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How the World Works The Story of Human Labor from Prehistory to the Modern Day

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Review of Political Economy
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How the World Works: The Story of Human Labor
from Prehistory to the Modern Day
by Paul Cockshott, New York, Monthly Review Press, 2019, 440 pp., $89.00
(hardcover), ISBN 978-1-58367-778-0
Bill Jefferies
To cite this article: Bill Jefferies (2021): How the World Works: The Story of Human Labor from
Prehistory to the Modern Day, Review of Political Economy, DOI: 10.1080/09538259.2021.1912496
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Published online: 25 May 2021.
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How the World Works: The Story of Human Labor from Prehistory to the Modern
Day, by Paul Cockshott, New York, Monthly Review Press, 2019, 440 pp., $89.00
(hardcover), ISBN 978-1-58367-778-0
Paul Cockshott is a computer scientist and Marxist economist. How the World Works com-
bines both these skill sets to striking eect, taking the reader on the journey of human labour
from the earliest stage of human economy to the modern day. Cockshott situates himself in
the classical Marxist tradition aligned with Engels and seeks to show how human labour
denes and is limited by the productive capacity of society.
Cockshott asserts that the precondition of society is the reproduction of people(p. 21),
principally through the production of food, clothing, energy and shelter. Cockshott argues
that the biggest revolutionary development [in human history was] the one that separate
[d] hunting and gathering from all subsequent forms, since the development of agriculture
and animal husbandry involves humanity descending to a lower trophic level(p. 28). This
broadens the variety of foodstus available. Although sources on Stone Age society are
limited, anthropologists believe it was likely a form of egalitarian matriarchy with few
working hours. Agriculture developed independently in many human communities from
around 10,000 years ago, so that by 2,000 years ago most of the worlds population belonged
to agricultural societies. We might ask why, though, if agriculture initially required more
work? Possible explanations are climate change, population pressure, the supply of specialist
goods or a decline in the availability of wild resources. Once agriculture was established, the
higher population load meant there was no going back.
Cockshott constructs a model of a classless agricultural society and estimates the number
of calories required to reproduce the society. The model demonstrates that the conditions
necessary for reproduction enable the creation of classes: a group of people who are not
engaged in production can appropriate the emerging social surplus. Anthropologists
surmise that patriarchy, war and slavery arose as rival tribes sought to steal resources, includ-
ing young women, to improve their chances for survival and reproduction. Before commodity
production, slave labour was limited by the consumption needs of the household. The expan-
sion of slavery coincides with the growth of trade, which was itself dependent on the techno-
logical advances in shipping and navigation. Cockshott also models a slave economy. Slaves
consume only what their subsistence requires, so slave labour limits the scale of domestic
demand; hence the surplus product has to be exportedto the urban economy.
Cockshott dismisses neoclassical price theory as untestable that is, unfalsiable and
therefore as unscientic. The Classical labour theory of value of Adam Smith, David Ricardo
and Karl Marx determines the proportions in which commodities exchange according to the
proportion of labour xed in them. It provides a viable and testable alternative to neoclassical
theory. Ricardo estimated that about 93 percent of a commoditys relative price could be
explained by the amount of labour time required to produce it; Farjoun and Machover
(1983) postulated that the deviation would be less. Cockshott and Cottrell (1997) tested
Farjoun and Machovers hypothesis using a larger computer-based model, and established
that the correlation was around 9597 percent. The transformation of values into prices of
production based on Marxs assumption of equal prot rates is unnecessary, Cockshott
argues, as prot rates are unequal and relative values closely approximate prices.
But what about the other 25 percent? Marx recognised that the industrial revolution
created capitals of dierent compositions, that competition tended to equalise prot rates,
and that, therefore, prices of production systematically diverge from values. There need be
no direct relationship between the amount of value produced in a sector and the amount
of value realised in it. The divergence is systematic so the social laws which determined
value production, similarly, determined prices of production. Cockshotts relationship
between values and prices depends on the method he adopts for establishing sectoral rates
of prot; this is not unproblematic. Even if Cockshott is correct, the similarity between
values and prices does not obviate the transformation question. The dierence between cir-
cular and elliptical planetary orbits is not very large, but it is important.
Cockshott discusses the relationship between labour content and price through human
history, beginning from ancient civilisation. Catos description of a slave farmstead, he sug-
gests, illustrates the ecient application of labour time as the value of dierent tasks. Cock-
shott shows how consistent swap ratioscan be translated into a universal equivalent, or
money, as a standard of value. The regularity of commodity exchange, largely through the
growth of sea trade, enables the comparison of the labour content embodied in dierent com-
modities. As money develops as a universal equivalent, so it represents the social content of
Cockshott then moves on to a discussion of the medieval peasant economy, which is based
on subsistence agriculture. Mechanical energy is provided by the muscle power of humans
and animals, and occasionally by water and wind for milling. The absence of virgin territory
ties feudal farmers to their lords; ownership titles entail the inheritance of land and serfs. Serfs
generated a small surplus that was directly appropriated through compulsory labour services,
crop taxes and rent. The median family workforce consisted of ve people; the division of
labour was minimal. Transportation was underdeveloped; trade with urban centres was
limited. Nonetheless, the data available to us suggest that production was ecient given
the prevailing technology. By translating outputs of food into money prices using price
data from the sale of surplus grain to cities, Cockshott is able to estimate a rate of exploitation
of 25 percent.
Cockshott emphasises that the capitalist mode of production is machine productionand
he reminds us of Marxs observation that the hand mill gives you society with the feudal lord;
the steam mill, society with the industrial capitalist(p. 101). The features of a capitalist
system are articial energy, high-yield agriculture, machinery and applied science, wage
workers making commodities in private enterprises, and surplus product realised as
money. The capitalist system replaces direct calculation of labour times with indirect calcu-
lation, as inputs are commodities valued in money terms. To estimate the prot rate, Cock-
shott assumes the turnover of capital is monthly and he utilises the estimates of xed capital
provided by the US Bureau of Economic Analysis. He nds that prot rates are inversely pro-
portional to the organic composition of capital, as is to be expected if values are closely related
to prices. But we may question the reliability of this result. Cockshott has no method for esti-
mating the number of turnovers a year. This will dierentially impact capitals of dierent
compositions. Sectors with a lower organic composition of capital, or a higher proportion
of wages to xed capital, will show a higher rate of prot if the rate of turnover and depre-
ciation is too high and vice versa. His approach further assumes that the neoclassical estimates
of the value of the xed capital stock, based in the decline of revenues rather than on the rate
at which the cost of capital is recovered, are accurate.
Cockshott discusses why labour notes, of the type advocated by Robert Owen, could not
replace money. The relationship between value and price is indirect, uctuating around a
mean; but more importantly, the use of labour tokens would reveal the exploitative nature
of capitalist society, Cockshott argues. He calculates the rate of exploitation or surplus value
in the UK to be around 77 percent. Cockshott discusses how technological progress has mul-
tiplied many-fold the amount of non-human energy sources applied to production; from
around 1750 there was an explosion in the advance of installed articial power, initially
from water mills, and then from coal and steam. The advance of steam, initially developed
for pumping mines, spread to transport and then iron and steel. This process, Cockshott
observes, marked the transition from what Marx called manufactory, the formal subsumption
of labour to capital, to, after the industrial revolution, the actual subsumption. Marx noted in
the Grundrisse that this transition was simultaneous with the transformation of values to
prices of production and was disproportionate.
The book covers a wide range of issues. Cockshott shows how technological progress is
stimulated by prots of rst use. He draws a parallel between the impact of racism on
black people after the American Civil War and the caste system in India. He discusses the
relationship between capitalism and population dynamics. Capitalism is an urban system
dependent on agricultural surpluses to feed the part of the population employed in industry,
commerce and other non-agricultural sectors. It increased food output by territorial expan-
sion, better transport and productivity growth in agriculture. Cockshott notes that developed
capitalism tends to reduce the rate of human fertility below the rate required to keep the pop-
ulation from shrinking. Women face structural discrimination largely because the require-
ments of childcare lead to dierential employment rates between men and women.
Cockshott links income inequality to food insecurity and hunger. He also explains how
expenditures on arms is unproductive as it does not produce a useful good; the nancial
sector, which merely recirculates existing value, is also unproductive. (The pornography
industry, however, is productive, for it generates products which are sold.)
Marx and Engels gave no precise denition of socialism, so Cockshott adopts an empirical
denition: the Soviet Union existed and called itself socialist, and most people who called
themselves socialist attached that label to the Soviet Union too. The pertinent question,
though, is how did the law of value operate in centrally planned economies where inputs
and outputs were determined politically without reference to social costs, and without
money or labour values? Cockshott discusses the socialist economic growth model of
Feldman (1927), wherein the rate of growth increases as a function of industrialisation. Cock-
shott asserts that growth can be expressed in terms of money per unit of labour time. Cer-
tainly, in the Soviet Union plans were real, and inputs and outputs were allocated
according to relative productivities, not only of labour, but of other physical inputs as well.
As there was no market exchange, there was no commensurability between inputs and
outputs, and therefore no need for a standard of value. Prices were assigned to outputs by
planners post factum; they were subjective not objective. The aggregate of prices was a
made-up number. During the 1930s, consumption fell in the rst ve-year plan due the col-
lectivisation of farming and the shift of resources toward the industrial sector. Consumption
grew from the mid-1930s on, as ve million citizens were sent to labour camps and nearly a
million were shot in the terror. (Puzzlingly, Cockshott makes no mention of the murderous
brutality of the Soviet regime.)
Cockshott insists that the USSR used money to integrate the national accounts, to prepare
accounts for individual factories, and to distribute income to workers. But only around 30
percent of workersconsumption involved the use of money tokens, and spending decisions
had no eect on prices or on the supply of consumption goods. Cockshott notes that the use
of turnover taxes meant it was impossible to objectively measure costs by labour values. He
observes that labour time accounting demysties or de-fetishizes social relations(p. 263), as
social credit is awarded for work undertaken. Indeed, but this is precisely why it could not be
used in the USSR. The corruption of the state bureaucracy, reected in the use of opaque and
fake money measures, was designed precisely to mystify and fetishise social relations. Cer-
tainly, the collapse of the Soviet economy was an economic disaster; Gorbachevs reforms
did indeed bankruptand debauchthe state (pp. 266, 269). There were about 12 million
excess deaths in the twenty years after the collapse of the Soviet Union. Perhaps we ought
not to presume that the Soviet Union was Communist merely because the Communists
Party members who destroyed it said so.
Finally, Cockshott discusses future economies, for which it is necessary to consider the
real contradictionsbetween technological imperatives and social forms: The consequences
of the existing economy for climate change, food security and health are so severe [as to make
clear that] something historically unprecedented is happening(p. 273). His favoured source
of carbon-free power is fusion; but reducing the carbon footprint in building materials sectors
like steel and aluminium, or in transport, will be more expensive, an issue that is exacerbated
by slowing productivity growth as technology starts to push up against physical and social
limits. At the same time, the decline in the rate of world population growth may restore
the balance of power in favour of labour and lead to rising wages. This possibility, for Cock-
shott, raises the prospect of a coming era of social conict [that] could well result in the
mutual ruin of contending parties(p. 295). How the World Works is an engaging and
thought-provoking book.
Cockshott, P., and A. Cottrell. 1997.The Scientic Value of the Labor Theory of Value.
Farjoun, E., and M. Machover. 1983.Laws of Chaos: A Probabilistic Approach to Political Economy. London:
Feldman, G. A. 1927[1964].On the Theory of Growth Rates of National Income.In Foundations of Soviet
Strategy for Economic Growth, edited by N. Spulber, 174202, 304331. Bloomington: Indiana University
Bill Jefferies
School of Oriental & African Studies, University of London
© 2021 Bill Jefferies
ResearchGate has not been able to resolve any citations for this publication.
Full-text available
A probabilistic approach to economy using labor value of products as a basic measure. many variables are defined as random variables and their distribution is shown to have some important implications. Profits, accumulation of capital and wealth and wages are discussed in a historic and present day framework.
The Scientific Value of the Labor Theory of Value
  • P Cockshott
  • A Cottrell
Cockshott, P., and A. Cottrell. 1997. 'The Scientific Value of the Labor Theory of Value.' cottrell/eea97.pdf.
On the Theory of Growth Rates of National Income
  • G A Fel'dman
Fel'dman, G. A. 1927[1964]. 'On the Theory of Growth Rates of National Income.' In Foundations of Soviet Strategy for Economic Growth, edited by N. Spulber, 174-202, 304-331. Bloomington: Indiana University Press.