[OPE-L:3082] Re: Re: Re: Re: Re: empirical verification of interpretations of Marx? (fwd)

From: Steve Keen (stevekeen10@hotmail.com)
Date: Wed May 10 2000 - 21:23:27 EDT

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You haven't (necessarily) embarrassed yourself with the analogy, Rakesh, but
your definition leaves out two classes of "commodities" which are of great
interest to Marx: money, and capital.

The former is obviously not "produced" by labor in the conventional sense
that you take a kilo of this, add 20 grams of that, heat to 350C then cool
and hey presto, money! Instead, when we consider money created by a loan, it
is produced by the mutual consent of the parties to the issuance of credit
on the one hand, and a debt (with repayment obligations) on the other. The
"labor" involved in this is no more than the cost of book-keeping, and
couldn't possibly determine the loan's price, as Marx notes:

"What, now, does the industrial capitalist pay, and what is, therefore, the
price of the loaned capital?... What the buyer of an ordinary commodity,
buys is its use-value; what he pays for is its value. What the borrower of
money buys is likewise its use-value as capital; but what does he pay for?
Surely not its price, or value, as in the case of ordinary commodities."
(Capital III: 352)

In fact, Marx ends up by concluding that this "commodity" is sold, not for
its value or exchange-value, but for its *use-value*, and:

"Its use-value, however, lies in producing profit" (Capital III: 355. See
also TSV III: 457-58).

Capital also *sometimes* involves things which have not been produced--such
as minerals in a mine.

Both these instances led Marx to engage in some very interesting
speculations using his concepts of use-value and exchange-value:

"Ricardo never uses the word value for utility or usefulness or ‘value in
use’. Does he therefore mean to say that the ‘compensation’ is paid to the
owner of the quarries and coalmines for the ‘value’ the coal and stone have
before they are removed from the quarry and the mine--in their original
state? Then he invalidates his entire doctrine of value. Or does value mean
here, as it must do, the possible use-value and hence the prospective
exchange-value of coal or stone?" (TSV II: 249)

In other words, the price a capitalist will pay for a capital asset will be
based, not on its cost of production, but on what his expectations are of
its possibilities for generating exchange-value in the future. This will
apply, not just to mines (where, as Marx says, the minerals in situ have no
value), but to capital assets (such as factories) produced by labor (and

This raises issues of expectations formation under uncertainty, and the
existence of two price levels under capitalism--one for normal commodities
(most of the ones captured by Rakesh's definition) based on
value/exchange-value, the other for money and capital assets, based on
expectations of their (quantitative) uncertain future use value.

I regard these musings by Marx as among the best instances of the power of
his use-value/exchange-value dialectic.

(and by the way, Ajit is of course quite right to point out that, starting
from my perspective on Marx's starting point of the commodity, I end up
concluding that the labor theory of value is "so much mumbo jumbo).

>From: Rakesh Bhandari <bhandari@phoenix.princeton.edu>
>Reply-To: ope-l@galaxy.csuchico.edu
>To: ope-l@galaxy.csuchico.edu
>Subject: [OPE-L:3072] Re: Re: Re: Re: empirical verification of
>interpretations of Marx? (fwd)
>Date: Tue, 9 May 2000 18:24:32 -0400 (EDT)
>Jerry, I'll just make a quick reply to one of your appreciated challenges.
> > In another post you defined commodities as objects produced in order
> > to be sold. In this post you regress still further by claiming that
> > commodities are "objects with exchange value". By that definition,
> > commodities don't even have to be produced. Are you claiming that
> > this was Smith's perspective or is it your own?
>What I am saying is that Marx took over in his analysis of the wealth
>of nations or bourgeois wealth the physiocrats and then Smith's
>restriction of objects with exchange value or the commodity form.
>But this is not all. He further restricted himself to objects produced by
>labor (obviously) in order to be exchanged.
>Now Paul C and Duncan and perhaps every else on this list knows
>a lot more physics than I.
>But this seems to be a perfectly reasonable procedure. For example in the
>field of condensed matter physics, a scientist will first investigate the
>properties of a region of a crystal far away from its boundaries so its
>effects due to atoms at those boundaries can be neglected. Indeed the
>physicist draws the distinction between bulk properties and surface
>properties which are determinated by the atoms at the boundaries.
>Similarly for Marx he is interested in the supra sensate or value property
>of sensate or thingly commodities.
>It is a bulk property of a vast accumulation of commodities, a property
>not shared by the commodities at the boundaries of the full commodity
>'lattice'--we would include here all those non reproducible commodities:
>rare art works, pieces of land, golden meteors.
> So Marx is interested in the bulk properties of specifically
>reproducible commodities only as they are part of a lattice which is a
>vast accumulation of commodities. He is interested in the bulk or general
>property of exchangeability, exchange value, value of and the nature of
>the labor represented by reproducible commodities.
>That is, Marx is interested in commodities only as the cell form of
>bourgeois society.
>If I have embarrased myself with this analogy, feel free to tell me.
>Yours, Rakesh

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