[OPE-L:2530] theory of surplus-value and individual prices

Fred Moseley (fmoseley@laneta.apc.org)
Mon, 17 Jun 1996 18:54:52 -0700 (PDT)

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This is a reply to Paul C.'s (2523) on the relation between Marx's theory of
surplus-value and his theory of individual prices.

Earlier, Paul had asserted that "one cannot have a theory of surplus-value
without a theory of relative prices." I argued in (2514) that this
assertion is false and more like the opposite is true: it is impossible to
have a theory of prices of production without a prior theory of surplus-value.

Paul replied in (2523):

You may be right as regards a theory of prices of production, though some
would dispute this, but this is not what I am talking about. I was talking
about a theory of relative prices, not specifically about the theory of
production prices. The analysis of surplus value in volume 1 is independent
of the production price theory, but dependent upon a labour value price
theory. It depends crucially on goods that contain more labour selling for
a higher price. Were this not the case, the whole analysis of absolute and
relative surplus value falls.

My response:

1. According to my interpretation, relative prices are even less important
in Marx's theory than are prices of production. Price of production is the
total price of all goods produced in a given industry. This is the price
variable that is determined in Marx's theory of prices of production in Part
2 of Volume 3 as the means of explaining how rates of profit are equalized
across industries. From this total price of an industry's output, one could
derive per unit prices and per unit relative prices (by assuming a given
quantity of output). However, these individual unit prices play no role in
Marx's theory. They are not determined in Volume 1 or in Volume 3.
Therefore, my prior argument that Marx's theory of surplus-value in Volume 1
does not depend on prices of production applies even more to relative unit

2. I agree that Marx's theory of surplus-value in Volume 1 depends on a
"labor value price theory," but I argue that this labor value price theory
in an AGGREGATE price theory, not a theory of individual or relative prices.
In my last post and in other posts, I have argued that such an aggregate
labor value price theory is at least logically possible and can provide the
basis for an aggregate "surplus labor theory of surplus-value." Marx's
analysis of absolute surplus-value (conflict over the length of the working
day and over the intensity of labor) and relative surplus-value
(technological change) follow as logical deductions from this aggregate
theory of surplus-value, as Duncan has already argued.

Paul added at the end of (2523):

I am not greatly concerned with production price theory, which I regard
as at most a minor second order perturbation, and at worst a snare and a

These are strong words. If working on a theory of prices of production is a
delusion, then Marx certainly shared this delusion. I argued in a post
yesterday that one of Marx's main criticisms of Ricardo was the latter's
failure to provide a theory of prices of production and that Marx considered
such a theory of prices of production to be important and necessary for at
least the following three reasons: (1) to refute the criticisms of Malthus,
Torrens, etc, that the labor theory of value is contradicted by equal rates
of profit, which had been one the main justifications for rejecting the
labor theory of value by the classical economists; (2) as the first step in
his theory of the distribution of surplus-value, which would then serve as
the basis for the determination of the other forms of surplus-value of
merchant profit, interest, and rent (and also of the determination of market
prices differing from prices of production); and (3) as the first step in
the explanation of the surface appearances of capitalism as necessary forms
of appearance of the underlying law of value (in prices of production and
the average rate of profit on which they are based, surplus-value appears to
come from the total capital, rather than just the variable capital).

I would argue that a theory of prices of production is still important and
necessary today for pretty much the same reasons. The apparent
contradiction between the labor theory of value and equal rates of profit
continues to be one of the most frequent criticisms of Marx's theory,
especially within the economics profession. Therefore, it is still
important today to respond to these criticisms and to provide a theoretical
defense of the labor theory of value on this important point. This task is
certainly not the only task worth doing (there are many tasks worth doing -
too many), but it is at least A task worth doing, and I think an important
task. One should not overlook the realities of the ideological struggle
within the economics profession and for the minds and hearts of generations
of students.

At the EEA conference in Boston in March, Massimo recounted how when he was
a student, his interest in Marx was dismissed derisively by a professor (a
leftist, as I recall) with the ringing indictment, with reference to the
transformation problem: "Marx was wrong!" I am sure that incidents like
this have occurred countless times over the last century. Such facile
dismissals of Marx's theory will no doubt continue to happen in the future,
but at least as a result of our efforts coherent alternative interpretations
will be available, based on a much more thorough understanding of Marx's
theory, and especially the logical method used to construct his theory.