[OPE-L:6366] On the meaning and implications of price-value equivalence

From: Gil Skillman (gskillman@MAIL.WESLEYAN.EDU)
Date: Fri Jan 18 2002 - 19:08:01 EST

In his post 6353, Rakesh picks up on my thread with Patrick:

>1. Andrew Brown has importantly argued that Marx's chapter 5 argument 
>does not depend on price value equivalence as Gil says it is.

He did?  Where?  I must have missed it; could someone forward me the
relevant post?  But more to the point, I've never, ever argued that Marx's
chapter 5 arument "depended on" price-value equivalence, contrary to
Rakesh's assertion.  Rather, Marx's argument in Chapter 5 is devoted to
establishing the analytical necessity of *positing* the condition of
price-value equivalence as the starting point for explaining the existence
of surplus value, as Marx concludes:

"The transformation of money into capital *has to be developed* on the
basis of the immanent laws of the exchange of commodities, in such a way
that the starting-point is the exchange of equivalents." [pp. 268-9,
Penguin edition; emphasis added].

I have argued rather that the two grounds Marx gives in Ch. 5 for this
explicit conclusion are logically invalid.

>2. I also don't think it matters for Marx's argument in ch 5 whether 
>labor power sells in terms of the values or the prices of production 
>of the wage goods needed to reproduce it as labor will add value in 
>excess of either.  

Of course it doesn't, since Marx never mentions the term "labor power" (or
for that matter, "prices of production" or "wage goods") in Chapter 5.  The
term, and the corresponding distinction between "labor" and "labor power"
is first introduced in Chapter 6.  However, what *does* matter is that
Marx's *sole* justification for introducing these concepts in *Chapter 6*
(not chapter 5) is in order to account for the existence of surplus value
*given price-value equivalence*.  Thus Marx:

"The change must therefore take place in the commodity which is bought in
the first act of circulation...but not in its value, *for it is equivalents
which are being exchanged, and the commodity is paid for at its full
value.*  The change can *therefore* originate only in the actual use-value
of the commodity, i.e. in its consumption.  In order to extract value out
of the consumption of a commodity, our friend the money-owner must be lucky
enough to find within the sphere of circulation...a commodity whose
use-value possesses the peculiar property of being a source of value..."
[p. 270, emphases added]

It is *this* reasoning, based explicitly and solely on the postulate of
price-value equivalence, that Marx uses to motivate his subsequent
treatment of the labor-labor power distinction in Chapter 6.  To put this
point another way:  granting entirely that profit and thus surplus value
requires the expenditure of surplus labor, it does not follow that
capitalists must *purchase labor power as a commodity* in order to achieve
this result.  The latter conclusion is dictated *solely* by the postulate
of price-value equivalence.  Thus I must disagree with your claim that 

> Price value equivalence is not the pivot of the 

>3. I  agree that Gil is  is quite right that it is possible for 
>surplus value to be made out of exchange by merchants in terms of 
>their own circuit without an actual increase of value in circulation 
>in the system as a whole. 

Not only do I never, ever say this, the statement you've just made is quite
*wrong*, according to Marx:  it is *not* "possible for surplus value to be
made out of exchange by merchants in terms of their own circuit without an
actual increase of value in circulation in the system as a whole."
According to Marx, surplus value *by definition* cannot be realized merely
through redistribution of values that existed prior to the initiation of a
given circuit of capital.  My critique *accepts* and *proceeds from* Marx's
stipulation.  What I note rather is that the circuit of merchant's capital
*extended to direct value producers* (as in the case of the putting-out
system) does involve the creation of new value (and thus necessarily "an
actual increase of value in circulation in the system as a whole), and thus
lead to the appropriation of surplus value by merchant capitalists.  

>Marx himself underlines this but tells his 
>reader  to defer with him the analysis of merchant capital, for 
>merchant capital will be revealed to now derive from the industrial 
>circuit of capital that he is about to unfold.

My point here is that this representation begs the central question at
hand, since in light of the above, there is no need in *value-theoretic*
terms to "derive" the possibility of surplus value-producing merchant's
capital (which historically preceded the circuit of industrial capital, in
any case) from the circuit of industrial capital.

> Historically originary 
>forms of capital are now revealed to be analytically and practically 
>derivative of the newest form of capital.

Which, again, begs the question of how they were capable of yielding
surplus value well before the "newest form of capital" ever came on the scene.

>4. Gil argues that if the latter is what Marx wanted to explain--an 
>increase of the value in circulation--and if value is defined as 
>labor time, it follows tautologically that circulation alone cannot 
>increase the value in circulation.
>Then Gil says that Marx's ch 5 argument is a big tautology.

No:  granting that it follows from Marx's *definition* of surplus value
that it requires an increase of the total value in circulation, I argue
rather that, contrary to Marx's Chapter 5 argument, this simple tautology
is logically inadequate to establish that price-value disparities are
"incidental" to the existence of surplus value.  It is a logical fallacy to
assert that some condition A is "incidental" to the existence of condition
B if A is not *sufficient* for B; it might still be the case, for example,
that A is *necessary* for B, and Marx *never addresses this latter
possibility one way or the other in Chapter 5.*

>5. And I say at one level yes indeed, but it allows Marx to sharpen 
>the distinction between use value and value. That is, through 
>circulation the use value of commodities can be increased to their 
>owners without circulation itself having increased the value in 

This is fine, but it doesn't address my critique of Marx's Ch. 5 argument.

>6. The question then becomes how does circulation become a moment in 
>the production of new value. It must be possible to purchase a 
>commodity whose use value is labor itself.

The "must" in the latter statement follows *only* if you've posited the
condition of price-value equivalence as a necessary starting point for the
argument.  Otherwise, for example, one might explain the existence of
surplus value derived from loaning money or constant capital goods to value
producers (as in the circuit of usury capital) or providing raw materials
and paying for output by the piece (as in the putting-out form of merchant
capital).  See above.

>7. But this means that capital cannot buy labor itself. What then 
>does capital buy?

This question is a red herring, if one need not account for surplus value
on the basis of price value equivalence.  In the case of usury capital
mentioned above, the capitalist doesn't "buy" anything, and in neither
merchant nor usury capital can the capitalist be said to buy *labor power*.
  Indeed, surplus value might be understood to arise from a case in which
*labor power* buys capital in the form of leasing, for example.

> It buys labor power, not labor.

It need buy neither, at least on the basis of Marx's *valid* arguments in
Chs 5 and 6; see above.

>    Marx thus discovers the distinction between labor and labor power.

As I've always said, Marx's distinction between labor and labor power is
critically important.  But *not* for the reason he spells out in Chapter 6. 

>8. That commodities thus have a use value and a value is thus indeed, 
>as Steve K, claims Marx's fundamental discovery in the sense that it 
>is explanatorily prior to discovering the distinction between labor 
>power and labor.
>9. Steve K then makes the fantastic argument that the consumption of 
>any commodity can increase the value in circulation. But the 
>consumption of dead labor cannot add live labor, and the consumption 
>of wage goods extinguishes their value. So only live labor can add 
>new value. And the use value of only one commodity is live labor: 
>labor power.

Steve K's critique is interesting, but it has nothing central to do with my
critique.  I have no idea why you're connecting the two.  

>In my opinion, there is no reason to be consumed by Gil's and Steve's 

You're entitled to your opinion, Rakesh, but insofar as you've demonstrably
and fundamentally misrepresented my critique in the foregoing, wouldn't you
say I was justified in holding the opinion that you don't yet understand
it, and thus have no way of gauging its legitimate impact?


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