Peter Ross has responded to my critique of his value theory work, and he has largely doubled down on his original points. He insists that it is only because of the “social relation” of wage labor that surplus value is produced, and hence full automation necessarily leads to profit rates falling to zero. In my previous essay on AI and Marxism, I have shown why this is not the case; however, let’s examine each of the points that he makes.

1

Wright confuses a change in profit with its absolute level. He suggests humans create value because only they can innovate to get more outputs for fewer inputs. But for Marx, absolute surplus value exists whenever the working day exceeds the time needed to produce the equivalent of the worker’s wage.

In his original essay for Cosmonaut, Wright very specifically describes absolute surplus value operating precisely in this fashion, and when he fully formulates his theory of causal powers, he addresses both absolute and relative surplus value:

Marx defines the production of new absolute surplus-value by a change in the length of the working day or a change in the intensity of work. And he defines the production of new relative surplus-value by a change in the techniques of production. So Marx’s theory is about the cause of change in the level of profit due to a change in the conditions of production. And in this respect, Marx’s theory is irreducibly and fundamentally a dynamic theory of changes in profit over historical time.

Therefore, Wright doesn’t suggest absolute value is determined by innovation; he says quite specifically that it is the change in length and intensity of work that determines absolute value. Machines cannot change their working time and intensity to create more value, because doing so merely comes at the expense of higher depreciation, whereas higher exploitation in this fashion does not necessarily come at higher costs for reproducing workers (at least not before certain biological limits are hit).

2

Wright points to an excerpt from the Grundrisse to support his claims. Yet if we look at the content of that text, the argument points in the opposite direction. Marx writes that “as soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure, and hence exchange value [must cease to be the measure] of use value.” Marx concludes this thought by declaring that at this point, “production based on exchange value breaks down.”

There is important missing context here in Ross’s quotation. If we look at what Marx says immediately before this first sentence Ross cites, we see the following:

In this transformation, it is neither the direct human labour he himself performs, nor the time during which he works, but rather the appropriation of his own general productive power, his understanding of nature and his mastery over it by virtue of his presence as a social body – it is, in a word, the development of the social individual which appears as the great foundation-stone of production and of wealth. The theft of alien labour time, on which the present wealth is based, appears a miserable foundation in face of this new one, created by large-scale industry itself. [Emphasis original]

In other words, it is not because of some ironclad law of political economy that production based on exchange breaks down; it is because, when the understanding and mastery over nature as the basis of production is compared to the present theft of alien labor time as the basis for production, the “miserable foundation” of the present system is made apparent. Just because this truth becomes plain doesn’t mean that production based on exchange automatically collapses in really existing empirical history; that would require a further political intervention.

3

To refute the premise that full automation eliminates profit, Villarreal points out that machines cannot produce goods with a price of absolute zero because production will always require physical inputs. To be precise: in Marxist terms, the machines and the raw materials represent constant capital. Their value is merely transferred to the final product; it does not expand. What falls to zero is not the absolute price of the product, but the new value added. Because there is no human wage labor, no new surplus value is created. Under competitive pressure, the product’s price is driven down exactly to its cost of production—the cost of those transferred physical inputs—leaving zero room for profit.

For one, it is not human wage labor which is necessary to produce surplus value even where human labor is concerned. There is nothing special about paying individuals a wage, as Marx is abundantly clear in Theories of Surplus Value when speaking about how peasants and self-employed handicraftsmen within capitalism can just as well produce surplus value. And my point is quite simple. If the machines can produce the basic consumption goods necessary for both the capitalists and machines to reproduce themselves, then any exchanges in such a society would be exchanges of surplus, therefore surplus value.

The reason profit does not necessarily fall to zero in such a situation comes down to differential rent of natural resources. Marx introduces the concept well with some assistance from Ricardo in volume III of Capital:

Ricardo is quite right in the following observations: "Rent is always the difference between the produce obtained by the employment of two equal quantities of capital and labour" (Principles, p. 59). [He means differential rent, for he assumes that no other rent but differential rent exists.] He should have added, "on equal areas of land" in so far as it is a matter of ground-rent and not surplus-profit in general. In other words, surplus-profit, if normal and not due to accidental occurrences in the circulation process, is always produced as a difference between the products of two equal quantities of capital and labour, and this surplus-profit is transformed into ground-rent when two equal quantities of capital and labour are employed on equal areas of land with unequal results.

A future capitalist or techno-feudal lord with a more productive estate due to the presence of a rich iron mine or fertile wheat fields will necessarily be able to acquire more surplus value when selling their excess produce than a capitalist whose natural resources are only 50% as productive. In order to have a zero average profit rate you’d need to have half of the profit rate distribution to be negative, which, while not unimaginable, (the profit distribution of US public companies isn’t far off) is not guaranteed, nor is necessarily a total breakdown in the system of exchange. The canonical Ricardian analysis is that the least profitable firm would have zero profit, which corresponds to a situation of hard budgets determining the profit rate distribution, and so long as there is differential rent in such a situation the average profit rate would not be zero. The reason the falling rate of profit so threatens the capitalist system is because it threatens the reproduction of the capitalist class at large, see chapter 32 of Capital volume I, or my recent book The Inexorable Fall. Should capitalists secure a means of guaranteeing their reproduction as a class, then even zero average profits is no real issue for them. Whether they will still count as capitalists would be a debate for future historians, if such historians still exist.

4

To bypass the problem of automation eliminating surplus value, Villarreal turns to the Kalecki profit equation. He claims that surplus value “is merely the sum of capitalist consumption and investment,” arguing that profit depends purely on a difference in “nominal budgets” and “a pure accounting relationship.” By this logic, capitalists do not need to exploit labor to accumulate capital—they can generate capitalist growth indefinitely simply by spending money among themselves. This misses the fundamental driving force of the capitalist system. Capitalists do not invest money merely to shuffle nominal budgets, nor do they invest to increase the physical mass of goods in the world.

What Ross simply does not understand is that the Kalecki profit equations are merely encapsulating the logic of exploitation in monetary form. Just as the working day can be split up into portions of reproducing the working class, reproducing the means of production, and reproducing the capitalists, so must the spending in the economy. This is precisely what Marx did with his reproduction schema and Kalecki is just expressing the same idea for modern national accounts. Of course, there are certain monetary arrangements which are not compatible with the consistent reproduction of a real world capitalist economy. If capitalists spent 99% of the money in the economy, and therefore appropriated 99% of the economy’s products, it’s unlikely that the working class would be able to reproduce themselves and therefore the system would collapse. However this is contingent on the social, political and technical conditions of production we currently have. With a different arrangement, it’s possible that workers could subsist on merely 1% of the national income. Capitalists taking up any share of the national income are necessarily engaging in exploitation, because they are commanding a certain amount of labor for themselves, away from the technical requirements of reproducing the system of production outside of their class.

Of course, capitalists can in fact generate infinite nominal growth just by spending money, and indeed infinite nominal gross profits, but capitalists cannot control how much money must be allocated to the factors of production, and therefore cannot control the rate of profit. Just as Kalecki wrote about himself, one capitalist's prices are another capitalist’s inputs, and so whether the spending or the prices are the things leading the nominal monetary expansion, the capitalist is not necessarily in a better position.

This is also why I insisted that in order for profit rates to fall to zero in the way Marx expected from the tendency for the rate of profit to fall, we must see investment rise to 100% of gross profits, as this would force constant capital to eat up the whole of profits. Hence also why I insisted on the importance of competition. When there is competition, capitalists cannot control what percent of profits must be allocated to investment, but when there is not sufficient competition, they can consciously decide what to invest.

5

Without the realization of surplus value, the capitalist incentive to invest evaporates, and capitalist accumulation stops. Villarreal seems to imagine that capitalists will simply ignore this, bypassing the market and continuing to invest purely to grow the physical stock of goods for their own consumption.

I am in fact assuming that the drive to invest (in terms of net investment) has already largely been exhausted in neoliberal capitalism. Capitalists are perfectly content to simply reproduce their class position rather than develop the productive forces if they are not forced to by the logic of capital.

6

Wright and Villarreal can persist in their confused “theory” if they wish, but they should stop pretending that it has anything to do with Marxism. The implications of their ideas are reactionary. If value is simply a product of “causal powers,” and robots eventually acquire those powers, then capitalism can replace workers with machines indefinitely, even replace the whole working class. The whole basis of Marxism’s revolutionary perspective—that capitalism must inevitably break down due to its own internal contradictions—is discarded.

Having just written an entire book regarding why capitalism must break down from its internal contradictions, I find this accusation absurd. What Ross does not understand is that the logic of capital, and capitalist social relations, are two different things, indeed in contradiction with each other. Marx’s critique in Capital was that the logic of capital would destroy the capitalist social relations. But it could just as well be the reverse, that capitalist social relations could prevail against the logic of capital, at the expense of all the revolutionary development of the productive forces that comes with such logic. However, the rise of Chinese state capitalism appears to have saved us from this ultimate fate.

When it comes to whether there are or are not particular causal powers the working class possess which create value, it's only in denying the existence of such powers that one leaves the realm of material reality. For if nothing but the working class could ever create value, then we must necessarily be dealing with some hidden essence of the sort found in idealist philosophy.

7

Villarreal comes to exactly this conclusion. Oddly, he describes this endpoint as a slave society built on universal robot labor, but at the same time treats it as a transitory depression that capitalism might survive. He predicts that the ruling class will simply manage the obsolescence of human labor via “AI-assisted methods of social control” and a “universal basic income,” and speaks of the collapse of working-class demand as a mere “transitory depression.”

The situation where universal basic income is invoked is the one where current levels of demand are mostly preserved.

8

But the bourgeoisie are not invincible managers who can seamlessly dial down social conflict and transition out of capitalism at will. If the exploitation of wage labor—the sole source of surplus value—were fully automated away, the capitalist system would not stabilize, but collapse. Stripping this structural inevitability from Marx’s theory leaves a working class that is obsolete, rather than one holding the unique historical power to end class society.

Certainly I have never claimed this process would be seamless, if it indeed occurs at all. I say in my original essay, “The chaos and intensity of class struggle such an economic collapse would summon is also what makes it less likely.”

More importantly, this whole notion of “unique historical power” associated with the working class is something which is merely asserted, similar, in that respect to the way Ross brandishes about the notion of “social relation.” What gives social relations and the working class these particular characteristics? This does not seem to be something Ross is capable of answering.