This is in reply to Fred. We continue to work toward establishing
some common terrain from which to continue theoretical development.
> 1. We all now seem to agree (me, Gil, Mike, Tony, etc.) that the subject of
> Capital from the beginning is capitalism. This in itself is an advance. At
> least it rules out the standard Engels-Meek-Sweezy-Mandel interpretation of
> "simple commodity production".
I agree that this represents an advance, but as I explained in my
previous post, Mike's and my critique of Marx's Chs. 5/6 argument
continues to hold even with the foregoing stipulation. This is
perhaps difficult to see from Fred's post, since there is virtually
no recognizable connection between my argument and Fred's
representation of it, as I'll indicate below. Thus some restatement
of what I've actually said is necessary before moving to new ground.
> 2. However, I now realize that we have different interpretations of what
> Marx meant by "capitalism" - at least Gil and I have different
> interpretations. I argue that Marx defined capitalism to include the
> purchase and consumption of labor-power, and Gil argues that Marx defined
> capitalism as "the appropriation of surplus-value based on some circuit of
> capital" (1586), which may or may not include labor-power.
This is simply not true. Here's the passage from my post 1586 that
Fred refers to: "...my definition of capitalist exploitation, i.e.
appropriation of surplus value on the basis of a circuit of
capital..." Note the definition is of "capitalist exploitation", not
"capitalism", which term in fact does not show up in the passage Fred
cites.
Moreover, in the same post I explicitly agree with Mike that the
capitalist mode of production includes "the purchase and consumption
of labor power", referring to the latter condition more specifically
as the subsumption of labor under capital. E.g., this passage from
1586: "...i.e., that capitalist relations of production entails at
least formal subsumption of labor under capital..."
[My authority for distinguishing capitalist exploitation from the
capitalist mode of production is Marx, in the several passages where
he says "Usurer's capital has capital's mode of exploitation without
its mode of production." (I, 732)]
Thus Fred charges me with a "different interpretation" of capitalism
that I've never advanced.
What I did say, and to which I can find no direct response from Fred,
is that using Fred's own test, the "actually existing capitalism" of
Marx's day also had interest capital loaned to worker cooperatives and
proto-industrial merchant's capital, so some specific argument is needed
to justify Marx's exclusive Vol. I focus on the purchase of wage labor and its
subsumption under capitalist production as the basis for capitalist
exploitation once workers become "free in the double sense."
> I think Mike agrees with my interpretation and I am not sure about Tony.
> Gil interprets Tony as agreeing with him, but I am not sure. Tony can
> speak for himself.
I did not "interpret Tony as agreeing" with me. Just the opposite: I
agreed with Tony when he stated "This does not mean the derivation of
the necessity of wage labor in capitalism follows by definition. An
argument must be provided." I did not presume to speak for Tony.
> Marx's prior specification of his theory as a theory of the capitalist mode
> of production (including labor-power)
Not just "labor power", but the purchase and consumption of labor
power within capitalist production. Without this modification there
is nothing to disagree about, since "labor power" is simply the
capacity to labor. No one denies that exploitation presumes the
capacity to labor.
> means that his theory of surplus-value
> tries to explain surplus-value within this capitalist mode of production;
> his theory of surplus-value does not try to determine whether surplus-value
> is possible in non-capitalist modes of production. The latter question is
> Gil's question, not Marx's question.
It is not true that this is "Gil's question" with regard to Marx's
analysis in Volume I. Here Fred completely ignores my response in
post 1544 to a similar charge of his:
> [Marx] was not asking a general question about all the various
> possible ways in which capital as a general category could make a
> profit in various different modes of production. He was asking a
> much more "historically specific" question: how can capital IN
> CAPITALISM make profit?
To which I responded:
"Indeed, his question was even more specific than that. Having
asserted, invalidly, that surplus value must be explained on the
basis of price-value equivalence, Marx asked, how can capital IN
CAPITALISM make a profit, given that all commodities exchange at
their respective values?"
In an earlier passage from the same post, also ignored, I make
explicit what "Gil's question" really concerns:
"I...have never suggested that Marx was trying in Vol. I to 'explain
the historical emergence of capitalism or derive the necessity of
capitalism....' I have insisted, based on Marx's own words, that for
Marx 'analyzing actually existing capitalism' involved distinguishing
what is accidental to the process of capitalist exploitation from
that which is central to it."
Thus, Fred attributes to me a position I've never taken, and indeed
have explicitly denied in direct response to him.
[...]
> 3. At the same time, I agree with Tony that, even if capitalism is defined
> to include labor-power (as I argue Marx did), Marx still tried to derive the
> NECESSITY of labor-power in capitalism, in the sense that labor-power is
> necessary to explain surplus-value in the capitalist mode of production.
Then I guess Fred and I agree as well, because this is what I've been
arguing all along. E.g., where Tony wrote
>A few comments on Marx's claim that wage labor in capitalism is
>necessary...
I responded: "Necessary for what? In Volume I, Part 2 of CAPITAL
Marx suggests that the purchase of wage labor and its subsumption
under capital is necessary to explain the existence of surplus value
on the presumption that all commodities exchange at their respective
values..."
If this specification is accepted, then Fred and I agree.
> Therefore, the crucial issue in this debate is the adequacy of Marx's
> derivation of the necessity of labor-power in Chapters 5 and 6 of Capital.
Yes, I agree strongly, subject to the caveats given above. This is
what I've been arguing since I first introduced the Ch. 5 critique.
The reader might keep this agreement in mind in what follows.
> 4. Gil argues that Marx's derivation of the necessity of labor-power
> depends on the assumption that the prices of individual commodities are
> equal to their values, i.e. depends on Marx's conclusion at the end of
> Chapter 5 that surplus-value must be explained on the basis of the
> assumption that the prices of individual commodities are equal to their
> values.
These two claims are not equivalent, so the "i.e." is inappropriate.
I argue the latter but not the former: any claim by Marx in Vol. I
as to the *necessity* of [the purchase and subsumption] of labor
power [for capitalist exploitation] depends on the premise that
surplus value must be explained on the basis that all commodities
exchange at their respective values.
> Gil argues further that, since there are historical circumstances in which
> the prices of individual commodities are not equal to their values, Marx's
> derivation is invalid, and we must seek other "historical-strategic"
> explanations for the necessity of labor-power in capitalism.
This is doubly inaccurate. First, I argue that Marx's derivation of the
above-named premise is invalid because it does not follow from the
arguments he gives in Chapter 5 [it also does not follow from Fred's
alternative argument, as I'll show below]. Second, I didn't say that
"since there are historical circumstances in which the prices of
individual commodities are not equal to their values, Marx's
derivation is invalid"--I said that there were historical
circumstances in which *capitalist exploitation* in Marx's sense of
the term was based on the appropriation of newly created value via
price-value divergences, providing a counter-example to Marx's
apparent Ch. 5 conclusion that any instance of surplus value is
isomorphic to one in which all commodities exchange at their
respective values.
> 5. This interpretation of Marx' theory of surplus-value, as requiring that
> the price of individual commodities must be equal to their values, makes no
> sense from the perspective of the macro "capital in general" interpretation
> of Volume 1
Perhaps not, but I can't help that: I'm simply proceeding from what
Marx actually said in Volume I, rather than imposing a particular
interpretation on what he meant. And on that score, I should add that
while I agree with Fred that Marx advances this "macro" or aggregate
perspective in Volume I, he also consistently advances a disaggregate
story, as confirmed for example by a passage quoted below by Fred
himself. But again, the bottom line is that my argument is based on
what Marx actually said.
> According to
> this "capital in general" interpretation, the prices of individual
> commodities are not analyzed or determined at all in Volume 1.
Whether or not prices of individual commodities are "determined" is
beside the point. The question is whether Marx asserts an
analytically significant connection between individual commodity
prices and values. And he certainly does, asserting on one hand that
such prices are "regulated" by their corresponding values (confirmed
by a passage Fred quotes below) and on the other that the
transformation of money into capital must be explained on the basis
that values are equivalent to prices. Finally, Marx asserts, without
definition or analysis, that price-value equivalence represents the
"pure" case of commodity exchange.
[...]
> 6. Gil's argument rests primarily on Marx's statement at the end of Chapter
> 5 that:
> 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 in the beginning.
>
>
> However, I have argued in (1223) (to which Gil has not responded) that this
> assumption that individual prices are equal to their values is only a
> provisional and inessential assumption,
I did not respond to (1223) because most of the key arguments are
replicated in post 1544 which addresses a later post by Fred. And
Fred has not responded to most of my arguments in the later post, so
I'm not sure what would be gained by responding to 1223. See, for
example, my response to Fred's stipulation that Marx focused in
Volume I on "actually existing capitalism."
Recall from above our agreement that Marx must establish the
*necessity* of purchasing and subsuming wage labor for capitalist
exploitation. As I'll show below, the requirement of price-value equivalence is
hardly "provisional" and "inessential" to this demonstration.
> and means only that: (1) this is the
> only assumption regarding the prices of individual commodities that is
> consistent with the labor theory of value at this abstract, aggregate level
> of analysis;
I don't see how this follows, and Fred gives no basis for this
conclusion. To the contrary, I suggest that strictly aggregate
relationships imply *no* particular connection whatsoever between
individual prices and values. So unless Fred is importing some
non-standard meaning in the phrase "consistent with the labor theory of
value", there is no basis for this conclusion.
>(2) since the aggregate amount of surplus-value cannot be
> explained on the basis of divergences of individual prices from their
> values, this aggregate surplus-value must be explainable on the assumption
> that individual prices are equal to their value.
This statement simply repeats the fallacy in Marx's Chapter 5 that
I've criticized from the beginning. Marx argues rather that "the
aggregate amount of surplus value cannot be explained on the basis of
divergences of individual prices from their values", *taken alone*.
But for that matter, the "aggregate amount of surplus value *also*
cannot be explained on the basis that commodity prices are equal to
values, **taken alone**. Thus it is a _non sequitur_ to assert
that "this aggregate surplus-value must be explainable on the
assumption that individual prices are equal to their value."
*No* particular analytical connection between prices and values and
the existence of surplus value is established by Marx's argument
> Point (2) is made clear by the first sentence to the footnote to the above
> passage:
>
> The reader will see from the foregoing discussion that the meaning of this
> statement is only as follows: the formation of capital must be possible
> even though the price and value of a commodity be the same, for it cannot
> be explained by referring to any divergence between value and price.
This repeats the fallacy. Marx has shown only that "the formation of
capital" cannot be explained by referrring to any divergence between
value and price, **taken alone.** But for that matter, he has also
shown that the formation of capital cannot be explained when prices
and values are equivalent, **taken alone**. Thus the conclusion does
not follow. The historical cases of usury and merchant's capital
extended to small producers provide counter-examples to illustrate
the invalidity of this claim, since in those cases the formation of
capital (which requires that someone other than the producer
appropriates newly created value) *did indeed* require divergences of
price and value.
But I've already argued these points at length, against this specific
passage Fred quotes.
> Marx's argument regarding point (2) in Chapter 5 is one of the key points at
> which the logic of his theory depends on the prior specification that his
> theory is a theory specifically and solely of the capitalist mode of
> production. Gil has argued that this argument is fallacious because it
> ignores the possibility of capitalists appropriating surplus-value from
> other classes, i.e. from other modes of production.
These two statements are not the same, so the "i.e" is inappropriate.
For example, the capitalist mode of production certainly requires
"capitalists appropriating surplus value from other classes."
> However, Marx's prior
> specification of the subject of his theory ruled out by assumption the
> possibility of appropriating surplus-value from non-capitalist modes of
> production. His theory is concerned solely with surplus-value produced and
> appropriated within the capitalist mode of production.
But I've addressed this point already in my previous response to
Fred, and he does not respond. Here's the passage: Fred says
> This limitation [in Volume I to the capitalist mode of production]
>requires that the answer to this question must be an element of
>actually existing capitalism.
I replied: "Yes, but 'actually existing capitalism' allows a lot of
leeway: there are price-value disparities in actually existing
capitalism, and capitalists earn interest on loans to worker
cooperatives in actually existing capitalism. And forms of
proto-industrial capital were still quite common in the actually
existing capitalism of Marx's day. Yet Marx focuses on the purchase
an subsumption of labor power, and evidently rejects the rest as
incidental. On what basis?"
And again I ask: On what basis?
> Therefore, under
> this specification, Marx's argument that "the capitalist class as a whole
> cannot defraud itself" is valid.
I don't believe so. This phrase comes at the end of a passage where
Marx establishes that price-value disparities **taken alone** can
only redistribute value, not create it, and thus cannot constitute
surplus value. But this follows from the definition of surplus
value. Thus the assertion that "the capitalist class as a whole
cannot defraud itself" is twice irrelevant: first, because the
preceding argument has only shown that the set of *all* commodity
sellers "cannot defraud itself". This leaves open the possibility
that a *sub*set of sellers, e.g. the capitalist class, could defraud
*others*, and to suggest otherwise is to commit a fallacy of division.
Second, the irrelevance of redistribution follows from Marx's
definition, not from this argument.
> Individual divergences of prices from
> values do not affect the total amount of surplus-value produced and appropriated
> within capitalism and hence can be ignored in an analysis of this total
> amount of surplus-value.
This misses the point completely. Of course the appropriation of
surplus value *can* be explained on the basis of price-value
equivalence, given exchange in and subsumption of wage labor. No one
has ever denied this. The issue, as Fred agrees above, is whether
Marx has established the *necessity* for capitalist exploitation of
purchasing and consuming labor power within the capitalist mode of
production--that is, whether price-value disparities *must* be
ignored in the analysis of surplus value.
**Marx's only basis in Volume I for asserting this necessity is the
assertion that surplus value *must*--not *can*--be explained on the
basis of price-value equivalence.**
**This assertion is invalid. It does not follow from the arguments
given in Chapter 5. It also certainly doesn't follow from Marx's
"aggregate" level of analysis.**
> Finally, the provisional nature of this assumption that individual prices
> are equal to their values is made clear in the final sentence of this
> footnote:
>
>If therefore he were at all interested in disinterested thinking, he would
>formulate the problem of the formation of capital 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.
This passage is doubly problematic for Fred's position. First, it
confirms my argument that Marx maintains a disaggregate level of
analysis: the notion that "prices are regulated...ultimately by the
value of commodities..." is manifestly not an implication of an
aggregate level of analysis. Second, Marx has established no basis
for such a claim, and we now know important reasons to doubt it.
In particular, unless one begs the central question at hand by
presuming the central relevance of purchasing and consuming labor
power, price-value disparities may play a key role in the
appropriation of surplus value, as they did in interest capital
extended to worker cooperatives and proto-industrial merchant's
capital, both of which were part of the "actually existing
capitalism" of Marx's day.
> Here Marx explicitly acknowledged that individual prices are in fact not
> equal to their values.
Of course he does. No one has denied this.
> But the divergences of individual prices from their
> values due to the equalization of profit rates, like the divergences
> discussed in Chapter 5 due to cheating, etc., do not affect the total amount
> of surplus-value
They do if newly created value can only be appropriated by
capitalists via price-value divergences, as in the historical cases of usury
and merchant's capital extended to small producers. This is because
newly created value only becomes surplus value if it is
appropriated by non-producers [I, 268]. Thus, Fred is wrong if he is
suggesting here that surplus value can be understood without reference
to the question of how newly created value is appropriated by
non-producers.
For example: take an economy in which surplus value is appropriated
solely via proto-industrial capital on the basis of a disparity in the price
and value of labor *services*. Now, *holding aggregate value
constant*, if we impose price-value equivalence, surplus value
must disappear!
>and therefore can be ignored in the analysis of this total
> amount of surplus-value. These divergences affect only the distribution of
> this total amount of surplus-value across individual industries.
Again, this misses the point completely. Of course surplus value
*can* be explained given price-value equivalence, via the exchange
for and subsumption of wage labor. But this does not establish why
the latter is *necessary* for capitalist exploitation, and Fred
agrees above that this must be done.
> I wonder: does Mike agree with this key point of Gil's interpretation that
> Marx's theory of surplus-value depends on the assumption that the prices of
> individual commodities are equal to their values?
To be precise, I argue [based on what Marx actually says], that
Marx's argument as to the necessity for capitalist exploitation
of exchange in and subsumption of wage labor depends on the premise
that surplus value *must* be explained on the basis of price-value
equivalence. Fred and I agree that Marx must establish this
*necessity*.
> 7. I argue instead that Marx's argument for the necessity of labor-power is
> based on the conclusion derived in Chapter 5 that NO VALUE IN PRODUCED IN
> EXCHANGE. On the basis of this conclusion, Marx explicitly ruled out in
> Chapter 5 the possibility of explaining surplus-value solely by the buying
> and selling of commodities (merchant capital) or by lending money
> (interest-bearing capital).
But I've already demonstrated that this argument is wrong, and Fred
has never responded to this demonstration. I'll summarize:
A) The claim that no value is produced in exchange follows directly from
the definition of value as socially necessary labor time expended in
production. Exchange is not production.
B) But Marx also says that surplus value must arise "both in
circulation and not in circulation." As confirmed by Marx's own
historical analysis, this can occur with usurer's capital and
merchant's capital extended to small producers for the creation of
new value, which is then *appropriated* in exchange. Marx confirms
this possibility *explicitly* and *repeatedly* (I've listed the
references before, but available again if requested). So the
tautology that value is produced in exchange in no way establishes
the "necessity of [purchasing and subsuming] labor power", contrary
to Fred's assertion.
C) Not only does Marx explicitly embrace the possibility of surplus
value via usury and merchant's capital elsewhere [Oh, OK, one
example: "In India, for example, the capital of the usurer advances
raw materials or tools or even both to the immediate producer in the
form of money. The exorbitant interest which it attracts...is just
another name for surplus-value." (I, 1023)], but he doesn't
categorically rule out these cases in Ch. 5:
"If the valorization of merchant's capital is not to be explained
merely by frauds practised on the producers of commodities, a long
series of intermediate steps would be necessary, which are as yet
entirely absent, since here our only assumption is the circulation of
commodities and its simple elements."
The long series of intermediate steps is, simply, that merchant's
capital funds means of production to be used in the creation of new
value, some of which is appropriated by the capitalist.
A final note: what is at issue is not "the possibility of explaining
surplus value solely by the buying and selling of commodities
(merchant capital) or by lending money (interest-bearing capital), as
Fred suggests here. The issue is whether the purchase and
subsumption of wage labor is necessary for capitalist exploitation.
But it isn't, given the possibility of appropriating surplus value
via these alternative circuits in the manner described. Limiting the
analysis to "actually existing capitalism" doesn't change this
conclusion, for the reasons advanced above.
[...]
> 9. After this abstraction from merchant capital and interest-bearing
> capital, based on the conclusion that no value is produced in exchange, it
> follows directly from the labor theory of value that, in order to explain
> surplus-value, capitalists must be able to purchase a commodity whose
> consumption, outside the sphere of circulation, results in additional labor
> and thus in additional value produced. This special commodity can only be
> labor-power. Hence, the necessity of labor-power follows from the labor
> theory of value and the assumption that no value in produced in exchange.
Unless "the labor theory of value" is taken to include the premise
that "surplus value must be explained on the basis of price-value
equivalence", this argument is invalid, for the reasons advanced
above. The bare fact that value is not produced in exchange does not
rule out the possibility of appropriating surplus value via usurer's
capital and merchant's capital extended to small producers, and thus
the "necessity" of purchasing and subsuming labor power has not been
established.
If, on the other hand, the labor theory of value *is* taken to
include this premise, this simply begs the central question at issue.
The premise does not follow from Marx's arguments in Ch. 5, as I've
shown.
> 10. Gil agrees with the conclusion that "the source of surplus-value must
> be additional labor". But he argues that:
> *Of course* the source of surplus value must be additional labor.
> This is a consequence of Marx's definition of surplus value as
> self-valorizing value (rather than redistribution of existing value),
> not the labor theory of value.
> And later:
> The stipulation that surplus-value must be derived from additional labor
> stems from Marx's definition of surplus-value, not from the labor theory
> of value.
>
> To borrow a little of Gil's bravado:
Go ahead; I've got plenty to spare {:-)}
> surely this is wrong. Marx's
> definition of surplus-value as self-valorizing value requires a prior
> definition of value. Marx's prior definition of value, presented in Chapter
> 1, is abstract labor. Therefore, Marx's definition of surplus-value as
> self-valorizing value depends on the prior definition of value as abstract
> labor. That is why Chapter 1 comes before Chapter 4, etc. Marx's argument
> is: if value is labor, then surplus-value can only arise from additional
> labor.
Yes, that's what I just said. Surplus value comes from abstract labor
expended in production (and thus can't arise solely from exchange),
by Marx's definition. But a definition of value does not constitute
a "labor theory of value", so my point stands.
> Does Gil suggest that Marx defined value as abstract labor in
> Chapter 1 and then ignored this definition of value in his analysis of
> surplus-value as self-valorizing value? That would be a strange procedure.
Indeed it would. Of course I don't do so.
> 11. Gil has referred several times to the "obscure authorities" to which
> Marx referred in Chapter 5 (Le Trosne, de la Meciere, etc.). These writers
> were cited by Marx, not to support the provisional and inessential
> assumption that individual prices are equal to their values (as Gil
> suggests)
I do not. I said these writers were cited by Marx in support of the
claim that "In its pure form, the exchange of commodities is an
exchange of equivalents". If this has any meaning (unclear, since
Marx never defines what he means by "pure"), it is problematic, for
reasons advanced in previous posts. And I've explained above why
price-value equivalence is not "inessential" to Marx's argument.
>, but rather to support the fundamental and essential assumption
> that no value is produced in exchange (as argued in #7 above).
Which, as Fred and I both argue, follows simply from the definition
of value as abstract labor expended in production, so no such
"support" is required.
Bottom line: Fred, Mike, Tony and I apparently agree that Marx must
establish the necessity for capitalist exploitation of purchasing and
consuming labor power on the basis of the capitalist mode of
production. However, this necessity does not follow from the
tautology that value cannot be created in exchange, nor from an
exclusive focus on Marx's "aggregate" approach to price and value.
Nor does it follow from the undeniable claim that surplus value *can*
be explained on the basis of price-value equivalence.
The *only* basis for Marx's argument as to necessity is thus his Ch.
5 conclusion that surplus value *must* be explained on the basis of
price-value equivalence. But this conclusion is invalid.
Nothing in the foregoing is affected by the stipulation that
Marx is analyzing "actually existing capitalism."
In solidarity, Gil