proper position in the scale of
values. In comparing, therefore, the value of
the same commodity at different periods of
time, the consideration of the comparative
skill and intensity of labour required for that
particular commodity needs scarcely to be
attended to, as it operates equally at both
periods.
Smith also treated the problem of equal
labour in the same spirit. For example, he
wrote,
It is not easy to find any accurate measure,
either of hardship oringenuity. In exchang-
ing, indeed, the different productions of dif-
ferent sorts of labour for one another, some
allowance is commonly made for both. It is
adjusted, however, not by any accurate
measure, but by the higgling and the bargain-
ing of the market according to that sort of
rough equality, which, though not exact, is
sufficient for carrying on the business of
common life.
It is apparent that the concept of equal
labour in classical political economy (CPE)
is a theoretical approximation of an em-
pirical quantity It is this idea that can be
found in a developed form in the conven-
tional literature on Marx's abstract labour.
It has been argued, for example, that
through the analysis of reduction of skilled
labour to unskilled labour, Marx laid a
material foundation to the concept of equal
labour in CPE. The Marxian concept of AL
is thus presented as an extension of the
classical concept of equal labour.
Marx, as is apparent from Rubin's analy-
sis of abstract labour, approached the pro-
blem from a fundamentally different
angle. 2 The starting point in Marx's
analysis is the concept of AL in the sense
of Hegel. While probably connected with the
concept of equal labour, it has, however, ab-
solutely no relation to the equality as
perceived by classical political economy.
Abstract labour, for Marx, implies equality
in the eyes of law, in the sense of equal rights
in a contract. "Capital" examines the pro-
blem of realisation of this equality in the
context of a capitalist society. Marx is hardly
dealing here with the problem of hetero-
geneity of labour across occupations in the
sense of the classical economists. The obses-
Review of Political Economy January 1986
sion of classical economists w i t h this pro-
blem culminates in the work of Bohm-
Bawerk who charges Marx's account of
equalisation of labour on the basis of ex-
change as being guilty of circular reasoning.
In contrast, Marx was referring to a dif-
ferent notion of equality that may be traced
back to Rousseau and Hegel. Unaided by a
theoretical understanding of the process of
exchange, Rousseau's admirable critique of
equalisation of labour overlooks the positive
aspects of the implicit concept of equality
itself. At the other extreme, all contradic-
tions resolve themselves in Hegel's concep-
tion of abstract labour. Matx's concept of
A L , though developed along the lines of
Hegel and Rousseau, is not a synthesis of
the two, and also is distinct from the quan-
titative notion of equal labour in CPE.
Quantitative aspects of AL assume impor
tance at a later stage of Marx's analysis; and,
as we shall see later, this 'quantity' is also
distinct in meaning from quantity as under-
stood by the classical economists.
MARVS EXPOSITION OF ABSTRACT
LABOUR
Much of the confusion over the concept
of abstract labour could have been avoided
if Marx had started from the bourgeois no-
tion of equality and freedom. Instead, Marx
started from commodities—from exchange
and exchange ratios—and on its basis deve-
loped the idea of bourgeois equality and
freedom simultaneously with its critique. In
discussing exchange, one has to bear in mind
that the exchange ratio in Hegel is a quali-
tative entity Quality is understood here as
an internal determination that is identical
with the being it determines. Quantity on the
other hand is ah external determination.
However, in a particular category of quan-
tity, the ratio, quality re-emerged. The ratio
then is a unity of quality and quantity
( . . . an unity that is reflected in . its
measure). 1
Since the exchange ratio, like any other
ratio in Hegel is also qualitative, it is quite
likely for a student of Hegel to probe into
the qualitative aspects of the exchange ratio.
Hegel was probably interested in the issue
himself. Lenin for example mentioned in his
Philosophical Notebooks that
regarding the question of measure it is not
without interest to note the remark made in
passing by Hegel that 'in developed civil
society aggregate of individuals belonging to
different trades are in a certain relation to
one another.
I m p l i c i t in exchange ratios are these
relations—a quality Science required that
this quality be explained. It is this philoso-
phical position that leads Marx to analyse
value as a quality.
Now exchange value refers to the exchange
ratio between two commodities. In order to
be comparable commodities exchanged
against one another must have something in
common. This is equal labour or abstract
PE-41
Review of Political Economy January 1986
labour For example one ton of iron and one
ton of coal are physically comparable in
terms of their common weight. Marx then
analyses the common element in exchange
ratios, i e, equal labour/abstract labour, It
is not merely labour in general that gives AL
its comparability. Abstract labour is specific
to capitalism. It is the equality in the eyes
of law that makes commodity production
viable, and along with it the realisation of
the concept of equal labour. The circle
then is complete: C o m m o d i t y Ex-
change ratios® Quality® Value®Equal
Next we intend to examine the reaction
between quantity and quality in the current
literature on the subject. It is acknowledged
here that in order to be measurable, exchange
ratios must contain something in common,
viz, abstract labour. However this in itself
is incomplete and taken to its extreme may
lead to the depoliticisation of Marx and turn
" C a p i t a r into an exercise in method. It is
necessary to emphasise here that the proper-
ty common to commodities is not merely
labour in general but equal labour as it ap-
pears in a specific society—civil society—
and is therefore endowed with a special
quality—the quality of individuals con-
sidered to be formally equal. The emphasis
here is on the issue of equality and freedom
and not on cornmensurability. As such star-
ting from an analysis of equality and
freedom, Marx shows how freedom in a
capitalist society implies its negation -the
legation of that freedom—and ultimately
the negation of the negation—socialism.
WHY UTILITY IS N O T A M E A S U R E OF
VALUE
U t i l i t y like abstract labour ensures com
mensurability and therefore has the claim to
be a measure of exchange ratios; it also
satisfies the condition of equivalence in
terms of marginal utilities. Marx rejects
utility as a measure of value because it is
not consistent with his philosophical pre-
suppositions and consequently his know-
ledge object. This philosophical position
that society is prior to individuals and not
merely an aggregate of individuals is a pre-
supposition rather than a proposition in
"Capital". Utility, in the concrete, refers to
individuals and implies a description of
society as a mere aggregate of individuals
unless one assumes that the individual refer-
red to is representative in some sense. Thus
starting from utility one cannot make a valid
abstraction and remains a prisoner of the
concrete. Utility, in the concrete is common
to all epochs and consequently fails to cap-
ture the specificity of capitalism. Marx
therefore rejects utility or use-value in
general as a measure of value—the special
quality of a particular social organisation. 4
Use-value relates to wealth and Marx in
"Capital" is discussing commodity, capital
PE-42
rather than wealth of nations. Therefore,
Marx writes,
Whatever its social form may be, wealth
always consists of use-values, which in the
first instance are not affected by this form.
From the taste of wheat it is not possible to
tell who produced it, a Russian serf, a French
peasant or an English capitalist. Although
use values serve social needs and ther fore ex-
ist within the social framework, they do not
express the social relations of production...
To be a use-value is evidently a necessary pre-
requisite of the commodity, but it is im-
material to the use-value whether it is a com-
modity. Use-value as such, since it is indepen-
dent of a determinate economic form, hes
outside the sphere of investigation of political
economy
RUBINS DILEMMA
A captive of his times, Rubin fails to ap-
preciate the philosophical implications of his
own theory. A distance separates his novel
theoretical frame from his orthodox philoso-
phical position. Abstract labour is actualised
in exchange. Logically, this implies that there
cannot be an external measure of AL prior
to exchange. Rubin here faces the dilemma:
"Only exchange brings about this equalisa-
tion, How can we reconcile these statements
of Marx with the basic view that value is
created in exchange? It is hard to reconcile
these views."
Rubin is unable to reconcile this because
he docs not examine the philosophical no-
tion of measure. In this respect, Diane
Elson's analysis is a significant improvement
over Rubin's. Elson, following Marx, in-
troduces two notions of measure—external
measure and internal measure. Thus while
value itself has an internal measure that
relates to production, value magnitudes give
the external measure that follows from ex-
change. Value magnitudes consequently can-
not be defined independently of exchange,
it is only after the mediation through ex-
change that one can attribute a quantitative
dimension to such magnitudes.
In the concluding portion of his analysis,
Rubin in essence abandons his theory of A L .
The problem of distribution of social labour
is presented here as a distribution of con
crete instead of A L. An attempt is also made
to reconcile the theory of S and D with
Marx's theory of prices of production.
Prices emerging from the intersection of S
and D are, according to Rubin, unstable
prices—as they do not guarantee the equali
sation of the rate of profit. Consequently
capital moves across sectors, supply curves
change. Thus the supply-demand model
throws up ever-changing equilibria and
stability is reached only with the establish-
ment of a uniform rate of profit. The supply
curve corresponding to this rate of profit is
associated with stable equilibria. Thus
supply demand theory is reconciled with the
theory of prices of production.
ECONOMIC AND P O L I T I C A L WEEKLY
C R I T I Q U E OF D I A N E ELSON
While Elson follows in many respects she
departs in her conceptualisation of AL as
pertinent to all epochs. Elson adheres to
Marx's contention that the problem of
labour time is valid for all societies while the
law of value is specific to capitalism. This
suggests the conclusion that in Marx, the
category of value and the category of AL
are derived through alternative routes. Con-
sequently, the problem of allocation of this
labour-time common to all epochs is endors-
ed here by a concept of labour in general'
that is itself valid for ail epochs. This 'labour
in general 1 is Elson's abstract labour.
The citation from Marx, however, does
not necessarily imply a concept of AL that
is valid across epochs, It is true that Marx
writes,' 5
The economy of time, ultimately all
economy, is reduced to this. Society must
distribute its lime functionally so as to ob-
tain a production in accordance with all its
needs; so the individual must also divide his
time correctly to acquire knowledge in the
right proportion and to fulfil the various
demands on his activity In conditions of pro-
duction in common the first economic law
remains, therefore, the economy of lime, the
planned distribution of labour-time between
the different branches of production. But all
this is quite distinct from the measurement
of exchange values by labour-time.
However, 'time' here does not refer to clock-
time; instead, it is to be understood in a
socio-temporal sense. Time corresponds to
the theoretical space; as the space of correla-
tions changes, so does the meaning of time.
Social time, therefore must be understood
in the context of some specific society. What
capitalism considers to be a drifting or lazily
paced life, for example, may constitute for
some pre-capitalist people a reasonable
social tempo. Time is understood in relation
to change, i e, to the transformation of the
objects under studies. The objects change
across societies inciting a change in the
meaning of time itself. Capitalism may not
appreciate the social dynamic articulated
through dances and other spontaneous
orgies associated with the tribal rituals of
sacrifice. But that, by itself, cannot deny the
obvious value of the time spent on such
activities, in the organisation of these anti-
quated' modes of social reproduction. As
theory seeks to analyse the distribution of this
social time that is contingent on the par-
ticular social pattern, an invariant concept
of general labour time, like Elson's, is easily
seen to be a contradiction. This departure
from Rubin's concept of abstract labour has
several consequences. To start with, the
distinction between socially equal labour
and abstract labour, the two key concepts in
Rubin's frame, is obliterated. For Rubin,
abstract labour is the particular form of
socially equalised labour that one encounters
in a capitalist society. Consequently it can-
not be defined except with reference to the
ECONOMIC AND P O L I T I C A L WEEKLY
process of exchange. It follows that socially
equalised labour is more a general category,
though not a universal one.
Thus Elson fails to appreciate the implica-
tions of AL for political practice. The very
generality of this category of 'abstract
labour', according to Elson, leaves no room
for concrete political action. Significantly,
political activity is shifted out ofthe domain
of abstract labour to that of concrete labour
in Elson's analysis. 6
The position, we think, is Hegelian. Hegel
locates the social dynamic w i t h i n the con-
tradiction between the lord and his serf, the
latter's consciousness being assigned the
leading role. The 'self-consciousness' of the
serf that arises out of his separation from
the concrete labour that he embodies, con-
stitutes the motive force behind this
dynamic In civil society, where the concrete,
personalised, dominance-sub ordination rela-
tionships between the lord and his are replac-
ed by the impersonal rules of abstract
labour, such a process ceases, to, operate,
Hegel's dynamic therefore ends with civil
society; the transformation to a more deve-
loped mode of production, e g, socialism,
is inconceivable.
Rubin's conception of S H L , as a more
general category, that includes AL as a par-
ticular, enables a better insight into the social
dynamic AL contains within it, its opposite,
the socially equalised, labour of a higher
form, much as the bourgeois notion of
equality contains within it the concept of
socialist equality. Nor are all contradictions
resolved"here; instead, new ones emerge,
heralding higher forms of political action
AL i e, social labour formally equalised in
the sense that it enjoys bourgeois freedom
provides the basis for political action in
capitalist society. It is conscious rather than
inert, being conscious of its formal freedom
to enter into a contract, and hence also of
the negation of true freedom—which under
capitalist society is a negation that only the
introduction of socialism can efface. A L ,
then, is labour endowed w i t h a culture. It
is the conscious organised action of this
cultured and formally free labour that makes
real emancipation possible.
Ill
Implications of R u b i n ' s Analysis
In an appendix to volume I I I of "Capital"
Engels contends that value magnitudes (VM)
are historically prior to prices of production.
VM are involved in the barter trade between
independent producers in some pre-capitalist
systems. Engels observes that: 7
The peasants of the middle ages knew fairly
accurately the labour-time required for the
manufacture of the articles obtained by him
in barter. Not only was the labour-time spent
on these products the suitable measure for
the quantitative determination of the values
to be exchanged, no other was at all possi-
ble Or is it believed that the peasant and the
artisan are so stupid as to give up the pro-
duct of ten hours labour of one person for
that of a single hour's labour of another? No
other exchange is possible in the whole period
of peasant natural economy than that in
which the exchanged quantities of com-
modities tend to be measured more and more
according to the amounts of labour em-
bodied in them.
But Engels' position is found to be untenable
even if history supports the existence of such
societies. The labour theory of value pre-
supposes the existence of 'equal labour', as
Rubin so aptly demonstrates. Different types
of labour are equalised only through ex-
change mediated by money. By definition,
barter precludes money and hence a mecha-
nism for ensuring equality between different
types of labour. It is however a relief to find
that elsewhere, Engels limits the role of
labour theory of value to capitalism as ap-
parent from the following passage:8
Economic value is a category specific to com-
modity production and disappears with the lat-
ter, as it likewise did not exist prior to com-
modity production. The relation of labour
to the product, before as after commodity
production, is no longer expressed under the
value-form.
INVALIDITY OF L A W OF V A L U E IN A
SOCIALIST SOCIETY
The operation of the law of value is con-
tingent on the existence of abstract labour
which constitutes the content of the value
form. As already stated, AL is labour
equalised on the basis of exchange, imply-
ing a distinction between AL and SHL.
Under socialism, labour is equalised by the
subjective evaluation of the planner and
ultimately the party instead of the market.
It follows that Rubin's exposition of AL con-
tradicts Stalin's notion of validity of the law
of value under socialism. The existence of
a market in a socialist society does not by
itself validate the law of value. Introduction
of the appropriate planning mechanism
under the guidance of the party changes the
content of socially equal labour. As form
and content are dialectically related, a
change in the content implies a correspon-
ding change in the value form. Consequent-
ly, under socialism the law of value ceases
to operate.
Studies on AL that identify simple labour
with the abstract conceal the distinction
between the simple labour employed in
various branches of production. Deskilling
is presented here as the central—indeed the
sole—issue regarding A L . Particular skills
assumed to be the products of the system
itself are expressed as multiples that are
determined concurrently w i t h the value
magnitudes by solving a set of simultaneous
equations. Value magnitudes and abstract
labour, therefore, are determined from the
technical conditions of production alone,
without any reference to the process of
exchange
Review of Political Economy January 1986
Except for a few restrictive cases, the ex-
istence of these skill multiples destroys the
uniformity of the rate of exploitation across
industries. The uniformity is valid only if the
ratio of wages of skilled to unskilled labour
is equal to the multiple of reduction men-
tioned above It is worth noting that the
absence of an uniform rate of exploitation
endangers the validity of certain basic pro-
positions of capital.
Rubin firmly rejects this method of reduc-
ing skilled to unskilled labour on the basis
of technical conditions alone For Rubin
labour is equalised through exchange; labour
producing different use-values is considered
equal because it creates commodities which
are treated equally on the market. The
market, in other words, compares them on
the basis of some identical or undifferen-
tiated norm. A n d as the commodities are
considered equal in terms of the bourgeois
ideals of equality and freedom, so must the
labour producing them be treated on an
equal footing. The labour, thus equalised,
is not measured by a clock, but by the social
time corresponding to the norm specified by
the market. Thus the internal or immanent
is reflected exclusively through the external
measure of the labour embodied in com-
modities, in the prices of production, and
cannot be measured without any reference
to it. The existence of objective processes
behind the equalisation is acknowledged,
but contrary to traditional expositions these
processes themselves are considered to be
unamenable to mathematical formulation.
The problem of 'reduction' may, conse-
quently, be seen as a false problem, arising
out of the and chanistic interpretations that
identify skills with human capital. It is in
other words a product of the neoclassical
economic philosophy of vulgar materialism
that tries to give AL in "Capital" some
substantive material content rather than a
historically developed form of the social
relations of production.
Significantly neither Bohm-Bawerk nor
Hilferding, his critic, adopts this method of
reduction. Bohm-Bawerk charges the con-
cept of AL of being guilty of circular reason-
ing. Labour itself equalised on the basis of
equivalences of exchange cannot be used to
explain the ratio of these same equivalences.
Elsewhere, Bohm-Bawerk summarily rejects
any attempt at reducing skilled labour to the
unskilled labour embodied in it. Hilferding
in his defence also accepts the determina-
tion of AL in the process of exchange. Con-
sequently his defence of the so-called cir-
cularity is on the ground that the objective
of theory here is to investigate the laws of
change—in this case the change of prices—
rather than to explain the prices of produc-
tion by empirical means. On the subject of
A L, Hilferding remarks: 9
There is no question here of the same
amount, no question of quantitative equality.
We are solely concerned with the com-
PE-43
Review of Political Economy January 1986
parability of different kinds of labour, that
is to say with the possibility of expressing
them in terms of some common measure,
with the possibility of their qualitative
equalisation.
In this connection Hilferding adds that the
reduction ratio between skilled labour and
simple labour need not be determined in ad-
vances of prices, because Marx's purpose is
not to determine the height of prices. As
Hilferding writes:
It is really true, however, that in default of
a knowledge of the ratio [reduction ratio bet-
ween skilled labour and unskilled labour] the
law of value becomes unworkable? In strik-
ing contrast with Bohrn-Bawerk, Marx looks
upon the theory of value not as a means for
ascertaining prices, but as the means for
discovering the laws of motion of capitalist
society. Experience teaches us that the ab-
solute height of prices is the starting point
of this movement, but, for the rest, the ab-
solute height of prices remains a matter of
secondary importance, and we are concerned
merely with studying the law of their varia-
tion. It is a matter of indifference whether
any kind of skilled labour is to be reckoned
the four-fold multiple or the six-fold multi-
ple of unskilled labour. The important point
is that a doubling or trebling of productive
power in the sphere of skilled labour would
lower the product of skilled labour two-fold
or three-fold vis-a-vis the product of unskill-
ed labour (by hypothesis unchanged).
Hence H i l f e r d i n g dismisses the necessity of
determining the 'multiples of reduction' in
advance of prices on the ground that the
determination of the level of prices is not
Marx's purpose.
IMPLICATIONS FOR T H E A N A L Y S I S OF
TRANSFORMATION PROBLEM
Traditional Anglo-Saxon discourse on the
transformation problem (TP) attempt to
derive the value magnitudes and prices of
production from input coefficients. The
former are consequently shown to be
measurable in terms of the latter This is
followed up by an examination of Marx's
conjectures on value magnitudes and prices
of production. On this basis, it is claimed
that though either of the t w i n equalities
0) sum of values = sum of prices, and
(ii) profit = surplus value can be proved by
normalisation not both the equations can be
simultaneously satisfied. Other conjuctures
on the ratio of economic magnitudes
are shown to be valid under restrictive
conditions.
Extensions of Rubin clearly demonstrate
that these mathematical exercises are based
on some fundamental misconceptions. The
authors are, in fact, dealing here with con-
crete labour The equations involving the
technical conditions of production [aij's and
aoj's] are derived without any reference to
exchange and therefore involve concrete
labour. Consequently such exercises are im-
permissible in the context of the Marxian
frame.
PE-44
The dependence of AL on the equi-
valences established in the course of ex-
change rules out the possibility of any
dichotomy between prices and values. In
other words, the entire mathematical exer-
cise involving the application of Leontief-
type input-output coefficients to the deter-
mination of value follows from a philoso-
phical position that is fundamentally con-
tradictory to Rubin's line of thought.
Such standard works tend to isolate the
basic relationship into two separate and un-
connected compartments: (a) technical rela-
tions, and (b) social relations. Value magni-
tudes are determined exclusively by technical
relations while social relations are seen to
enter into the determination of the prices of
production,value magnitudes therefore are not
historically specific concept but are valid in
general inasmuch as they are dependent
solely on certain basic technical relations
that can be found in all societies. Only prices
of production are determined historically
and arc consequently specific to capitalism.
Marxism however does not support such a
universal value-category that is prior to the
prices of production. As the sum of values
is determined from the value equations,
while the sum of prices is determined from
the price equations, it is pointless to verify
the equality between the sum of values and
the sum of prices. Rubin emphasises that
since the sum of values cannot be determin-
ed without any reference to the sum of
prices, any attempt to examine the equality
between the two is absolutely inconsequen-
tial. The normalising devise also tends to
evade the issue.
An extension of Rubin reveals that value
magnitudes rather than input coefficients
must provide the starting point for the
theory of value. The determination of value
magnitudes as well as empirical derivation
of prices of production are of no conse-
quence in this context. Marx's own deriva-
tion of the prices of production is direct, in-
stead of being mediated by the technical co-
efficients of production. Consequently his
solution of the transformation problem does
not address the question of determination
of V M . Here, it must be emphasised, lies the
strength of Marx's method, rather than its
weakness. Value magnitudes are not em-
pirically measurable; empirical magnitudes
must be related to concrete labour. Abstract
labour makes its appearance in the real pro-
cess of exchange and its internal measure s -
value magnitudes—are restricted to a speci-
fic historical domain in capitalism. By
definition, this internal measure of value
must depend on the external measure.
As VM are not empirically determined,
neither are prices of production. They are
only explained by the V M . As Hilferding's
remarks quoted in the earlier section make
clear, M a r x was not interested merely in the
determination of the absolute level of prices.
Neither a determination of prices nor an ex-
planation of their variation is integral to the
ECONOMIC A N D P O L I T I C A L WEEKLY
understanding of the laws of notion of
capitalism.
[I am indebted to Debaprasad Chatterjee, Par-
tha Chatterjee, Kaiyan Sanyal and Sarbajit
Sengupta for helpful discussions. The croors—
and idiosyncracies—are mine.]
[For unavoidable reasons the notes to this
article will appear next week. Ed]
LIC
LIFE INSURANCE CORPORATION OF
I N D I A ( L I C ) h a s an ambitious programme
of equipping its divisions and branches with
inkroprocessors for uptodate record mainte-
nance and effective post-sales service to
customers. As many as 339 microprocessors
are being located in various divisions and
branch offices. A S Gupta, Chairman, has
stated that in 1984-85 there has been a
substantial decline in the percentage of
outstanding claims to total claims payable
during the year. The Corporation is pro-
gressively opening offices in various parts
of the country, particularly in the rural areas
so that there w i l l be a better contact with
the public The renewal expense ratio and the
overall expense ratio for the year ended
March 1985 show a fail from those of the
previous year. The gross yield on the mean
Life Fund recorded an increase to stand at
9.46 per cent as against the previous year's
9.19 per cent and the total income of the
Corporation rose to Rs 2,519.99 crore from
the previous year's Rs 2,173.22 crore, a rise
of 15.96 per cent. The combined fund of the
L I C constituting Life Fund, Capital Redem-
ption and Group Gratuity and Superannua-
tion Funds has gone up by Rs 1,387.63
crore. As on March 31, 1985 it stood at
Rs 11,643.97 crore (Rs 10,256.34 crore). In-
dividual assurances rose to Rs 5.398 crore
from Rs 4,415 crore, showing an increase of
22.3 per cent. The number of new individual
life policies issued also increased by 3.34 lakh
to 27.05 lakh. Group new business worth
Rs 8,395 crore (Rs 7,525 crore) was under-
written. A combined new business worth
Rs 13,793 crore (Rs 11,940 crore) was tran-
sacted on individual assurances and group
schemes. New business done in rural areas
showed an increase of 24.5 per cent over the
previous year in terms of sum assured.
Foreign business has been showing consi-
derable improvement over the last three
years. The number of policies issued has
gone up by about 6.2 per cent over the pre-
vious year. New business worth Rs 1,508.94
crore under Non-Medical Schemes covering
13.63 lakh policies was finalised as compared
to the previous year's business of Rs 1,153.45
crore on 11.70 lakh policies. Salary Sav-
ings Scheme business (new) amounted to
Rs 1,112.65 crore under 7.44 lakh policies as
against the preceding year's business of
Rs 833.63 crore under 6.07 lakh policies.