[OPE-L:3369] Re: Re: Re: Reply to first part of Gil in [3365]

From: Gil Skillman (gskillman@mail.wesleyan.edu)
Date: Sun May 28 2000 - 20:47:50 EDT

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>Gil, What's the point? We all agree that the price value divergence is to
>be independent of the question of the formation of capital, price-value
>divergence doesn't add to an understanding. Fine. Why should we care
>about all the rest you are saying? You don't say that Marx FAILS to
>establish the formation of capital, that in fact Marx would REQUIRE a
>price-value divergence to establish the formation of capital. Or have I
>missed something? Paul

Paul, The point first, then the explanation:

1) Contrary to Marx's apparent intent, he shows no necessary connection
between the existence of surplus value and the phenomenon of capitalist
production. As far as Marx's *valid* argumentation takes us, capitalist
production--Marx's canonical case--could be simply coincidental to the
existence of surplus value.

2) Of course none of us believes that; surely there is some systematic
connection between capitalist production and surplus value. **But contrary
to Marx's conclusion at the end of Ch. 5, pursuing this connection on the
basis of price-value equivalence gives an *essentially misleading* view of
what this connection is.** Substantively, the intrinsic connection between
capitalist production and surplus value stems from strategic or conflictual
problems capitalists encounter in exploiting the absolute scarcity of
capital through simply giving workers production loans or putting-out
contracts, *not* from any putative connection between commodity prices and
3) To see this, let's say for a moment that Marx does not *assume* in V.
I, Part 2 that capitalist exploitation is based solely on the circuit of
industrial capital, i.e. on capitalist production. Then in fact the
formation of capital may *require* targeted price-value disparities: in
the case of usury capital extended to direct value producers, unless there
is a price-value disparity (in the form of interest) for the money
commodity acting as capital, usury capitalists *cannot* appropriate surplus
value. In the case of merchant capital extended to value producers (as in
the putting-out system), capitalists *cannot* appropriate surplus value
unless there is a price-value disparity between the piece rates paid to the
putters-out (the historical equivalent of independent contractors) and the
value added they produce. But conversely, if such targeted price-value
disparities are admitted, then these historically were adequate vehicles
for surplus value, as Marx emphasizes.

4) Let me put the point more strongly: an economy that gives rise to
surplus value is in a deep sense *essentially* one that gives rise to
targeted price-value disparities; that is, the conditions that make it
possible to have surplus value are also *generically* ones that give rise
to targeted price value disparities. They must always occur except in one
analytically uninteresting case. Why?

A) Marx identifies two necessary conditions for the capitalist mode of
production: first that workers are completely expropriated:

"...the capitalist mode of production and accumulation, and therefore
capitalist private property as well, have for their fundamental
condition...the expropriation of the worker." (p940, Penguin ed);

and second, that excessive capital accumulation by those who have the
wealth doesn't drive the profit rate to zero. Obviously Marx argues this
won't happen--he gives two mutually reinforcing arguments why it won't in
Ch. 25--but at least he recognizes the logical possibility of excessive

B) Granting both of these conditions is tantamount to ensuring that capital
is *absolutely* scarce in any given production period; were we to translate
this condition into supply and demand curves, it would imply that the
aggregate "supply curve" for capital would be *vertical* where the
aggregrate "demand curve" crossed it. Again using neoclassical language,
it would mean that capital owners receive economic rents. Translating back
into Marxian language, this means that even if all other commodities
exchanged at their value, the price of capital goods *must necessarily
exceed their value*. If capitalists only exploited labor power via capital
markets, this would show up in positive interest rates. ***Thus if some
form of capital scarcity exists, prices of capital goods exceed their
values, other things equal, and this is the basis of surplus value.*** If
some form of capital scarcity doesn't exist (and it could be "economic
scarcity" rather than "absolute scarcity", as above), then surplus value
doesn't exist, no matter *what* the connection between prices and values,
or whether or not capitalist production exists.

[Lest you think I'm relying too heavily on neoclassical theory to make this
point, it's similar to the basis Marx gives for land rent or usury
capital--i.e., a class monopoly. For that matter, it's also the basis
Ricardo gives for price-value disparities in non-reproducible items like
"rare statues and pictures, scarce books and coins, [or] wines of a
peculiar quality"]

C) Now we get to the punch line: there is a seemingly obvious rebuttal to
the triple-starred sentence just above: in Marx's canonical case of
capitalist production, capitalists don't exploit labor by selling capital
services at interest, they exploit it by buying labor power. Since the
capital isn't being sold, the targeted price value disparity highlighted
above goes away. Thus it's *possible* to have price-value equivalence in
this case and still have surplus value.

But the fact that it's *possible* to have this case doesn't mean that it's
at all significant. It isn't. It still remains the case that surplus
value derives from the scarcity of capital, not from capitalist production.
 Were capitalists to decide to return en masse to being usury
capitalists--and at least so far as any argument Marx has given us by V. I.
Ch 6, **there is absolutely no reason not to do so**---targeted price value
disparities would again *necessarily* arise, and furthermore be the
*necessary* basis for capitalist appropriation of newly created value.

Thus, to insist on the condition of price-value equivalence in explaining
surplus value is to elevate a mere logical possibility to the status of a
canonical case, and furthermore in doing so to direct attention away from
the real basis of surplus value.

6) But wait a minute: isn't direct capitalist control of production
necessary because propertyless workers would default on production loans,
and putting-out workers would make excessive personal use of the raw
materials they were provided, and in neither case would workers expend
sufficient effort to maximize capitalist profits? Yes, of course. But
these reasons have nothing whatsoever to do with the condition of price
value equivalence. They have to do with historical arguments Marx develops
from the Grundrisse onward but leaves utterly out of his analysis in V. I,
Part 2. Again, insisting on this condition necessarily draws attention
from what's *really* driving the connection between surplus value and
capitalist production.

Finally, assume that Marx posited capitalist production as the sole basis
of capitalist exploitation as the basis of his Ch. 5 argument, per Fred's
interpretation. Then points 1 and 2 above still hold, only more
emphatically: first, no intrinsic connection of capitalist production to
surplus value can have been established, since capitalist production was
assumed to begin with; and second, the connection between prices and values
is irrelevant. Marx does not need this stipulation to infer the purchase
and subsumption of the commodity labor power, as he does at the beginning
of Ch. 6, because according to this interpretation, he's already assumed
it. There's nothing to derive.


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