The authors conduct a number of other tests to determine the value of human capital at high-income levels, including whether most top earners are simply children of 1-percenters living off an inheritance, and they find that more than three quarters of top-earning children are “self-made.” The major factor influencing profitability is technology. New technologies replace workers with means of production. They produce less value and surplus value but realise more value at the cost of the technological laggards. The latter, in their turn, will shift to more efficient technologies. It is this continual process of modification driven by changes in technology and competition that tells you that Marx’s law of value is not a static equilibrium theory, instead, that the process of commodity production is in continual motion. When a production process (P1) terminates, another one (P2) begins, that is, the outputs of P1 become the inputs of P2. The value of the inputs of P2 is then their value contained as output of P1. This is the basis of the temporalist theory of the transformation of (1) labour into value and of (2) value contained into value realised, which is usually referred to as the transformation of value into price. Contemporary capitalism is always evolving. From digital technologies to cryptocurrencies, current trends in political economy are much discussed, but often little understood. So where can we turn for clarity? As Michael Roberts and Guglielmo Carchedi argue, new trends don't necessarily call for a new theory. Some research has suggested that income of the top 1 percent is mostly earned by the idle rich drawing on non-human capital The most essential element of Marx’s economic theory is his concept of value. Its absence from mainstream economics, whether neo-classical or Keynesian, is at the root of the discipline’s failures. Many left-wing economists have deliberately abandoned value, viewing it, like the left-Keynesian Joan Robinson, as merely a metaphysical abstraction. It is not, however, as Roberts and Carchedi point out at the outset of Capitalism in the Twenty-First Century. Value is the direct physical result of the exertion of human labour on nature’s use values, turning them into other use values (p.1).

We define imperialist exploitation as a persistent and long-term net ­appropriation of surplus value by the high-technology imperialist countries from the ­low-technology, dominated ones. This process is placed within the secular ­tendential fall in ­profitability, and not only in the imperialist countries, but also in the dominated ones. 25 The logical development of the major categories that Marx develops in his analysis of money starts from labour time, moves through value and exchange value, and then ends up at money. He explains how money arises from what commodities have in common. They are all products of the expenditure of human labour time. This is the expenditure of abstract labour as it disregards the specific features of each type of labour. The socially necessary amount of this abstract labour required for production forms the magnitude of the value of a ­commodity. Yet, this value can only express itself in terms of exchange value, which itself is expressed in terms of money—the so-called universal equivalent.

Open Library

In Capitalism in the 21 st Century, the authors show how Marx's law of value explains numerous issues in our modern world. In both advanced economies and the periphery, value theory provides a piercing analytical framework through which we can approach topics as varied as labor, profitability, technology, the environment, the role of China, imperialism, and the state.

The law of profitability has a host of implications, but to return to inflation, it provides the basis for the authors to construct a new Marxist theory of inflation. To begin with, they show that, due to the long-term rise in the organic composition of capital, there is in fact a tendency towards disinflation. This is because the mounting accumulation of total value in the economy increases relative to the total purchasing power of labour and capital (wages and profits) combined. All books on value have the difficult task of trying to define what Marx meant by the term. In my view, Carchedi and Roberts are broadly correct in their approach, although I inevitably have some differences when it comes to the detail. Following Marx, they explain, “Commodities have two aspects—a use value and a value—because they are the products of both a specific (concrete) type of labour, which produces use values, and abstract labour, which produces value”. 2 Value then takes the form of exchange value. Value and exchange value are distinct, although value can only express itself in terms of exchange value. The value of a commodity is seen as being the result of the exertion of human labour and is represented by a quantity of abstract labour time. This is the labour time socially necessary for the production of a commodity. Value then goes through a series of transformations that results in an exchange value, which itself is expressed in terms of money. So, money represents value, which in turn reflects labour time. Unfortunately, we cannot make simple statements like “money is labour time” for reasons I will touch upon later, but we can make statement such as “the value of a commodity is based on labour time” and “money represents a claim on part of the total labour time in society”. Equally deserving of a much longer discussion is the chapter on ‘Robots, Knowledge and Value’. The authors are convincingly sceptical of the wilder claims made for robotics and AI, and demonstrate that any likely developments in those technologies will not change the fundamental character of capitalism. Rather, new technology of these kinds will ‘intensify the contradiction under capitalism’ between the drive for profits through increasing productivity, and the consequent rise in the organic composition of capital, which leads to further decline in the rate of profit. Claims for the future of ‘immaterial labour’ are also thoroughly debunked, and some important philosophical arguments advanced about the material nature of all labour, both mental and physical.Restates Marx’s critique of political economy for today, displaying formidable theoretical rigour and command of the empirical evidence. Roberts and Carchedi offer challenging analyses of ecological catastrophe, economic crises, imperialism, robots, and socialism from which everyone will learn' A sweeping, authoritative and accessible overview of major issues in the global economy from a Marxist perspective

However, when it comes to empirically validating their theory with data, Carchedi and Roberts calculate a “value rate of inflation” by combining the purchasing power in value terms with money quantities. Yet, it is unclear why the combined purchasing power can be used to measure the amount of new value created. In my opinion, the work on inflation needs to be presented with much greater clarity and transparency. The view of Carchedi and Roberts is that neither mainstream nor Marxist theories of inflation have adequately explained changes in price inflation in economies with fiat currencies. 12 Unfortunately, this still appears to be the case. 13 Crises, robots and knowledge Offers a rigorous Marxist interpretation of some of the major issues in contemporary capitalism. Its analysis is firmly based on the Marxist labour theory of value and is coupled with meticulous empirical support'Just as it cannot adequately explain or deal with inflation, so the ‘falling rate of GDP growth for the G20 countries is puzzling to conventional macroeconomics’ (p.118). The answer, of course, lies in Marx’s value theory; the rising organic composition of capital, and the falling rate of profit. The latter has bounced up and down since 1950 in the G7 countries, but has had a marked downward trajectory; from a height of 10.3% in the mid-1960s, to a low of 6.4% during the financial crisis of 2007-8, and barely recovering thereafter. One factor, however, that has slowed the deterioration in growth in the core imperialist countries is the ‘inflow of surplus value … from the rest of the world’ (p.120).

Other orthodox approaches to inflation are the ‘demand-pull’ theory and the ‘cost-push’ theory, both of which rest on ‘supply and demand but from different ends’ (p.77). In the former, if wages fail to keep up with the production of goods, then there is disinflation, and conversely, if wages outstrip output, demand increases beyond supply, and this causes inflation. On the ‘cost-push’ side, it is increasing costs of production, mainly wages, which cause the rise in prices. This is the Keynesian approach, which makes it ‘a wage-push theory. Inflation depends on the relative demand for and supply of labour forcing up wages’ (p.78). Capitalist imperialism grows out of the accumulation of capital as the ­intersection of competition between capitalist states and capitalist firms. It is a global system of powerful states competing for domination of the world system using all the economic, military and political means at their disposal. Lenin, analysing capitalism at the start of the 20th century, explained the origins of the First World War as the outcome the conflict between rival imperialist powers. 23

Authors

Carchedi and Roberts argue that modern capitalism is increasingly no longer dominated by the production of things, but rather increasingly by the production of knowledge. 21 The product of mental labour is knowledge, which has to be commodified and sold. Knowledge commodities can include commodified data, computer software, chemical formulae, recorded music, films and patented information. Both tangible objects and mental objects require the expenditure of human energy and can be productive of value: Carchedi and Roberts argue that the transformation of abstract human labour into the value of commodities is the focus of Marx’s law of value and that three aspects of this law are crucial to explaining the developments in 21st century capitalism. 3 These aspects are surplus value, the organic composition of capital and the rate of profit. Regular readers of Roberts’s excellent blog, “The Next Recession”, will be ­familiar with many of the arguments presented here about money. Marx developed his theory of money in the first three chapters of the first volume of Capital: In value terms, replacing human labour by robots raises the productivity of the remaining workers and increases the profitability of those capitalists who are the first adopters. However, once the new robotic techniques have been generalised, the first adopters lose their advantage and profitability falls due to less workers being employed. This is one of Marx’s fundamental insights to the workings of capitalism; it is a contradiction that flows from the competitive accumulation of capital. So, in this sense, robots are just another stage in the growing productivity of labour and the consequent tendency of the rate of profit to fall.