[OPE-L:5187] RE: ideal vs real value

andrew kliman (Andrew_Kliman@msn.com)
Thu, 5 Jun 1997 12:16:48 -0700 (PDT)

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A reply to Mike L's ope-l 5091.

1. Mike quotes my statement that "I think the key issue is quantitative" and
interprets it as if I had written that the key issue *in value theory* is
quantitative. I don't think that's the case. I think the key issue in value
theory changes with the historical moment.

What did I mean, then? I wrote (ope-l 5018): "Potential, ideal, putative,
vs. real. It is unclear to me what, if anything,
this distinction (in any of its forms) denotes that is different from what is
denoted in the distinction Marx does make throughout _Capital_, that value is
created (or produced) in the immediate production process and (usually)
realized (usually) in exchange. ... I think the key issue is quantitative.
If the process (or as Jerry might put it, "act") of exchange does not alter
the magnitude of value in existence ..., then it seems to me that the
denotation is the same. ... If, on the other hand, the magnitude of a
commodity's value is indeterminate until sale, or if it only becomes a value
upon sale, then [it is not]."

My point was only that, to judge whether the distinction between PIP value and
"real" value was consonant with _Capital_, the key issue is quantitative.

2. Mike writes: "there are others on the list for whom the key issue is
quantitative, who do think it is possible to measure abstract labour directly
(the stopwatch discussion) and who, accordingly, do view Marx's theory of
value as an explanation of relative values. (Paul C. and Allin are, I think
the purest and most consistent in this group which would include, I believe,
Andrew and Alan.)"

Again, I do not think the key issue is quantitative in this sense. Nor do I
think that Marx's value theory is an explanation of the fluctuations of
exchange ratios. What Marx cared about was that, no matter how much exchange
ratios fluctuate, *total* price and profit were determined by the *total*
value and surplus-value created in capitalist production. For instance, we
read in his Notes on Wagner (_Texts on Method_, pp. 187-88, emphases in

"if the price of corn rises after a bad harvest, then, in the first place, its
*value* rises, because a given quantity of labour is *realized in less
product*; in the second place, its *selling price* rises still more. What has
this to do with my theory of value? To the degree that corn is *sold* above
*its value* , other commodities, whether in their natural form or in their
money-form, are, to the same degree, sold *below their value*, and, to be
sure, even if their own money price does *not* fall. The *sum of values*
remains the same, even if the expression of that total *sum of values* were to
grow in money [terms]; hence, the sum of 'exchange-value' rises, according to
Herr Wagner. This is the case, if we assume that the *fall in price* in the
sum of other commodities does not cover the *over-valued price* (excess price)
of corn. But in that case the exchange-value of money has, to the same
degree, fallen below its value; the sum of values of all commodities not only
remains *the same*, it even remains the same in *monetary expression*, if
money is reckoned among the commodities."

(I have copied out this passage in full because it may be helpful for other
issues under discussion as well. For instance, it has been argued against the
TSS refutations of the Okishio theorem that our profit rate is arbitrary,
because it assumes an unchanged monetary expression of value or exchange-value
of money. It is clear from the above that Marx would not have accepted this

3. I do think it is possible to measure abstract labor directly. You may
think I am not "significantly advanced beyond Ricardo, ... not grasping the
significance of Marx's concept of abstract labour," but as I've noted, this
presumes that what is profound is difficult or impossible to measure. I've
noted that this reasoning would imply that Marx's analysis of the commodity is
not profound, because commodities are easily measurable.

I think that the view that labor becomes abstract in the market has its roots
in a perspective in which production relations, technological relations, are
regarded as neutral and transhistorical, so that the historical specificity of
capitalism lies in the mode of distribution and/or market institutions.
Capitalism is then just like every other society, at least every other
exploitative society, once one penetrates the mystified appearances and
discloses the bedrock material reality behind it. Thus, for instance, the
work that workers actually do is considered as unproblematic, transhistorical,
*concrete* labor only, so that the abstraction of labor becomes a mere *form
of appearance* of an *invariant* essence. This is just one instance, then, of
a theme that pervades the Marxism of the 2d and 3d Internationals, which never
appreciated the significance of the real subsumption of labor under capital,
the inversion of subject and object that occurs in the course of the
production process itself.

But just as the commodity is not just a use-value that also *appears* as a
value, but is itself a contradictory unity of these opposites, so too, the
labor that produces commodities is not just concrete labor that also *appears*
as abstract labor. Rather, it itself has, as Marx says, a dual character. It
is a contradictory unity of the labor that produces use-values, concrete
labor, and the labor that produces value, abstract labor.

This abstract labor, Marx tells us, is "real work," the magnitude of which is
determined in production just as is the magnitude of concrete labor, for in
fact it is the same real work: "The work is not done twice over, once to
produce a suitable product, a use-value, ... and a second time to generate
*value* and *surplus-value*, to *valorize value*. ... All that is contributed
is the labour of spinning, etc. ... This *real* work creates value only if it
is performed at a normally defined rate of intensity ... and if this *real
work* of given intensity and of given quantity AS MEASURED IN TERMS OF TIME
actually materializes as a product. ... Therefore, the labour process becomes
a valorization process by virtue of the fact that the concrete labour invested
in it is a quantity of *socially necessary* labour (thanks to its intensity)
.. [and] represents an *excess* over the amount contained in wages. It is
the *quantitative* calculation of the particular concrete amount of labour as
*average, necessary social labour*. What corresponds to this calculation,
however, is the real element, firstly, of the normal intensity of work (i.e.
that to produce a product in a certain quantity only the socially necessary
labour-time is consumed) and of the extension of the labour process beyond the
*time* necessary to replenish the value of the variable capital invested"
(Resultate, Capital I, Vintage, pp. 991-92, caps added).

In MECW 32, p. 326 (this is also in TSV part III, in the section on Bailey),
he notes similarly: "Ricardo continuously confuses the labour which is
represented in use value and that which is represented in exchange value. It
is true that the latter species of labour is ONLY THE FORMER SPECIES EXPRESSED
IN AN ABSTRACT FORM" (caps added). So the difference between them was not
that Ricardo thought that the work that workers actually do creates value,
whereas Marx disagreed. No, he agreed with that, because abstract labor *is*
concrete labor "expressed in an abstract form." Where Ricardo went wrong is
in failing to recognize that, although *real work* does create value, it does
so not by virtue of its natural properties, but by virtue of an historically
specific, alienated *production relation* in which the

"worker puts his life into the object, and his life no longer belongs to
himself but to the object. ... The *alienation* of the worker in his product
means not only that his labour becomes an object, assumes an *external*
existence, but that it exists independently, *outside himself*, and alien to
him, and that it stands opposed to him as an autonomous power. The life which
he has given to the object sets itself against him as an alien and hostile
force" (Marx, "Alienated Labor").

4. Mike writes: "Of course, the magnitude of a commodity's value is
indeterminate until sale; of course it is the market which determines whether
too much of society's labour has been devoted to, e.g., linen (cf. Vintage,
Vol. I, 202) and is therefore 'superfluously expended labour-time'. Note that
Marx proceeds and comments (203) that if the process of sale does 'take place
at all, i.e., if the commodity is not impossible to sell, a change of form
must always occur, although there may be an abnormal
loss or accretion of substance--- that is, of the magnitude of value.'
Apropos of earlier points re PIP value, note Marx's subsequent statement that
'the realization of a commodity's price, or of its merely ideal value-form, is
therefore at the same time, and inversely, the realization of the merely ideal
use-value of money....')."

This is his answer to the following questions of mine: "If, on the other
hand, the magnitude of a commodity's value is indeterminate until sale, or if
it only becomes a value upon sale, then I would like to know how defenders of
this [PIP] interpretation account for the determination of value. Where and
how does the quantitative alternation in value take place? Also, is
there any difference between magnitude of value and price?" It doesn't seem
to me, however, that the last 2 questions have been answered (note that the
last specifies "magnitude" of value and price).

More importantly, if the market determines the magnitude of value, then many
important parts of _Capital_ go out the window. For instance, all of Marx's
reasoning behind the law of the tendential fall in the profit rate would
simply make no sense. He writes

"In so far as the development of productivity reduces the total quantity of
labour applied by a given capital, it reduces the number by which the rate of
surplus-value has to be multiplied in order to arrive at its mass. Two
workers working for 12 hours a day could not supply the same surplus-value as
24 workers each working 2 hours, even if they were able to live on air and
hence scarcely needed to work at all for themselves" [Vol. III, Vintage, pp.

If the magnitude of value, and thus of surplus-value, were determined by "the
market," then it could certainly be the case that two workers working for 12
hours a day could supply the same surplus-value as 24 workers each working 2
hours, or indeed more. All that would be required is wise demand-management
policies. Even if one wished to question that, the fact remains that there
would be no necessary relation between the amount of time that workers work
and the amount of "real" value and surplus-value produced (or perhaps
"marketed" would be a better word than "produced").

Moreover, such things as the distinction between productive and unproductive
labor would become completely inexplicable. Indeed, salespeople and
especially advertising and marketing specialists would then become the point
men (and women) in value generation, since they are located precisely at the
"point" of its generation.

Even aspects of _Capital_ that Mike agrees with and indeed emphases would have
to go out the window. For instance, Mike writes on page 138 of his book "the
source of the capital which confronts workers in each transaction is the
result of the previous exploitation of workers." This cannot be the case if
"the market" determines the magnitude of value. Assume that workers
throughout the economy each receive as wages the equivalent in money of 4
hours of labor. Assume each works only 4 hours. There is no exploitation.
Yet if "the market" determines that prices will be high enough, there will be
profit and thus new capital. Conversely, assume that each worker works 24
hours, but that "the market" dictates that, in each case, 20 hours of this is
superfluous. Then there is certainly exploitation, but no profit and no

Marx's view of this is quite clear. He calls the theory according to which
"the market" determines value "the crude mercantilist conception of 'profit
unpon expropriation.'" This phrase comes from his critique of Torrens MECW
32, p. 267 (cf. TSV III). He notes that there are two possibilities. Either

(1) the "'accumulated' labour contained in the fixed capital and raw material
remains the same *after* the process of production as it was *before* [I
emphasize *after* and *before* so that everyone will note yet another passage
from Marx that directly contradicts the "replacement cost" interpretation of
value transfer and supports the TSS interpretation]." The worker replaces the
accumulated labor contained in wages with a greater amount of labor. Then
"the commodity contains more accumulated labour than the capital advanced did.
Then profit arises precisely out of the surplus of accumulated labour
contained in the commodity over that contained in the capital advanced."


(2) "immediate labour only represents the quantity embodied in the wages, is
only an equivalent of it. ... Where does the profit come in this case? [Good
question!] Where does the surplus value, i.e. the excess of the value of the
commodity over the value of the component parts of production, or over that of
the capital outlay, arise? Not in the production process itself -- so that
MERELY its realization takes place in the process of exchange, or in the
circulation process -- but in the exchange process, in the circulation
process. We thus come back to Malthus and the crude mercantilist conception
of 'profit unpon expropriation'. And it is this conception at which Mr.
Torrens consistently arrives, although he is, on the other hand, sufficiently
inconsistent to explain this *payable value* not by means of an inexplicable
fund dropped down from the skies, namely, a fund ... derived from the means of
the purchaser .... [caps added]."

Does anyone seriously doubt which of these two alternatives Marx chooses? Or
that he meant what he wrote?

5. The passage from the Grundrisse. Mike writes: "I ... offered what I
considered to be a definitive statement by Marx from the Grundrisse on this
question ...."

I do not understand how anything written in the Grundrisse can be considered
definitive. The whole thing was written in a big hurry, it was never revised,
and the author chose not to publish it. It took him *nine* more years of very
hard labor to complete the work he did publish, _Capital I_, and even then he
revised it twice more (2d German and French eds.)

Mike writes that my "interpretation that Marx's statement that when the
capitalist uses money to purchases use-values (raw materials, etc) his capital
"would thereby lose the *form* of value" has to do with exchange-value rather
than value looks like the result of a rushed reading. Let me note the context
a bit better. Marx is talking about the "devaluation" or demonetization
process when "capital has made the transition from the form of money into the
form of a *commodity*, of a product, which has a certain price, which is to be
*realized*. In its money form it existed as *value*. It now *exists* as
product, and only ideally as price; but not as *value as* such." [Grundrisse,
403. Emphasis in the original.] Marx then goes on to say that by making the
transition to use-values, the capital loses the form of value and that if he
can't sell the commodity he has lost both the new value and the original
value. Again, it is not realised as value until sale. This discussion has
*nothing* to do with exchange-value as such, and an attempt to discount the
quote as less "authoritative" doesn't stand up."

I don't think my reading of this passage is rushed. Of course, the larger
context is precisely whether, having advanced money, the capitalist will be
able to get it (or more money) back. The question is whether the capital
loses *value* or just the *form of value* when it moves from circulation into
production. Is the original sum of value advanced *lost*, so that it has to
be *regained* by means of another act of exchange? Or is it the case that
the value *remains intact and indeed increases* through the process of
production, so all that is lost is the form of value, specifically the money

The passage, especially "devaluation forms one moment of the realization
process"; "In its money form it existed as *value*. It now *exists* as
product" and "the product of the process in its immediate form is not *value*"
of course suggests that it actually loses *value*. But when read in this
manner, it directly contradicts Marx's analysis in _Capital_: "value is here
[in the circulation M-C-M] the subject of a process in which, while constantly
assuming the form in turn of money and commodities, it changes its own
magnitude ... it alternately assumes and loses the form of money and the form
(Vol. I, Ch. 4, Vintage, p. 255, caps added). On the next page he calls
capital a "self-moving substance"; the philosophic meaning of "substance" is
precisely that which remains identical to itself through the changes it

There are then only two possibilities. Either Marx changed his mind, or the
passage in the Grundrisse is simply imprecise. I do not want to discount the
possibility of the former, but I suspect the latter is the case. This is why
I pointed out that it is crucial to recognize that Marx had not yet worked out
the distinction between value and exchange-value (form of value) when he wrote
this initial draft or even the CCPE. Without that distinction, it would be
very hard to express in any coherent, sustained manner what Marx expresses
very simply and clearly in Ch. 4. It really does require a clear distinction
between value itself and form of value. Instead of being able clearly to
state that the capital advanced retains and indeed increases its original
magnitude of value through the production process, though losing the form of
value, Marx is forced to employ such abstract expressions as "capital is
reproduced as value and new value in the production process, [but] it is at
the same time posited as *not-value*, as something which first has to be
*realized as value by means of exchange*."

Mike writes: "Certainly this particular passage is not a discussion of
magnitude--- either of value or of extent of valorisation; it is an attempt to
clarify concepts (which it does)."

Not quite. H does use quantitative terminology: "devaluation," "worthless
product," "not only not gained a new value, but also lost its original value."
But I agree that Marx is focusing on a problem here that concerns form of
appearance, not magnitude. Why, then, are you trying to give an essentially
quantitative interpretation to a passage that really just concerns form of
appearance, Mike? No one thinks that productive or commodity capital has the
form of value, or that value is realized in the same process in which it is
created and its magnitude is determined (at least initially -- subsequent
events can make it lose value or be revalued upward). The dispute is about
whether the MAGNITUDE of a commodity's value is determined in production, or
in circulation.

Andrew Kliman