It's about time that I got into this (very enjoyable)
debate, and Paul's response to Alan on money is as
good an entry point there as any. Paul says that he
found Marx's passage on money in _Poverty_ remarkable: that
|the value of money as such "is not determined by the labour time its
|substance embodies, but by the law of supply and demand only" (Marx
|approvingly paraphrasing Ricardo).
Paul argues, contrary to Alan, that Marx "later completely
reversed this judgment ... without, ... ever acknowledging that
he had changed his mind on the subject.... I can report that Marx
positively excoriates Ricardo for abandoning the labour theory of
value (in the standard sense) in the case of money..."
Well, yes and no; in the first sections of Capital I, I would grant
Paul's interpretation. But in Capital III, and also TSV III, Marx
explicitly uses an analysis which accords with Alan's interpretation
(while Capital I is chronologically subsequent to these works, I
would argue that rather than abandoning this style of analysis, Marx
probably intended delaying its development until the 5th or 6th book):
"What, now, does the industrial capitalist pay, and what is,
therefore, the price of the loaned capital?... What the buyer of an
ordinary commodity, buys is its use-value; what he pays for is its
value. What the borrower of money buys is likewise its use-value as
capital; but what does he pay for? Surely not its price, or value, as
in the case of ordinary commodities." (Marx 1894, p. 352. [Ch. 21,
about 14 pages in])
This is surely "an abandonment of the labour theory of value, (in the
standard sense) in the case of money". But it is not the only time
that Marx "abandons" it: he does likewise when considering the price
attached to an undeveloped asset, such as a mine. Marx chastised
Ricardo for explaining the price of minerals in situ on the basis of
their "value", when no labor has gone into their production. Marx
points out that they therefore contain no value--though they have
obvious potential quantitative use-value, determined by the expected
sale price of the estimated quantity of ore. Thus, if mining rights
and the like could be purchased, like commodities, for their cost of
production, they would be free. Hence as with loaned capital, the
exchange-value of assets is determined not by their costs of
production, but by their perceived use-value--that of being a
potential source of exchange-value:
"Ricardo never uses the word value for utility or usefulness or "value
in use". Does he therefore mean to say that the "compensation" is paid
to the owner of the quarries and coalmines for the "value" the coal
and stone have before they are removed from the quarry and the
mine--in their original state? Then he invalidates his entire doctrine
of value. Or does value mean here, as it must do, the possible
use-value and hence the prospective exchange-value of coal or stone?"
(Marx 1861 Part II, p. 249 [Ch. 11 Section 3])
What Marx is arguing here is that, whereas for standard commodities,
their exchange-value is determined by their value, for money and
for "assets", *their exchange value is set by their use-value*.
This may look--to those accustomed to thinking in terms of the
labor theory of value--as total heresy (maybe even as bad as
Gil -:>). Perhaps it is. I prefer to see it as the logical
fulfilment of Rosdolsky's statement:
"How often has the thesis of the 'contradiction between use value
and exchange value been repeated? On the other hand, how often
has anyone really taken the trouble to develop this thesis or
regard it as something more than a survival of the time when Marx
'coquetted with the Hegelian manner of expression'? In reality we
are dealing here with one of the most fundamental discoveries of
Marx's economics, the neglect of which makes his conclusions in
the theory of value and money appear utterly distorted."(_The
making of Marx's Capital_, p 133)
Obviously I believe that this kind of analysis has consequences
extending far beyond the issue of the role and value of money.
But I'll leave my contribution to the argument at this point
for now.
Cheers,
Steve Keen