Left Voice: Your work, both independently and with Guglielmo Carchedi, points to the importance of Marx’s labor theory of value. It’s an idea that at least in some sectors of the left — including some Marxists — has been kind of ignored or rejected. And for many new young socialists out there, coming to Marxism and the idea of socialism for the first time, they may not see the importance of a “labor theory of value.” Could you say a few words about why this idea is so important and why you see it at the heart of Marxism today?

　　Michael Roberts: Marx’s law of value argues that only human labour power creates value. Think of it this way: if all workers stopped working, then nothing would be produced and so no value would be produced.

　　Mainstream theories deny that the value/price of commodities is due to human labour. Instead, some argue that the value or price of a commodity depends on the individual demand for it, its degree of utility. You might pay $1 for an ice cream but somebody else might pay $2, depending on the ‘marginal utility’ of an ice cream to each person. So the price is dependent on the desire of each individual, averaged in some way.

　　This is nonsense; first, because how can you add up each individual’s desire for an ice cream to reach its average value? Second, the question that is not answered is: why does an ice cream cost only $1-2 while a motor vehicle is priced at $30,000? What decides that is the cost of producing each in terms of the labour time involved, not the individual demand for cars over ice creams.

　　Value in things and services produced as commodities for sale by capitalists has a dual basis: 1) it must be useful to somebody so that it will be bought, i.e. it has a “use-value”; but 2) it must be sold for money, i.e. it has exchange value. The great discovery by Marx was to show that the value or wages paid to workers for their labour time is less than the value of the goods or services sold by the capitalist. The worker works eight hours in a day but gets paid the equivalent of just four hours labour time. The capitalist appropriates the remaining four hours on the sale of the product. This is “surplus value” free to the capitalist. But this surplus value is hidden. The worker gets a “fair day’s pay” for his or her work and the capitalist gets the price of the product sold — so the surplus is hidden. This is exploitation — again denied by mainstream economics, which instead argues that labour and capital are just “factors of production” where labour gets wages and capitalists get profits for their roles in production.

　　Marx’s law of value shows that the capitalist mode of production is based on making a profit on the sale of commodities produced by workers. The capitalists own the means of production and the commodities sold; the workers own nothing and can only make a living by selling their labour power to the capitalist for a specific period of time.

　　Companies do not produce and sell things unless they make a profit. So production takes place without any consideration for the consequences for labour or nature. Also, because capitalist production is for profit (exchange-value) and not for social need (use-value), there is a contradiction between production and profit. Marx goes on to explain that this contradiction leads to perennial crises of production and investment because profitability tends to fall over time. So capitalists periodically reduce investment and production.

　　The Keynesian version of the mainstream theory denies that profitability has anything to do with crises. Instead it is due to a “lack of demand,” not a crisis of profitability. This view is dominant among many leftists and Marxists. In my view, this denies the essence of Marx’s law of value, which shows how labour is exploited for profit and how any fall in profitability for capital is its Achilles’ heel.

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　　LV: Donald Trump changed the conversation on economic policy since 2016, when he started to push for tariffs. Although he did not go as far as he threatened to do, Biden has not reverted these taxes on imports. Do you foresee increased protectionism during Trump’s new term, or do you think it is mostly a threat to renegotiate trade agreements on better terms for the U.S.?

　　MR: Trump has broken with the “globalist” view of US hegemony, namely that the US economy and technology is so superior to the rest of the world that free trade and the free flow of investment and people will benefit US capital and the world. The Great Recession of 2008-9 and subsequent long depression of the 2010s ended that view. Now it is every country for itself and in particular, the US must resort to “making America great again” by defeating any competitor. Trump is returning to the protectionist approach of McKinley after the end of the depression of the late 19th century. He also wants to restore the Monroe doctrine that stated the US should have hegemonic control of the Western hemisphere–Canada, Greenland and Latin America. Above all, in the 21st century China must be reduced and weakened in its competitive rivalry to the US globally. So tariffs will be used to do this or at least as a threat to force rivals into concessions like investing in the US rather than producing abroad.

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　　LV: So much of the election in the U.S. revolved around inflation and its effects on working people. But inflationary pressures don’t seem to have completely gone away. And Trump’s policies, like tariffs, seem like they could add more fuel to the fire. Do you see inflation as a continuing threat in the coming period?

　　MR: The recent bout of inflation was due to weak productivity growth before the pandemic and then a severe “supply shock” after the pandemic due to the breakdown of supply chains of manufacturing, transport and trade, particularly in food and energy, areas then exploited by the major multi-national producers. It was not to do with “excessive demand” created by government spending or “excessive wages.” If anything, it was profit-led not wage-led as profits rose sharply while wages failed to match price rises. Central bank “tightening” (raising interest rates) aimed at lowering excessive demand,and that is why it has not been successful in reducing inflation. Indeed, inflation is starting to rise again. Trump’s tariff measures will only add to that rise as it will push up import prices for the many goods that the US buys from abroad. And high interest rates will threaten the ability of many indebted companies, so-called zombie companies, to service their debts, increasing the risk of a financial crash.

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　　LV: Do you see that as a main economic danger facing the U.S. economy, or if there are bigger dangers lurking elsewhere?

　　MR: Look at it this way. If Marx’s law of value is right, then what matters for capitalism is the profitability of their investments and output Despite the huge profits reported by the so-called Magnificent Seven, hi-tech and social media companies and the energy moguls and banks, the rest of the economy is experiencing very low rates of profit. At the same time, corporate debt is very high and interest rates on borrowing are staying high, both for households (mortgages) and companies (loans). So companies are caught between the two blades of a scissor (profit low, interest high). These scissor blades of profit and interest pose the risk of recession and of a credit crunch especially because the level of debt is hidden in so-called private equity and “shadow banking,” not in the bank accounts.

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　　LV: Can you say something on the economics of Trump and his mass deportation? His administration has started the wheels moving of a massive attack on immigrant labor.

　　MR: Evicting immigrants by deportations and incarceration is inhumane and racist. And the cost of this is immense — billions of dollars. Immigrants have always been key to America’s expansion and there is a real need for labour in many sectors. Indeed, without immigrant labour, the US economy would have hardly grown in the last ten years. Trump wants to keep the immigration of “skilled workers” but stop the rest. If that happens, it will seriously reduce growth and boost inflation.

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　　LV: But an important part of the U.S. workforce is immigrant labor. What kinds of economic pressures will this attack on the working class bring with it?

　　MR: Millions of immigrants could face the loss of jobs and incomes. And these jobs won’t and cannot be filled by registered US citizens. The US economy will suffer, causing a rise in unemployment and inflation for all workers. Instead, what is needed is for workers, immigrant or non-immigrant, to combine together to raise wages and preserve jobs. Unionisation of all workers.

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　　LV: Your work charts both the tendency of capitalism to cyclical crisis, but also its long term trends — like the tendency for capitalism to undermine itself in a falling rate of profit. There are lots of other left economists though who reject this idea of that kind of long-term trend. Why do you think it’s so important for leftists and socialists — and for Marxist politics — to see and understand that trend?

　　MR: There are some on the left who argue that Marx’s law of the tendency of the rate of profit to fall is irrelevant to the regular crises that capitalism has. They argue that crises are due to a sudden lack of demand (Keynesian theory) or to financial instability (so-called post Keynesian theory). This is not Marx’s view and also is disproven empirically.

　　There also some Marxists like Rosa Luxemburg who argued that Marx’s law of falling profitability only applies to the very long term, indeed “like the time it would take for the sun to burn out.” At the end, others argue that Marx’s law is only an explanation of periodic crises and does not indicate a “transient nature” in the capitalist mode of production in the long term.

　　In my view the law is both the basis of a theory of recurring crises and an indication that capitalism has a limit as a mode of production because profitability will keep falling over the long term,(and indeed it has). That is why Marx’s law of value and profitability are such powerful theories.

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　　LV: You mentioned in your interview with Ashley Smith that, even though capitalism limps along in its long depression, it could be restored to more profitability if there was a slump big enough to wipe out lots of value. But you point out capitalists and states are so afraid of this, and have done extraordinary things — massive bailouts for example — to prevent such a slump, since the consequences could be bad for them.

　　So it seems like there’s a bind the ruling class is in. It can limp along hoping things get better; or it can allow massive wipeouts of value through crisis and see what happens. Can you say a little more about this situation — why, and how, the ruling class has prevented a slump big enough to jumpstart the economy again? And perhaps, too, about whether you think it’s possible such an economic “restart” might be in the offing?

　　MR: Your question sums up the “choices” available to capital. If it does not raise the profitability of future investments sharply, then technological innovations like AI, which could ratchet up the productivity of labour (by shedding jobs), will not happen sufficiently to get economies out of the current stagnation.

　　Profitability is so low now that a major slump would be necessary to cleanse the capitalist economy by liquidating weak companies, dispensing with old technologies and reducing unproductive workers, thus reducing costs dramatically. On the other hand, a major slump could provoke political and social unrest and lose a lot of output. So far, the strategists of capital have opted for bailouts and fiscal subsidies to avoid a slump. But staying as things are now just extends this tepid level of growth and incomes: stagnation.

　　There is evidence that capitalist expansion moves in long waves or cycles and it could be that the current downphase in the latest cycle is coming to an end. Then there could be a new upwave based on higher profitability combined with new technologies and with the expansion of capital into new areas, particularly Africa, which is the only region with a fast rising human population.

　　There is one other option: war. The Great Depression of the 1930s was eventually overcome by a world war where governments took control and workers spending was restricted to boost profitable investment for the war effort. As a result, capitalism got a new lease of life after the end of the war. But now we are in a nuclear world and a major conflict could bring about the destruction of humanity itself. So that would be an Armageddon option.

　　Editor: Zhong Yao  LiuTingting

　　From:https://www.leftvoice.org/is-a-major-slump-on-the-way-an-interview-with-marxist-economist-michael-roberts/（2025-3-24）