Caveat auditor:--danger of significant theoretical progress ahead, at
the cost of a relatively lengthy post.
Many thanks to Fred for his recent response. It turns out that I
agree with much of his interpretation of what Marx said (never having
indicated otherwise), though of course Fred and I are likely to have
different spins on the implications of these statements.
However, it also strikes me that Fred makes a number of statements
about what Marx said and didn't say, in Ch. 5 and elsewhere, which
are manifestly and completely wrong, and I'll ask any and all OPE-L
observers to be my judge on these points, since they go to the heart of
my criticism of Marx's Ch. 5 argument, and how it has been construed by
Marxists since Marx wrote.
That said, I see grounds for a possible resolution of our seeming
disagreement, in that granting Fred's central point--that Marx was
talking explicitly about the capitalist mode of production in Ch.
5--is not at all inconsistent with my critique. The reason is this:
whether or not capitalist exploitation within the capitalist mode
of production must be explained on the basis of hiring wage labor
at its value and subsuming it depends on factors which fall
**outside the purview of Marx's value theory.** The key issue
thus seems to be differing opinions about what the appropriate theory
needs to accomplish with respect to explaining capitalist profit
and exploitation.
Fred writes: [...]
> In earlier posts, a key point of Gil's argument has been Marx's footnote at
> the end of Chapter 5.
Since it matters for what follows, let me note that this depiction is
not quite right; I've always and only invoked Marx's footnote as it
modifies the last paragraph in Ch. 5, its explicitly announced
purpose.
> Let's take a look again at the key sentence from
> this footnote. Marx stated that the problem of the formation of capital
> should be formulated as follows:
>
>How can we account for the origin of capital on the assumption that prices
>are regulated by average price, i.e. ultimately by the value of commodities?
>I say "ultimately" because average prices do not directly coincide with the
> values of commodities, as Adam Smith, Ricardo, and others
> believe. (C.I. 269)
Fred seems to have jumped over some critical stuff in arriving at
this "key sentence", which is in fact simply a justification for the
claim which leads off the footnote (which is explicitly intended to
amplify the corresponding claim in the last paragraph of the text of
Ch. 5):
"The reader will see from the foregoing discussion that the meaning
of this statement [made in the last paragraph] is only as follows:
the formation of capital must be possible even though the price and
the value of a commodity be the same, *for it cannot be explained by
referring to any divergence between price and value.* [This statement
is invalid unless modified by the phrase, "taken alone"--but more on
this below.] If prices actually differ from values, **we must first
reduce the former to the latter,** i.e. disregard this situation as an
accidental one in order to observe the phenomenon of the formation of
capital on the basis of the exchange of commodities *in its
purity*, and to prevent our observations from being interfered with by
**disturbing incidental circumstances which are irrelevant to the
actual course of the process."** [Emphases added]
Marx then goes on to qualify the above, including the passage Fred
quotes. But note the very different sense of the two passages,
especially as we move to Fred's next step:
> I do not see how this footnote can be interpreted to mean that Marx is
> arguing that surplus-value must be explained on the basis of the assumption
> that individual commodities exchange at their values. In fact, it seems to
> me that Marx is saying the opposite: that individual commdities DO NOT
> exchange at the values, contrary to Smith, Ricardo, etc.[ Aside: the
>difference here is one of definition rather than substance.
>Ricardo for example is quite explicit that prices may not be proportional
>to corresponding embodied labor quantities.--GS] The prices of
>individual commodities are "ULTIMATELY REGULATED" by their values, but these
> prices "DO NOT DIRECTLY COINCIDE" with their values.
This is a double confusion. First, what Fred here calls "the
footnote" is in fact a passage from near the end of the footnote.
The *beginning* of the footnote, the part Fred leaves out,
says--what?--that we must explain surplus value "on the basis of the
assumption that individual commodities exchange at their values", to
use his phrase, in order to understand the process of capital formation
on the basis of exchange "in its purity" and to discard
"irrelevant circumstances", to use Marx's words.
Now, I've argued in detail that both of the last clauses are
problematic at the very least, but since Fred ignores these
arguments, I'll simply refer readers to my earlier posts on these
issues.
Second,* of course* Marx says that commodities do not typically
exchange at their values. Nobody has suggested otherwise. But this
has no bearing on the point that he also insists that surplus value
must be explained on the basis of price-value equivalence.
> However, this
> divergence of individual commodities does not affect the analysis of the
> aggregate amount of surplus-value in Volume 1. In this analysis of the
> aggregate amount of surplus-value, the prices of individual commodities play
> no role. Rather, the AGGREGATE price of commodities is assumed to be
> proportional to the aggregate labor-time required to produce these
> commodities.
This passage begs the central question at issue by simply reiterating
Fred's position in the previous post. I'm criticizing this position.
> Therefore, contrary to Gil, Marx did not argue in Chapter 5
> that surplus-value must be explained on the basis of the assumption that the
> price of individual commodities must be equal to their values.
Here are Marx's words, straight from the last paragraph of Ch. 5"
"The transformation of money into capital *has to be developed* on
the basis of the immanent laws of the exchange of commodities, in
such a way that the starting point is the exchange of equivalents.
The money owner...*must buy his commodities at their value, sell them
at their value* and yet at the end of the process withdraw more value
from circulation than he threw into it at the beginning."
So, contrary to Fred, yes, he did say that "surplus-value must be
explained on the basis of the assumption that the price of individual
commodities [is] equal to their values.". The footnote, read in
its entirety, confirms this. Can anyone doubt this?
I've criticized Marx's conclusion on three grounds: first, it does not
follow from the arguments given in the chapter, second, it is
pernicious since it appears to support implications inconsistent with
his historical analysis, and third, it reifies an essentially
epiphenomenal case of price-value equivalence as the "pure" form of
commodity exchange. Marx **never** analytically justifies this
categorization (other than by references to obscure authorities), and
Roemer has demonstrated that this characterization is fundamentally
misleading at best. In particular, whether or not capitalist
exploitation can proceed on the basis of price-value equivalence
depends on strategic conditions which are outside the purview of
Marx's value analysis. I've argued all of these points in detail and
points 1 and 3 are undenied. More on point 2 below.
Fred continues:
> The aggregate nature of Marx's theory of surplus-value and of Marx's
> discussion in Chapter 5 about the possible origin of surplus-value in
> circulation is indicated by Marx's discussion of the "capitalist class as a
> whole" in Chapter 5 (C.I. 265-66). Marx argued that, although one may
> explain the profit of individual capitalists by fraud or by selling
> commodities above their value, this gain can only come at the expense of
> other capitalists who lose value. Thus, the profit of the capitalist class
> as a whole - which is Marx's main question here - cannot be explained in
> this way.
I've argued in detail that the very passage Fred isolates here
commits an obvious fallacy of division, so any "indications" derived
from this passage are defective. Briefly, the claim that "the
capitalist class of a given country, taken as a whole, cannot defraud
itself" is perhaps true but necessarily irrelevant: the question at
issue is whether it can "defraud" some other class.
> There is another sense in which I think that Gil has fundamentally
> misunderstood the general nature of Marx's argument in Chapter 5. Gil
> argues that Marx's main question in Chapter 5 was whether capitalist
> exploitation (i.e. surplus-value) could be explained without assuming the
> capitalist mode of production.
Now, if Fred is going to say that I have "fundamentally
misunderstood" Marx's argument, it seems he should at least represent
my argument accurately. I have never said that "Marx's main question
in Ch. 5 was whether capitalist exploitation...could be explained
without assuming the capitalist mode of production." Indeed, I quote
Marx to establish what Marx's main question in Ch. 5 was. Rather,
I've argued that Marx's conclusion in the last paragraph, as
amplified by the footnote, *implies* that capitalist exploitation
requires the capitalist mode of production. Indeed, as the critique
of Roemer's work indicates, most Marxists have interpreted Marx this
way. More on this point below.
> However, this is not Marx's question in
> Chapter 5. As I have argued before (and there seemed to be at least a fair
> amount of aggrement on this key methodological point), Marx's theory in
> Capital ASSUMES THE CAPITALIST MODE OF PRODUCTION FROM
THE VERY BEGINNING IN CHAPTER 1.
Actually, my experience in arguing this issues before various
audiences is that there is not "a fair amount of agreement" on this
score. But it doesn't really matter, as I argue below.
> Marx's theory, from the very beginning, is about capitalism as
> an existing totality. Marx's theory begins in Parts 1 and 2 of Volume 1 by
> analyzing the abstract sphere of exchange, but this is the sphere of
> exchange IN CAPITALISM, not the sphere of exchange in some pre-capitalist
> mode of production or a general analysis of exchange in all modes of
> production. Chapter 5 is part of this analysis of the abstract sphere of
> exchange of the existing totality of capitalism.
>
> Therefore, Marx's question in Chapter 5 is not whether capitalism is
> necessary to explain surpus-value, as Gil argues
(no, I don't)
, but rather WITHIN
> CAPITALISM, can surplus-vlue be ex[plain]ed solely on the basis of exchange.
As Fred confirms below, the qualifier WITHIN CAPITALISM is
unnecessary, since by the definition of surplus value it
*necessarily* can't be explained *solely* on the basis of exchange,
since the latter does not involve production. If that's all that
were going on, the chapter's argument would be really simple. But
Marx's conclusion in the last paragraph, as we've seen, indicates
more than this, and the conclusion does not follow from the arguments
in the chapter, as I've argued and Fred does not deny.
> Marx is not trying to explain the historical origins of capitalism, but is
> rather trying to explain the origins of surplus-value within capitalism.
> Marx was also arguing against the influential theory of the mercantilists
> and later classical economists (such as Malthus and Torrens), according to
> which surplus-value within capitalism could be explained on the basis of
> exchange alone, e.g. by commodities selling above their value. Gil's
> question is important, both for historical analysis and for the analysis of
> non-capitalist modes of production in today's world economy, but Marx's
> question is the most important question in a theory of currently existing
> capitalism, both in Marx's time and in our's.
Excellent! Here is the crux of the matter. Let me for the sake of
argument *grant entirely* Fred's representation of Marx's purpose as
"trying to explain the origins of surplus value within capitalism."
Does the exclusive focus of Marx's Volume I account of capitalist
exploitation on the purchase and subsumption of the commodity
labor power derive from the logical necessity of explaining
surplus value on the basis of price-value equivalence?
No, of course not, since this "necessity" does not follow from the
arguments given in Ch. 5, as I demonstrate and Fred does not deny.
Furthermore, Fred denies (falsely) that Marx even makes such a claim.
Very well, then if for my or for Fred's reason we discard the case
of price-value equivalence as essentially irrelevant, **what accounts for
the central theoretical role played by the purchase and subsumption of labor
power** in Marx's analysis of capitalist exploitation? Why isn't
this regularity a mere "accident" or "incidental circumstance" of
surplus value, to quote Marx's words?
Indeed, why can't I use the exact parallel of Fred's argument against
him? Yes, I might say, exploitation under capitalism typically,
perhaps always, involves purchase and subsumption of the commodity
labor power. But in exactly parallel fashion, commodity prices under
capitalism typically, perhaps always, diverge from their
corresponding labor values, as Fred emphasizes.
If we reject the case of price-value equivalence as irrelevant to
Marx's story, ****on what authority can Fred insist that the former
regularity is central but the latter regularity is incidental***?
Any answer he gives will necessarily fall outside the purview of
Marx's value theory, which is to say that the analysis of Chs 4 and 5
of Volume I **cannot possibly** establish a relevant basis for what
follows in Ch. 6 and beyond. That's my point.
There. If this does not establish some grounds for progress then I
give up.
Fred continues:
> Marx's answer to his question about the origin of surplus-value within
> capitalism was of course no - surplus-value cannot be explained on the basis
> of exchange alone or by assuming that commodities sell above their value.
> This conclusion follows trivially from Marx's assumption that new-value is
> produced only in production, and not in exchange. But this chapter, simple
> as it is, was nonetheless necessary in order to expose the logical
> contradictions of the still influential "exchange" theory of profit. As
> Marx expressed this necessity in the earlier draft of Chapter 5 in the
> 1861-63 manuscript (in a part recently published for the first time):
> one still meets the nonsensical assertion, even from renowned economists
> that surplus-value as such can be derived from things being sold dearer
> than their value. (MECW.30. 26)
Since we're quoting prior material let me append this gem from VALUE,
PRICE AND PROFIT, since it corroborates my reading of Marx's conclusion
at the end of Ch. 5: "To explain, therefore, the *general nature of
profits*, you must start from the theorem that, on average,
commodities are *sold at their real values*, and that *profits are
derived from selling them at their values*...***If you cannot explain
profit upon this supposition, you cannot explain it at all.***
[Triple-* emphasis mine]. Sounds to me like Marx believes that
surplus value *must* be explained on the basis of price-value
equivalence. Does anyone still doubt this?
> My interpretaton that Chapter [5] is about the origin of surplus-value within
> capitalism, and is not about whether surplus-value is possible in other
> non-capitalist modes of production, is further supported by Marx's explicit
> discussion of merchant profit and interest in Chapter 5 and by his later
> determination of these forms of suruplus-value in Parts 4 and 5 of Volume 3.
> It is clear from these discussions that MERCHANT PROFIT AND INTEREST ARE
> ANALYZED BY MARX AS PARTS OF THE TOTAL SURPLUS-VALUE PRODUCED IN THE
> CAPITALIST ECONOMY AS A WHOLE, not as forms of income in non-capitalist
> modes of production.
Not quite---see below.
[Fast forward....]
> In Volume 3, merchant profit and interest are explicitly analyzed as parts
> of the total surplus-value produced within capitalism, not as forms of
> income in non-capitalist modes of production.
Again, this statement is demonstrably false. Fred quotes the
chapters where indeed "merchant profit and interest are explicitly
analyzed as parts of the total surplus-value produced within
capitalism", but somehow neglects to mention Chapters 20 and 36, in
which merchant's profit and usury respectively are explicitly
analyzed as "forms of income in non-capitalist modes of production",
contrary to Fred's representation. Can anyone doubt this?
Why does this matter? Because in contrasting Marx's Vol III account
of capitalist exploitation *prior* to the capitalist mode of
production with Marx's account of capitalist exploitation *within* the
capitalist mode of production, one discovers the true,
*historical-strategic* basis for the significance of the subsumption of
labor power within the capitalist mode of production--a basis that is
essentially independent of Marx's value analysis.
In solidarity, Gil