[OPE-L:970] Re: Chapter 5

Gilbert Skillman (gskillman@mail.wesleyan.edu)
Tue, 6 Feb 1996 17:47:12 -0800

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Continuing my response to Alan's posts. I think with this one I'm
finally caught up.

Alan writes:

> This post concerns the reading of Chapter 5, which though you
> have clarified your interpretation, I still don't agree with -
> again, no surprise.
> In the first variant (OPE 877) there seems to me to be a missing
> Boolean Variable. I wonder if you accept that this is the case
> and I also wonder if this is the reason you issued a revised
> version (OPE 879)

I agree that something has probably been left out in my original
formulation; I also think that one has to read the chapter backwards
(i.e., incorporate the condition stated atop p. 268, rather than
proceed linearly from p. 258) to see what has been left out.
Another way of putting this is that I don't think your candidate for the
"missing Boolean variable" does the trick. But I think these arguments
are at this point secondary. What say we move directly to my critique as
it was immediately amended, and come back to these issues if and only if
they still matter?

However, I would like here to clear up any lingering misperceptions
about my argument that the original version of the critique might
have created.

[Fast forward...]

> But once the variable SC is introduced, it can be seen that the
> chapter is an argument about whether simple circulation is the
> cause of exploitation.

As indicated by my amended critique, I think the claim has to be put
more precisely: the chapter is an argument about whether surplus
value can be understood to arise from simple circulation *taken

> The argument you provide makes me think you have misunderstood
> the function of Chapter 5, and this makes me wonder whether
> John Roemer has similarly misunderstood it; not having seen the
> contribution you refer to, I can't tell.

I'm sure I haven't misunderstood the function of Chapter 5; I quote
directly the conclusions Marx believes he takes from the argument in
the chapter, and show why they don't follow from what was actually
argued. John Roemer does not *explicitly* address Chapter 5, so
there is no question as to whether he has "misunderstood" it.
Rather, his analysis provides a counterexample to Marx's conclusion
that capitalist exploitation is isomorphic to a condition in which
price-value equivalence holds.

> The starting point of Chapter 5 is the assertion that you miss
> out. Marx wants to establish whether exploitation can be
> explained on the basis of simple commodity circulation, C-M-C.

It seems rather that *you've* left out the starting point of Ch. 5,
since the argument you mention is an (early, but) intermediate step.
What "Marx wants to establish" is announced by the title of the
Chapter, Contradictions in the General Formula of Capital, the latter
being of course M-C-M', not C-M-C.

Marx starts out by observing that the general formula of capital
represents a simple inversion of the order of exchange given by
C-M-C, and asks: "How can this purely formal distinction change the
nature of these processes, as if by magic?" He then goes on to note
that for 2 of the 3 parties to this transaction, there has for all
effective purposes been no inversion of the circuit of commodity

*On the basis of this equivalence*, Marx poses the question as
"whether this simple circulation (of commodities), by its nature,
might permit the valorization of the values entering into it..."
This linkage is crucial for Marx's argument; otherwise there would be
no basis for his end-of-chapter conclusions about the logic of M-C-M'
on the basis of arguments about C-M-C. My critique challenges the
validity of these deductions.

> Moreover, its purpose is not to explain the origin of surplus
> value. It is to show that surplus value cannot arise from
> simple commodity circulation, C-M-C.

No, it is more than that, as explicitly stated in the conclusion of
the chapter. Its purpose is to establish the "double result" about
the logic of M-C-M': "The transformation of money into capital has to
be developed on the basis of the immanent laws of the exchange of
commodities, in such a way that the starting-point is the exchange of
equivalents...[The process of appropriating surplus value] must, and
yet must not, take place in the sphere of circulation."

>Which is why it doesn't
> explain the origin of surplus value: This is done in the next
> chapter, chapter 6.

But Marx's sole focus in Ch. 6 onward on the hiring and subsumption
of *labor power* as the basis of capitalist exploitation can only be
justified if the "double result" quoted above is valid. I argue that
it isn't.

> However, there is more than this to it. Your category A or
> 'price-value equivalence' never figures as such in Marx's
> argument in chapter 5. It always appears as a specialisation, a
> subcategory, of something else. Marx draws no general
> conclusions from his argument, outside of that specialisation.

This is exactly how my amended interpretation of his argument
represents it.

[Fast forward...]

> Chapter 5 general question: Does simple circulation explain
> surplus-value?
> ============================================================

As indicated above, this is *not* the general question of Ch. 5; it
is a subsidiary question. If nothing else, Marx's "double result"
conclusion confirms this.

> 1) Case 1: can surplus-value result from exchange between two
> isolated parties if they exchange at values? No, because
> neither party to the exchange parts with more or less than what
> they gain.

It's not clear in this context what "isolated" means. This is
important, because as Marx affirms subsequent to Ch. 5, surplus value
can indeed result from exchange between two parties if they exchange
at values. That's why the true representation of the argument needs
to be, as in my representation, that exchange based on price-value
equivalence *taken alone* cannot result in surplus value.

> 4) Now study not just C-M but also M-C. Still in isolated
> exchange, we find that anyone who sells and then buys, must
> lose in the second exchange exactly what they have gained in
> the first. Thus, no surplus value can arise from C-M-C (simple
> circulation), even for an isolated seller, through a general
> price increase alone. [This result holds for all prices, not
> just price-value equivalence]

That's because the case of proportional divergence of prices from
values is equivalent to the case in which prices "equal" values
(i.e., the transformation factor from labor units to money units is 1
to 1).

> 5) Case 3: can we explain surplus-value by postulating a
> class "which buys but does not sell" (for example the ancient
> Roman dictators). Yes, but such a class must from somewhere
> acquire the money with which it buys. If it obtains this money
> by noncapitalist means (eg tribute) then it does indeed secure
> surplus value, but during the seizure of the money, not the
> spending of it. We now set this digression aside and 'keep
> within the limits of the exchange of commodities'

This is a misrepresentation of Marx's argument. He does not ask
whether surplus value can be explained "by postulating a class which
buys but does not sell." Rather he *concludes* that explaining
surplus value on the basis of price-value disparities *requires* the
assumption of "a class of buyers who do not sell, i.e. a class of
consumers who do not produce."

But this conclusion, as stated, is fallacious, and indicates the
importance of stressing that what Marx wants to show is that
circulation *taken alone* cannot explain surplus value. That one
class reaps a surplus from another via exchange only requires the
much less problematic assumption of a class which "buys but does not
sell" a *particular* commodity whose price exceeds its value; e.g., let's say
a commodity which increases the productivity of labor in producing other
commodities, such as a machine. And since the buyers could use this commodity to
produce value, some of which they then pay to the seller, it also
doesn't follow that the buyers are a class that "consumes but does not
produce". Thus Marx's conclusion *makes no sense* in general unless
one understands the argument to be that circulation *taken alone*
cannot account for surplus value.

> 6) Case 4: Can we explain surplus-value by assuming a seller
> who sells dear and buys cheap. Yes. A "may be clever enough to
> get the advantage of B and C without their being able to take
> their revenge".

It is dangerous to allow that "surplus value" can arise from mere
redistribution. We'll see immediately below that Marx's argument
about the prospects of the capitalist class taken as a whole commits
the fallacy of division. For the record, I understand Marx to rule
out this understanding of surplus value when he defines surplus value
as self-valorizing value, value which creates more value. In my
economics & philosophy article, I allow "surplus value" in the sense
that you refer to here, and I think it only adds noise to the
argument, the conclusion of which does not depend on this inclusion.

> 7) Does this explain the surplus-value of the capitalist
> class as a whole? No, because the sum of price-value
> differences over the whole class of sellers, must be zero.

[Marx does not actually say this in the passage alluded to; he says
that the sum of value cannot be altered by the simple process of
commodity exchange. He makes no claim whatsoever about the equality
of the sum of prices and the sume of values.]

> Proof: after exchange, the same commodities are present as
> before. The value of each commodity, as proved in Chapter 1,
> cannot be modified by exchange. Therefore, the value in the
> hands of the sellers is the same as it was before.

This commits exactly the same fallacy of division that Marx commits.
Note the equivocation implicit in your first two sentences the
paragraph earlier. First you speak of "the capitalist class as a whole",
i.e., a strict subset of the set of all sellers. But then in the next sentence
you shift to the "whole class of sellers". While it's true that the *whole*
class of sellers cannot reap a net gain via price-value disparities,
it is invalid to infer that a subset of this class--i.e., the
capitalist class--cannot reap a net gain in this manner. To insist
otherwise is to commit the fallacy of division. This is just the
error Marx makes when he concludes that "the capitalist class of a
given country, taken as a whole, cannot defraud itself." True but
utterly irrelevant.

Bottom line: one either rejects by definition the notion that
surplus value can arise from redistribution, or else Marx's entire
argument collapses on the basis of this fallacy.

> 8) We have now proved that *simple circulation* cannot
> produce surplus-value under any of the assumptions, and for any
> of the reasons, proposed by the economists.

See caveats above.

> 9) Since *simple* circulation cannot produce surplus value,
> we must now ask what can.
> 10) Can it be something outside of circulation altogether?
> That is, can a producer create surplus value merely by selling
> a product created with her/his own labour?

You've skipped a step. Before proceeding to explain why a producer
can't create surplus value by simply augmenting the value of given
materials and selling the result, Marx first asserts that "something
must take place in the background which is not visible in the
circulation itself." This, and *not* the passage you refer to above,
is the condition I label "B".

> 11) No. Gil labels this conclusion 'B' in his second version
> of the critique,

No, I don't--see above.

> and - I think - mistakenly - takes it as
> something Marx wishes to prove. But Marx actually says: "it is
> therefore impossible that, outside the sphere of circulation, a
> producer of commodities can, without coming into contact with
> other commodity-owners, valorize value, and consequently
> transform money or commodities into capital". I.e. Marx
> disproves it, or claims to. And I think he has to, because he
> shows (in chapter 6) that surplus value arises from the purchase
> and sale of a special *commodity* - labour power.

And I grant this. It is irrelevant to my critique. What is relevant
is the implied claim that capitalist exploitation can *only* be
explained on the basis of hiring this special *commodity*.

> 12) "Capital cannot therefore arise from circulation, and it
> is equally impossible for it to arise apart from circulation.
> It must have its origin both in circulation and not in
> circulation"

> We'll come back to this Hegelian contradiction in a tick.
> Right here I just want to note that statement (12), I think, is
> almost as far as Chapter 5 actually goes, except for the statement
> that Marx will now deal with surplus value using exchange in its
> 'pure' form, which has caused so much grief.

This is the "exception" that makes all the difference.

> Therefore, looking at what you say about the Historical-Strategic
> perspective, it seems to me that the conflicts between your
> view and Marx's appear in a different place. Surely, what you
> should be disputing are points like 5 and 11, where Marx
> specifically denies that antediluvian circuits can give rise to
> surplus value?

See caveats as to the correct statements of the arguments alluded to
in points 5 and 11, above. I do dispute these claims (as corrected),
but I do something better--I criticize the core of the argument that
produces these invalid conclusions.
> I just think that you are biting off far more than you need to
> chew. Instead of taking on the whole of Marx's value theory, I
> think you should co-exist with it; I don't think the conflicts
> between the theory you have described, and Marx's value theory,
> really exist. But I can't tell until I've heard the theory
> itself.

We'll see. But for what it's worth, I'm not "taking on the whole of
Marx's value theory", and have never suggested otherwise. Rather
I've criticized various, quite explicit claims which involve this
theory of value. I spell these out in an earlier post.

And I'll continue to stand by my critique of Ch. 5 as amended. Marx
does make the argument I've outlined, and it is indeed fallacious,
whether or not this carries implications for Marx's value theory
taken as a whole.

> You could conceivably construct a critique which went as follows:
> Marx has only established that C cannot arise from circulation in
> the simple case; he has not reconstructed the same argument when
> he passes to the more general case of capitalist circulation. Maybe
> this is the real substance of your critique.

But that is the central implication of my critique.

> I think such an argument could be rebutted, but it seems to me
> closer to what you are trying to say.

We'll see.

> However if all you want to do is nail Charlie using modern logic,
> the place is surely point 12.

The question is how Charlie *arrives* at point 12; I show his
reasoning is invalid.

> Never mind the old A, B, C,
> implies, isomorphism what-have-you: here we have "A and not-A",
> plain as the nose on your face. Tut tut, can't be, nice theory
> shame about the math.

For what it's worth, I resorted to the formal logical structure just
as a way to condense and clarify the argument, which is explained in
non-formal detail in my Science & Society piece, and with slightly
more noise in my Ec & Phil article. It's a shame in a way that
you've focused on my first statement of the core structure of Marx's
Chapter 5 argument, since this seems to have led to several dead
ends, and I immediately amended the argument just so as to avoid many
of these objections.

[Fast forward...]

> But on either interpretation, the concept of circulation in chapter 5
> as so far is simple circulation, and chapter 5 successfully proves -
> I think - that exploitation cannot arise from it.

In order to justify Marx's subsequent focus in Volume I, Chapter 5
must "successfully prove" the conclusions stated in the final
paragraph, as clarified by Marx's final footnote. I demonstrate that
the argument in ch. 5 does not do so, and suggest the consequences of
correcting this error.

> So what might you have a quarrel with?

See above.

> Well, let's turn to the second version of your critique in OPE
> 879. Here you introduce a new Boolean variable B, 'a condition
> arising outside of exchange'. Writing C as before for exploitation,
> you then attribute to Marx the statement that C implies B.

This is the exact formal interpretation of the passage "for [surplus
value] to be formed, something must take place in the background
which is not visible in the circulation itself", as any logician will

> The problem with this is that Marx says the opposite: he says
> (two paras later) that C cannot arise from B, that exploitation
> *cannot* arise 'outside the sphere of circulation'. His
> language is very strong: he says it is impossible.

Again, this misrepresents what Marx says. The passage you allude to
here states that B *taken alone* does not imply C. This in no way denies
that C implies B, as Marx explicitly states (see above).

> The citation which, you claim, asserts that C implies B,
> actually asserts that C cannot arise from SC, from *simple*
> circulation. This is better expressed as 'No SC implies C'

No, it isn't. The phrase "not visible in the circulation itself" is
simply a modifier for "something which must take place in the
background". Or to put it the other way around, the argument only
works if by *simple* circulation Marx means circulation as divorced from
this "something...in the background", as stated in my amended
representation of Marx's argument.

> The conclusion that follows from this, is not that exploitation
> arises outside of circulation, but that it arises outside of
> simple circulation. Hence, it must be produced by something
> which is a part of circulation in general, but not a part of
> simple circulation.

But add the critical qualifier: ...a part of circulation in general
in which price-value equivalence holds.

> This implies a particular type of commodity purchased *only* to
> produce other commodities: labour-power.

But the argument advanced in Ch. 5 *does not* validly imply this
conclusion. That's the entire point of my critique.

> This appears only in a more extended form of circulation,
> capitalist circulation: C'-M-C-P...C'. Its special nature is
> that it emerges as a commodity only when C' is extended to
> include the purchase and sale of labour power. In this case, we
> no longer have simple circulation, but simple circulation plus
> the sale of labour-power, or capitalist circulation. Labour
> power is not, as Simon has pointed out, a capitalistically-
> produced commodity. It has an independent circuit of its own,
> side-by-side with the simple circulation component of C'-M-C.

Again, that's the problem: the inference that surplus
value-begetting capitalist circulation requires "the purchase and
sale of labour power" is invalid.

> I suspect that what you have a quarrel with is Marx's *disproof*
> of B. For, you would have to show that surplus value could
> arise from sources *other* than the purchase and sale of labour
> power.

This statement inappropriately shifts the burden of proof, because my
argument is that Marx has failed to establish that the purchase and
sale of labour power is required, in the first place. But for what
it's worth, Roemer's analysis demonstrates the logical possibility of
surplus value arising from circuits of capital which do not depend on
the purchase and sale of labor power, and Marx's historical analysis
repeatedly and emphatically affirms that this possibility took place.

>Therefore, it seems to me, you have to show that surplus
> value can arise from sources outside of capitalist circulation,
> which Marx has failed to consider.

It seems to me that it begs a major question to define "capitalist
circulation" as involving the purchase and sale of labor power. The
general circuit of capital does not require this as a matter of
definition. And as stated above, Marx explicitly affirms cases in
which capitalist exploitation occurs without the purchase and sale of
labor power.

> But in that case, I don't think you have any quarrel with
> the central conclusion of chapter 5, namely:

> Suggested Agreement 2(conservation of value in exchange)
> =====================
[I do have a quarrel with your particular interpretation of this
"conservation"; see above and separate post.)
> =============================================================
> Exploitation and surplus value cannot arise from the simple
> exchange of commodities, whether at prices equal to values
> or at prices not equal to values.
> =============================================================

See caveats above. The real issue, it seems to me, is whether this
statement can be validly construed to support Marx's "double result"
at the end of Chapter 5. The point of my critique is to demonstrate that
this result is not supported by the arguments advanced in the Chapter.
This assessment is not dislodged by the foregoing.

> Quantity, Quality and the 'pure' case
> =====================================
> What has not been dealt with here is, why study only the 'pure'
> case of sale at values, in the succeeding development of
> chapter 6?
> I think this argument is easier to understand in quantitative
> rather than purely qualitative terms. I think it is much
> clearer with numbers, though it can be done, as Marx here has,
> in qualitative terms. It requires the result from point 7 above
> (sum of values = sum of prices, the quantitative expression of
> the result that surplus-value cannot arise from simple
> circulation).

Marx does not claim that sum of values = sum of prices in the passage
alluded to; indeed he doesn't even use the word prices (understood as
distinct from values) there. And if he had asserted this claim, it
is either invalid in general or true only by definition.

> But in order to furnish the proof, I need to use this result
> (which chapter 5 does establish). So, before proceeding, I need
> to know what are the objections to the numerical example I
> gave earlier this month, showing that this equality holds in
> Marx's given case.

As argued in an earlier post, your numerical example "show[s] that
this equality holds" only by assuming it holds.

It's difficult arguing by e-mail, since one can't use visual clues or
or other immediate reactions to determine the speaker's intention.
However, there is more scope for iterated convergence to the core of
the matter. Let's hope that's what's happening here.

In solidarity, Gil