Ed Miliband’s Big Idea

Yesterday, the leader of the Labour Party gave a speech at the party conference which contained one big idea: production. He wants to reward the ‘producers’ and punish those who ‘want something for nothing’. Both sides of this opposition contain a double-meaning that crosses political lines.

When Miliband uses the word ‘producer’ he refers both to wage-labourers and productive capitalists. This conflation is normal amongst neoclassical economists, but it is rare (perhaps unprecedented?) among the leadership of the labour party. He gave emphasis to the former when he reminded everyone that the labour party is committed to labour – which he reduced to the concept of ‘work’. He gave emphasis to the latter when he argued that he is on the side of business but against that part of finance capital that is not productive but profits from short-selling and the like. The FT reported that ‘business’ was not convinced by the speech. Well, the labour movement shouldn’t be convinced either. Not only did Miliband separate one form of capital from another, he divided the working class into two antagonistic groups.

These ideas that Miliband touted yesterday are designed to fudge and mystify the distinctions between capitalist and labourer. Let’s use them as an excuse (as if we needed one!) to point out the difference between them. When we think of producers, we need to distinguish between workers and capitalists. When we think of people who want something for nothing, we need to distinguish between unemployed workers and capitalists. There is a world of difference between the capitalist who gets something for nothing (investing a sum of capital in order to withdraw more than they have invested) and the worker who has a right (fought for by earlier generations of workers) to state support when there is no work for them in a system that is no longer geared towards full employment. If Miliband argued for a change of economic policy that aimed for full employment, then his attack on the unemployed would be slightly more credible. As it is, it is nothing but an attack on all working people. There is also a world of difference between the productive capitalist and the productive wage-labourer. Do I need to remind you that the former extracts surplus-labour and surplus-value from the latter?

Arguing for the values of rewarding work and punishing those who want something for nothing, Miliband set wage-labourers against the unemployed. The assumption is that it is in the interests of workers to put the unemployed under pressure and get them back to work, but the bigger picture is not so clear. When the state makes it harder for unemployed people to live it gives an incentive for them to take work at lower wages than they otherwise would (or worse conditions, or work for which they are over-educated, and so on). This means downward pressure on wages, which ultimately means that those people who are already employed (whose apparent interest it is to get the unemployed back into work) compete with workers who are willing to work for less and therefore lose their bargaining power to increase wages.

More than that, Miliband’s dream of putting pressure on the unemployed is actually an example of the state intervening in the labour market for the benefit of market forces (for the benefit of the ‘consumers’ of labour-power, the productive capitalists). This is unusual. Mainstream economists usually regard state intervention as an interference in market forces, but this kind of intervention does the opposite. Labour markets are ‘sticky’, which means that changing market conditions do not show up in changes in the wage-rate very quickly or easily. By putting the pressure of the state against the unemployed, Miliband reduces the protection of individuals from market forces and speeds up the process of wage reductions that the market demands but which workers and their organizations resist.

Jean-Jacques Lecercle, the Marxist theorist of language, says that ideology loves puns and Marxism loves neologisms. Saying that workers are ‘free labourers’, as the classical economists did, is to use the word ‘free’ in a new way that is nothing but a pun of the ordinary understanding of it. Using the term labour-power is to disentangle labour as it is experienced and labour as it is bought and sold. It seems that Miliband’s use of the word ‘producer’ in his speech was a textbook example of ideology. This is just how John Major previously used the phrase ‘classless society’ and how David Cameron uses the phrase ‘big society’. We have to remember that ideology loves puns so that we don’t get fooled that Miliband’s agenda in favour of ‘producers’ is, in fact, a deliberate erosion of the political boundary between capital and worker, capitalism and socialism, of work as something necessary for society and work as a commodity exploited by capitalists.

Ed Miliband’s big idea is to make capitalism ‘responsible’ by rewarding only productive capitalists, entrepreneurs and that section of finance capital that supports the productive capitalist. The inference is that he will try to tame the irresponsible financial asset strippers, arbitrageurs and short-sellers. The enormous power that this sector of the economy wields will not allow Miliband to make serious changes. Maybe, if he is elected, he’ll get one or two reforms through that will send a message but make little difference. However, insofar as Miliband’s big idea is also to make the working class ‘responsible’ too, mostly by coming down hard on the unemployed, he will have a great deal more impact. The Unions have a bad record in defending the interests of the unemployed although they may well speak up against the more inhuman reforms. Just as Tony Blair, who came into power with the three priorities of ‘education, education, education’, was the first Prime Minister to introduce tuition fees for Higher Education, Miliband is destined to be the Labour leader whose first speech praised the ‘producers’ but who went on to be introduce the most stringent attack on the unemployed in British history. If he gets in.

Notes on art assets

The variations of price of an artwork are not due to underpaying or overpaying in relation to the actual value, nor is it due to an increase or decrease in the average cost of the means of production. A collector does not pay less than the value of a work by a young artist only to realize its true value once they become a mature artist, or once their reputation has been cemented. Both the relatively cheap price and the relatively expensive price are the true value of the work at two different points in time. Art appreciates. However, while investments normally appreciate partly because a firm for which one owns shares is doing well, or is perceived to have a reasonable chance of doing well in the near future – that is to say, by drawing on or anticipating the production of surplus-value in production. This is not the case in the appreciation of artworks. The relative cheapness of a work by a lesser known artist or ‘early work’ is based on the risk that the artist will never develop a significant career, and the relative expensiveness of the same work later on is based on the subsequent rarity of ‘early work’ and the price of the mature work, which retrospectively sets the pace for prices of earlier works. Just as skilled workers are paid more than unskilled workers because this kind of labour costs more to reproduce, the cost of reproducing a successful, mature, reputable, established artist with hundreds of important exhibitions and a bibliography to match is expressed in the price of their works. But this explanation, which can be found partly in Diedrichsen, presents an immediate difficulty, which Diedrichsen misses. The reputation of an artist is not a quality which is contained in their labour, is not produced by them, and is not in their control. The reputation of an artist is ascribed to their work by others. So, if we are to explain the high prices of artworks in terms of the reproduction of labour-power that produces them, we need to consider the labour-power of those who contribute to the value of the work’s reputation.

Why and how do investments in art appreciate in value? Baumol argues that the value of artworks, especially of noted artists who are dead, ‘float more or less aimlessly’. [1] But if prices are set by scholarly reputation, then individual works are valued according to the value attached to it by the artworld. This is not aimless, but it is external to the commodity and also external to the artist. When the price of artists’ works rise and fall this is due, if we are talking about average prices, to the general state of the art market or, if we are talking about uneven changes, variations in the artist’s reputation. The importance of the artist’s reputation in the determination of the prices of art is a key factor, I would argue, in the dominance of the secondary market in the economics of art. Values in art do not survive because they are embedded in products that are bought and sold or patterns of consumer preference that affect markets, but because practitioners and commentators keep them alive in productive practices of producing objects and knowledge. Values in art are not only expressed through the economic consumption of products, but in the activities of learning from them, asking questions of them, reconfiguring them in new products, combining them and rejecting them. And we can see this very clearly in the practices of dealers, auction houses and investment groups who refer directly to art historical judgements and other scholarship prominently within their published information on the commodities that they sell. Auction houses, for instance, include ‘lot notes’ that indicate the reputation of an artist or work by quoting an authority referring to them. We can begin to understand the high prices of artworks as luxury items by examining the ‘lot notes’ to sales of art at auction. The purpose of ‘lot notes’ is to secure the place of the work in the discourses and history of art. In similar fashion, dealers will have photocopies of articles, copies of books and other material as evidence of the artist’s reputation among critics and scholars.

The high prices of art derive from its high status of the work within the discourses of art. Rather than demonstrating art’s incorporation into the trading practices of the luxury market, what we find is the opposite: that the luxury trade for art is utterly dependent on the value attributed to art through the non-market mechanisms of art’s discourses. Prices are set by scholarship. In fact, we can go further than this and say the only characteristic of an artwork that makes it a luxury is its reputation within its own field (albeit a field endorsed by the state’s ideological apparatuses). We arrive, therefore, at a counter-intuitive but very interesting novel conclusion for a Marxist economic analysis of the price of artworks. The economics of art must be analyzed in two phases. Today’s large studio factories of artworks do not require economizing measures, and prices are not determined by them, because the value of artistic labour does not determine the prices of artworks. This, the first phase, is a strong indication that art production, by itself, even when it is produced directly for the art market, is not commodity production according to the labour theory of value. However, we can see in the second phase, that the labour of others in the field contribute to the value of a work by writing about it, exhibiting it and being influenced by it. The value of artworks appreciate proportionally to the growth of information and judgement. The value of this intellectual labour does not disappear without being expressed in prices somehow, but the collector or investor does not pay for the labour of those who increase the value of their holdings, hence the capitalist benefits from it gratis, and the escalating prices of artworks is not reflected in the incomes of either artists or academics.

Technically, therefore, we can say, art historians, critics, scholars, academics, curators and other artists produce relative surplus value for art. Art scholarship is a form of consumption of art, as well as a productive industry in itself. It is strange within the labour theory of value to think of an act of consumption added value to a product, but in fact no value is added at all, even though the prices of artworks appreciate. The difference in price is not extracted from labour but, as Marx puts it when talking about trade as a zero-sum game, is ‘coaxed’ out of the pockets of another capitalist. What I am suggesting here is that the increase or decrease in the price of artworks is not ‘a floating crap game’, nor is it determined by the level of desire of consumers, but by the changing circumstances of the artwork itself vis-à-vis the esteem it is held in by the art community.

[1] W. Baumol, “Unnatural Value: or Art Investment as a Floating Crap Game”, American Economic Review, 76, No.2, 1986, p.10

Notes on Art, Capital and Labour

When an economist says a “work of art often arrives on the market because of one of the famous ‘three D’s’ (divorce, death, or debt)”_ it is clear that cultural economics places its emphasis on consumption and the secondary market. From a Marxist point of view this is very curious. That is to say, it is utterly absurd for a product to ‘arrive’ on the market without being produced or works arriving on the market not from its producers but its consumers. From a mainstream economic point of view this is a no-brainer: they are following the money. The labour theory of value, on the contrary, puts the emphasis of economic analysis on the contribution of ‘living labour’. As such, a Marxist economic analysis of art cannot begin with the arrival of the artwork for resale on the secondary market. Imagine an economics of the automobile industry based entirely on the second-had car market. No explanation of car production, factory work, technology, management, assembly workers’ wages and so forth would be required for such an economic analysis. Simply, data of sales and fluctuating prices on a global scale would suffice, alongside the analysis of the behaviour of dealers, salespersons and buyers. The price of cars, we would no doubt discover, is entirely determined by issues such as the rarity of a particular make and model and the subjective preferences of consumers. This is how cultural economics deals with art. Even if we could press the economist to start the economic analysis of art with its arrival for sale on the primary market, we would have arrived too late. No Marxist could knowingly subscribe to such a belated economic analysis. Artworks themselves cannot be a given, as it is for mainstream economics, but must be identified as the object of economic analysis.
Let’s begin to redress this situation by spelling out precisely what Marx’s labour theory of value sets out to explain. Andrew Kliman tells us, “Marx’s value theory … pertains exclusively to commodity production, that is, to cases in which goods and services are ‘produced for the purpose of being exchanged’, or equivalently, produced as commodities.”_ This is important for a Marxist economic analysis of art because, as he goes on to say, “if the products have been produced for a different purpose, that of satisfying the producers’ and others’ needs and wants, they have not been produced as commodities.”_ If art is produced as a commodity, that is to say produced for the purpose of being exchanged, then it is the kind of product that Marxist economics explains. If art is not produced as a commodity, but rather to satisfy aeshetic and cultural needs and wants, then it is not. This may sound too simplistic. Couldn’t a product be produced both for exchange and to satisfy the needs and wants of those who purchase it? All commodity production imagines itself to be both, but as soon as exchange is brought into production, then something fundamental changes. “A key reason for distinguishing between commodity production and non-commodity production”, Kliman explains, “is that prices or rates of exchange are determined differently in the two cases. When things are not produced as commodities, the rates at which they exchange may depend exclusively upon the demand for them, or upon normative considerations, or … upon customary rules. It is only when products are produced for the purpose of being exchanged that their costs of production become significant determinants of their prices.”_
So, a loaf of bread is not a commodity if it is baked for personal consumption by oneself or one’s family or friends. This loaf does not enter circulation, is not exchanged and is not made for the market. What would change if this domestic baker decides to start a business baking and selling bread? First, the quantity of loaves would increase. This is why Marx emphasizes two connected changes to use in the production of commodities: that commodities have a ‘social use value’ (ie that they are made for others to consume) and that they are made not for the producer’s use (ie the commercial baker, even a small artisan baker, will bake far more bread than they could possibly consume themselves). Not only is the quantity increased, but commodification requires production to be determined by the needs and wants of others. The commercial baker, now baking bread for others, needs to bake the bread ‘demanded’ by the consumers, to match their ‘preferences’ and so on. This is because the loaf is being produced for others, as a business, for money, and therefore responding to consumers’ preferences.
In terms of quantity, artists make more products than they need to consume (to display in their home etc) but not necessarily more than they can ‘use’ productively ie when the production of a product is for example an act of self-actualization, then it is not at all clear that it is possible to produce more than you can ‘use’. What’s more, artists produce a very small proportion of the art that they actually ‘consume’ (by viewing rather than purchasing) in the works of others. Also, art production is unusual in relation to quantity insofar as artists typically produce more work than they can sell or exhibit, producing works experimentally and speculatively and allowing themselves to make mistakes, subsequently holding the inferior or adventurous ones back. In classic economics we would expect something like the opposite, in which a producer who produces more products than they can use, takes the surplus to market. In art, there is a surplus to what is chosen to be circulated which is then retained by the artist.
Nevertheless, it would be naive to think that artists do not increase their production when there is a buoyant market for their. Here, the increase in quantity is a direct result of market demand. As such, we might say that this increase is a sign of commodification, or at least partial commodification. Full commodification would require the ‘social use value’ of the product to be determined in its quality by the market – by the needs, wants and preferences of the consumers. So, if an artist makes more works than they usually would but continues to make them without regard for the tastes and so forth of their collectors, then the products have not been commodified, even if the production has been accelerated because of the market demand. If artists increase and decrease production according to demand and alter the production of their work according to the preferences of the market (eg halting production of this version of their work and expanding production of that version of their work), then, it seems to me they must be in the business of producing commodities.
At the same time, of course, we must insist that if artists do not increase and decrease production according to demand and do not alter the production of their work according to the preferences of the market, then they are demonstrably not in the business of producing commodities. Just as baking has not been commodified once and for all, but we need to examine its economics case by case, art cannot be commodified once and for all. There is no shortcut to this kind of economic examination, no general rule, no standard economics of art in the age of consumerism, or the changing economic status of the artwork in the society of the spectacle. Even in the case of those artworks which are produced for the art market, there is a notable abnormality in the relationship between its production and its value. We can look at the general case of art’s apparent commodification by asking whether, as Kliman puts it, “their costs of production become significant determinants of their prices”.
Following the labour theory of value, we would expect to determine whether art is produced as a commodity from an analysis of artistic production, not by examining the behaviour of its consumers or its systems of distribution and display. The labour theory of value, which explains how value is produced within capitalism, states that labour is the source of value. This value is then broken down into three types: the transfer of value, absolute surplus value and relative surplus value. Machines, for instance, transfer their value to the product; labour-power produces absolute surplus-value, that is to say, value on top of the wages paid for it. Relative surplus-value is produced by the division of labour, automation and so forth, which through increases in productivity and efficiency do not produce value in itself but increases the proportion of surplus-labour in relation to wages. If we find that art production does not correspond to the model of commodity production, then no matter how art is subsequently brought into the circulation systems of capitalism, art is not converted into a commodity in its consumption. This cannot be overstated. Let’s turn now, then, to a question that neither Marxists nor mainstream economists have provided a satisfactory answer: how are the prices of artworks set?
The labour theory of value proceeds from the value of labour, so we need to ask whether the prices of artworks are determined by the value of the labour in their production. Artworks can be inordinately expensive, reaching prices in the tens of millions, and increasing numbers of artists are completely tied up with the market, producing works in numbers for sale. Do we regard the artist, in such cases, as the equivalent of the proletariat, producing value through labour, albeit highly valued labour (if not always highly skilled in the usual sense)? Or, should we regard the artist as occupying the place of the capitalist, such as when commercially successful artists make artworks specifically for sale, advancing capital to pay the wages of assistants from which great sums are made as profit both by the artist and the dealer?
We can test the question of the price of artworks as determined or not by the cost of labour in production by observing the means of production. In capitalist commodity production two common measures are based on the fact that value is produced by labour. First, capitalists increase absolute surplus-labour (and thereby surplus-value) by attempting to extend the working day, the working week, the numbers of days worked in the year, and the number of years worked in a worker’s life. Second, relative surplus-value is increased through the use of technology and supervision, which play an effective part in driving down labour costs through the division of labour, deskilling and increasing productivity. These two factors are not established as economic determinants in artistic production simply by observing that artists get their assistants to work long hours or that they produce works in greater quantities by dividing the labour up among their assistants. The key question is whether the prices that artworks fetch are determined by such efficiencies. If the price of an artwork is set by the labour that goes into it, then we would expect two processes to be evident. First, that the means of production of art would be constantly revolutionized. And second, that prices of artworks would vary according to the average labour that goes into producing them. Neither is evident. First, art’s means of production have not been constantly revolutionized; its relations of production have not been socialized; technological developments are not implemented to increase productivity; producers still own their means of production. Art prices are not determined by ‘socially necessary labour-time’. Second, when the price of an artist’s work goes up, this is not because the labour producing it has gone up, that the assistants have managed to have their wages increased, or their hours reduced. Also, when the price of an artist’s work drops, this is not due to the efficiencies of competitors in the market who have managed to get their production costs down. No, the prices of artworks do not fluctuate according to the cost of labour, technological efficiencies and the like.
Of course, assistants are wage-labourers. But this, in itself, is not proof that artists employ them as capitalists in order to generate surplus-value from them. If assistants do not produce surplus-value then they are to be regarded as luxuries, like domestic servants in the nineteenth century.