[OPE-L:884] Positive responses

Alan Freeman (100042.617@compuserve.com)
Wed, 31 Jan 1996 05:30:04 -0800

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Gil's latest post [OPE-L:876 Mon, 29 Jan 1996] helps
substantially on the clarity front. I want to proceed on the
basis of the following agreement, taken more or less word for
word from this post:

Agreement 1

"Marx does not take the case of price-value equivalence as an
assumption in Volume I"

It might be useful to see how wide this agreement is shared on

I think it removes a lot of mental clutter. If Gil feels that
he was saying it all along, I don't want to quarrel with that;
I would rather proceed on the basis of this agreement.

Digression from agreement 1

[I agree we should have a discussion on whether Marx considered
value-price equivalence 'normal'. However, I don't think it
affects agreement 1. Whether Marx considered it normal,
abnormal, or downright freaky, the decisive issue is that he
didn't use it as the basis of his definition of value. I would
however, in anticipation of this discussion, point out that
there is a big difference between using sale at values for
the purpose of illustration, or for the purpose of debate
with those (such as Proudhon) who hold it to be true, and using
it as the grounds of a proof. One may illustrate the theory of
gravity by referring to the fact that bodies 'normally' fall
towards the earth. One may even use this fact - as did Galileo
at Pisa - to refute people who hold that bodies fall at different
accelerations, depending on their weights. But both arguments are
a very long way from asserting that bodies *always and under
every circumstance* fall towards the earth, and completely
different from saying 'the theory of gravity is founded on the
principle' that bodies fall towards the earth.]

To use the language of speculative philosophy, the assumption
of price-value equivalence is not a necessary precondition of
Marx's derivation of the value and price categories of Volume
I. It is not 'posited' by this derivation. You don't have to
assume it, to draw the conclusions. Therefore, the conclusions
are not based on it.

What I'd now like to do is draw a conclusion or two from
agreement 1 and see they shed more light on differences.
Starting with:

Corollary 1 of agreement 1

Any argument which does define value on the assumption of price-
value equivalence may be interesting, but isn't Marx's.

Also, both myself and Gil disagree with any such argument.
Other options are open; for example one may say that though
Marx didn't reason from price-value equivalence, he should
have, and that he can only be made consistent by introducing
this extra, additional assumption. This is one possible
interpretation of Sweezy's intervention.

We take, I think, what I shall call the strong anti-price-value-
equivalence position: we both agree Marx didn't base his
argument upon it, and we both think such arguments are wrong

Supplementary remark to corollary 1

An example of such an argument is to be found on page 16 of
John Roemer's "Analytical Foundations of Marxian Theory" where
the content of Morishima-Okishio's 'Fundamental Marxian
Theorem' is explained:

The rate of exploitation is defined in terms of the labor time
embodied in the subsistence bundle. The vector of labor values
is lambda [henceforce transliterated as v - AF], a 1 X n
vector, where

v = vA + L (1)


This argument depends on the assumption which, we both agree, is
both wrong and not Marx's.

The usual justification for this equation, henceforth equation (1)
is the following:

Values are defined, in volume I, as the prices which goods
would sell for, if they exchanged at values;

the money in the capitalists's possession at the M-C stage
of reproduction can therefore be divided into two parts; one part
buys the inputs(C) and one pays the wages(V). Since both are
purchased at their values, no contradiction can arise between the
money spent by the capitalist and the value of what s/he purchases;

the value of any product is thus given by the sum of the
values (= prices) paid for inputs, plus the value added by the

There may be another justification for it, but I haven't seen it.

But we have just agreed that the goods which make up constant
capital (here, vA) cannot be assumed to be purchased at their values.

But in that case, the usual justification for equation (1) has just

Moreover, suppose another justification exists. This would require,
in Volume I, that inputs transmit to the product a quantity
of value different from the value of the money paid for them.

By what mechanism is this achieved?

We find nothing in Marx which suggests such a mechanism. As far
as Marx is concerned, the value of constant capital is represented,
for the capitalist, by the value of the money with which the
capitalist must part in order to obtain this constant capital.

The universal assumption that, in Volume I, goods exchange at
their values, has allowed the academic world to ignore this issue
- the so-called 'transformation of inputs' - until Volume III. But
once agreement 1 is reached, the issue must be addressed where it
belongs, and where Marx in fact 'solved' it (I place the word
"solved" in quotes, because there is in fact nothing to solve)
- in Volume I.


Corollary 2 of agreement 1

If goods do not sell for their values, the money paid by the
capitalist is no longer necessarily equal to the value of the
elements of constant capital. The standard justification for
equation (1) therefore ceases to exist.

A contradiction has opened out, which John has signalled in the
discussion with Fred: is the value transmitted to the product
by the elements of constant capital equal to their value, or
their price? And if it is not equal to their price, where does
the difference go?

We have to make a choice, which the traditional interpretation
neatly avoids: is the value transmitted to the product by
constant capital equal to the labour embodied in it, or the
labour its elements represent in the process of circulation?

The implications of this choice are genuinely 'Fundamental'.

If the capitalists can add value to their product which is
different than the value of the money they part with, there
are indeed sources of value other than living labour. If you
stick with equation (1), Marx's 'second equality' is not in general
true. The importance of this is not some scholastic reverence
for the texts; it is the real 'Fundamental Marxian' proposition
which is that *only living labour creates value*.

Moreover, if Marx did not assume value-price equivalence in
Volume I, but nevertheless assumed equation (1), then Volume I
is full of many unpardonable lapses, for again and again he
refers to the 'price' of the goods making up constant capital
as the basis for the formation of value: for example in the
very passage which Fred cites in support of reproduction
valuation, from p317 but also see the eye-opening discussion
on p969, both Volume I Penguin/International edition.

Thus once price-value equivalence is dropped, very little basis
remains for equation (1).

Therefore some *other* equation defining value must be sought,
which makes no reliance on price-value equivalence.

Supplementary remarks to Corollary 2

I make this point for three reasons:

to test the real extent of the agreement. If others in the
debate (not just Gil) are happy to sacrifice equation (1) then
I think we really are in new territory and I'm very happy. If
not, then I suspect we will have to come back and ask why the
equation has to be defended: what is so 'special' about it that
we can't do without it?

to make again, gently but very, very, very insistently, a
point I've made several times and will not stop making until
evidence that it has been taken seriously enters the literature:
if this equation is not Marx's, then it should not be attributed
to him. It is simply not acceptable by any normal standards of
scholarly conduct. No-one would dream of writing down their own
theorems and calling them the 'Fundamental Roemer-Skillman
Theorem'; the same courtesy should be granted to Marx.

Thus if the Theorem known in all the literature as the
Fundamental Marxian Theorem, is based on an assumption that is
not Marx's, then it is wrongly named.

It doesn't help the debate, it doesn't help Marx, and it
doesn't help the advance of theory, to attribute ideas to
people they don't belong to. I don't mind if it is called the
Fundamental Morishima-Okishio Theorem, or the Fundamental
Roemer Theorem, or the Fundamental Analytical Theorem or just
the Fundamental Theorem. But it *ain't* the Fundamental Marxian

if agreement 1 holds then - as remark (i) argues - we lose
the entire traditional explanation of what Marx means by value;
which means we have to discuss what goes in its place. We can't
just leave an empty hole. I take a lot of what Gil says to be
making this point, though this could be a misreading.

My gut feeling is that Gil thinks nothing goes in its place;
that Marx has no real argument, so that the whole house of
cards falls down, once the assumption of exchange at values
goes. Hence the importance (to him) of re-establishing Marx's
main qualitative conclusions by other means.

I am also convinced that here lies one of the reasons so few
marxists are willing to let go of price-value equivalence in
Volume I (and also why they are unwilling to let go of
simultaneism, but that's a relatively autonomous question).

They feel deep in their hearts that, once you lose price-value
equivalence, you lose this equation and with it the definition
of value; that you then have no firm place in which to stand.

I think they are wrong. There is a firm place to stand. I hope
to convince them of that.


Proposition 1: there *is* a Marxian derivation of value and
price which relies neither on equation (1) nor on price-value

Thus there is indeed a firm place to stand, it maintains all
Marx's principal qualitative conclusions, it keeps value and
price perfectly distinct both quantitatively and qualitatively,
it clearly identifies abstract labour as the substance and
magnitude of value, it's much easier to understand once you get
the hang of it (for a start you don't have to do eigenvalues),
it's much more general, and it squares almost word-for-word
with the text of Marx. It can also be used to establish that
the surplus-value appropriated by the capitalist class as a whole
can only arise from the expenditure of living labour, in
the fully general case of purchase and sale at any general
market prices.

Before people rush in and rubbish the above as unproven
assumption, let me make it clear that it is a statement of
intent; it is what, over the next period, I believe can be
established and will try to establish.

[In terms of placing cards on the table (Jerry's OPE 869),
that's a fairly large number of cards]

But first:

Theorem 1: Equality of value and price sums in Volume I

The precondition for further progress is, I believe, to thrash
out the substance of disagreements around an almost throwaway
remark of Gil's in OPE:861, which I already picked up on but I
want to repeat, because it is one of those remarks which makes
you realise that, just when you think you are talking the same
language, you are really just using the same words. This is:

"In anticipation, I note that the passage [on p263-AF] does not
suggest--nor could it validly suggest in general--that the sum
of values is equal to the sum of commodity prices."

I just don't understand the basis for this remark.

As I said in my quick response:

The wine and the corn must have the same price, in order to
exchange. So the wine costs L45 and the corn L45. The wine has
a price of L45 and a value of L40, the corn has a price of L45
and a value of L50.

Total value = L40 + L50 = L90 Total price = L45 + L45 = L90

What's the problem?

Well, what *is* the problem? To me, it is obvious that's what
Marx meant, and there's the numbers which prove it. I say this
not to diss the objections without considering them but
because, if we can establish why this solution is *not*
considered acceptable - nay obvious - we might just clarify the
semantic and ontological issues at stake.

The construction which led to the prices above is perfectly
general. Given any arbitrary set of values and any arbitrary
set of exchanges we can always ascertain a unique set of prices
which effect these exchanges, corresponding to which is a set
of gains and losses of values - 'value transfers' which sum to
zero. Each good has a perfectly distinct value and a perfectly
distinct price, in general not the same as its value, and the
value lost or gained by the owner of any commodity bundle is
equal to the sum of the value-price differences of each item in
the bundle. Over the capitalist class as a whole, the net gain
or loss of value is zero.

As Paul and I both put it, value is conserved in exchange.

Moreover we can always express any price magnitude, and any
value magnitude, either in money or in hours of socially
necessary abstract labour.

The only complication arises if there is a general inflation or
deflation of all money prices, that is, if the value of money
falls or rises. This also is dealt with by Marx in Chapter 5,
on p263, I think quite clearly. We have to reduce the sum of
values, calculated prior to monetary inflation, and the sum of
prices, calculated after monetary inflation, to a common unit.
We can no more compare two monetary sums expressed in a
different monetary unit, than the macroeconomists can compare
production in 1990 and in 1980 and argue that the economy has
grown 200% because prices have doubled. Or, as Marx puts it,
you can no more create value by inflating money, than by
expressing prices in silver instead of gold.

It could be that Gil disagrees with this last point. He may
wish to assert that a general rise in all money prices changes
the quantity of value in existence.

In that case, what is involved is not a fault in Marx, but a
different concept of value. Gil may then seek to define value
as equal to money price, regardless of monetary inflation; Marx
does not.

It could be that he feels cheated; that Marx's construction or
my figures express a tautology.

Don't knock tautology: every theorem in the first order
predicate calculus is formally speaking a tautology, and there
are a lot of them about, some of them quite hard to prove.

Such as Fermat's last theorem.

The definition of a tautology is a statement which cannot
possibly be false. If we can move from 'Marx is inconsistent'
to 'Marx cannot possibly be false' we'll make a lot of people
including myself very happy.

It may be that he feels the theorem is true by definition.
That's a long way from 'cannot be valid'. Is this definition a
consistent one? If it isn't, he has a point. If it is, we have
the axiomatic foundation of a general theory of value and

If what is required is a proof I'm happy to give one but I
suspect that this isn't what's at issue. I think almost anyone
could construct this proof *if* they follow the line of
argument. The underlying problem is that something, and I don't
know what, leads Gil to reject this entire way of arguing. So
what is it? Show us the arithmetical error in the figures given
for the example chosen, construct another example where this
equality, which I think really *is* a 'Fundamental Marxian
Equality' breaks down, or tell us the logical fallacy involved
- but I've given the numbers, and I think the onus is now on
those who disagree with proposition 1 to show us what's wrong
with them.