[OPE-L:4992] Re: Production and Circulation

riccardo bellofiore (bellofio@cisi.unito.it)
Tue, 13 May 1997 08:53:00 -0700 (PDT)

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At 10:41 -0700 9-05-1997, Duncan K. Foley wrote:

>As I read Marx, he thinks value is created in production through the
>expenditure of living labor, and realized in circulation when commodities
>are exchanged against money. [...] If we look at an economy over a
>specific >period,
>we can in principle (subject to a number of problems about measurement of
>labor, reduction to simple labor, and distinction between productive and
>unproductive labor) observe how much labor time was expended. We can also
>observe in principle the money value added realized in the sale of those
>commodities (taking account of the time lag between production and sale).
>The stipulation that the "monetary expression of labor time" is equal to
>the ratio of the money value added realized in the sale of the commodities
>to the living labor time expended in their production is supposed to
>correspond to this idea. So I would say that the labor time expended in the
>mass of commodities sold in a given period is "given prior to sale", but
>the expression of this labor time in money is not necessarily given prior
>to sale. The definition of the "monetary expression of labor time" above is
>inherently ex post. It tells us what happened after the dust has settled.

I agree with Duncan that Marx intended to show that value is

-(first) created in production by living labour and

-(afterwards) realized in circulation, when commodities are exchanged
against money.

I also think that this is why Marx's theoretical project is worthwile: the
dialectic between absolute value and exchange value.

However, I fear that there are some problems which are not accounted for by
Duncan. Trying to be brief, the issue is the following. If Colletti's and
Rubin's view according to which the abstraction of labour is actually
realized in exchange - a point of view which I think is shared by most
people on this list (and, BTW, also by myself) - how can we sum up the
various private labours expended in production? To the question: what
capitalism is, the answer usually given is: "the exchange of commodities
for money". That's why it is not possible to divorce value from money. But,
note, in this argument the labour expended in the various spheres of
production are nothing but concrete labours, before exchange. This is a
point made long ago by de Brunhoff et al. against Sraffa; but, I think, it
is a valid one, and may be levelled against most recent Marxism on value.

But if this is how matters stand, how can it be said that there is a
priority of the production of value over its expression circulation, so
that we can say: labour produces value, value is expressed in money? This
other sequence seems to be quite Marxian as the other: value is actually
born at the intersection of production and circulation, labours become
socially homogeneous in exchange, there is no quantitative magnitude of
value before exchange. Before exchange we have only a qualitative statement
about the exclusive productivity of labour, where it is not clear how
different labours can be made equal before exchange.

Suggestion: may be there is a problem here in Marx, because both positions
are in Marx. The problem is to ground a position where value is born at the
intersection of production and circulation without cancelling the priority
of the production of value over its realization. It is not easy, because
there seems to be a logical contradiction here.

This problem is still open. I think that a way out should start from the
idea that capitalism is first of all the buying of labour power by money
capital on the labour market; and that because of this special market,the
living labour of the wage worker is (tentatively) made homogeneous already
in the production process. Marx goes on in the three volumes in a way
similar to the one sketched out by Fred, grounding value as the joint
outcome of production and circulation in a sequence which goes from
immediate production to the reconstruction of capitalist phenomelogy.

But then the accent in Marxian theory must shift: from money as the general
equivalent to money as purchasing power on the labour market; from abstract
labour in exchange to abstract labour as the living labour of the wage

Summing up. In Marx, value is created in production and realized in
circulation. But in Marx, the abstraction of labour is perfected in
exchange. The latter statement creates troubles for the first: we cannot
say with Marx that living labour creates value in production before
exchange *unless* we have some argument supporting this position. The
argument is lacking if we go backwards from money as general equivalent in
general commodity exchange, beacuse this argument *destroys* the priority
of absolute value over its monetary expression.

The good argument may be a monetary argument, stressing the *logical*
priority of the exchange of money as capital with the special commodity
labour power over the final exchange between commodities and money. The
capitalist class is the one who has power over money, hence being able to
subsume and organize living labour in production for general exchange, and
to decide the composition of output.

This argument is fully compatible with Marx's labour theory of value, but
recognizes some problems in it. I think it is also compatible with Duncan's
argument but requires some adaptations of the way the New Interpretation is
usually interpreted. That is: if we await that the dust has settled, the
priority of production over circulation has vanished. The New
Interpretation gives an accurate account of what is the result of a
process. But Marx's labour theory of value is essential in the analysis of
the process, not of its result. That is why, rightly, the labour theory of
value is present only as a postulate. Moreover, at the macro level the real
wage bill - according to the previous argument - is given by capitalist
firms decisions. Hence, prices divergent from values do not affect the rate
of surplus value in labour embodied terms but merely its expression in
labour represented terms.

Too long: but I hope the main line of the difficulty I wanted to stress is