This is an aside to the general point being made, but lest important details
of Marx's analysis be lost in the shuffle later on, I'd like to comment on a
passage by Alan recently quoted by Andrew. Andrew writes:
>I think the shorter of Alan's recent papers, "Reply to some objections," has
>answered this objection already. Let me quote.
[Fast forward]
>"I think that there is good reason to believe this Marx himself has this
>approach and I think it is poorly understood by economists. I emphatically
>reject, for example, the idea that Marx's concept of value in Volume I of
>*Capital* assumes exchange at values. Nothing in the first five chapters
>supports this idea and several passages, as de Brunhoff notes, explicitly deny
>it. Chapters 1-5 in my view make perfect sense if understood, just as Euclid's
>axioms define the abstract properties of all geometries of lines and points,
>as an attempt to define abstractly what all commodity circulation has in
>common, regardless of the mode of production or stage of history. Exchange at
>values is introduced in chapter 7 *after* Marx has established, in chapter 5,
>what to me is exactly an 'accounting identity'; that value cannot be created
>in simple circulation. It is precisely because of this identity that any
>system of exchanges is homomorphic in respect of the relation of exploitation
>to a system of exchange at values, and I find Marx's procedure very
>mathematically coherent; since the Chapter 5 identity establishes that the
>total magnitude of profit is an invariant with respect to all changes in
>relative price and all nominal changes in the price level, it is perfectly
>legitimate to study the special and simplest case where commodities exchange
>in proportion to values, as the canonical form of all homomorphically
>equivalent sets of actual exchange ratios.["]
To which I reply:
1) I agree absolutely with Alan that Marx does not *assume* the condition
of price-value equivalence (exchange of commodities at prices proportional
to values) throughout Volume I. Rather he explicitly justifies his
stipulation of price-value equivalence subsequent to Chapter 5 on the basis
of the conclusion that "the conversion of money into capital has to be
explained...in such a way that the starting-point is the exchange of
equivalents" [I, p 162, International Publishers ed.], a point on which he
elaborates in the subsequent footnote.
2) However, this conclusion does not follow from the argument Marx gives in
Chapter 5. *Entirely granting* the point made by Marx and seconded by Alan,
to the effect that "value cannot be created in simple circulation", it
*certainly does not follow* "that any system of exchanges is homomorphic in
respect of the relation of exploitation to a system of exchange at values."
This is because surplus value as Marx defines the term requires *two*
conditions: the creation of new value [which of course must occur outside
of production, regardless of the relation of prices to values], *and its
appropriation by capitalists via the circuit of capital.* However, as a
historically contingent strategic matter, the latter may involve, or even
require, price-value disparities.
Two examples, both affirmed explicitly and repeatedly by Marx (over a period
of 10 years beginning with the Grundrisse and continuing through the
Economic Manuscript of 1861-63 and the material eventually published as Vol
III and the Resultate) as cases of capitalist exploitation _par excellence_:
a) capitalists appropriate surplus value from producers by loaning them the
means of production (directly or indirectly), and then extracting a portion
of the resulting newly created value through the interest rate (which Marx
terms an "irrational" price of the money commodity precisely because it is
not based on the value of the latter); b) under proto-industrial systems of
production such as the putting-out system, capitalists hire the *services*
of labor (paid by the piece) rather than merely the *capacity* to labor.
The divergence between the value of these labor services and the price of
these services is the basis for proto-industrial capitalist profit.
In every way possible, Marx affirms these particular versions of usury and
merchants' capital as "capitalist exploitation without the capitalist mode
of production." However, since in both of these cases *realization* of
surplus value by capitalists requires price-value disparities in some form,
it cannot be the case "that any system of exchanges is homomorphic in
respect of the relation of exploitation to a system of exchange at values."
3) Consequently, even if Marx's Volume I stipulation of price-value
equivalence is "mathematically coherent", it is analytically invalid, since
it has the effect of stipulating, *without justification*, that capitalists
must appropriate surplus value (only) by hiring the *capacity* to labor and
coercively extracting surplus labor in the process of capitalist production,
which Marx calls the subsumption of labor under capital. As a historically
contingent strategic matter, subsumption of labor under capital may be
necessary for the *maximal realization* of surplus value for given class
conditions, but no argument is given for this in Vol. I, let alone for the
notion that subsumption is necessary for the mere *existence* of surplus value.
4) Perhaps there's some other reason for stipulating price-value equivalence
as a "base case" for analyzing capitalist exploitation? Marx suggests as
much in Chapter 5 when he refers to price-value equivalence as the "pure
case" of commodity circulation, but he does nothing to justify this
characterization except quote two writers, Mercier de la Riviere and Lee
Trosne, who do not share Marx's definition of value. In other words, Marx
*begs the question* when he characterizes price-value equivalence as the
"pure case" of commodity circulation. When Alan and I discussed this point
on OPE-L long ago I pointed out that his interpretation of this passage was
circular, and Alan has not replied to this point.
5) In contrast, John Roemer has established powerful reasons for believing
that price-value equivalence is *not* the *pure case* of commodity
circulation in any meaningful sense, at least for any system in which
surplus value arises. He does this by establishing the isomorphism of a
system yielding surplus value via exploitation via canonical markets for
labor power to a system yielding exploitation via interest capital, and also
to a system yielding what he calls "unequal exchange exploitation"without
markets for labor power or interest capital (see "Unequal Exchange, Labor
Migration, and International Capital Flows: A Theoretical Synthesis" in
_Marxism, Central Planning, and the Soviet Economy_). Of course, Roemer's
isomorphism argument ignores strategic problems in the extraction of surplus
labor from labor power, but then so does Marx's argument in Chapter 5.
To put it in other words, putting aside historically contingent strategic
concerns which are in any case ignored by Marx in Ch. 5, a surplus
value-producing system is more appropriately understood as homomorphic to
one in which prices *diverge* from values.
Gil Skillman