David Harvey on Reading Marx’s Capital Volume 1, Class 03

David Harvey is a Professor of Anthropology and Geography at the Graduate Center of the City University of New York.

Class 3 of his video series on Reading Marx’s Capital Volume 1 is below.



This video deals with Chapter 3 of volume 1 of Capital.

My critical comments:

(1) at 8.25 onwards and later at 20.30 Harvey notes that money is no longer a commodity or is convertible into a commodity like gold at fixed rate. But this is quickly dismissed, and glosses over a severe problem with Marx’s theory of money: that Marx thought money must ultimately be a commodity or represent a commodity, and modern fiat money has shown that this is wrong. At 1.36.15 onwards, we can even see that Marxists are still pushing the absurd metallist view of Marx and that they refuse to accept that fiat money really is a viable and successful form of money.

(2) Harvey draws attention to this passage where Marx states that labour value and price can diverge:

“Magnitude of value expresses a relation of social production, it expresses the connection that necessarily exists between a certain article and the portion of the total labour-time of society required to produce it. As soon as magnitude of value is converted into price, the above necessary relation takes the shape of a more or less accidental exchange-ratio between a single commodity and another, the money-commodity. But this exchange-ratio may express either the real magnitude of that commodity’s value, or the quantity of gold deviating from that value, for which, according to circumstances, it may be parted with. The possibility, therefore, of quantitative incongruity between price and magnitude of value, or the deviation of the former from the latter, is inherent in the price-form itself. This is no defect, but, on the contrary, admirably adapts the price-form to a mode of production whose inherent laws impose themselves only as the mean of apparently lawless irregularities that compensate one another.” (Marx 1906: 114).

So, according to Marx, as labour values are converted into prices, we find “the shape of a more or less accidental exchange-ratio between a single commodity and another.” Astonishingly, we find no further analysis of how prices diverge from labour values in Chapter 3. Harvey (2010: 58–59) interprets this passage as a recognition by Marx that supply and demand conditions govern the prices of commodities on everyday markets. But Harvey also argues that Marx thinks that the long-run Classical equilibrium price (or natural price) is the centre of gravitation for market prices, and that this natural price is a “representation of socially necessary labor-time that generates the value crystallized in money” (Harvey 2010: 61, 59). This is utterly unsatisfactory, since the Classical natural price includes a uniform profit rate and Marx denies that this natural price directly equals or corresponds to labour value.

(3) Marx’s ideas on the origin of money are grossly inadequate in light of modern anthropology and history, as we can see here, here, here, and here.

(4) Marx’s critique of Say’s law is underdeveloped and the concept of aggregate demand in Marx is pretty feeble. Hence Harvey’s attempts to claim that Keynes owed some great debt to Marx on this is unconvincing. In reality, Malthus was a better critic of Say’s law than Marx.

Further Reading
“Marx’s Capital, Volume 1, Chapter 1: A Critical Summary, Part 1 (Updated),” June 21, 2015.

“Marx’s Capital, Volume 1, Chapter 1: A Critical Summary, Part 2,” June 26, 2015.

“Marx’s Capital, Volume 1, Chapter 2: A Critical Summary,” June 4, 2015.

“Marx’s Capital, Volume 1, Chapter 3: A Critical Summary,” June 12, 2015.

“David Graeber on the Origins of Money,” January 23, 2012.

“Quiggin on the Origin of Money,” February 10, 2012.

“Observations on Non-Commercial Money,” February 18, 2012.

“Philip Grierson on the Origin of Money,” March 21, 2012.

BIBLIOGRAPHY
Harvey, David. 2010. A Companion to Marx’s Capital. Verso, London and New York.