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The main issue in the thread with Michael W. concerns the logical force of
Marx's concluding focus in Chapter 5 on the case of price-value equivalence
as the basis for explaining surplus value. There is some redundancy in my
for which I apologize, because I somehow missed the second half of
Michael's post in the first run-through.
[Passages marked by > are by Michael; passages marked >> are from my
earlier post that Michael addresses]
I wrote earlier,
>> The passage I quote from the footnote is adduced by Marx to support the
>> argument, in the text, that "[t]he transformation of money into capital
>> *has to be developed* on the basis of..." etc. This is a "necessity"
To which Michael responds,
>I think not. Rather the fuller context is even more clearly supportive of an
>'as if' argument. In the text we have:
>"The conversion of money into capital has to be explained on the basis
>of the laws that regulate the exchange of commodities, in such a way
>that the starting-point is the exchange of equivalents."
>And then the note [*emphasis* added]: "1 From the foregoing investigation,
the reader will see that this statement
>*only means that the formation of capital must be possible even though the
>and value of a commodity be the same*; for its formation cannot be
>any deviation of the one from the other#. If prices actually differ from
>we must, first of all, reduce the former to the latter, in other words, treat
>the difference as accidental in order that the phenomena may be observed in
>their purity, and our observations not interfered with by disturbing
>circumstances that have nothing to do with the process in question."
>#The imperative I see here is a methodological one ('in order that the
>phenomena may be observed in all their purity') of making a cognitive
>abstraction in order to model (already!) the mechanism in question
First, this does not deny that Marx is advancing a "necessity" claim here;
at most Michael shows that Marx is making a *contingent* necessity claim, to
the effect that "in order to accomplish theoretical purpose X, it is
necessary to account for surplus value on the basis of price-value
equivalence." And what is that theoretical purpose? According to the
footnote both Michael and I cite, it's to understand the phenomenon of
surplus value in the absence of "incidental" factors "that have nothing to
do with the process in question." Note that.
Marx makes this point somewhat more emphatically in a parallel argument
developed in _Value, Price and Profit_:
"To explain, therefore, the *general nature of profits* you must start from
the theorem that, on an average, commodities are *sold at their real
values*, and that *profits are derived from selling them at their values,
that is, in porportion the quantity of labour realised in them. **If you
cannot explain profit upon this supposition, you cannot explain it at
all.**" (p. 37, International Publishers ed.; latter emphasis added)
Thus, to make my assessment of Marx's Ch. 5 conclusion somewhat more
precise, Marx is arguing that it is *necessary* to explain surplus value on
the basis of price-value equivalence, because to do otherwise is to
introduce "accidental" or "disturbing" factors. If one does not eliminate
these factors, Marx argues, "you can't explain profit at all." In context,
that is a fairly powerful necessity argument, if you ask me.
Now, it's worth reiterating that I've strongly indicted this claim by Marx:
does he necessarily fail to establish that price-value disparities are but
"disturbing incidental factors which are irrelevant to the actual course of
the process", but there are (I argue) powerful reasons for thinking
otherwise, so that stipulating price-value equivalence leads to a
fundamentally misleading representation of the basis for surplus value. I
elaborate on this point below.
But second, characterizing Marx's chapter 5 conclusion as an "even if"
argument doesn't rescue it from my critique, because as such that argument
only has a legitimate claim on our attention to the extent that it
corresponds to some analytically meaningful or relevant economic state of
affairs. But Marx never shows this, although he asserts it, and the
assertion is demonstrably and severely problematic. The scenario of
price-value equivalence does not correspond to the classical case of
"natural prices", to the general case of neo-Ricardian prices of production,
to the case of neoclassical competitive equilibrium, to the central tendency
of "oscillating" prices, to the "realm of Freedom Equality, Property, and
Bentham," or any other known microeconomic scenario that might be taken as
a meaningful analytical benchmark.
To the contrary: unless one *assumes* the *conclusion* of Marx's argument
in Part 2 of V. I --that is, unless one *specifically* assumes that surplus
value is derived universally from the purchase of labor power *as a
commodity* and its subsumption in capitalist-controlled production processes
(in which case Marx's argument is reduced to a simple tautology)--it is more
appropriate to state that price-value disparities are an *intrinsic* feature
of a system that yields surplus value, since such disparities follow
generically from the conditions of capital scarcity that Marx identifies as
*necessary* for reproduction of the capitalist mode of production.
As Allin correctly anticipates, in the absence of a coherent *prior*
for this "even-if" scenario, the stipulation of price-value equivalence
literally has no more relevance or significance than "even-if" stipulations
such as: the moon is made of green cheese; all capitalists have the same
height or weight or shoe size; or the money commodity always takes the form
of Danish currency. I recognize that most of us on this list have, at one
time or the other, acquired the presumption that the case of price-value
equivalence has some fundamental economic significance or relevance. But
this presumption must be unlearned. Not only does Marx fail to establish
valid grounds for this presumption, but there are, I think, very powerful
grounds for believing the contrary.
Bottom line: Marx's Ch. 5 conclusion does indeed represent a necessity
argument in a fundamental sense--he says his manifest mission of explaining
surplus value *can't be carried out* unless one postulates price-value
equivalence. Representing this conclusion as an "even-if" argument doesn't
rescue it from my critique, since my indictments of his necessity claim also
impugn the possible relevance or significance of price-value equivalence as
an analytical scenario.
Continuing...where I wrote, in part,
>> I agree with Michael that this is a particular interpretation
>> of "has to be", but it's surely more than *simply* an "even-if" argument,
>> as the remainder of Marx's comments in the footnote make clear.
>Well, let's see. The note continues:
>"We know, moreover, that this reduction is no mere scientific process. The
continual oscillations in
>prices, their rising and falling, compensate each other, and reduce
themselves to an
>average price, which is their hidden regulator. It forms the guiding star
of the merchant or the
>manufacturer in every undertaking that requires time. He knows that when a
long period of time is taken, >commodities are sold neither over nor under,
but at their average price."
>Well, this just says (with classic 19th century verbosity) that the average
>of random oscillations is a measure of their central tendency - which is
>more or less definitional of one meaning of 'average'.
Verbose or not, Marx's claim here is both unproven and generally incorrect.
First, he doesn't *show* that the "central tendency" of oscillating
commodity prices is toward their respective labor values. But second, it's
false: unless one assumes very strict and empirically unrealistic
conditions, "average" prices will not correspond to their respective labor
values. To the contrary, as noted above, unless one assumes Marx's
conclusion at the beginning of Ch. 6 (thereby transforming Marx's argument
into a simple tautology), the existence of surplus value in an important
sense *necessitates* price-value disparities for targeted commodities, e.g.
labor services (as opposed to labor power) or the money commodity within
the circuit of interest-bearing capital.
>Back to the note:
>"If therefore he thought about the matter at all, he would formulate the
>problem of the formation of capital as follows: How can
>we account for the origin of capital on the supposition that prices are
>regulated by the average price, i.e., ultimately by the value of the
>say “ultimately,” because average prices do not directly coincide with the
>values of commodities, as Adam Smith, Ricardo, and others believe."
>And this is just a statement of a postulate of the classical labour theory
>of value - which of course we may wish to dispute.
Actually, I dispute something more fundamental: it is clearly the case
that Smith and Ricardo *don't* believe that "average prices...directly
coincide with the values of commodities", contrary to Marx's assertion. In
addition, the notion that prices are "ultimately" regulated by labor values
is both unproven by Marx and severely problematic as a general statement.
First, as I show in a recent post, in the absence of universal constant
returns to scale it is more appropriate to say that values and average
prices are both regulated by relative commodity demand. Second, to the
extent that constant and variable capital inputs are substitutable in
production, and capitalists seek to increase their profits, labor values
will generically be dependent on the relative prices of input commodities,
rather than vice-versa. And third, under the scarcity conditions
recognized by Marx as necessary for the existence of surplus value, the
magnitude of price-value disparities is determined by relative demand levels.
>So none of this undermines an 'as if' interpretation of what Marx is doing
I think it does, and quite emphatically so, once one eliminates Marx's
illegitimate or unproven claims. See above.
>Gil goes on (in the nicest possible sense ...:
Yeah, Michael, I know what you really mean: Gil goes on and on and on...
>>the possibility of explaining surplus value "even if" all commodities
exchange at their
>> respective values is *utterly without theoretical interest or relevance*
unless some cogent
>> reason is advanced for investigating this scenario.
>But the theoretical interest that remains compelling even if one adopts
>something other than the classical labour theory of value (such as Elson's
>'value theory of labour' and the subsequent notion that Marx's theory can be
>interpreted as a theory of the systemic logic of labour allocation iaw with
>value-form imperatives under capitalism) is that of arguing for the
>necessity of the expenditure of labour under capital for valorisation.
I've already addressed this claim at length in previous posts.
First: The fact that surplus value requires the expenditure of new labor
subsequent to the initiation of a circuit of capital follows from Marx's
Ch. 4 *definition* of surplus value as requiring "valorization" of value
rather than merely *redistribution* of existing value. If this were not
simply an aspect of Marx's *definition*, Marx's Ch. 5 assessment of the
hypothetical exchange between parties A and B (p. 265, Penguin ed; p. 160,
international publishers ed) would necessarily be a non sequitur, since as
a result of the unequal exchange under consideration A certainly ends up
with a value greater than he started with. Were these values monetized he
would certainly have M' > M, so it's only by the definitional outlawing of
redistribution that this doesn't constitute surplus value. And one
doesn't need the stipulation of price-value equivalence (PVE) to make this
point, as is confirmed by the Fundamental Marxian Theorem, which
establishes the logical equivalence of positive profit rate and positive
rate of surplus value without positing PVE.
But second: Marx stipulates *two* conditions for the existence of surplus
value: first, that new value be created subsequent to the initation of a
circuit of capital, as per above (condition VC); and second, that
capitalists, understood as distinct from the value producer, appropriate a
portion of this newly created value (condition VA).
These conditions have equal weight in Marx's conception of surplus value:
"It is therefore impossible that, outside the sphere of circulation, a
producer of commodities can, without coming into contact with other
commodity-owners, valorize value, and consequently transform money or
commodities into capital. Capital cannot therefore arise from circulation,
and it is equally impossible for it to arise apart from circulation. It
must therefore have its origin *both in circulation and not in
circulation.*" (p. 268; emphasis added)
Granting that price-value disparities alone cannot account for VC (true by
definition) has no implications one way or another for the relationship of
price-value disparities to VA, the other necessary component of surplus
value. Thus, whatever else is true, Marx *cannot* be read as having
established a "compelling theoretical interest" in the case of PVE, since
his argument for this case is logically incomplete. As noted above, there
are strong grounds for believing that at least targeted price-value
disparities are generically *intrinsic* to a world in which VA occurs. One
can get around this by assuming Marx's evident conclusion in Ch. 6, with
logical consequences already noted.
Conclusion: The demonstration that surplus value depends on VC, which
follows immediately from Marx's definition in any case, does not establish
coherent logical grounds, much less a "compelling theoretical interest",
for the scenario of PVE.
>>But this leaves *entirely open* the possibility that they are a
>> supporting the "value appropriation" (VA) aspect of Marx's definition of
>> surplus value (see my recent response to Paul Z.).
>I think that no one (including, of course, Marx) denies that the forced
>expenditure of labour and appropriation of its product can be brought about
>via usury and merchant capitalist mechanisms that do involve unequal
>exchange. But that is perfectly compatible with an 'as if' interpretation of
>Marx's argument exploring the nature of 'industrial' capital.
Not unless Marx is to be understood as assuming his central conclusion in
Part 2 of Volume I. In the historical cases of usury and merchant capital,
VA *required* targeted price-value disparities (subject to a small caveat
noted at the end of my post 3188--I won't bring that up unless necessary).
Thus to presume PVE is to dismiss these relevant cases--acknowledged as
such by Marx, as Michael notes--by fiat rather than by argument.
Alternatively, of course, one could simply *assume* that surplus value is
everywhere based on the circuit of industrial capital, including
specifically the condition that labor power is purchased as a commodity,
but in doing so one necessarily assumes what Marx evidently intends as a
deductive *inference* from PVE at the beginning of Ch. 6, rendering his
argument a tautology.
In other words: Marx doesn't posit *both* PVE and the circuit of
industrial capital in Ch. 5. He posits the former in Ch. 5 and *infers*
from this postulate in Ch. 6 the need to analyze the latter. But this
procedure is only legitimate if their are legitimate *prior* grounds for
invoking PVE that do not involve *assuming* the circuit of industrial
capital as well. There are no such grounds--certainly not any established
by Marx in Ch. 5. Alternatively, one could *start* by assuming the circuit
of industrial capital, rendering Marx's argument circular, but in that case
stipulating the scenario of PVE is entirely superfluous!
A final comment: Note that Michael's argument doesn't dispute my point:
Marx's argument about the connection between price-value disparities and
surplus value is necessarily incomplete, since it only focuses on VC and
>> I think, *Fred's* reading of one *justification* for this
>> even-if argument, to the effect that price-value equivalence represents
the "pure" case of commodity exchange. >>Whatever that means, it doesn't
mean that it's the typical or representative scenario of a system yielding
>> surplus value.
>The notion of 'purity' is of course evoked by Marx, as well (see above).
Yes, I know, and I indict it as such, in detail, along with the companion
claim that PVE is an expression of "the immanent laws of the exchange of
commodities." See above.
>> This is not comparable in light of my argument that price-value
>> equivalence is not only irrelevant and unenlightening with respect to
the explanation of surplus value, stipulating >>also seriously
misrepresents the logic of capitalist exploitation, and the role of
capitalist production in
>> that logic.
>On the last page of Ch VI (to which you advert elsewhere for support of the
>notion that Marx's notions of exchange can be usefully modelled by standard
>microeconomic models) Marx makes it quite clear that the fair, just and
>harmonious system of exchange of equivalents is exactly the real but partial
>appearance through which capitalism presents itself to everyday
>consciousness that he wishes to pierce with his value theory. To 'model'
>this as the exchange of equivalents seems entirely appropriate, relevant,
>enlightening and indeed, exciting!
Ah, but to assert this is to beg the central question at issue, i.e. that
the sense of "exchange of equivalents" invoked by Marx on the last page of
Ch. 6 corresponds to the case of PVE. Marx never proves this, and he
can't, at least not validly, because it's not true. The "equal exchange"
Marx refers to at the end of Ch. 6 refers to the strictly *formal* equality
of commodity owners who transact voluntarily. This formal equality IN NO
WAY implies the condition of PVE. To the contrary, absent extremely
stringent and unrealistic assumptions, a system of formally equal exchange
that systematically gives rise to surplus value *generically* corresponds
to a scenario of price-value *disparities*, not price-value *equivalence*.
>> Reference to "average" prices
>> doesn't eliminate systematic price-value disparities; and there is no
>> meaningful sense in which labor values can be held to "regulate" commodity
>> prices, and lots of powerful reasons to think that the reverse is true.
>I have a lot of sympathy with this view - but continue to seek a synthesis
>in which the mutual constitution and quantitative determination of value and
>price can be conceptualised - since it seems to me that that is what is
>going on in market capitalism.
This is necessarily a separate, and potentially very interesting
discussion, Michael, but for present purposes I can only say that Marx
certainly hasn't established valid grounds in Ch. 5 for stipulating the
condition of PVE as the basis for explaining surplus value, and I've
indicated grounds for believing otherwise.
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