Rakesh writes, in part, >As for our debate, I have argued two contradictory things, so I do >need to stick to one position as you have rightly said. I would >agree with you that in your merchant capital case there is indeed >surplus value for the mercant capitalists even though the sum of >value has not been increased through this circuit. As I have quoted >Marx, he himself underlines this possibility, but argues that if we >first explain how the sum of value in circulation itself increases, >then we will see how modern merchant capital is derived from this >newly produced sum of surplus value. So there are two definitions of >surplus value: one is the difference M' minus M in *the circuit of >capital*, as you have rightly insisted, and this does not require the >production of more value (this is also the definition I have used in >my debate with Allin over the transformation problem); the other >definition of surplus value--which I think is the more important one >in chapter 5--is simply a greater sum of value at t+1 in the *system >as whole* than at t. I don't quite go along with this, Rakesh, for a couple of reasons: first, I think Marx has only one definition of surplus value: the positive difference between M' and M in the circuit of capital corresponding to "valorization" of the value embodied in the initial M. We don't find out what this newly coined term means until Ch. 5, namely that the increment in value embodied in M' must be derived somehow from value newly created subsequent to the initiation of the circuit. No other definition of surplus value is mentioned by Marx. But second, your "other" definition, to the effect that surplus value "is simply a greater sum of value at t+1 in the *system as a whole* than at t", isn't strong enough. Marx says so himself on the next-to-last page of Ch. 5. Suppose a commodity owner buys some raw materials like leather at period t [M--C], adds his or her own labor to them, and then sells the result for a higher amount of money at t+1 [C'--M']. Here, as Marx says, the positive difference between M' and M does not count as surplus value, even though there is surely "a greater sum of value at t+1 in the system as a whole", other things equal. You earlier suggested a way of thinking of the definition, i.e. in aggregate terms, that gets around this ambiguity. Think of the circuit of capital as being the sum of all individual circuits. Then Marx's definition says in effect that for this aggregate circuit, surplus value is the positive difference between M' and M, based on the caveats that this increment be based on value newly created subsequent to initiation of the circuit, and that the increment be received by someone --i.e., capitalists--other than the value producers themselves. This understanding of the definition supports Marx's Ch. 5 conclusion that surplus value can't be based on a mere redistribution of existing values. What it does *not* support is Marx's suggestion, echoed by you above, that merchants' capital is incapable of extracting surplus value in the absence of industrial capital. This claim has not been validly established in Ch. 5, and Marx elsewhere affirms to the contrary for circuits of merchant capital extended directly to value producers prior to the era of the capitalist mode of production. More about the historical contingency of this result below. >You are absolutely correct that given the claim of the nature of the >substance of value, the sum of value cannot be greater at t+1 without >an additional expenditure of labor, so circulation in itself cannot >be the source of surplus value. In his critique of Condillac, I think >Marx is trying to show that what circulation does then increase (for >it does increase something) is the use values of commodities to their >owners, not the aggregate exchange value in circulation. There is >indeed something 'analytic' about the claim here, but I read it as a >helpful demonstration and reinforcement of the new meanings of the >concepts which Marx is developing. I would not dismiss it as mere >tautology (hereI think you are being ungenerous); one gets a feel for >new meanings exactly by working out 'analytical' truths like this. Well, even granting the heuristic or demonstration value of Marx's exercise, it *is* still tautological, because unless the definition of surplus value stipulates a priori that it must be based on newly created value, one can't rule out SV based on redistribution, and his Ch. 5 argument folds. But I'm saying something stronger than that Marx's argument is a tautology, although it's certainly that. It's also fallacious, because 1) he invalidly infers that price-value disparities are "accidental" to the existence of surplus value on the basis of the (tautological) claim that they are not *sufficient* for the existence of surplus value. This is fallacious because it might still be the case that such disparities are *necessary* for the existence of surplus value, ***and Marx makes no argument about this one way or the other.*** This is like saying that the presence of oxygen in the earth's atmosphere is "accidental" to the existence of human life because it is not a sufficient condition for human life, which is obvious nonsense. Thus his argument is necessarily incomplete. But second, explaining surplus value on the basis of price-value proportionality is *essentially misleading* about its systemic basis, for reasons I've given elsewhere and won't repeat here. That's why I don't think I'm being ungenerous in calling his argument here invalid. Now, as for Marx's critique of Condillac, I think it's doubly beside the point. The first reason is given above: once we understand the definition of SV, it follows tautologically that surplus value can't arise through exchange. If I thought generosity had anything to do with the issue, I'd say that *Marx* is being ungenerous, because he's chastising Condillac on the basis of a newly coined definition of surplus value that in any case Condillac evidently didn't share. This is obviously ungenerous, because *unless* one rules out redistribution as a basis for surplus value *by definition*, it is in fact the case that gains in use-value--what neoclassicals would call consumer surplus **make possible** profit through raising price above cost. So Condillac isn't as completely out to lunch as Marx indicates. It's as if I answered all of your arguments by defining terms in a new way and then called you an idiot because your arguments didn't address these new definitions. Second, although I'm not sure I want to get into this here, Condillac's condition that exchange yields higher use values is certainly a *necessary* condition for the existence of surplus value, even under Marx's definition of the term. To say otherwise is to suggest, for example, that capitalists can exploit workers in production even if excessive accumulation has driven the rate of surplus value to zero, which is a clear contradiction. That said, it is certainly true that the creation of use values through exchange is not a *sufficient* condition for the creation of surplus value, so if Condillac said otherwise he was clearly wrong. > As I understand Marx, he fully recognizes that capitalists can >obtain surplus value in the first sense without an increase in the >value in circulation in the second sense. Do you agree that Marx >himself notes this possibility in the form of commercial cheating >near the end of ch 5? He actually doesn't "note" this explicitly, but I agree he doesn't explicitly rule it out. He rather notes explicitly the possibility that surplus value can arise from the circuit of merchants' capital *without* the need for "commercial cheating," but that it goes beyond the scope of the immediate argument to explain this. Here's the relevant passage: "If the valorization of merchants' 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." [p. 267, emphasis added] That's from the Fowkes translation. The Aveling and Moore translation makes this point even more clearly: "If the transformation of merchants' money into capital is to be explained *otherwise* than by the producers being simply cheated, a long series of intermediate steps would be necessary, which, at present, when the simple circulation of commodities forms our only assumption, are entirely wanting." [p. 161, International Publishers, emphasis added.] Marx does go on to say, as you suggest below, that merchants' and interest-bearing capital are "derivative forms," which, especially in light of his Volume III analysis, might be read as saying that they can derive surplus value only from its fount in the circuit of industrial capital. But one of my points is that Marx has not validly established that the circuit of industrial capital is necessary in the first place. >In his theory as a whole--to which I simply don't think you are >paying sufficient attention-- Marx is arguing modern merchant (and >interest-bearing) capital derives from the additional sum of value >produced out of the circuit of industrial capital at t+1. This is >nothing more than the ABC's of Marx's theory. I realize that Marx asserts this. My point is that he has not validly established that the circuit of industrial capital is necessary in the first place, and thus has not established that the alternative circuits of merchants' and interest-bearing capital are necessarily derivative. Considering his repeated insistence elsewhere that these circuits *did* systematically yield surplus value in the era prior to the capitalist mode of production, an argument is certainly called for. >Marx's chapter 6 >argument is that the industrial circuit of capital can only increase >the value in circulation if it is labor power in the form of >commodity that free wage workers, qua juridical persons, alienate, >instead of their labor time. Not exactly. Rather, his chapter 6 argument is that *if* one starts from the postulate of price-value proportionality [PVP], then the only possible way to account for surplus value [understood by definition as derived from newly created value] is that capitalists purchase a commodity whose use value is exactly the creation of new value, and that commodity is, of course, labor power. But all of Marx's Ch. 5 arguments for invoking the postulate of price-value proportionality are invalid or worse, so this argument doesn't get off the ground to begin with. Thus, although Marx evidently believes that he has established the necessity of the circuit of industrial capital for the existence of surplus value, he has not successfully done so. Let's suppose, then, that we have to explain how surplus value, understood as value newly created subsequent to the initiation of a circuit of capital, might arise from that circuit, but don't require that this explanation has to be based on the bogus condition of PVP. Then we know or can immediately infer from the definition that surplus labor has to be extracted from labor power, ***but we don't know that capitalists have to purchase labor power as a commodity to achieve this.*** Indeed, they might not have to purchase anything at all; they could loan money to value producers, or lease constant capital goods to them. Thus, since Marx has not successfully established the basis for PVP, he has not validly established the necessity of purchasing labor power as a commodity in order for capitalists to realize surplus value. Thus he has not validly established the necessity of the circuit of industrial capital, or the "derivativeness" of the alternative circuits. This gains significance given Marx's repeated affirmation that these alternative circuits were sufficient to yield surplus value prior to the advent of the circuit of industrial capital. It is true that he says, in Vol. III, that once the historical conditions of the capitalist mode of production are realized, these alternative circuits are no longer adequate vehicles for realizing surplus value. But he never explains exactly why this is the case. The central point, by the way, of the second, "historical-materialist" half of my critique, as yet largely unaired on OPE-L, is to fill in the gaps in Marx's story and account for this theoretical dichotomy. This account relies in no way on Marx's value-theoretic analysis in Vol. I, Part 2, however. >Out of this increase in the sum of value >then modern merchant and interest bearing capital is derived. The >demonstration that in modern capitalism that the latter two forms of >capital, though historically primary, now derive from industrial >capital is what I have suggested is quite pregnant in its >implications for the critique of the socialism of fools. Pregnant but aborted, for reasons given above. > There are >other implications of this theory of the relationships among the >forms of capital. But the great theoretical achievement here is to >show how the oldest forms of capital become subordinate forms as >commodity production has become generalized. Again the ABC's of >Marx's historical dialectics. Do you agree that there is an >achievement of great significance here? I agree that Marx established a theoretical achievement of great significance in _Capital_, but the above is most emphatically not that achievement, because he *has not* validly shown via his argument in Vol. I, part 2 that "the oldest forms of capital become subordinate forms as commodity production has become generalized." To assert this is to assume what must be proved. Gil
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