Mar 13Liked by Branko Milanovic

Just came to mind - who said that net profit in manufacturing doesn't include rent of some shape or form? In fact, under monopolistic competition framework, it kind of is. It wouldn't exist unless there was, well, monopolistic rent. This marries phisiocrats with neoclassical economic theory nicely.

Expand full comment

In Marx, the human being -- and therefore all possible forms of human society -- is always a natural being. That means humans must always be treated as a species like any other from the biological point of view, but particularly human in its social point of view. It is literally the human species (homo sapiens).

Labor is thus treated as a specifically human trait. A human uses its labor power in order to transform natural (objective) matter into something. This something must always be something humanly useful, which makes it a social phenomenon opposite to just physical labor, which any species and, indeed, anything that generates any amount of joules (which, in physics, is called "work", not labor).

With labor applied, a human transforms nature into something useful for itself as a species. (remember, in Biology, everything is at a species level; there is no such thing as an individual that acts completely for itself). The key word here is "transforms": humans do not create nature, but only transforms it into something else. Humans do not create anything in the strict, STEM meaning of the word; they do not literally create space-time and particles and energy, but only transform, at a loss, those basic elements of Planet Earth that were already there since before humanity even existed.

Applying this philosophic concept to societal formations and History was an easy task for Marx, who had a Masters and a Ph.D. in Logic. Well, since humans do not really create anything, then what we consider "growth", "surplus" or "wealth" must necessarily be a social concept, a subjective concept from the human point of view. Since humans are only a single species, it is patent it act as a species, which means it can only exist in, let alone prosper, in very specific and objective natural conditions -- its habitat, in biologic terms. "Wealth", "growth" etc. etc. must thus be the state where the homo sapiens expand its habitat in all meanings of the term.

So, how does that apply to capitalism specifically? In book I of Das Kapital, Marx talks about simple and amplified reproduction. Simple reproduction is the intuitive process where one system consumes everything it receives in order to reproduce itself identically; amplified reproduction is when it reproduces itself at a larger scale than before. How do we consolidate amplified reproduction with the obvious and undeniable fact humans do not create anything?

Here the dialectical method shows its elegance and scientific precision: Marx demonstrated logically (which is a proof beyond the scientific) that, objectively, amplified reproduction is simple reproduction, but simple reproduction <B>beyond a certain point</B>. A capitalist, before he starts to profit, must first maintain what he had in the state before. Capitalism must first maintain everything it already had before amplifying what it already had. Before valorizing, capital must revalorize. One cannot dream about earning his millionth USD before earning his 999,999th USD.

Either way, the only tool humans have to do both processes (which are actually just one process) is through labor, because labor is the only mediation possible between humans (homo sapiens) and the natural objective world (nature). After all the homo sapiens is still only a species.

From the macro case we can easily infer the micro case. The difference between value and surplus value is the simple extension of labor beyond a certain point (the point before being the previous state); the capitalist may simply extend the journey of the worker or make it more intense (transform more matter and energy from the natural objective world per unit of time) or both. The principle is exactly the same.

Expand full comment

Georgism seems to get many of these dynamics right—even reducing commuting by increasing city density.

Expand full comment

Interesting discussion. All this seems to be directly or indirectly based on labour theory of vàlue. With a útility value theory, productivity males more sense.

Expand full comment