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Continuing the discussion with Allin.... Although it makes the post a bit
longer I'll include the passages of mine he's responding to, indicated by (>>):
>> I agree that assuming price value-equivalence creates a
>> puzzle, Allin, and that the logical answer to the puzzle as
>> Marx poses it is the distinction between the use and
>> exchange values of labor power sold as a commodity. But for
>> several reasons it's the *wrong* puzzle, representing the
>> significance of the labor/labor power distinction in an
>> essentially misleading way.
>I'm puzzled, but prepared to read on...
>> ... price-value equivalence is not an economically
>> meaningful condition for describing an economy that
>> systematically yields surplus value, even in the abstract:
>> it doesn't correspond to the classical system of "natural
>> prices," it doesn't correspond to neoclassical "competitive
>> equilibrium," ...
>Hold on. It would be difficult to maintain that David Ricardo's
>system was not the most highly developed version of
>"classical" theory and of course Ricardo held that natural
>prices correspond closely with embodied labour contents.
Two points. First, the required adverb in *this* context is not "closely"
but "exactly." Magnitude of price-value disparity is not at all the issue,
if for no other reason then no theoretical standard is established, in
Marx, Ricardo, or anywhere else, for what would constitute a "significant"
departure from exact proportionality of prices and values. [However, for
his part Ricardo concludes that variations in capital intensity introduce
"a considerable modification" to the principle that commodities exchange at
their respective values--see p. 23, Everyman edition of Ricardo's
_Principles_.] In particular, nothing in Ricardo's argument disbars the
possibility that the price-value disparities he allows for account for
*all* of capitalist profit.
Second, it would arguably be more appropriate to say that Ricardo's system
was the most highly developed version of *certain aspects* of classical
theory, namely those aspects flowing directly from the labor theory of
value. But Adam Smith introduced substantive departures from such a
theory, such as compensating differentials in wage and profit, which
Ricardo essentially ignores. These departures, plus Smith's notion of
monopoly land rents, fundamentally clash with the *theoretical* notion that
commodity prices systematically correspond to values (more on the
significance of their *empirical* correspondence below).
>> To the contrary, an economy that systematically yields
>> surplus value is *generically* one in which price-value
>> disparities arise, and unless the circuit of industrial
>> capital is *universally* the vehicle for appropriation of
>> surplus value (bear with me for just a second), targeted
>> price-value disparities are to some extent even *necessary*
>> conditions for that appropriation.
>Well, "just a second" perhaps, but If the deal is that
>price-value discrepancies are the /necessary/ basis of surplus
>value I emphatically do not buy it.
No, the deal is only to allow me to *start* without the stipulation of
universal capitalist production, so long as I promise to *end up* with
it--a promise, as you've seen, that I keep.
>> And now to the key point you raise: restricting attention
>> to the analytically polar (and in no real-world capitalist
>> economy exactly descriptive) case in which the purchase and
>> subsumption of wage labor is the *only* basis for
>> appropriating surplus value...
>No theory worth bothering with is "exactly descriptive". But
>what percentage of surplus value today, would we reckon, is
>appropriated on the basis of hiring the labour-power of those
>not possessed of their own means of production? Seems to me
>that anything without a "9" in front is out of order.
Perhaps, but again, what we're dealing with are in effect *categorical*
claims on Marx's part about the relationships among capitalist
exploitation, price-value equivalence, and the condition that workers are
"free in the double sense," so any fraction less than "1" serves my point.
>> Suppose that there are significant disparities in ownership
>> of the means of production, but workers are not entirely
>> expropriated. This is a world, for example, of family farms
>> and cottage industries, perhaps in addition to
>> capitalist-run factories.
>OK, the early 19th century.
...and perhaps into the 2nd half of the 19th century as well, at least in
>> There are two characteristics of the general competitive
>> equilibrium (simply a point of reference) that emerges from
>> this scenario:
>> 1) Assuming that there is a range of available technical
>> compositions of capital, and individuals can freely choose
>> among (economically feasible) production processes, the
>> wealth inequalities described above will lead to systematic
>> differences in the factor intensity (organic composition) of
>> production, with relatively wealthy producers choosing
>> "constant capital-intensive" techniques and relatively poor
>> producers choosing "variable capital-intensive" techniques.
>> For well-known reasons these differentials will create
>> equilibrium disparities in commodity prices and values.
>> Thus price-value disparities are *characteristic of*, rather
>> than *accidental to*, this scenario of wealth
>> inequalities---inequalities that, in extreme form, Marx
>> takes as a necessary condition for systematic capitalist
>OK, price-value disparities may well be essential to forms of
>exploitation that existed on the margins of early capitalism.
The term "margins" may beg the question, and in any case is certainly a
hindsight judgment: for the period in which Marx was writing, the forms I
refer to were quite common if not actually statistically predominant. A
more appropriate way to put the point is therefore that price-value
disparities are necessary for the existence of surplus value via at least
some circuits of capital, contrary to Marx's *categorical* claim in Ch. 5
(unless you assume that Marx has assumed his Ch. 6 conclusion, in which
case Marx's argument is simply circular).
>> But John Roemer has demonstrated...
>Roemer is smart, alright, but for my part I can't credit his
>counterfactuals with the same sort of importance one grants to
>Marx's attempt to come to grips with the _actual_ mode of
>production that was emerging in his day, and that has since
>taken over the world.
Roemer's counterfactuals are centrally relevant because they help
illustrate why the logical deficiencies I've identified in Marx's Ch. 5
argument *matter.* No one denies the empirical predominance of capitalist
production, but that isn't the basis of Allin's challenge. The issue is
whether there is any validity to Marx's assertion that one must stipulate
price-value equivalence in order to understand the nature of surplus value.
Using Roemer's (to some extent) counterfactuals as logical
counterexamples, I argue that Marx's Ch. 5 argument is a non sequitur if it
isn't taken as simply circular (and therefore irrelevant). To answer the
charge of non sequitur, by the way, it would be necessary to engage in just
the sort of market analysis that Roemer undertakes and Marx avoids in Ch. 5.
>For the rest, Gil, I think you are too smitten (you're certainly
>not alone in this) with the idea that a normally functioning
>capitalism requires substantial, systematic price-value
Not in the least! My argument holds in its entirety even if, as a matter
of empirical fact, commodity prices are *exactly* proportional to their
respective values. This is because the *empirical* connection between
prices and values cannot speak one way or the other to the *theoretical*
claim that one must *posit* price-value equivalence in order to study
surplus value in its essence. As I've argued, this conclusion does not
validly follow from the arguments Marx advances in Ch. 5.
> Remember, that is a theoretical proposition,
>based on strong assumptions regarding the equalization of the
>rate of profit and an arbitrary variance of organic
Well, it follows from variances, arbitrary or otherwise, in organic
compositions of capital, but in no comprehensive sense are theoretical
price-value disparities "based on" these conditions. Price-value
disparities can emerge even with identical organic compositions given
sectoral variations in wage or profit rates, not to mention other
departures from the "law of one price". [For example, right now I can go
within a 20-mile radius of here and buy a 20 oz bottle of a given
brand-name soda for anywhere from a buck to $1.45.]
> Paul C and I (and others who've dome empirical
>work) do not find it to be borne out.
This work has potentially valuable empirical uses, but for reasons
indicated above, can't possibly address the *theoretical* issue at hand.
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