[OPE-L:133] Re: "law of value" (was: Marx's goals)

James Devine (JDevine@lmumail.lmu.edu)
Mon, 25 Sep 1995 13:06:51 -0700

[ show plain text ]

Below, I skipped over most of Gil's note, out of pure ennui with
the deja vu of this silly argument that's been going on for
years. (There! I blew my wad of high-school French!) I focus
instead on a small number of points.

Gil writes: >>One will see from the following that in most of the
points Jim raises we aren't in disagreement.<<

I don't see that we were mostly in agreement; rather, it seems that
as usual, we are talking past each other with zero comprehension. I
guess this reflects having different world views.

A. >>I don't see how raising irrelevancies is going to help us focus
our attention on what parts of Marx's foundation needs to be
rebuilt, and what parts should be carried forward.<<

I don't see how my comments were irrelevant. One of the basic
principles of science is to study something before one
comes to conclusions about it (just as Bob Dole should see movies
before he criticizes them). Another principle is that one has to be
open to new questions and answers rather than clinging to one's
preconceived notions. Thus it seems that Gil should not reject "the
law of value" (LoV) before discussing with others on ope-l what exactly
this "law" is. He seems to have a clear meaning for what the "law"
is but he never states exactly what that is.

My view that the "regulating" connection values and prices is to be
found at the macrosocietal level, he writes, >> may be a very common
meaning, but it is not Marx's meaning as he makes clear throughout
Capital and in other places. Why bring this up? It doesn't address my

Yes it does. Gil wants to reject the "LoV," to destroy what seems to
be one of the foundations of Marx's edifice. It's thus important to
put forth the perpective that the Bortkewicz _et al_ view of the LoV
as a price theory is not the _only_ one. Rakesh recently cited one
alternative view which struck me as reasonable (the author's name
escapes me).

What then, is the "LoV"? For me, it's the one expression of
the _dialectical method_ that Marx applies in CAPITAL. For Gil is it
a sign that Marx was a minor pre-Walrasian, with an inferior price
theory? (Part of the problem here, I guess is the common confusion
of price theory with value theory, as with Debreu's little book.)

Where does Marx _define_ what he means by the "LoV"? My
impression is that he _never_ does so (and this is one of Marx's
weaknesses). My view of what the "LoV" is based on a view that what
Marx wrote has to make a certain amount of sense, that he wasn't an
idiot or a maniac or someone who needed modern General Equilibrium
and game theories in order to see the light. I've tried to read as
much of Marx as possible (along with the secondary sources) on the
topic of value and then figure out how it makes sense. (It doesn't
_all_ make sense, but that's another question.)

I see Marx's LoV as a specific case of his materialist conception of
history. The latter is summarized, I believe, by Marx's view that
people make history, but not exactly as they please (being limited
and shaped not only by nature but by the societal institutions and
technologies they create). Labor is a specific kind of "making
history." Value is the expression of labor that is specific to
commodity-producing societies.

B. Gil asserts that what I said was >>inconsistent with Marx's
insistence that surplus value can't be the result of price-value

And no, what I said was _not_ inconsistent with Marx's view that
surplus-value cannot be the result of price/value disparities.
Marx's view was that the _production_ of surplus-value for society
as a whole does not come from price/value disparities. But he was
very clear that some could _receive_ surplus-value out of proportion
to the surplus-value that their workers create (see Marx's presentation
of the "transformation problem" in K3). Some get surplus-value even
though they (or rather the workers they hire) make no contribution to
the production of surplus-value, i.e. due to price/value disparities.
E.g., rentiers receive interest even though they do no production.

Individuals and groups can receive surplus-value due to price/value
disparity; society as a whole cannot.

>>But yes it can: the divergence of the value of the money commodity
in the form of capital from its price, i.e. interest... <<

As Paul C. notes, for Marx, the "price of money" is not the interest
rate. Gold money has a price that Marx assumes is proportional to
its value; paper (fiat) money has a monopoly price which cannot be
proportional to its value. The interest rate is not "the price of
money" (except in intro-econ discussions of Keynesian monetary
theory). The interest rate is the "price of finance" or "the price
of credit," the price one pays for temporary _access_ to money
(while the activity of providing temporary access to money creates
no value, at least according to Marx). Temporary access to money is
different from money itself.

C.Gil writes >>I already explained why the abstraction, however
"useful", is essentially misleading about "the societal nature of
capital and its exploitation", whether of wage labor or not, as
corroborated by Marx's analysis in Vol. III of circuits of capital
which did not presume hiring of wage labor.<<

As I wrote at length on pen-l and as I am writing in a comment upon
which I am working, this conclusion is based on (1) Gil's
willingness to reject Marx's relatively clear discussion in K1 on
the basis of obscure quotes from Marx's posthumously-published notes
that are subject to a wide variety of interpretation (which do not
all contradict K1), (2) an inappropriate application of Roemer's
"isomorphism" theorem, (3) a very strange interpretation several
books concerning the economic history before the full development of
capitalism, and (4) his idiosyncratic interpretation of Marx.

Most important is the fact that Gil confuses Marx's discussion of
surface appearances in K3, in which rentiers, landlords, etc. get
shares of surplus-value, with the fundamental analysis of K1, which
shows how these groups are able to get surplus-value without actually
hiring workers to create it. It's a confusion of distribution with

The point again is that it's quite consistent with Marx for someone
to get surplus-value without hiring wage-labor; however, to get
surplus-value produced in the first place, wage-labor must be hired
and put to work (or producers must be subject to some other kind of
domination such as serfdom or slavery or coercion by a loan-shark's

D. I wrote: >Sure, once the rate of surplus-value is positive
(profit exists), prices of production will differ from values
(unless, as is extremely unlikely, all capitalists have the same
organic composition of capital). But in order to understand why
prices of production differ from values, one has to first understand
why surplus-value exists.<

>>No, it's a problem of simultaneous determination. As a *strictly
logical* matter, price-value disparity is not implied by the
existence of surplus value; Marx's Volume I analysis purports to
establish this.<<

Note that I brought in the unequal organic composition of capital
condition, which is also needed for price/value deviation (along
with the the mobility of capital and labor-power amongst sectors).
But suppose that we have unequal o.c.c.: if the rate of
surplus-value equals zero, then all the analyses of the
"transformation problem" I've seen indicate that prices of
production are proportional to values. See Morishima, MARX'S
ECONOMICS, p. 82, the formula at the top of the page, after the word
"Hence." If, on the other hand, surplus-value exists, then prices
of production differ from values.

E. If we reject the LoV, what are we left with? In a different
message, Gil presents the Roemerian claim that exploitation can
be understood _simply_ in terms of>> Conditions necessary and
(up to a question of degree) sufficient for capitalist exploitation
(however historically derived) are differential ownership of
relatively scarce productive assets.<<

This makes Marx like an idiot. He spent all that time writing a
hard-to-read book and it turns out that the problem with capitalism
is that the scarce wealth of society is unevenly distributed? We
don't need to be concerned with production or social relations?
I guess he should have succumbed to reductionist social science, in
which the complexity of real-world systems can be reduced to simple
ideas. (I am not using "complexity" in the technical sense, BTW.)

Anyway, such an unvarnished (and unreferenced) invocation of
Roemer's theory ignores the article that Gary Dymski and I published
in ECONOMICS AND PHILOSOPHY in 1991. (BTW, our criticism was not
that Roemer was untrue to Marx, though many have accurately argued
such, but that he had a poor understanding of how economies work.
Based on inference via revealed preference, Roemer seems to agree
with this criticism, since he has focussed more and more on normative
economics.) For example, in a dynamic world (e.g., that of capitalism)
if capitalists receive income simply because productive assets are
scarce, this creates a market incentive for them and workers to
accumulate like crazy. This ends the posited scarcity and the rate
of profit equals zero. Yes, we can save the scarity theory
of profits by simply _assuming_ that workers can't accumulate and so
forth. But then you need a societal analysis (such as Marx's) of why
workers are blocked from accumulating. This brings us to the
workers' inability to survive without selling their labor-power to
the capitalists and the importance of the reserve army of
involuntarily-unemployed labor. That also helps us understand why
workers are usually so willing to _submit_ to being exploited.

in ope-l solidarity,

Jim Devine jdevine@lmumail.lmu.edu
Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA
310/338-2948 (daytime, during workweek); FAX: 310/338-1950
"It takes a busload of faith to get by." -- Lou Reed.