From: glevy@PRATT.EDU
Date: Sat Feb 19 2005 - 14:55:24 EST
---------------------------- Original Message -----------------------
Subject: Marx's Form of Analysis
From: "Jurriaan Bendien" <andromeda246@hetnet.nl>
Date: Sat, February 19, 2005 1:30 pm
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In reply to Andy, strictly speaking I think Marx's argument about the
"commensurability of commodities in exchange" does not depend on the
existence of money, and therefore the presence of any money-price is
theoretically irrelevant.
The reason for this is, as I mentioned before, that commodities can and do
exchange for other commodities without monetary mediation (although a
"price" could, most generally, be defined as "the condition for supply of
a good or service", which is not necessarily a money-price, but just
whatever is offered in return).
Exchange-value does not have to be expressed in money, it can be expressed
in a quantity of commodities offered in exchange. That is why the
category exchange-value is distinct from price. Marx defines "price"
specifically as the monetary expression of exchange-value, and it is not
true that exchange-value and price are identical in his theory. Modern
economics theorises trading relations only in terms of prices, assuming
exchange will occur "naturally". Marx does not assume this, he says
exchange is a social process which has preconditions. Hence the
difficulty modern economics has with explaining how you create a market
where there are no exchange relations (how you get people to trade).
I take the general aim of Marx's development of the "value form" to be one
of giving a succinct abstract exposition of the principles of trading
relations, from the most simple to the more complex. Thus Marx aims to
illuminate the social meaning of an activity which always involves a
triple relationship: between people, between people and their products,
and between products. The relationship between products denotes the
"form", but the substance of it is that people are also trading in their
species-activity, and their time on earth.
The "value form" pertains exclusively to the phenomenology of exchange
processes. The products of human labor have a value, but what exactly that
objective value is, beyond an individual value (e.g. "it cost so many
hours to procure or produce it to the point of sale") may only be
revealed through exchange. Trade increasingly abstracts from labour
effort, focusing on the prices of outputs, but the more it does so, the
more it imposes the value form on human species activity and human
work-time; in other words, "socially recognised value" takes the form of
"specific exchangeability".
Many Marxists I think though forget that in the contemporary world
economy, various types of barter are still a very important method of
exchange and circulation of goods, be it perhaps as countertrade (in
which a monetary valuation can still an external referent). That is to
say, both the simpler and the more complex forms of value persist in
trading processes.
................
As an aside, business people themselves are quite happy to talk about
values, average values, regulating values and non-existent prices, so why
economists make so much of a problem about the theory of value, I do not
know; the only reason I can think of is the moral justification of income
sources.
What trade and the cash nexus do, of course, is to separate any moral
ground for entitlement to resources from commercial or economic interest
in purchase. Thus, in an open market at least, I have cash, I buy a good,
but my ownership entitlement to the good only depends only on my cash,
not on any moral requirement or moral condition of access. This is
"market freedom" (of course if I do not have the cash, my freedom runs
out). The value-form pertain to the valuing of things, not people,
although as Marx says there is also the ""thingification" of people and
their mutual relationships. That thingification however can occur only
because people adjust their social relations according to the relations
between their products.
I think that value theory is essential for economics to understand
production, circulation, distribution and consumption within a competitive
framework, and under conditions of market uncertainty, where goods have
value but prices are uncertain. And indeed if you look how businesspeople
analyse all of that, they do exactly what Marx says they do, except that
they might call it different names. They must adjust to an objectively
given structure of input and output price-relativities, and then the
question arises what generates, regulates and maintains that structure?
Any explanation of this as "the outcome of interactions between millions
of economic agents with rational expectations" isn't very helpful. It's a
bit like saying that the waves of the sea are the result of the movements
of trillions of hydrogen molecules, and that if you want to explain this
particular wave, you have to look at the movement of the hydrogen
molecules in it.
And moreover prices are then at once the RESULT of rational expectations,
and the CAUSE of rational expectations, which boils down to the idea that
"the market is rational", and that market actors are reflexive, both
shaping and responding to the market simultaneously. But why is the
market rational? Presumably because it makes economic interests (costs
and benefits) manifest, and quantifies them in an objective way through
price, without any reference to subjective moral values, whims and
prejudices. Marx could just as well have talked about "the market",
instead of "the value form".
I think basically Marx aimed to show that what impels the capitalist
market is the quest for as much surplus-value as possible, irrespective
of specific forms of income it may take (profit, interest, rent,
royalties, gratuities etc.). That is the core of the competitive process.
It is not that markets necessarily gravitate towards a "uniform rate of
profit" (after all, competition includes blocking competitors), but
rather that generally enterprises aspire to realise an above-average rate
of profit, and economise resources according to that goal, insofar they
can. But point is that this real practice of economising does not occur
simply in buying and selling (market activity), it occurs within
production itself, where means of production and labor-power exist
("factors of production") which do not have any sale-price, because they
happen to be in use and consumed. Although they therefore lack a current
sale price, they still have a value, and that value happens to be
critical to business efficiency.
In fact if you consider the concept of GDP itself, it means "value added",
and of prime concern to business is then the net income you can realise,
derive or appropriate out of that value-added, that net output. Marx calls
that income "surplus-value"... it's just that value produced and value
realised as income are two different things. If that wasn't the case, the
distinction between value and price would not really be necessary. We are
not simply talking about an accounting theorem here, but about the real
modus operandi of markets and real economic behaviour. What those who
reject value-theory forget is that they are no longer entitled to refer
to any "value-added" at all. There is no longer any value added, just
purchase prices and sale prices. Well, you try telling that to an
accountant or a businessman!
Jurriaan
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