[OPE-L:815] Re: Exchange at prices in Volume I

Gilbert Skillman (gskillman@mail.wesleyan.edu)
Fri, 19 Jan 1996 18:04:00 -0800

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Alan writes:

> (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?

In the introduction to Part 7 of Volume I (which is a bit late in the
game), Marx writes "...we assume that the capitalist sells the
commodities he has produced at their value." [p. 710 Penguin ed.]

The inference that Marx focuses throughout Volume I on the case
in which commodities exchange at their value might be drawn from
passages such as the following:

"The fact that the corn and the clothes are equivalents [in the
circuit C-M-C] does not deprive the process of all sense and meaning,
as it does in M-C-M. The equivalence of their values is rather *a
necessary condition of its normal course.*" [p. 252 Penguin, emphasis

This usage in mirrored in Marx's Chapter 5 references to the "pure"
case of commodity exchange as one in which commodities exchange at
their values. [pp 260-262 and p. 269n]

The inference is that nothing of substance is lost in focusing on the
"normal" or "pure" case of price-value equivalence; so that one might
allow that Marx is positing this case as a simplifying assumption.

However, as I've argued elsewhere, there are at least two problems
with this imputation. First, Marx nowhere establishes the sense in
which price-value equivalence represents the "normal" or "pure" form of
exchange. John Roemer, employing assumptions not ruled out in Marx's
value-theoretic analysis, shows this usage to be highly problematic: given
differential ownership of relatively scarce productive assets, prices
will not in general be equal to values, even in a subsistence
exchange economy (i.e., one without markets for labor power or
interest capital). Thus, given consistent effective wealth
disparities, price-value *non*equivalence is the "normal" case.

But second, and more importantly, Roemer also shows that the same
conditions which guarantee nonequivalence of prices and values in a
subsistence economy guarantee the existence of capitalist
exploitation via interest-bearing capital (usury) in an economy
without wage labor or specifically capitalist production [an argument
I've extended to the case of proto-industrial merchant's capital in
my Economics & Philosophy article]----

---That is, *unless* one understands "capitalist exploitation" to
require specifically capitalist production and wage labor (that is,
the subsumption of labor under capital) **by definition.** But there
is no good reason to think that Marx stipulates this, and lots of good
textual reasons to believe that he does not, so that in Marx as in
Roemer, capitalist exploitation can exist without the capitalist mode
of production.

Thus, I believe there is a problem when Alan says:

> On p263 its purpose is as clear as it is limited: to show exploitation
> does not arise from unfair exchange.

, in that this fails to distinguish *purely redistributive*
price-value disparities and those associated with the appropriation
of *surplus* value in Marx's strict sense. The logical difficulty
with Marx's argument, I suggest, is indicated by the following
passage quoted by Alan:
> "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."

But Marx's Chapter 5 argument has not shown this; it has rather shown
only that the formation of surplus value cannot be explained by
price-value disparities, *taken alone.* But for that matter, Marx
also shows that the formation of surplus value cannot be explained on
the basis of price-value equivalence, *taken alone.* Thus the
Chapter 5 argument, validly construed, yields *no* implications
whatsoever about the connection between prices and values associated
with the formation of surplus value. One possibility not ruled out
by Marx's argument, for example, is that surplus value might be [and,
under conditions outside the purview of Marx's value theory, *must*
be] explained on the basis of price-value disparity *plus* some
additional condition [which Roemer has shown, and Marx's historical
analysis is Volume III, the Grundrisse, and the Resultate confirms,
to be differential ownership of relatively scarce productive assets].

To put it simply: Marx's chapter 5 argument has the structure: "A
does not imply B", where A is price-value disparity and B is the
existence of surplus value. This is does not imply the claim that "A
and C does not imply B", where C is differential ownership, etc.

Alan continues:

> 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.

I don't see how this follows, except by assumption.

>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.

I've suggested reasons to worry about this representation in separate
posts. I won't go into them here.

> 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 my argument is that introducing the notion of a parallel, or
equivalently, the notion of "being exchanged for" does not imply
*equality*, which is what Marx must establish in order to derive the
necessary existence of a "third thing" common to all commodities.

Thus, I see a problem with Alan's claim:

> 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.

Alan continues:

>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.

Not to beat the horse, but my argument is that whether or not there is a
need for a "separate" measure of value, the fact of exchange does not establish
that such a separate measure exists. Thus it has nothing to do with
the relation between prices and values.

> 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
> people.
> 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.

I have. And above I indicate two sets of grounds why I believe this
interpretation is untenable.

In solidarity, Gil Skillman