Re: [OPE-L] monetary macro interpretation

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Thu May 25 2006 - 18:56:13 EDT

So, Fred and others, here is Engels'
well known comments on Lexis in the preface to third volume
of Marx's Capital. I don't understand why Engels insists
that Lexis has not solved but only correctly formulated the problem.
Would Marx have agreed? I don't think so.
Yours, Rakesh

In his critique of the second volume (Conrads 
jahrbücher, XI, 1885, S. 452-65), Professor Lexis 
took up the question, although he did not care to 
offer a direct solution. He says: "The solution 
of the contradiction" (between the 
Ricardo-Marxian law of value and an equal average 
rate of profit) "is impossible if the various 
classes of commodities are considered 
individually and if their value is to be equal to 
their exchange-value, and the latter equal or 
proportional to their price." According to him, 
the solution is only possible if "we cease 
measuring the value of individual commodities 
according to labour, and consider only the 
production of commodities as a whole and their 
distribution among the aggregate classes of 
capitalists and workers.... The working class 
receives but a certain portion of the total 
product,... the other portion, which falls to the 
share of the capitalist class, represents the 
surplus-product in the Marxian sense, and 
accordingly ... the surplus-value. Then the 
members of the capitalist class divide this total 
surplus-value among themselves not in accordance 
with the number of workers employed by them, but 
in proportion to the capital invested by each, 
the land also being accounted for as 
capital-value." The Marxian ideal values 
determined by units of labour incorporated in the 
commodities do not correspond to prices but may 
be "regarded as points of departure of a shift 
which leads to the actual prices. The latter 
depend on the fact that equal sums of capital 
demand equal profits." For this reason some 
capitalists will secure prices higher than the 
ideal values for their commodities, and others 
will secure lower prices. "But since the losses 
and gains of surplus-value balance one another 
within the capitalist class, the total amount of 
the surplus-value is the same as it would be if 
all prices were proportional to the ideal values."
It is evident that the problem has not in any way 
been solved here, but has, though somewhat 
loosely and shallowly, been on the whole 
correctly formulated. And this is, indeed, more 
than we could have expected from a man who, like 
the above author, takes a certain pride in being 
a "vulgar economist". It is really surprising 
when compared with the handiwork of other vulgar 
economists, which we shall later discuss. Lexis's 
vulgar economy is, anyhow, in a class of its own. 
He says that capital gains might, at any rate, be 
derived in the way indicated by Marx, but that 
nothing compels one to accept this view. On the 
contrary. Vulgar economy, he says, has at least a 
more plausible explanation, namely: "The 
capitalist sellers, such as the producer of raw 
materials, the manufacturer, the wholesale 
dealer, and the retail dealer, all make a gain on 
their transactions by selling at a price higher 
than the purchase price, thus adding a certain 
percentage to the price they themselves pay for 
the commodity. The worker alone is unable to 
obtain a similar additional value for his 
commodity; he is compelled by reason of his 
unfavourable condition vis-à-vis the capitalist 
to sell his labour at the price it costs him, 
that is to say, for the essential means of his 
subsistence.... Thus, these additions to prices 
retain their full impact with regard to the 
buying worker, and cause the transfer of a part 
of the value of the total product to the 
capitalist class."
One need not strain his thinking powers to see 
that this explanation for the profits of capital, 
as advanced by "vulgar economy," amounts in 
practice to the same thing as the Marxian theory 
of surplus-value; that the workers are in just 
the same "unfavourable condition" according to 
Lexis as according to Marx; that they are just as 
much the victims of swindle because every 
non-worker can sell commodities above price, 
while the worker cannot do so; and that it is 
just as easy to build up an at least equally 
plausible vulgar socialism on the basis of this 
theory, as that built in England on the 
foundation of Jevons's and Menger's theory of 
use-value and marginal utility. I even suspect 
that if Mr. George Bernard Shaw had been familiar 
with this theory of profit, he would have likely 
fallen to with both hands, discarding Jevons and 
Karl Menger, to build anew the Fabian church of 
the future upon this rock.
In reality, however, this theory is merely a 
paraphrase of the Marxian. What defrays all the 
price additions? It is the workers' "total 
product". And this is due to the fact that the 
commodity "labour", or, as Marx has it, 
labour-power, has to be sold below its price. For 
if it is a common property of all commodities to 
be sold at a price higher than their cost of 
production, with labour being the sole exception 
since it is always sold at the cost of 
production, then labour is simply sold below the 
price that rules in this world of vulgar economy. 
Hence the resultant extra profit accruing to the 
capitalist, or capitalist class, arises, and can 
only arise, in the last analysis, from the fact 
that the worker, after reproducing the equivalent 
for the price of his labour-power, must produce 
an additional product for which he is not paid - 
i.e., a surplus-product, a product of unpaid 
labour, or surplus-value. Lexis is an extremely 
cautious man in the choice of his terms. He does 
not say anywhere outright that the above is his 
own conception. But if it is, it is plain as day 
that we are not dealing with one of those 
ordinary vulgar economists, of whom he says 
himself that every one of them is "at best only a 
hopeless idiot" in Marx's eyes, but with a 
Marxist disguised as a vulgar economist. Whether 
this disguise has occurred consciously or 
unconsciously is a psychological question which 
does not interest us at this point. Whoever would 
care to investigate this, might also probe how a 
man as shrewd as Lexis undoubtedly is, could at 
one time defend such nonsense as bimetallism.

This archive was generated by hypermail 2.1.5 : Wed May 31 2006 - 00:00:03 EDT