[OPE-L:1164] Re: individual prices in Volume 1

Steve.Keen@unsw.EDU.AU (Steve.Keen@unsw.EDU.AU)
Tue, 20 Feb 1996 15:38:05 -0800

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I'm supposed to be writing a grant application -:(, but I can't
resist quickly jumping in here. Gil has been at great pains to
point out that Marx's insistence that surplus *must* be explained
on the basis of the exchange of equivalents is intellectually

First off, I agree with him: it is invalid to claim that it *must*
be so explained. But it is not invalid to claim that it *can* be
so explained.

Following Meek, I see Marx's theory as the logical culmination of
the Canonist approach to value, which saw value as being determined
by the effort involved in production. This approach has always been
in conflict with what began as the Mercantilist approach, which
sees "value" (really price in their framework) as being determined
by what the buyer is willing to play. This of course reaches its
culmination in neoclassical value theory.

The former approach has to explain surplus on the basis of the
exchange of equivalents, since it argues that value determines
price, value reflects effort, and therefore when things are
exchanged, one party gives something that took x amount of
effort in return for a different thing that also took x
amount of effort. The latter approach (in its radical guise)
can explain surplus out of unequal exchange, which I think I
can broadly use to characterise Gil's position.

My point is that you cannot logically decide between these two
perspectives a priori. Gil has been arguing this point from a
different perspective, and I would agree with him. As Meek
insisted, and this is to some extent what Fred has been arguing,
the proof of two such different paradigms has to come in the
eating: which better describes reality.

Here a quandary arises. The culmination of the Canonist approach
has been seen to be Marx's labor theory of value, but at an
intellectual level it has many many difficulties; OPE-L wouldn't
exist if that statement were not true. The rival mercantilist
approach also has its problems, but has developed a much more
sophisticated analysis. So to some it seems that we are faced
with a choice between an analysis with a compelling foundation
but immense problems in erecting a superstructure, or one with
objectionable foundations (from a Canonist perspective) but
enviable intellectual development.

I argue a different case, that the labor theory of value was *not*
the culmination of the Canonist perspective, but rather an
intermediate step (by Marx) on the way to a far more sound foundation
for this perspective, based on a dialectical analysis of the
commodity. Unfortunately, while Marx believed that his intermediate
(labor theory of value) analysis and this later analysis were
consistent, they were not.

I'll develop the argument later. At this stage, all I'd ask is
whether Gil would accept that his dispute with Fred et al largely
resolves around the fact that Marx used *must*, where all he was
justified to use was *can*.

Steve Keen