[OPE-L:3538] Price-value equivalence and surplus value: 2nd thought experiment

From: Gil Skillman (gskillman@mail.wesleyan.edu)
Date: Sun Jun 25 2000 - 14:51:32 EDT

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In post 3369 responding to Paul Z., I develop a thought experiment to
illustrate my claim that, contrary to Marx's representation in Chapter 5,
price-value disparities are most appropriately thought of as *intrinsic* to
a system in which surplus value systematically arises. While I continue to
think that this thought experiment is legitimate (and I await Mike L.'s
reactions on this score), I see that it suffers from the *tactical*
disadvantage of invoking conditions that, although clearly put forward by
Marx in Volume I, equally as clearly fall outside the purview of Marx's
analytical framework as of Part 2 (that is, Chapters 4-6) of Volume I. As
Mike L.'s comments illustrate, once this is done it is fair game to
question the exact set of necessary conditions for surplus value identified
by Marx.

In this post, I develop a second thought experiment that sidesteps even
this objection. Indeed, the significance of this thought experiment
derives in part from its insistence on limiting attention to just those
analytical considerations introduced by Marx through Part 2 of Volume I.
The cost of this improvement is that the systemic conditions which give
rise to the existence of surplus value remain unclear, just as they are in
Marx's account through Chapter 6; what is made clear, however, is that
invoking the scenario of price-value equivalence (PVE) as the basis for
explaining surplus value *necessarily* misrepresents the analytical
significance of the fact that capitalists purchase labor power as a

1) The reference point for the thought experiment is Marx's canonical case,
deduced and analyzed in Ch. 6, in which surplus value exists within a
system of commodity exchange and is derived solely on the basis of the
circuit of industrial capital, where the latter is understood specifically
to involve the purchase of labor power as a commodity. Take as given that
surplus value requires the creation of new value subsequent to the
initiation of a given circuit of capital, per Marx's definition. Also take
as given, per Marx's argument in Chapter 6, that workers are "free in the
double sense", i.e. both legally able and economically compelled to gain
access to the means of production through exchange relations with
capitalists (note that the latter does not logically imply that workers
must *sell their labor power*, as the ensuing analysis will make clear).

In Marx's canonical case, capitalists purchase labor power as a commodity
and do something, we're not sure as of Ch. 6 what or how, to ensure that
the use value (labor) they extract from this commodity exceeds its exchange
value, leading to the creation of surplus value. Since a commodity's
exchange value is not, according to Marx, *quantitatively* determined by
its use value, it's *possible* to imagine that this occurs even in the
event that all commodities exchange at their respective values. Notice, by
the way, that since workers are understood to be "free" in the sense that
they own their capacities to labor, it is more appropriate to say that
capitalists *lease* labor power from workers, not *buy* it. Ownership of
labor power always remains with workers.

2) Now let us imagine an alternative scenario that *exactly corresponds* to
the foregoing one in all details--market, class, technological,
etc.--except one: instead of the circuit of industrial capital, in which
capitalists hire labor power as a commodity, we posit an alternative
circuit in which capitalists *lease* the alienable means of production
(i.e., constant capital goods) to workers-- either individually or in
teams, as the prevailing conditions of production dictate. Nothing in
Marx's analysis through Chapter 6 invalidates this alternative: this is a
system based on "Freedom Equality, Property, and Bentham", and capitalists
can do with their property as they please. In particular, if they so
desire, they can stipulate as a condition for the leasing arrangements that
workers do whatever is necessary to yield the surplus value that arises in
Marx's canonical case (remember, as of Ch. 6 we have know idea what that
is). Similarly, nothing stops workers from accepting these leasing
arrangements: although they are propertyless, they can pay the rental
costs out of the value they create using the leased means of production.

This scenario is *exactly symmetric* to Marx's canonical case: by
hypothesis, all conditions are the same save one: instead of workers
leasing their capacities to labor, capitalists lease the alienable means of
production to workers. In particular, the commodity Marx calls labor power
is not being sold, at its value or otherwise.

3) Since by hypothesis all conditions pertaining to the relations between
capitalists and workers are held constant save for the detail of who is
leasing what to whom, conditions that support the existence of surplus
value in Marx's canonical scenario necessarily also support the existence
of surplus value in this one. In particular, in both cases positive rates
of return depend on the creation of new value subsequent to the initiation
of the circuit of capital that enables this production. One difference
between the scenarios is a trivially formal one: in the canonical
scenario, surplus value takes the form of profits, while in this one,
surplus value takes the form of rental payments.

There is a second difference, however, and this one is absolutely crucial
to the sense of Marx's argument: since workers are leasing constant
capital goods rather than selling their labor power, the existence of
surplus value **requires** a disparity between the labor embodied in the
constant capital expended in production and the rental rates charged for
this capital, other things equal. If this disparity did not exist, surplus
value *could not exist.* On this point, recall Marx's insistence in Ch. 5
that the origin of surplus value requires *both* value creation and value
appropriation by capitalists: if new value is created but capitalists
don't appropriate a portion of it through a circuit of capital, then no
surplus value exists.

Thus, contradicting Marx's claim at the end of Ch. 5, price-value
disparities in this scenario are most emphatically not "accidental" to the
existence of surplus value; rather they are *essential* to it.

4) Although there is *absolutely no basis whatsoever in Marx's analysis
through Ch. 6 for making such a claim*, the possibility exists that the
leasing arrangements posited in the alternative scenario are less
productive of surplus value than the circuit of industrial capital. Since
*all other* conditions are held equal by assumption, the *only* basis for
this possibility is that for some reason it is difficult for capitalist to
specify contractually the labor that must be accomplished by workers to
satisfy the leasing agreements. **But whether or not this is true depends
in no way on the connection between prices and values**. Thus, asserting
the condition of price-value equivalence as the basis for focusing on the
circuit of industrial capital, as Marx does at the beginning of Ch. 6,
essentially misrepresents what is significant about this circuit of
capital. To link analysis of this circuit to a particular price-value
regime, as Marx's analysis in Chs. 5 and 6 clearly does, is necessarily to
misrepresent what is significant about the purchase of labor power as a
commodity and its subsumption under capitalist controlled production. This
statement is valid no matter what Marx's *intended* or "main" purpose was
in Part 2 of Volume I.

5) What has been illustrated by this thought experiment?

First, the categorical claim that price-value disparities are "incidental"
to the existence of surplus value (advanced by Marx at the end of Ch. 5) is
*necessarily invalid* unless one first *assumes* that surplus value is
premised *universally* on the circuit of industrial capital, understood
*specifically* to include purchase of labor power as a commodity. If the
latter clause is not explicitly added, the claim does not follow.

I do not believe that Marx makes this assumption anywhere in Chapters 1- 5.
 Indeed, he doesn't even mention the term "labor power" anywhere before
chapter 6. (I give several additional textual grounds for this belief in an
earlier post.) If this assessment is accurate, then Marx's explicitly
stated argument ending Ch. 5 and beginning Ch. 6--not some mythical
argument I impute to him, note--is exactly backward: one can't validly
*infer* the circuit of industrial capital, involving the purchase of labor
power as a commodity, from the condition of price-value equivalence on the
grounds that price-value disparities are mere "accidents" to be abstracted
from, because the latter assessment *requires* that you first *assume* that
surplus value is universally based on the purchase of labor power as a
commodity. **Unless Marx is understood as *assuming* what is manifestly
the *conclusion* of his inference at the beginning of Ch. 6, the basis for
his inference is invalid.** Thus Marx's concluding focus on the purchase
of labor power as a commodity as the basis for surplus value is a non
sequitur if it is not simply circular.

But second, by premising this focus on a particular relationship between
prices and values, which has *nothing whatsoever* to do with the possible
reasons why capitalists purchase labor power rather than lease constant
capital goods, Marx's argument *necessarily* misrepresents the significance
of this phenomenon for the existence and magnitude of capitalist profit.

Another tactical advantage of this thought experiment is that it avoids
reference to any "antediluvian" circuits of usury and putting-out capital.
The proposed scenario is something that existing capitalists, operating
under the capitalist mode of production, presuming workers "free in the
double sense," could do right now if they chose. In fact, many capitalists
*do* frequently lease capital goods. Thus, this scenario is *necessarily*
permitted by Marx's Ch. 5 analytical conditions, *unless* he is understood
specifically as assuming his conclusion at the beginning of Ch. 6.


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