[OPE-L] New article at artefact

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

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
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

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.


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.


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.


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