Happily, Rod Hay (6/17/06) has relieved me of the task of documenting   
from Marx's writings the claim that all (exchange) value derives from   
labor.  He says, he was "particularly interested in the second part of   
my attribution to Marx the claim that "all value derives from labor and   
not giving labor all of production amounts to exploitation."  Peter   
Stillman (6/17/06) has confirmed the first part and cites Marx's own   
disputation of the second (Wikipedia has the same argument).  Stillman   
writes: "Marx criticizes the Gotha Program, written by Lasalle and his   
allies, for making [my] argument.  Marx points out that, in order to   
have an on-going society that can reproduce and improve itself, some of   
production must go to replacing depreciation, some to education, etc.,   
before the remaining production can be returned to the laborer directly."  
  
I'd like to point out that I wasn't quoting Marx directly in the second   
part of my statement.  I would have put the words in quotation marks,   
had I wanted to claim that.  Instead, I was drawing a direct inference   
from Marx's theory of exploitation, even as that theory is summarized as   
the ratio of surplus value to variable capital (wages fund).  This is   
how we can calculate a 100% rate of exploitation if laborers work for 8   
hours but are paid the equivalent of 4 hours, leaving the "capitalist"   
the surplus of 4 hours' produce.  
  
Indeed, Marx argues that constant capital does not create a surplus but   
transmutes the equivalent of itself into the value of output -- the   
value of depreciation.  But if constant capital is "congealed" past   
labor, then it must have been made possible only because not all the   
previous produce went to paying workers.  This is how I derive the   
conclusion that "not giving labor [workers] all of production AMOUNTS to   
exploitation" (capitalization introduced).  
  
I thus consider my conclusion to be consistently derived.  I think that   
is the reason writers of the Gotha Program drew a similar inference from   
Marx's labor theory of value.  Marx's objection stems, I think, simply   
from his realization that if people acted upon the logic of his own   
claims, an economy run on that principle could hardly long endure.  I   
see in his criticism of the Gotha Program an argument for some   
"necessary exploitation" of labor in order to sustain a viable economy.  
  
I also draw another conclusion from Marx's stance as well as what his   
adherents make of the theory of exploitation.  It is only exploitation   
under private enterprise economy or capitalism, what his adherents call   
"exploitation of man by man," that is bad and must be rid off even with   
violence.  But exploitation by the state is good, because the state   
will get to distribute the proceeds of that exploitation "wisely,"   
"humanely," or whichever adjectives they might prefer.  Otherwise, what   
is the meaning of "from each according to his ability to each according   
to his need"?  
  
Rod (6/17/06) also says that he was "teasing James for suggesting that   
one should be careful not to associate with Marxists."  I meant nothing   
of the sort.  What I (6/15/06) wrote was "... I think people who refer   
to themselves as Georgists must also bear in mind that Henry George had   
the goal of establishing socialism with his single-tax proposal.  I wish   
they would not get overly excited when that motivation is brought up."   
It is the equivalent of "if it walks like and duck and quacks like a   
duck, it's a duck."  In other words, if one employs a mode of analysis   
as well as endorses policy prescriptions of a school of thought, one   
must accept being associated with the common label of that school.  Fair   
enough?  I don't mind associating with Marxists on a personal level.   
It's their method of analysis and policy agenda that I find objectionable.  
  
I thank Mason Gaffney for his elaboration of Henry George's background   
and activities after publishing his Progress and Poverty.  Mason writes:  
  
"Remember, also, that George evolved over time.  After 1886 he split   
with his socialist allies - at least the more doctrinaire, intolerant   
ones he knew in New York City.  Folks at the von Mises Inst. find little   
to fault in George's Protection or Free Trade, written to support Grover   
Cleveland (although it was a bit overboard for the cautious Grover).   
After the bust of 1893 George rediscovered some of his earlier   
radicalism and lined up first with the Populists, and then with Bryan,   
Altgeld, Tom Johnson, and other radicalized Democrats.  He stayed in   
tune with the temper of the times, for he was always a political   
activist.  You may praise him or fault him for "weathervaning", but that   
was George.  Many of his political associates expressed irritation at   
his constancy, as he never lost view of his basic goal of reforming   
taxation."  
  
But whiles Mason interprets George as being flexible in his thinking as   
against those "perhaps trapped in a one-dimensional paradigm, Left vs.   
Right," I interpret George differently.  He was consistent in his   
thinking and pursuit of socialism, as he himself says, by uniting "the   
truth ... of Adam Smith and David Ricardo" with that of "Proudhon and   
Lassalle."  Smith is well-known for his prescription of free trade and   
Ricardo for pointing out how free trade in corn would delay for a long   
time the arrival of the stationary state.  Thus, George's difference   
with the "intolerant" socialists would be only on their method -- an   
all-out war on private property.  George, instead, had his problems   
mainly with private land-ownership.  
  
To Roger Sandilands, I'd like to point out that the fact that firms may   
purchase capital goods out of depreciation charges (funds) or "capital   
consumption allowance," does not absolve Henry George from my criticism   
of his failure to recognize that wages are paid out of savings or   
previously accumulated "capital."  Everyone, I suppose, already knows   
that depreciation charges are an allowance for firms to recoup part of   
their previous expenses in purchasing capital goods (other than raw   
materials).  In the absence of such an allowance, a firm would have to   
replace wear and tear out of its profits (income of stockholders).  But   
from where did the firms get the funds to have purchased the capital   
goods against which they are now being allowed to deduct depreciation?   
Savings or borrowed funds, I submit.  
  
Roger uses data indicating that "business depreciation" in 2003 amounted   
to over $900bn to buttress his claim that "Household saving is mostly   
absorbed in residential investment" and that the "business sector as a   
whole is usually a net saver."  He maintains the same view of businesses   
as net savers even after I'd cited comparative data in 2003 (from   
Hubbard 2005) showing that the savings of households in bank deposits   
and holdings of corporate equities dwarf the $900b in depreciation   
charges for business.  Not even after I've tallied the entries in the   
Fed's "Flow of Matrix for 2005" (p. 115) in which households are net   
holders of financial assets and businesses are the net issuers.  And   
Kevin Hoover sides with him.  What else can one say in the case of a   
refusal to admit an obvious error?  
  
Kevin thinks it was out of anger that I wondered if he were not a   
macro-monetary economist.  He writes "In his [James's] mood of high   
dudgeon, James Ahiakpor doubts my bona fides as a monetary/macro   
economist."  Not so.  It was rather from shock or surprise.  I'll add   
Kevin's present stance on reading the Flow of Funds Matrix to his   
previous difficulty in accepting that currency is the liability of a   
central bank (The Fed).  I'll cease from now on to be ever surprised by   
anything he writes that I find to be incorrect.  
  
James Ahiakpor