Re: [OPE-L] Fwd: Marx's Form of Analysis

From: Andrew Brown (A.Brown@LUBS.LEEDS.AC.UK)
Date: Mon Feb 21 2005 - 05:16:19 EST

Hi Jurrien,
We are agree on 'value-added'.
Of course 'price' is a more complex category than 'exchange value'. This initial question Marx in fact poses is 'why do commodities have a socially given (set of) exchange value(s)?': answer, because they are commensurable as values.
It transpires later on that the same the same essential question can be posed more sharply as 'why do commodities have a socially given price?': answer, as above. The passage of your to which I was objecting actually mixed exchange value and price as somehow possible *answers* this question.

	-----Original Message----- 
	From: OPE-L on behalf of glevy@PRATT.EDU 
	Sent: Sat 19/02/2005 19:55 
	Subject: [OPE-L] Fwd: Marx's Form of Analysis

	---------------------------- Original Message -----------------------
	Subject: Marx's Form of Analysis
	From:    "Jurriaan Bendien" <>
	Date:    Sat, February 19, 2005 1:30 pm
	In reply to Andy, strictly speaking I think Marx's argument about the
	"commensurability of commodities in exchange" does not depend on the
	existence of money, and therefore the presence of any money-price is
	theoretically irrelevant.
	The reason for this is, as I mentioned before, that commodities can and do
	 exchange for other commodities without monetary mediation (although a
	"price" could, most generally, be defined as "the condition for supply of
	a  good or service", which is not necessarily a money-price, but just
	whatever  is offered in return).
	Exchange-value does not have to be expressed in money, it can be expressed
	 in a quantity of commodities offered in exchange. That is why the
	category  exchange-value is distinct from price. Marx defines "price"
	specifically as  the monetary expression of exchange-value, and it is not
	true that  exchange-value and price are identical in his theory. Modern
	economics  theorises trading relations only in terms of prices, assuming
	exchange will  occur "naturally". Marx does not assume this, he says
	exchange is a social  process which has preconditions. Hence the
	difficulty modern economics has  with explaining how you create a market
	where there are no exchange  relations (how you get people to trade).
	I take the general aim of Marx's development of the "value form" to be one
	 of giving a succinct abstract exposition of the principles of trading
	relations, from the most simple to the more complex. Thus Marx aims to
	illuminate the social meaning of an activity which always involves a
	triple  relationship: between people, between people and their products,
	and between  products. The relationship between products denotes the
	"form", but the  substance of it is that people are also trading in their
	species-activity,  and their time on earth.
	The "value form" pertains exclusively to the phenomenology of exchange
	processes. The products of human labor have a value, but what exactly that
	 objective value is, beyond an individual value (e.g. "it cost so many
	hours  to procure or produce it to the point of sale") may only be
	revealed through  exchange. Trade increasingly abstracts from labour
	effort, focusing on the  prices of outputs, but the more it does so, the
	more it imposes the value  form on human species activity and human
	work-time; in other words,  "socially recognised value" takes the form of
	"specific exchangeability".
	Many Marxists I think though forget that in the contemporary world
	economy,  various types of barter are still a very important method of
	exchange and  circulation of goods, be it perhaps as countertrade (in
	which a monetary  valuation can still an external referent). That is to
	say, both the simpler  and the more complex forms of value persist in
	trading processes.
	As an aside, business people themselves are quite happy to talk about
	values, average values, regulating values and non-existent prices, so why
	economists make so much of a problem about the theory of value, I do not
	know; the only reason I can think of is the moral justification of income
	What trade and the cash nexus do, of course, is to separate any moral
	ground  for entitlement to resources from commercial or economic interest
	in  purchase. Thus, in an open market at least, I have cash, I buy a good,
	but  my ownership entitlement to the good only depends only on my cash,
	not on  any moral requirement or moral condition of access. This is
	"market freedom"  (of course if I do not have the cash, my freedom runs
	out). The value-form  pertain to the valuing of things, not people,
	although as Marx says there is  also the ""thingification" of people and
	their mutual relationships. That  thingification however can occur only
	because people adjust their social  relations according to the relations
	between their products.
	I think that value theory is essential for economics to understand
	production, circulation, distribution and consumption within a competitive
	 framework, and under conditions of market uncertainty, where goods have
	value but prices are uncertain. And indeed if you look how businesspeople
	analyse all of that, they do exactly what Marx says they do, except that
	they might call it different names. They must adjust to an objectively
	given  structure of input and output price-relativities, and then the
	question  arises what generates, regulates and maintains that structure?
	Any explanation of this as "the outcome of interactions between millions
	of  economic agents with rational expectations" isn't very helpful. It's a
	bit  like saying that the waves of the sea are the result of the movements
	of  trillions of hydrogen molecules, and that if you want to explain this
	particular wave, you have to look at the movement of the hydrogen
	molecules  in it.
	And moreover prices are then at once the RESULT of rational expectations,
	and the CAUSE of rational expectations, which boils down to the idea that
	"the market is rational", and that market actors are reflexive, both
	shaping  and responding to the market simultaneously. But why is the
	market rational?  Presumably because it makes economic interests (costs
	and benefits)  manifest, and quantifies them in an objective way through
	price, without any  reference to subjective moral values, whims and
	prejudices. Marx could just  as well have talked about "the market",
	instead of "the value form".
	I think basically Marx aimed to show that what impels the capitalist
	market  is the quest for as much surplus-value as possible, irrespective
	of specific  forms of income it may take (profit, interest, rent,
	royalties, gratuities  etc.). That is the core of the competitive process.
	It is not that markets  necessarily gravitate towards a "uniform rate of
	profit" (after all,  competition includes blocking competitors), but
	rather that generally  enterprises aspire to realise an above-average rate
	of profit, and economise  resources according to that goal, insofar they
	can. But point is that this  real practice of economising does not occur
	simply in buying and selling  (market activity), it occurs within
	production itself, where means of  production and labor-power exist
	("factors of production") which do not have  any sale-price, because they
	happen to be in use and consumed. Although they  therefore lack a current
	sale price, they still have a value, and that value  happens to be
	critical to business efficiency.
	In fact if you consider the concept of GDP itself, it means "value added",
	 and of prime concern to business is then the net income you can realise,
	derive or appropriate out of that value-added, that net output. Marx calls
	 that income "surplus-value"... it's just that value produced and value
	realised as income are two different things. If that wasn't the case, the
	distinction between value and price would not really be necessary. We are
	not simply talking about an accounting theorem here, but about the real
	modus operandi of markets and real economic behaviour. What those who
	reject  value-theory forget is that they are no longer entitled to refer
	to any  "value-added" at all. There is no longer any value added, just
	purchase  prices and sale prices. Well, you try telling that to an
	accountant or a  businessman!

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