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