[OPE-L:791] Exchange at prices in Volume I

Alan Freeman (100042.617@compuserve.com)
Tue, 16 Jan 1996 02:19:19 -0800

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Thanks to Duncan, John and Iwao for their responses which I found
very interesting.

A consequence of having to catch up late on arguments, is throwing
in responses after everyone else has either moved on or gone home.
Please therefore excuse two late questions related to the previous

(i) Where does Marx say that goods exchange for their value in Volume I?

(ii)Why, since the assumption that goods exchange for their value is
not made in Volume I, do marxists almost universally assume that this
assumption is in fact made?

The only place I can find the explicit statement that goods exchange
at their values is on the origin of *surplus* value, [p263 Penguin/
International edition]. I find it nowhere else: I could have missed
something. In which case it would be handy to have the relevant
citations pointed out.

On p263 its purpose is as clear as it is limited: to show exploitation
does not arise from unfair exchange. It is adopted only at this point;
and the context shows that it is the *exception* to the general case:

"The formation of surplus-value, and therefore the transformation
of money into capital, can consequently be explained neither by
assuming that commodities are sold above their value, nor by
assuming that they are bought at less than their value."

The contrast with Volume II is striking; here the assumption is
explicit from the beginning, fully justified and repeated in several
places. I am sure if Marx meant it to apply to Volume I he would have
said so just as forcefully.

I do not see how the derivation of the concepts of either value or
price calls for goods to exchange for their values. On the contrary, this
seems to me a strait-jacket on the development of everything else Marx

Value is the 'the thing which' is independent of the specific use-values
featuring in any given act of exchange. I don't see why this implies that
it must be quantitatively equal to price: value is just the unit in which
prices are expressed. If I exchange something with you at the prevailing
price, then what I part with therefore represents as much value as what you
part with, regardless of what these prevailing prices actually are.

Or, to put it another way, the value possessed by all parties is an
invariant of the exchange process. What causes this invariant to vary?
Not the act of exchange, but the prior formation of the prices at which
exchange takes place.

The exchange relation arises because a single set of prices prevails
throughout society; it cannot possibly depend on what this set of prices
actually is. Value is the measure of the social relation which these
prices express: of the abstract purchasing power of the commodities in
my possession. Marx's argument is that in its fully developed form this
measure cannot be a quantity of any particular commodity, just as the
most developed measure of weight is not just another weight but a volume
of water.

But it is a measure, not a determinant. Why does this value possessed
by me have to be the value which was embodied in either my commodities
or your commodities during production? Marx's derivation does not
depend on this assumption. It depends only on the idea that the
magnitude of the value of a commodity can be determined independently
of its price, not that this value has to equal its price.

His 'third thing' argument is that in order for x yards of linen to be
comparable with or equivalent to ([p141]:both these terms, pace Gil, are
Marx's) y coats, they must be 'expressions of the same unit, things of
the same nature', just as, in order to assert that two towns are on the
same parallel we must first have a concept of a parallel, independent of
any particular town. Try to rephrase Gil's [OPE-L:710] argument without
the words 'latitude' or 'parallel' and this becomes obvious. They are
all equidistant from what? Each other?

But this only establishes that the value of x linen and the value of y
coats must each be a magnitude which can be determined separately,
independent of the ratio y/x. It does not require that this magnitude
should be equal to the labour time required to produce either x or y,
any more than saying that two towns are equidistant from the 60th
parallel requires them to be an equal distance from the equator or to
have an equal angular separation (they don't, because the earth is not
a sphere). Value, like latitude or distance, is in this respect simply
a unit of measurement, not a fixed grid on which all prices must be
arrayed like some Mercator projection of the real world.

Thus and on the contrary, the labour time required to produce x (or y)
is the unit in which we assess what the price of x actually is, just
as mass is the standard by means of which we assess how much matter a
given volume contains. If x takes an hour to make and y takes 2 hours
to make, then if 1x exchanges for 1y we can say the price of x is twice
its value and the price of y is half its value. We cannot make such a
statement if we are only allowed to deal with the ratio x/y, a problem
Ricardo grasped but never resolved.

In order to sustain Marx's argument we do not have to repeat Ricardo's
mistake of requiring that goods must only exchange in the ratio 2x=1y.
On the contrary, this is exactly the assumption that has to be
dropped. It is not necessary to make it in order to calculate the
value of x, precisely because, as Marx insists, the value of x is
determined independently of the rate at which it exchanges. Why go to
all the trouble of establishing that the value of a good is fixed
independently of the rate at which it exchanges, if the only permitted
exchanges are at this rate? In that case, price and value would
indeed merely be synonyms for the same thing.

Indeed Gil's argument only makes sense to me on the above assumption.
In this case, there would indeed be no need for a *separate* measure
of value since it would already be given by the 'natural price' and
all we would have to do is find an appropriate numeraire.

I can understand, in this case, Gil's frustration at the refusal of the
marxists to reply to the arguments of Menger, et al. But the frustration,
it seems to me, should be directed at the marxists, not Marx.

I think much of the confusion arises from the idea, introduced by
Sweezy and developed by Marx's detractors and defenders in equal
measure, that in Volume I Marx studies a special society in which
either organic compositions are equal or which is historically prior
to capitalism so that profit rates do not equalise.

Volume I has then been 'reinterpreted' to fit this idea.

But neither of these accounts correspond to the actual subject matter
of Volume I which is capitalism in its most advanced contemporary
form, namely England. And even a cursory study of his numerical
examples shows that there is no possibility that organic compositions
are everywhere equal (in contrast to Volume II again which, we should
remember, is *less* complete than Volume I. If he had made either of
the above assumptions, it is scarcely conceivable that he would not
have prepared numerical examples to match)

What is involved is a straightforward confusion between abstraction
and simplification.

Volume I does not deal with a simplified society. Everything in it
applies to a fully developed capitalist society in all its complexity.
Its difference with Volume III is that it deals only with those
aspects of Capital which are independent of whether value differs from
price. This is not the same as saying value equals price. It
establishes, on the contrary, what must be true regardless of the
actual level of prices. It is an abstraction from price-value
differences. To abstract from something means to consider only that
which is unaffected by it. The conclusions of Volume I are true
whether or not goods exchange at their values.

If from a study of humans I conclude that they are creatures which
reproduce, this does not depend on the properties of any specific
human being. If I then study *how* they reproduce I must distinguish
between women and men, children and adults. If I further study how
marriage affects this I must further consider distinctions and
relations (imposed by the society) between married and unmarried

This does not mean that, when I study 'people in general' I assume
immaculate conception. It means I confine myself to those
characteristics of humans which can be deduced without making
distinctions of sex, age or social standing.

Part of the legacy of the Bortkiewicz-Sweezy-Steedman tradition of
Marx interpretation is that two entire generations have been brought
up on the idea that the definition of value is 'what goods would
exchange at if it were not for the movement of capital'.

But it ain't so, Joe. And it's time we said it ain't so.

To recover this simple fact is an immense intellectual liberation. I
think it provides the basis for essentially simple answers to 990f
the 'problems' which marxism has with Marx.

Try it.