I have not had the time to participate in the discussion of whether or not
Marx assumed in Volume 1 that individual prices are equal to their values
(or even to read all the posts carefully), but I think that Duncan has
recently added an important new element to this discussion, which I would
like to comment on briefly.
I mostly agree with Duncan (except for one important point to be discussed
below). Duncan said (in 1036):
I think it makes the most sense to view Volume I of Capital as an attempt
to work out the consequences of the labor theory of value AT THE LEVEL
OF THE AGGREGATE COMMODITY (or, if you prefer, the average commodity).
The results are supposed to hold good whether or not prices are
proportional to embodied labor coefficients (if they exist). For
essentially pedagogical reasons Marx often works through examples on
the assumption that prices are proportional to embodied labor times,
but I don't read the text as limiting the conclusions to that
assumption. (emphasis added)
I agree that Volume 1 of Capital is primarily an analysis of the aggregate
level of the capitalist economy as a whole (the main question is the
determination of the total amount of surplus-value produced in the
capitalist economy as a whole), and I also agree that the strict equality
between prices and values applies only to the aggregate commodity product.
I think that Marx provisionally assumed in Volume 1 that the prices of
individual commodities, and of subsets of commodities such as the means of
production and the means of subsistence, are equal to their values, because
there was no basis for any other assumption consistent with the labor theory
of value, since the determination of individual commodities, or subsets of
commodities, are not considered in Volume 1. However, this provisional
assumption plays no essential role in Marx's theory of the aggregate amount
of surplus-value in Volume 1. The magnitudes of constant capital and
variable capital are taken as given as the quantities of money-capital that
initiate the circulation of capital. It makes no difference to the
determination of the total amount of surplus-value whether or not these
magnitudes of constant capital and variable capital are equal to the prices
of the means of production and the means of subsistence. The given
magnitude of constant capital is the value transferred to the price of the
product, whether or not this given constant capital is equal to the value of
the means of production. And the difference between the new-value produced
by current labor and the given amount of variable capital is the aggregate
amount of surplus-value, whether or not this given variable capital is equal
to the value of the means of subsistence. The main conclusions of Volume 1
do not depend in any way on whether or not the prices of individual
commodities are equal to their values.
However, I disagree with an earlier point made by Duncan (way back in 794)
that the Volume 1 of the aggregate economy is consistent with ANY theory of
individual prices, including neoclassical equilibrium theory. Duncan said:
An implication of this is that the labor theory of value is not a theory
of price in Marx, but is consistent with any theory of the pricing
of individual commodities, including, for example,
neoclassical equilibrium theory.
I do not see how, or in what senses, Marx's aggregate theory of price and
surplus-value is consistent with neoclassical equilibrium theory.
It seems to me that, even though Marx's aggregate analysis in Volume 1 does
not determined individual prices, Volume 3 does determine individual prices,
at least in the sense of showing how individual prices that yield equal
rates of profit are consistent with the labor theory of value (thus
overcoming Ricardo's "stumbling block"). Further, it seems to me that this
theory is different from neoclassical theory is at least two important
senses: (1) in Marx's theory of individual prices, the rate of profit is
determined by the prior analysis of Volume 1, and in the neoclassical
theory, the rate of profit is simply taken as given and unexplained as a
"cost" (the "opportunity cost"); and (2) the two theories imply very
different effects of a change of wages. According to neoclassical theory, a
general increase of wages (for example) has no effect on the assumed
"opportunity cost", but instead in all cases and unambiguously increases
marginal costs, thereby reducing supply and increasing the prices of the
commodities. In Marx's theory, on the other hand, the effects of an
increase of wages are more complicated, as analyzed in Chapter 11 of Volume
3. Such an increase of wages increases the variable capital, which is one
component of the price of production of all commodities, but at the same
time this increase of wages reduces the rate of profit, thereby reducing the
profit component of the prices of production of all commodities. The net
effect of these two offsetting effects on the prices of production of
individual commodities depends on the composition of capital of each
commodity: the price of commodities produced with capitals of lower than
average composition will increase, and vice versa.
So I wish Duncan (and perhaps others ) would elaborate and clarify this point.
Thanks a lot.
Fred