 Good day. This is Professor Resnick again, and I want to continue to develop this Marxian value and surplus value theory that you're reading in capital volume one. So we want to examine a bit more carefully this notion of abstract labor that we talked about last time. Suppose it takes four hours of abstract labor to produce an apple, and suppose it takes four hours to produce a shirt. Marx talks about a, let me go back for a minute before I just do that. When I mean it takes four hours, that that is the social requirement to produce an apple and a shirt. And that, we're worried to study this, that social requirement, socially the quantity, the quantum of labor to produce something is over determined by everything. So the politics, the economics, the culture, and the nature in society shape the quantum of hours required to produce a particular commodity. Marx talks about a relative form of value, and I'll write it in the blackboard. The value of an apple relative to the value of a shirt. Well, we just establish the common substance for both is abstract labor. So it takes four hours of abstract labor. I'm not going to keep writing it. Four hours of abstract labor to produce a shirt. So it's a common qualitative dimension in numerator and denominator. And hence the answer is one, or one apple is equal to one shirt. And that's an exchange of equivalence, as you can see. Apple producer gives up eight, gets back eight. I'm sorry, gives up four and gets back four, okay? Let me change it, dramatic moment for Marxian theory. Suppose it takes four hours of abstract labor to produce an apple. Same amount of labor, but I'm going to change it now. Suppose it also takes a shirt to produce an apple. I mean, it's a silly example, but nonetheless, you can think of a shirt as a kind of fertilizer or machinery or whatever. So think of it as another input. So it takes four hours to produce an apple, and it takes four hours. I'm sorry, it takes a shirt. How is Marx going to handle this? This is the way he does it, with his abstract labor theory of value. He says, okay, in this new example now, so let me erase this. In this new example, we have a new kind of production condition. It's taking four hours of labor to produce this one apple. But it's also taking another input. It's taking a shirt to produce this same apple. These are your inputs if you want, labors and shirts. You can think of this now as this is the kind of, I don't know, let's call it what he calls, living labor. And this is kind of the other input, the means of production to produce the apple. So let's measure it now. So to produce one apple is four hours of labor, just like it was before. Plus the one shirt, what's the one shirt worth? What's the cost of a shirt? Just like we did before, that's four hours. Hence, the value of an apple now becomes eight. And Marx develops a formula, which is very useful to us. He says, look, the value of any product, in this case apples, is equal to two things. It's the living labor required to produce it, which in our assumption is the same four hours. Plus, it's the labor already embodied in the shirt, the other input, because you've got two inputs in it. Now remember, he's using an abstract labor theory of value. So he's measuring everything in this social labor, this abstract labor, the socially necessary abstract labor time. So to produce the apple requires not only the living labor of four, but also the labor that's embodied, materialized in the other input, which in this case is a shirt. So now the relative form of value has changed from what it was before. By value, an apple of a value of a shirt, now we have eight over four, which is equal to two. In other words, one apple is equal to two shirts. Notice it's still in exchange of equivalents. By construction, it hasn't changed. The apple producer gives up eight hours and gets two shirts, which are worth four times two, eight hours. So we still have an exchange of equivalents, but we have changed it in an interesting way to take into account other kinds of inputs, and you can do this for each and every commodity, which is what Marx does. Next step on this. A change in the socially necessary abstract labor time to produce a commodity is a change in value. Just to think about it, let's see if it takes fewer hours to produce anything, then the value of that particular thing has fallen, because it takes a few hours to produce it. By the same logic, if it takes more hours, its value increases. Let me put this on the whiteboard, because this is a very important aspect of Marxian value theory that has to be developed. Let me take just the easiest example that I possibly can think of. So here's our labor hours, and again these are abstract labor hours. Here is the number of things, the number of pieces of wealth called the use values that are being produced. Suppose in one hour, one hour a person produces a chair, one thing. So let's measure then the labor hours per thing. Well you've got one hour in the numerator for one thing, so you've got one. So this is the socially necessary abstract labor time per thing, the entity, the concept we've been talking about. I want to take the reciprocal of it. This is the number of use values, that's the wealth in the numerator now, divided by the number of labor hours in the denominator. So I'm just taking the upside down. So this would be one thing, piece of wealth, divided by one hour. It's the upside down of this thing, this was one hour over one thing. Because I'm using the number one, this two is equal to one. This is equal to the productivity of labor. This one is the socially necessary abstract labor time per thing. The reciprocal of it is the productivity of that abstract labor. It's what the labor hours in the denominator yield in the numerator, productivity. Now watch, suppose we have one hour, same hour, but now in the same hour people produce two things, two chairs. They used to be producing one, now they're two. What that means is that, well let's put our numbers down. One divided by two. So now it takes less time to produce that chair. That is, in a half an hour you produce a chair, in the full hour you get two chairs. In a half hour, one chair, a full hour, two chairs. So the socially necessary abstract labor time to produce a chair has fallen. But then the productivity has risen. So the workers now produce two chairs in one hour, two chairs in one hour, their productivity has gone up. But that's just an alternative way of saying that the socially necessary abstract labor time has fallen. Why do this trivia? Well because of the following. Marx claims that in capitalism, capitalism, the society in which we live, it unleashes, let's use the term we used before, the forces of production, the capital, the technology, the machines and so forth, etc. Which is a steady rise in the productivity of labor. That's fantastic. That says that capitalism is progressive in the sense of giving us more and more wealth for the labor that we have in society. I mean I can't think of a sector in the U.S. society in which is more productive than U.S. agriculture over a long period of time. The other productivity of labor has risen rather dramatically because really the revolutionary production techniques which have occurred in agriculture. But by that logic, the socially necessary abstract labor time to produce wheat and corn has fallen dramatically, which it has in the United States. So you have on one hand a rise in the productivity of labor for producing these commodities and just another way of saying the same thing, a fall in the socially necessary abstract labor time. Marx is going to argue that this rise in productivity or this fall in the quantum of labor, social labor to produce something, is tied to, is connected to the business cycle. He's going to make an argument which we're going to see in this course that the ups and downs of a business cycle, that is the possibility of a recession like the last three years that we've had in the United States, is connected to a rise in the productivity of labor. So this is a contradiction, this is an ironic twist on capitalism. On capitalism on the one hand gives us a steady rise in the productivity of labor which is a wonderful and good thing. On the other hand it also gives us something which is terrible, a bad thing which is the possibility of a business cycle. And that to entice you, that's something that Marx is going to present. The next step is to talk about two different kinds of labor now that we have everything in place. I want to talk about two different kinds of adjectives that Marx places on labor. He describes labor as either being productive labor or unproductive labor and both kinds of labor occur in capitalism. So let me give you the definition right away. Productive labor in capitalism is that labor which is productive of surplus value. Unproductive labor is labor which is not productive, not productive of surplus value. So the adjectives productive and unproductive have absolutely nothing to do with the kinds of labor performed or their importance to society. That's a mistake. Productive and unproductive have only to do with whether or not that labor is productive of surplus or not productive of surplus. So I want to examine that since it's an important aspect of Marxian theory as we shall see. Let's consider a labor process in which a person paints a house or provides police protection or does accounting or lawyering or whatever. Then the question arises, is that material or that service labor productive or unproductive? Let's just take the painting of a house. Is the painting of a house productive or unproductive? And the answer is we do not know. That is one can't deduce productive or unproductive labor from the labor process itself. Painting a house doesn't tell us anything about whether that labor is productive or unproductive. And that's connected to this Hegelian logic that we discussed so far. You can't deduce anything from the thing itself. When you consider the thing itself, in this case the labor process, it's empty of meaning. It's meaningless. You can't answer the question. What you have to introduce are other non-labor processes in order to be able to answer the question whether that labor is productive or unproductive. And that's what I'm going to do now, but I don't want you to lose the main point. If someone says to you after we're all done here and have gone through this, is accounting productive or unproductive, that is the labor of accounting, your answer to that is I don't know. You have to interrogate that accounting labor to come up with an answer. And you interrogate it by examining the other processes that it occurs with. So let me give you the example of this.