John Milios appears to be correct, Engels did write that bit to Kautsky. The 
English translation cited is adequate. Engels states his view clearly in 
Part 3 chapter 4 of his 1876-1878 criticism of Prof. Dühring, written with 
Marx's approval (though it's not proved whether Marx read all of it, or 
whether he wrote bits of it; most probably I think Engels wrote the whole 
thing):
The concept of value is the most general and therefore the most 
comprehensive expression of the economic conditions of commodity production. 
Consequently, this concept contains the germ, not only of money, but also of 
all the more developed forms of the production and exchange of commodities. 
The fact that value is the expression of the social labour contained in the 
privately produced products itself creates the possibility of a difference 
arising between this social labour and the private labour contained in these 
same products. If therefore a private producer continues to produce in the 
old way, while the social mode of production develops this difference will 
become palpably evident to him. The same result follows when the aggregate 
of private producers of a particular class of goods produces a quantity of 
them which exceeds the requirements of society. The fact that the value of a 
commodity is expressed only in terms of another commodity, and can only be 
realised in exchange for it, admits of the possibility that the exchange may 
never take place altogether, or at least may not realise the correct value. 
Finally, when the specific commodity labour-power appears on the market, its 
value is determined, like that of any other commodity, by the labour-time 
socially necessary for its production. The value form of products therefore 
already contains in embryo the whole capitalist form of production, the 
antagonism between capitalists and wage-workers, the industrial reserve 
army, crises. 
http://www.marxists.org/archive/marx/works/1877/anti-duhring/ch26.
His objection to Prof. Duhring is then the following:
To seek to abolish the capitalist form of production by establishing "true 
value" {D. K. G. 78} is therefore tantamount to attempting to abolish 
Catholicism by establishing the "true" Pope, or to set up a society in which 
at last the producers control their product, by consistently carrying into 
life an economic category which is the most comprehensive expression of the 
enslavement of the producers by their own product. Once the 
commodity-producing society has further developed the value form, which is 
inherent in commodities as such, to the money form, various germs still 
hidden in value break through to the light of day. The first and most 
essential effect is the generalisation of the commodity form. 
http://www.marxists.org/archive/marx/works/1877/anti-duhring/ch26.htm
"So defined", value must by definition disappear if commodity production is 
abolished, and it is argued that economic planning will be according to 
direct social utility without market mediation:
>From the moment when society enters into possession of the means of 
production and uses them in direct association for production, the labour of 
each individual, however varied its specifically useful character may be, 
becomes at the start and directly social labour. (....) It will not express 
the simple fact that the hundred square yards of cloth have required for 
their production, say, a thousand hours of labour in the oblique and 
meaningless way, stating that they have the value of a thousand hours of 
labour. It is true that even then it will still be necessary for society to 
know how much labour each article of consumption requires for its 
production. It will have to arrange its plan of production in accordance 
with its means of production, which include, in particular, its 
labour-powers. The useful effects of the various articles of consumption, 
compared with one another and with the quantities of labour required for 
their production, will in the end determine the plan. People will be able to 
manage everything very simply, without the intervention of much-vaunted 
"value". 
http://www.marxists.org/archive/marx/works/1877/anti-duhring/ch26.htm
>From Part 3 chapter 2:
With the seizing of the means of production by society production of 
commodities is done away with, and, simultaneously, the mastery of the 
product over the producer. (...) The extraneous objective forces that have 
hitherto governed history pass under the control of man himself. Only from 
that time will man himself, with full consciousness, make his own history - 
only from that time will the social causes set in movement by him have, in 
the main and in a constantly growing measure, the results intended by him. 
It is the humanity's leap from the kingdom of necessity to the kingdom of 
freedom. To accomplish this act of universal emancipation is the historical 
mission of the modern proletariat. 
http://www.marxists.org/archive/marx/works/1877/anti-duhring/ch24.htm
J.
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