Joan Robinson on Marxist Economics, National Accounting and Exploitation

"How does the law of value, which was devised to penetrate the disguises of capitalism, turn out in a socialist economy?

First of all, labour-value as a unit of measurement of National Income is quite useless. We cannot estimate the total value of the goods produced in a year by simply totting up the hours of labour that have gone into them.

To begin with there is the problem of distinguishing between productive and unproductive labour...

Adam Smith is groping for the concept of labour which contributes to the process of accumulation. Marx took over the distinction between productive and unproductive labour. He includes transport as productive, but excludes commerce. In practice, in calculating National Income in the socialist countries, the line seems to be drawn between physical commodities and services. Thus a hat is part of National Income, but a hair-do is not. There may be very good empirical reasons for this procedure. A growth of productivity can be measured much more easily when there is a physical output (though differences in quality are hard to catch), while services can only be valued at what they cost. But from a philosophical point of view the distinction between value-producing labour and the rest is not very easy to understand...

Value is the product not of the hours of work actually expended on a job, but of socially necessary labour time. Marx was careful to avoid the absurd argument that the products of a slow worker contain more value than the product of an efficient one. Technical progress and accumulation of capital equipment reduce the value of given commodities, and when obsolete methods are still being used side by side with superior techniques or when some groups of workers are using more mechanical equipment than others, and at the same time some are more eff‌icient than others within each group, how can we work out the exact f‌igure for the socially necessary labour time for each branch of production?...

In practice the socialist economists have to tot up their National Incomes in money terms, and they have just the same problems about index numbers, the same puzzles about historic versus replacement cost, the same temptation to make f‌igures mean more than they can, as their capitalist colleagues. The theory of value does not help them in the least...

At the same time the socialist economy is proud to show a faster rate of accumulation than any capitalist economy has ever done. To have labelled investable resources ‘exploitation’ and ‘unpaid labour’ is somewhat embarrassing. To argue that the capitalists extract surplus for their own benef‌it while the social planners are concerned with the good of society is to argue on the subjective, moral plane; objectively considered, the capitalists in Marx’s scheme were an organ or society whose function was to secure accumulation, just like the socialist planners. As Keynes puts it: ‘Like bees they saved and accumulated, not less to the advantage of the whole community because they themselves held narrower ends in prospect.’ As we see nowadays in South-East Asia or the Caribbean, the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all. Here the law of value develops a kind of squint that leaves one deeply confused...

Among all the various meanings of value, there has been one all this time under the surface, the old concept of a Just Price — the principle that made Adam Smith’s hunters swap their game on the basis of the time that each species usually took to catch. It is the meaning that is wanted here. Prices ought to be such (subject to political expediency) that a day’s work in the country and in the town brings in about the same income. But even when this is granted as an ideal there still remains the problem of calculating what is to be considered an equivalent income for individuals leading quite different kinds of life in different environments. Value will not help. It has no operational content. It is just a word."

--- Economic Philosophy / Joan Robinson