From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Thu Feb 23 2006 - 16:19:54 EST
Hi Rakesh, Marx can't be wrong for both having deduced a wrong common substance and having chosen the wrong one. Which sword do you chose? I chose neither of them. I think, that Marx's argument has merit, but that he does not conclusively prove in his text that abstract labor must be the common substance which equates commodities. As I have argued, no such conclusive logical proof is possible, because of the nature of value itself. What you can do, is trace out empirically the real history of economic exchange, in order to prove how labor-time regulates product values. But it remains an interpretation among other interpretations, a generalisation about economic exchange, which has a certain explanatory power: "time is money", as I think Benjamin Franklin remarked. To put it awkwardly (just don't have the time), it seems to me that the condition of possibility of general commodity exchange by which each is measured, as an aliquot, in terms of an identical measure must be the existence of an at least conceptually homogeneous substance in terms of which commodities can be such abstract, only quantitatively differentiated, parts. (Of course I agree with Marx that with the development of capitalism social labor becomes more practically homogeneous.) Well as I argued, for a product to be exchanged it is unnecessary for there to be a common substance, it is sufficient that two people want to trade and that they want each other's commodity. The idea that there is a common substance is an interpretation of economic exchange. I have this treatise on economic exchange at home by the autodidact Alexander Gersch (oddly dedicated to President Richard Nixon) and even if it proves nothing much, it does show that economic exchange can be interpreted and looked at from many different points of view, and that things can trade in all sorts of curious ways. Otherwise, what is money measuring? Marx's logic seems hardly unreasonable, and it seems that his critics say many manifestly logically contradictory things in very tortured prose. Nobody is saying that Marx is being unreasonable, only that there exists no logical proof which can conclusively establish that abstract labour-time is the substance of value. It is a non-arbitrary theory, and this theory may explain a lot, or very little. Money can measure all sorts of things, or none at all, depending on how it's used. In Imre Lakatos's terminology, you have this "hard core" hypothesis about labor-time, which you are unwilling to let go of, very easily. Moreover, the other common substances simply cannot underpin socially objective measurements. Why not? If I say e.g. that what commodities have in common is just that they have a price, that's socially objective. I can go into a store and buy an apple, the apple is weighed or it has a sticker and it has a price, that's objective. Marx draws a clear distinction between vulgar economics (just concerned with surface appearances) and classical economics (which genuinely probes the meaning and dimensions of economic exchange). He doesn't want to argue with vulgar economics, because it is vulgar, it just toys in an eclectic manner with possible ways of explaining economic phenomena and doesn't understand the real problem, ie. the explanation of capital in its totality. I don't think it's an accident that bourgeois economics does not criticize Marx in terms of any form of subjective theory of value but in terms of Sraffa's theory which allows for commodities to serve as a determinate abstract part of what it holds to be an inherently heterogeneous gross product. But this is logically absurd, this holding to commensurability while denying that there is a substantial basis of commensurability at least as a condition of possibility of that commensurability. Well, there's a sense in which Sraffa's theory is a half-way house, yes, I think we have to explore further what the concept of price really means. But, as Ian would say, Marx himself said that "every bona fide scientific criticism is welcome". Ultimately we all live in the same social world, and every bona fide criticism (i.e. criticism in good faith) can help to uncover its true nature. Commodities absorb and potentially lay claim to an abstract quantity of homogeneous social labor. No palaver is needed to establish that. However the actual labor time which they are assigned is determined via a very complex social process. Demand plays at best an indirect and, even then, small role in this process; the level of labor productivity and intra capitalist competition are the overwhelmingly important factors. I don't think Marx argues that, I think he argues substantively that exchange-value expresses an economic relationship between product-value (in labour-time) and society's needs. Demand is very important, and influences market prices. The real question is why the equilibration of supply and demand, which is always just relative and never absolute, evolves towards a certain price level. And Marx tackles that abstractly with a series of concepts, including value, exchange-value, production price, market production price, market value and market price. This is an outline of a foundational theory of how prices are formed, a generalisation about that. At any rate, it is the task of value theory to lay bare that complexity. Indeed. I don't think Marx ever admitted that he failed to transform the inputs from value prices or simple prices to prices of production. This is not the error to which Marx was calling attention. In fact, Marx does say in chapter 9 of Cap. Vol. 3 that you have to bear in mind that input prices and input values can deviate from each other, and that there it is therefore possible to "go wrong" in the calculation. But he thinks it is not a very important problem, because when inputs are bought and withdrawn from the market for use in production, that is that, their prices, having being paid, can no longer change, all that can change is the yield on capital invested from sales of new output. One hundred years of Marx criticism has read Marx ass backwards. Well sometimes you can obtain new ideas by inverting an argument. In his exploratory writing, e.g. the Grundrisse or the Pris Manuscripts, Marx often looks at things ass-backwards. His claim is e.g. that the way things appear in competition inverts the real process, what is really going on. As people adjust their behaviour to the "state of the market", they are mostly unaware that simultaneously they accomplish aggregate effects which create the state of the market, and how that occurs. They see only prices, not the value relations or production relations behind prices. And I think many of Marx's defenders, even on this list, have not understood the nature of the error to which Marx was calling attention. At least Fred has understood my point. But if one accepts the traditional transformation problem, Winternitz obviously chose the correct invariance condition. Bortkiewicz had already entertained this possibility, but opted for a production price of sector III equal to 1, i.e. that the price of goods in sector III is equal to their value. Winternitz argues basically that total prices can change, only if the labor-hours required to produce total output change, or, the value of money changes. The New Zealand political economist Ronald Meek (1956, p. 152) shows that the Winternitzian solution still means that total profit then usually differs from total surplus value. Meek's own solution however, as I understand it - similar to the Bortkiewicz-Sweezy solution - implies that total price and total value cannot be equal. Disagree. As Marx explains, the production price (an ideal price) consists of the sum of the cost price and the average profit, which is also a price. This is what Marx calls the "external appearance form", the way it appears. Marx says that the market price of output is regulated by that production price. What, however, regulates or forms the production price? And Marx argues it is aggregate values, the substance of which is labour-time. However in a moving economic reality, labour-time, values, and prices of various kinds can be understood as different "fields" operating simultaneously but semi-autonomously and adjusting to each other in an interval of time. The mathematical difficulty is then how you would model that, but as said, I'm not a very good mathematician at this stage, I'm looking in the first instance at what has to be measured/equated and why. Jurriaan
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