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A number of my correspondents in the "Chapter 5/Marx's starting point"
thread have expressed the presumption that the scenario in which all
commodities exchange at their respective values (the condition I've
labelled price-value equivalence or PVE) enjoys some particular economic
relevance or significance, such that accounting for the existence of
capitalist profit under this scenario is somehow a meaningful theoretical
exercise. I understand where this presumption comes from, because I came
from the same place: all of us who have studied Marx's economic argument
seriously have acquired this belief at our mother's knee, so to speak, and
generally before we fully grasped the intellectual structure of Marxian
political economy.
But this presumption has to be unlearned, because there is absolutely no
valid basis for it (certainly none established by Marx), it is analytically
superfluous to what most correspondents have identified as Marx's central
point, and a serious case can be made that clinging to it leads to serious
misperceptions about the nature of capitalist exchange, competition, and
profit.
1) The scenario of PVE has no particular significance or relevance in
depicting capitalist reality:
--It doesn't correspond to the classical scenario of "natural prices", and
neither Smith no Ricardo invoke PVE in their accounts of capitalist profit.
To the contrary, both offer strong reasons why PVE does not generally
obtain. Nor does Marx provide any valid grounds for asserting this
correspondence.
--It doesn't correspond to the general case of "exchange under competitive
conditions," however that might be non-tautologically conceived, and thus
does not correspond to the "central tendency" of oscillating prices, to the
exchange values that result when "supply and demand are equated and thus
cancel out", to exchange under conditions of "Freedom, Equality, Property,
and Bentham", or the "exchange of equivalents" (unless the latter phrase is
understood *tautologically* to mean exchange according to labor values).
Moreover,Marx does not establish any valid grounds, in Chapter 1, Chapter
5, or anywhere else, for asserting such correspondences. To the contrary,
we know that absent very stringent and unrealistic assumptions, commodity
prices will in general *not* be proportional to values--even if one assumes
that surplus value is derived universally from circuits of industrial capital.
--It is not justified by the notion that commodity prices are somehow
"regulated" by their respective values, even if that were a valid claim.
This "regulation" refers at most to correlations between *changes* in labor
values and their respective average or production prices, and does not rule
out the possibility that there might be significant and substantive
price-value disparities notwithstanding. But furthermore, the exact sense
in which prices are "regulated" by their respective labor values is never
established by Marx, and there are strong grounds for doubting or even
reversing this connection, such that it is at least as appropriate to
imagine that labor values are "regulated" by relative commodity prices.
I'd add finally that while various correspondents have adverted to one or
the other of these justifications, no one has demonstrated their validity
or indicated where Marx has made such a demonstration.
2) The stipulation of PVE is completely unnecessary for establishing
Marx's "main point" or "central result" or "brilliant theoretical
achievement" in Part 2 of V. I, to the effect that capitalist profit
depends on the existence of surplus labor, in Marx's precise sense of that
term. First, the connection between surplus value and new expenditures of
labor subsequent to the initiation of given circuits of capital is dictated
by Marx's *definition* of surplus value as involving *valorization* rather
than simply *redistribution* of embodied labor that existed prior to
initiation of the relevant circuit. This definition, of course, does not
require the invocation of PVE.
Second, the connection between capitalist profit and surplus value so
defined requires no reference whatsoever to PVE. This fact is confirmed by
the "fundamental Marxian theorem (FMT)", which requires no axiom about the
connection between prices and values in establishing the formal equivalence
of positive rates of profit and of
surplus value.
Points 1 and 2 show that the scenario of PVE has no *intrinsic* economic
significance and is unnecessary to establish Marx's claim that capitalist
appropriation of surplus labor (i.e., capitalist exploitation) is the basis
of capitalist profit. These points alone suffice to dismiss the
presumption supporting PVE, and I could stop here with the satisfied glow
of knowing that my task is accomplished. But I've also offered another, if
somewhat more controversial, indictment of this scenario:
3) Given *Marx's own* statement in Volume I of the necessary conditions
for reproduction of the capitalist mode of production, the existence of
surplus value is more appropriately thought of as generically corresponding
to a scenario of systematic price-value *disparities*, not one of PVE.
This is because Marx's necessary conditions establish a scenario in which
capital is *absolutely* scarce, and conditions of absolute scarcity create
divergences between prices and values, other things equal. The latter is
not solely a "neoclassical" notion; Ricardo affirms the same point, as does
Marx in his Volume III treatment of interest-bearing capital and land rent.
[The same argument concerning the centrality of price-value disparities for
the existence of surplus value can be made if profits are only based on
"economic" or *relative* scarcity, but since this leaves "Marxian" for
"neoclassical" terrain and thus invites unnecessary additional controversy,
I won't develop it here.]
It is true that positing the universal reliance of surplus value on the
circuit of industrial capital, where the latter is specifically understood
to include the purchase of labor power as a commodity, makes it *possible*
for surplus value to exist even given PVE. But the *presumption* of PVE
invalidly elevates this mere logical possibility to the status of a general
case, and thus creates a serious misperception about the systemic basis of
capitalist exploitation by hiding its connection to conditions of absolute
scarcity.
I've developed this argument at length in responses to Allin, Paul Z., and
most recently in an exchange with Mike L in which he characterizes it as
"going off the deep end" into neoclassical thought. Rather than pursue
this argument further here, I'll wait to here Mike's response to my
response, and develop in a separate post a thought experiment that
sidesteps Mike's central objection to this argument.
In sum, there are absolutely no valid grounds for the presumption that PVE
constitutes a "conceptually valid benchmark" for the Marxian analysis of
capitalist profit; it's certainly true that *Marx* provides no such grounds.
Gil
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