Paul M. Sweezy summarises Böhm-Bawerk’s case against Marx:
“After a brief introduction, he devotes two chapters to setting out Marx’s theories of value, surplus value, average rate of profit, and price of production—‘for the sake of connection,’ as he says. On the basis of this exposition he concludes that Marx had not one but two theories of value (one in Volume I of Capital and another in Volume III) in Böhm-Bawerk’s sense of the term, that is, market exchange ratios. Moreover, according to Böhm-Bawerk, these two theories lead to different results, not occasionally or exceptionally but regularly and as a matter of principle. Hence, Böhm-Bawerk ‘cannot help himself’; he is forced to the conclusion that there is a contradiction between Volume I and Volume III of Capital. He next proceeds to analyze at length—more than a third of the whole critique is devoted to this—the arguments by which, according to Böhm-Bawerk, Marx seeks to prove that the contradiction is only apparent and that the theory of Volume I is valid, after all. Having disposed of these arguments one by one, Böhm-Bawerk is at last ready to deal with the heart of the matter, ‘the error in the Marxian system,’ for it is by now clear that error there must be. Naturally, he finds that the error lies in the fact that Marx started from the old-fashioned and exploded labor theory of value instead of pushing his way through to the new and scientifically correct subjective theory of value. This error ramifies throughout the system and vitiates it from top to bottom.” (Sweezy 1949: xiii–xiv).Böhm-Bawerk was right that the theory of value in volume 3 of Capital contradicts that in volume 1. But Böhm-Bawerk was not the first to point this out at all. In actual fact, it was the Italian economist Achille Loria (1857–1943) – himself sympathetic to Marxism – who first pointed it out in an article of 1895 (Loria 1895), which was before Böhm-Bawerk’s essay of 1896.
Those on the left who from their own reading of Marx happen to hold the same opinion as Böhm-Bawerk – that Marx’s value theory in volume 1 of Capital is radically inconsistent with the value theory in volume 3 – are not endorsing Austrian economics or anything else Böhm-Bawerk said. It is pathetic to see Marxists trying to smear their opponents by using a blatant ad hominem argument here.
In fact, one need not accept anything else in Austrian economics to agree with Böhm-Bawerk on this point. One need not even accept that subjective value is the fundamental or only cause of exchange value/price to see that Böhm-Bawerk’s criticisms have some merit.
As Böhm-Bawerk (1949: 10–11) points out, it is obvious that in volume 1 of Capital Marx refers to labour value determining real individual exchange values, as a type of regulative law of exchange value, and this can be seen in Chapter 1 and in Chapter 3 in Marx’s analysis of money.
Even though conditions of supply and demand cause prices to deviate from their pure labour values, they are brought back to them in a kind of equilibrium process:
“The production of commodities must be fully developed before the scientific conviction emerges, from experience itself, that all the different kinds of private labour (which are carried on independently of each other; and yet, as spontaneously developed branches of the social division of labour, are in a situation of all-round dependence on each other) are continually being reduced to the quantitative proportions in which society requires them. The reason for this reduction is that in the midst of the accidental and ever-fluctuating exchange relations between the products, the labour-time socially necessary to produce them asserts itself as a regulative law of nature. In the same way, the law of gravity asserts itself when a person’s house collapses on top of him. The determination of the magnitude of value by labour-time is therefore a secret hidden under the apparent movements in the relative values of commodities.” (Marx 1982: 168).When Marx, for example, says that it is possible to accurately measure the value of skilled labour by looking at the exchange values of products of skilled labour as against products of unskilled labour (Marx 1906: 51–52), this makes no sense unless Marx really believes that commodities tend to exchange at pure labour values.
“It is not money that renders commodities commensurable. Just the contrary. It is because all commodities, as values, are realised human labour, and therefore commensurable, that their values can be measured by one and the same special commodity, and the latter be converted into the common measure of their values, i.e., into money. Money as a measure of value, is the phenomenal form that must of necessity be assumed by that measure of value which is immanent in commodities, labour-time.” (Marx 1906: 106).
Furthermore, for Marx money must by necessity be a produced commodity with a labour value in order to even function as money, and commodity money like gold or silver, when it is initially brought to market, is exchanged with other commodities with an equal socially necessary labour time value as a barter transaction (Marx 1906: 122). And Marx thought that prices are determined by (at the least) (1) the long-run labour value of gold as determined by the abstract socially necessary labour time required for gold’s production and (2) as this labour value of gold relates in exchange to the labour value of other commodities (Marx 1906: 108) (on this, see here). Of course, these ideas, if taken seriously, require that the actual exchange value of gold as money against other commodities gravitates around the long-run value of the abstract socially necessary labour time needed to produce gold.
But in volume 3 Marx abandons the idea that individual exchange values tend to equal abstract socially-necessary labour time in his attempts to solve the transformation problem and in his acceptance that Classical prices of production are the long-run anchors for prices:
“To speak plainly his solution [sc. to the transformation problem] is obtained at the cost of the assumption from which Marx has hitherto started, that commodities exchange according to their values. This assumption Marx now simply drops.” (Böhm-Bawerk 1949: 21).But that radically contradicts what Marx said in volume 1 of Capital, and Böhm-Bawerk points to the paradox:
“And the actual exchange relation of the separate commodities is no longer determined by their values but by their prices of production; or as Marx likes to put it ‘the values change into prices of production’ (III, 231). Value and price of production are only exceptionally and accidentally coincident, namely, in those commodities which are produced by the aid of a capital, the organic composition of which chances to coincide exactly with the average composition of the whole social capital. In all other cases value and production price necessarily and in principle part company.” (Böhm-Bawerk 1949: 24).
“‘Either products do actually exchange in the long run in proportion to the labor attaching to them—in which case an equalization of the gains of capital is impossible; or there is an equalization of the gains of capital—in which case it is impossible that products should continue to exchange in proportion to the labor attaching to them.’” (Böhm-Bawerk 1949: 28).Many other critics of Marx have argued the same thing (Shove 1944: 48–49; Robinson 1966: 10, 14).
“I do not think that any one who examines the matter impartially and soberly can remain long in doubt. In the first volume it was maintained, with the greatest emphasis, that all value is based on labor and labor alone, and that values of commodities were in proportion to the working time necessary for their production. These propositions were deduced and distilled directly and exclusively from the exchange relations of commodities in which they were ‘immanent.’ We were directed ‘to start from the exchange value, and exchange relation of commodities, in order to come upon the track of the value concealed in them’ (I, 55). The value was declared to be ‘the common factor which appears in the exchange relation of commodities’ (I, 45). We were told, in the form and with the emphasis of a stringent syllogistic conclusion, allowing of no exception, that to set down two commodities as equivalents in exchange implied that ‘a common factor of the same magnitude’ existed in both, to which each of the two ‘must be reducible’ (I, 43). Apart, therefore, from temporary and occasional variations which ‘appear to be a breach of the law of the exchange of commodities’ (I, 177), commodities which embody the same amount of labor must on principle, in the long run, exchange for each other. And now in the third volume we are told briefly and dryly that what, according to the teaching of the first volume, must be, is not and never can be; that individual commodities do and must exchange with each other in a proportion different from that of the labor incorporated in them, and this not accidentally and temporarily, but of necessity and permanently.
I cannot help myself; I see here no explanation and reconciliation of a contradiction, but the bare contradiction itself. Marx’s third volume contradicts the first. The theory of the average rate of profit and of the prices of production cannot be reconciled with the theory of value. This is the impression which must, I believe, be received by every logical thinker.” (Böhm-Bawerk 1949: 29–30).
And, as Böhm-Bawerk noted, Marx attempted to solve this severe contradiction by certain arguments.
The most important of them was that, when the profit rate is equalised and stands at an average percentage of profit, prices above values and prices below values cancel out so that in the aggregate prices equal value (Böhm-Bawerk 1949: 32). But, given that labour value cannot even be properly defended in the first place, this is an absurd and empirically empty idea lacking any explanatory power.
Böhm-Bawerk knew this fundamental problem well: economists have no reason to accept the basic labour theory of value in the first place (Böhm-Bawerk 1949: 64–66).
That idea that exchange value fundamentally depends on quantities of labour expended in production of commodities is not “self-evident” (Böhm-Bawerk 1949: 65). That is, it is not some empirical proposition confirmed by convincing and clear evidence:
“Now it is certain that the exchange values, that is to say the prices of the commodities as well as the quantities of labor which are necessary for their reproduction, are real, external quantities, which on the whole it is quite possible to determine empirically. Obviously, therefore, Marx ought to have turned to experience for the proof of a proposition the correctness or incorrectness of which must be manifested in the facts of experience; or in other words, he should have given a purely empirical proof in support of a proposition adapted to a purely empirical proof. This, however, Marx does not do. And one cannot even say that he heedlessly passes by this possible and certainly proper source of knowledge and conviction. The reasoning of the third volume proves that he was quite aware of the nature of the empirical facts, and that they were opposed to his proposition. He knew that the prices of commodities were not in proportion to the amount of incorporated labor, but to the total cost of production, which comprises other elements besides. He did not therefore accidentally overlook this, the most natural proof of his proposition, but turned away from it with the full consciousness that upon this road no issue favourable to his theory could be obtained.” (Böhm-Bawerk 1949: 66).There is no convincing empirical evidence that the labour theory of value is correct, and Marxists often reduce it to a mere tautologous analytic statement that is empirically-empty anyway.
The remaining parts of Böhm-Bawerk’s essay mostly focus on diminishing marginal utility theory as an alternative theory of value, but one simply does not need to accept this to see the merits of Böhm-Bawerk’s critique as sketched above.
BIBLIOGRAPHY
Böhm-Bawerk, Eugen von. 1949. “Karl Marx and the Close of His System,” in Paul. M. Sweezy (ed.), Karl Marx and the Close of His System and Böhm-Bawerk’s Criticism of Marx. August M. Kelley, New York. 3–120.
Loria, Achille. 1895. “L’opera postuma di Carlo Marx,” Nuova Antologia di Scienze 55.3 (February): 460–496.
Loria, Achille. 1920. Karl Marx. (trans. Eden and Cedar Paul), George Allen and Unwin Ltd., London.
Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; trans. Samuel Moore and Edward Aveling from 3rd German edn.; rev. from 4th German edn. by Ernest Untermann). The Modern Library, New York.
Marx, Karl. 1982. Capital. Volume One. A Critique of Political Economy (trans. Ben Fowkes). Penguin Books, Harmondsworth, England.
Robinson, Joan. 1966. An Essay on Marxian Economics (2nd edn.). Macmillan, London.
Shove, Gerald F. 1944. “Mrs. Robinson on Marxian Economics,” The Economic Journal 54.213: 47–61.
Sweezy, Paul. M. 1949. “Editor’s Introduction,” in Paul. M. Sweezy (ed.), Karl Marx and the Close of His System and Böhm-Bawerk’s Criticism of Marx. August M. Kelley, New York. v–xxx.
Look at what you've done here. Seriously, just look at this mess.
ReplyDeleteI have responded in detail to every single "point" you make here, in the past. Every. Single. One.
I wish you'd spend even half as much time taking seriously your opponents as you spend regurgitating discredited attacks thereupon. Instead, you insist on counting yourself among those who, as Engels put it, "took more trouble to understand it wrongly than was necessary to understand it correctly."
Brief overview of problems herein follows:
-Reference to Loria is somewhat ironic, since the only thing rescuing his arguments from total obscurity is the fact that Engels himself tore them apart in a lengthy response published in his supplement at the end of Capital Vol. III (from which the above quotation was taken).
-The volume 1 equality of price and value is an explicitly unrealistic assumption held to simplify explanation. Numerous passages in v1 make it clear that divergence in an individual commodity is not only possible, but is the norm. As such, the "contradiction" B-B locates "between" volumes 1 and 3 is no such thing; he would have to locate it solely within v1, since v1 agrees with 3(!) on this point. Why, then, would B-B not simply have said "volume 1 is self-contradictory"? Because to attempt to do so would require quoting passages that "every logical thinker" would receive as a plain sign of a simplifying assumption. The argument is therefore the result of either an incautious reading or a willingness to fabricate.
-Even if False were True and there were a contradiction, that would leave us with, effectively, two separate theories. Funny, then, that we only get to hear about how wrong the theory that (allegedly) says "price=value always and everywhere hurf durf!" is. On the version that says otherwise? Silence. Wonder why.
-The idea that "value," as employed by Marx, cannot be defended is so blatantly false it boggles. It's on par with denying that there can be such a thing as an "hour." The entire value system is quantifiable on the basis of available statistics, and numerous theorists and practitioners have taken the time to crunch the numbers.
-LK denies the existence of empirical evidence for Marx's economics. Given that I have personally linked him to studies flatly contradicting this claim, I can either conclude that LK is promulgating falsehoods (wouldn't be the first time) or I can be more generous and take one of the following positions: "perhaps he did not notice the numerous references (some of which he scoffed at without further note)" or "perhaps he simply does not believe in the existence of documents he has not personally read." Not impossible, but improbable.
No, I think this is simply a case of dishonesty. Nothing new under the sun.
(1) "I have responded in detail to every single "point" you make here, in the past."
DeleteAnd totally failed to defend Marx or provide any convincing or coherent answers.
(2) "Reference to Loria is somewhat ironic, since the only thing rescuing his arguments from total obscurity is the fact that Engels himself tore them apart in a lengthy response"
First, Engels did not tear them apart. Engels comments are almost wholly a long ad hominem rant, typical of his and Marx's operating method. Secondly, it doesn't matter that Loria is obscure. His critique of Marx on this point is held by many people, including some Post Keynesians.
(3) "The volume 1 equality of price and value is an explicitly unrealistic assumption held to simplify explanation."
No, it is not. Marx says that gold or silver, when initially brought to market, is exchanged with other commodities with an equal socially necessary labour time value as a barter transaction (Marx 1906: 122). That requires exchange at pure labour values.
Marx also thought that prices are determined by (1) the long-run labour value of gold as determined by the abstract socially necessary labour time required for gold’s production and (2) as this labour value of gold relates in exchange to the labour value of other commodities (Marx 1906: 108). Marx says that the value of skilled labour can be determined by looking at the way products of skilled labour exchange for productions of unskilled labour.
Again, these require that exchange tends to happen in a way where pure labour values are an anchor of the system and when they deviate from pure values are drawn back to them, so that they tend to exchange at true labour values.
You are a TSSI cultist and hopelessly incompetent in actually reading what Marx says.
(4) "The entire value system is quantifiable on the basis of available statistics"
That is B.S. You cannot even independently define how to reduce all heterogeneous forms of human labour to a single homogenous socially-necessary labour time unit. When pressed, you are reduced to waffling or incoherent gibberish.
"Even if False were True and there were a contradiction, that would leave us with, effectively, two separate theories. Funny, then, that we only get to hear about how wrong the theory that (allegedly) says "price=value always and everywhere hurf durf!" is."
DeleteThat is blatantly dishonest B.S. I've given my opinion of the vacuous concept of value in vol. 3 as aggregate identities many times to you. It is empirically empty, adds nothing to economics, and no explanatory power.
Engels comments are almost wholly a long ad hominem rant, typical of his and Marx's operating method.
DeleteShall I take this to mean you haven't even read it?
Marx says that gold or silver, when initially brought to market, is exchanged with other commodities with an equal socially necessary labour time value as a barter transaction (Marx 1906: 122).
Once again, I must ask you to clarify: Did you not understand this passage, or are you willfully misrepresenting it? When Marx speaks of barter, he only refers to "use-values" exchanged. When he refers to "commodities," he's discussing a different mode entirely (simple value form or otherwise). In any discussion of developed commodity circulation, he states explicitly that price and value are at variance (see, e.g., chapter 3).
Again, these require that exchange tends to happen in a way where pure labour values are an anchor of the system and when they deviate from pure values are drawn back to them, so that they tend to exchange at true labour values.
This is false, though you haven't read far enough yet to know it, yet, and you obviously don't trust me for whatever reason, as though I've ever lied to you. Pure projection. But whatever.
As I said, keep reading; you'll get to it.
You are a TSSI cultist and hopelessly incompetent in actually reading what Marx says.
Says the guy who just demonstrated that he didn't read. Are you even capable of responding to an exegetical argument in kind, or is personal attack your only mode of discourse? Stop acting a boor and keep to the content.
That is B.S. You cannot even independently define how to reduce all heterogeneous forms of human labour to a single homogenous socially-necessary labour time unit. When pressed, you are reduced to waffling or incoherent gibberish.
No, THAT is B.S. I've explained exactly how to do this. Your only response is to ignore it and fib about it being "gibberish." Show me the gibberish, I challenge -- nay, "press" -- you. If it's so self-evidently B.S., then you should have no issue sharing it with the whole class. :)
It is empirically empty, adds nothing to economics, and no explanatory power.
Yes, I've seen you assert this before, sans argument -- as now. Are you saying it's empty *by virtue of being an accounting identity* or for some other reason? Because Keynes, Kalecki, Kaldor, Thirlwall, Godley, and other important PK thinkers would take serious issue with the former, FYI. But you definitely knew that... right?
(1) "Once again, I must ask you to clarify: Did you not understand this passage, or are you willfully misrepresenting it? When Marx speaks of barter, he only refers to "use-values" exchanged. When he refers to "commodities," he's discussing a different mode entirely"
DeleteYou're the only one here who apparently doesn't read Marx properly and misunderstands what he says.
Marx:
"In order that it may play the part of money, gold must of course enter the market at some point or other. This point is to be found at the source of production of the metal, at which place gold is bartered, as the immediate product of labour, for some other product of equal value. From that moment it always represents the realised price of some commodity." (Marx 1906: 122).
This is quite clear. Gold when first produced exchanges for other products of equal value: two individual products (gold and another good) exchange at equal labour value.
So you are either (1) so stupid and ignorant you don't understand Marx or (2) you are a pathological liar, just here to troll.
(2) "In any discussion of developed commodity circulation, he states explicitly that price and value are at variance"
Yet again either (1) ignorance of what Marx says or (2) dishonesty.
Marx says:
“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.” (Marx 1906: 114).
So all Marx says here is that prices can and do deviate from pure labour values, NOT that they never do or only rarely do. In fact, Marx's view in Chapter 3 is that prices are determined by (1) the long-run labour value of gold and (2) as this labour value of gold relates in exchange to the labour value of other commodities (Marx 1906: 108).
There's not even any point in publishing any more of your ignorant trolling.
DeleteYour last comment shows well actually what I said: you are either (1) ignorant or (2) dishonest.
(1) You won't even admit that Marx says explicitly:
"This point is to be found at the source of production of the metal, at which place gold is bartered, as the immediate product of labour, for some other product of equal value. From that moment it always represents the realised price of some commodity." (Marx 1906: 122).
That is, gold when first produced exchanges for other goods of the same labour value. That requires individual exchange of goods at pure labour values.
(2) Böhm-Bawerk never said that Marx in vol. 1 thought that value = price in all cases and always. Böhm-Bawerk said -- as Marx says in vol. 1 -- that Marx thought that prices have a tendency to exchange at pure labour values, and when they deviate are driven back to these values.
In short, you don't even understand Böhm-Bawerk's critique and until you show signs of actually understanding Böhm-Bawerk you're just spamming this blog with nonsense.
(1) I responded to this. I guess you didn't publish it because it would have made you look bad. How petty.
Delete(2) This amounts to *the exact same thing* in the language of volume 1, given the assumptions at play; in terms you (and Böhm-Bawerk) might find more comfortable, it's "pre-equilibrated," setting aside for a moment the lack of equilibrium in the price/value relation.
Regardless, the tendency described does not exist in the work. You can read such a tendency into Marx all you like, but at the end of the day you are left with a different theory -- one that I will gladly join you in tearing to shreds, as it is little more than "bollocks."
If there's a discrepancy between volumes 1 and 3, it should be demonstrable, not an artifact of some blind faith. If every effort to demonstrate it is debunked, then blind faith is all you have left.
The only one "spamming this blog with nonsense" is you. And now you're demonstrating your fear of an open debate, using strongarm tactics to silence dissent. You never consider my position; you merely attempt to shush or shout me into submission.
Well, I will not be intimidated by this brazen and cowardly bullying, sir. Until you state to me unequivocally and publicly that you DO NOT WANT further participation from me on your blog, I will carry right on exposing your facile nonsense for what it is.
I'll give you one last chance on this thread. Marx says:
Delete"This point is to be found at the source of production of the metal, at which place gold is bartered, as the immediate product of labour, for some other product of equal value. From that moment it always represents the realised price of some commodity." (Marx 1906: 122).
Marx says here that gold, when first produced, exchanges for other goods of the same labour value. That requires exchange of individual goods at pure labour values.
Do you agree? Yes or no? No evasion; no whining nonsense; no straw man arguments.
"This amounts to *the exact same thing* in the language of volume 1, given the assumptions at play; etc. "
DeleteChrist knows what you're even talking about here.
Böhm-Bawerk never said that Marx in vol. 1 thought that value = price in all commodity exchanges and always. You committed an error.
Do you acknowledge this error? Yes nor no?
Marx says here that gold, when first produced, exchanges for other goods of the same labour value. That requires exchange of individual goods at pure labour values.
DeleteDo you agree? Yes or no?
I agree with Marx's statement. I disagree with you on what it means.
The passage refers to barter, and only "from that moment [that a money relation emerges]" does anything become a "commodity." Equal-value exchange is a feature of the barter he discusses, but not of a developed capitalist marketplace. Only under the capitalist system does the "law of value" manifest, and said law is the focus of Capital. So to argue from one set of relations and laws to a completely different set thereof is straightforwardly fallacious.
I hope this explanation is clearer than my last one.
And I apologize if I've ever made a straw man argument, though I am not sure I actually have.
Christ knows what you're even talking about here.
I'm saying that even if B-B was discussing a tendency rather than a constant state of affairs, the assumption of price-value equality renders the two (tendency/constancy) identical for the purposes of this discussion.
Do you acknowledge this error? Yes nor no?
Sure, I'll cop to misrepresenting him. I worded it poorly and provocatively for the purposes of this discussion. I do understand the nature of his criticism, having read him years ago, but my above simplification obscured more than it clarified. So, sure, I will discuss his position in terms of long-run tendencies, going forward.
However, this is all moot since my fundamental point still stands: He's pointing to something that could only have been read into the value theory by mistaking a simplifying assumption for a central tenet. The long quote in your post lays it out exactly (the paragraph immediately before the one you highlight). Volume 1 suggests individual equality (whether tendential or constant) that does not exist in volume 3. Prices don't tend toward values; through profit rate equalization they tend toward prices of production, which themselves are not equal to values except in aggregate. Even in volume 1 of Capital, Marx says *several times* that prices don't actually tend to equal values, even on average.
For a more elaborate explanation, Chapter 8.3 of Reclaiming Marx's Capital gives an overview of the problem you may find more agreeable than my own.
And of course, for the classic long-form rebuttal to B-B, one should refer to Hilferding.
Do you acknowledge Böhm-Bawerk's error? Yes or no?
(1) so STILL you won't admit that Marx says here that gold exchanges for other individual goods at pure labour values.
DeleteThat is sufficient to damn your idea that Marx never thinks individual goods exchange at pure labour values.
And in any case the idea that people just "barter" newly produced gold is utter B.S anyway. Newly produced gold was normally sold for its market price, even in the 19th century.
(2) "Sure, I'll cop to misrepresenting him. I worded it poorly and provocatively for the purposes of this discussion."
Finally, an honest admission.
(3) "However, this is all moot since my fundamental point still stands: He's pointing to something that could only have been read into the value theory by mistaking a simplifying assumption ... etc."
It is not a "simplifying assumption". An careful reading of vol. 1 shows Böhm-Bawerk was correct. Nor was he the first or last to see this problem.
As we have seen, Marx says that the exchange values of products of skilled labour as against products of unskilled labour provide a way to accurately measure the value of skilled labour, and the only way that makes sense is if individual goods tend to exchange at pure labour values. . But you cannot explain that passage or provide any coherent or sensible explanation of it under your TSSI Marxist dogma.
Marx also argued that prices are determined by (1) the long-run labour value of gold and (2) as this labour value of gold relates in exchange to the labour value of other commodities:
“But, although the money that performs the functions of a measure of value is only ideal money, price depends entirely upon the actual substance that is money. The value, or in other words, the quantity of human labour contained in a ton of iron, is expressed in imagination by such a quantity of the money-commodity as contains the same amount of labour as the iron. According, therefore, as the measure of value is gold, silver, or copper, the value of the ton of iron will be expressed by very different prices, or will be represented by very different quantities of those metals respectively.
If, therefore, two different commodities, such as gold and silver, are simultaneously measures of value, all commodities have two prices.—one a gold-price, the other a silver-price. These exist quietly side by side, so long as the ratio of the value of silver to that of gold remains unchanged, say, at 15:1. Every change in their ratio disturbs the ratio which exists between the gold-prices and the silver-prices of commodities, and thus proves, by facts, that a double standard of value is inconsistent with the functions of a standard.” (Marx 1906: 108).
Again, you have no response to this.
Part 1:
ReplyDeleteOne of the most brought up figures in a critique of Marx and the LTV is “Marx and the Close of His System” by Bohm-Bawerk. Bohm-Bawerks critiques circulate around a (supposed) contradiction found in the first 5 pages of Capital Volume 1 and one chapter of Capital 3. His critique, however, lives and dies on the assumptions it is built off of, chiefly that Marx’s premise for the theory of value is built upon only the first 5 pages of Capital. This is where BB goes wrong. Marx in the first pages of Capital introduces his theory of value by the analytical method, and that alone, or that it passes from exchange value - value, and from value to labor. This, however, is merely the tip of the theory's iceberg. It is not until we observe the whole and complete dialectical ground of Marx’s theory of value, chiefly commodity fetishism, that the pieces begin to fall together. Only after we include Marx’s theory of commodity fethishism, which observes the general structure of the commodity economy, do the pieces of his theory become more clear. Bohm Bawerk believes Marx had failed to provide any empirical or psychological evidence for his theory that the source of all value is in labor, instead Marx “prefers another, and for such a subject somewhat singular line of evidence - the method of a purely logical proof, a dialect deduction from the very nature of exchange.”(Böhm-Bawerk, 68) From Aristotle, Marx had the idea that exchange only exists where there is equality (though this does not mean commodities are required to have equal amounts of labor), and that that very equality can not exist without a consumer. Beginning with this assumption, he presents the exchange of two objects in a mathematical equation. In order for a thing to be exchanged for another a general state of equality must be found, and that equality must be reduced from a common factor that exists between both objects. In the eyes of BB, Marx’s biggest weak spot is the logical process Marx uses to arrive at the “common factor.” BB contends that this deduction into equalization should be found in all things, not just commodities. BB asserts that trees, water, soil etc. and all things found in nature are all also exchangeable, and to forget that would be a terrible error in methodology. This point is rather simple to address, and laughable that it would be presented. In order for a tree, as an example, to fulfill the need of a pencil factory, that tree must be cut down, chopped into smaller pieces of wood, cleaned and removed of all imperfections, and then transported. The tree of which the smaller parts came from changed in its physical form via labor, and has therefore had an increase in value and fulfilled the use value of the consumer. At the end of the day, the wood is all the same, it is in essence from the same tree, but it is exchanged for a different amount. Why is that? Well as long as labor is performed on the tree to fulfill the need of others its ability to be brought to the market increases, as it fulfills the use a pencil factory owner had. Of course he could just buy the tree, but he would obtain at a lower relative cost per unit of measurement as he needs to account for the costs of labor he will spend on it. The labor embedded in the trees removal is what changes its relative long term price equilibrium. A similar example is kit cars. One can buy the components necessary for the building of a car for far less money than a factory, pre built car. Despite the kit car and the manufactured cars fulfilling the same need (ie utility in both cases is fulfilled equally after production,)
Part 2:
ReplyDeleteDespite all of this BB critique can be cast aside by the simple quote by Marx in Capital Volume 1 “something can have a use-value without having a value.” BB critiques Marx from another angle. Marx writes that if the use value is stripped from the commodity, the only element that would remain between them is their element of labor. But BB wonders if there would be any other common element, which of course, he feels there is. What about them all being scarce in proportion to demand? Or even that they all came at the expense of the owner, as Marx wrote in Capital 3? BB feels as if he did not produce any evidence for why they would all condense to labor, and none of these other apparent similarities between them which Marx has seemed to have overlooked. In the eyes of BB, the Marxian analysis establishes a contrast between utility and the product of labor. Now I, and Marx, fully agree that contrast does not exist. Labor must be done on most physical objects in order for them to be deemed “useful.” However, when we measure the utility, it does not matter how much labor has been expended on it. A good is not a commodity just because it is a product of labor, but only if it is a commodity does a good show the contrast between value and use value. A product only becomes a commodity solely by entering a relationship with other goods. Marx is explicitly clear with this concept, a commodity only becomes a commodity when in structural comparison to all other commodities in existence, or “the world of commodities.”