In the "Oxford Handbook of Karl Marx" (2018), Thomas Rotta and Rodrigo Teixeira investigate the validity of Marx's labor theory of value in the information economy of modern capitalism. They argue that knowledge is "immaterial labor" and that "knowledge commodities" are increasingly replacing material ones.



They define it as "all sorts of commodified data, computer software, chemical formulas, patented information, recorded music, copyrighted compositions and movies, and monopolized scientific knowledge."

Rotta and Teixeira believe knowledge commodities have no value in the Marxist sense because of their infinite replicative capabilities. And, if knowledge commodities have no value, Marx's law of value would no longer hold.

They suggest, however, that the owners of such commodities, through patents and copyrights etc., can extract "rents" from productive capitalism, just as landlords do through the monopolization of land. The question is whether this apparent defense of Marx's law of value is valid.

Although knowledge is intangible, that does not make it immaterial. Mental thought requires the expenditure of human energy. The cognitive process, thinking, involves reactions between neurons in the brain. This occurs through chemical and electrical synaptic communication, which makes perception of the world possible.

Knowledge creation, even if intangible, is nevertheless material. After all, if chemistry and electricity and their effects are material, why should such activity in the brain be treated as immaterial? Thus, the dichotomy is not about material and mental labor, but tangibility.

Karl Marx defined productive labor as labor expended to produce surplus value under capitalist production relationships. According to Marx, if a rich man employs a cook at home, this constitutes unproductive labor; however, in private restaurants, cooks are engaged in productive labor as they work to produce surplus value for the restaurant owner.

Productive labor can produce physical goods or what mainstream economists call services. However, Rotta and Teixeira claim that knowledge is created by unproductive labor that produces no value.

They use the following example: "When you buy a smartphone, part of the phone price covers the production costs of the physical components. However, another part of the price remunerates the patented design and the copyrighted software stored in the memory. The copyrighted parts of the phone are therefore knowledge-commodities, "and the revenues associated with these specific components are knowledge-rents."

However, why should the revenues from copyright and patents be regarded as rent? The idea, the design, and operating system have all been produced by mental labor employed by capitalist companies. They exploit that labor and appropriate surplus value by selling or leasing the software. This is productive labor that produces value.

When a pharmaceutical company employs scientists to develop and patent new drugs, built into the price of the drug is the initial cost of employing mental labor, testing the drug, the production process, plus equipment for administering it etc. The unit cost of the production of each additional pill may fall to a very low value, but it will not be zero.

The value of mental labor can be incorporated in a material form. This is an intangible and material commodity whose value is determined by the new value produced plus the value of the means of production used.

In a computer company, programmers are just as much productive as the workers making the computers. Once produced, the company can extract "rent" from their intellectual property by means of intellectual property rights.

Yet, the production of value comes first. Therefore, it is essential to differentiate between the process of production and appropriation.

Knowledge commodities cannot be produced for nothing precisely because they are material. The productivity of physical, tangible commodities is measured in units of output per unit of capital invested.

This also holds for knowledge commodities like video games. Mental products may appear in a material form like DVDs or be downloaded, both of which can be counted. Thus, reproduction becomes the numerator for productivity and profitability.

The original capital invested, the denominator, can also be measured. When capital is invested in the prototype, this may be spent on computers, premises, assembly plants, etc. as well as raw materials and wages, this will vary a lot depending on required skills and tasks. There are also costs of administration, advertising and marketing.

Then additional capital is invested in the reproduction of replicas of the prototype to produce a total value.

In sum, knowledge is material (if intangible) and if knowledge commodities are produced under conditions of capitalist production i.e. using mental labor and selling the idea, the formula, the program, the music etc., on the market, then value is created by mental labor.

There is no need to invoke the concept of rent extraction to explain the profits of pharmaceutical companies or Google. The reality of the production of knowledge commodities does not support the popular rent-related theory of modern capitalist economies.

Heiko Khoo is a columnist with China.org.cn. For more information please visit:

http://china.org.cn/opinion/heikokhoo.htm

Michael Roberts is a London based Marxist economist. He published the "The Great Recession" in 2008 and "Essays on Inequality" in 2014.

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