But it is nice to see that the Victorian economist Philip Henry Wicksteed (1844–1927), as early as 1884, identified the same contradiction:
“With reference to the theory of value, it will be convenient to follow Marx in his fundamental analysis of the process of exchange.We can see here that Marx’s flawed argument attempting to prove the labour theory of value was spotted by Wicksteed early on.
He begins by pointing out that the fact of two wares being exchangeable (no matter in what proportion) implies of necessity both Verschiedenheit and Gleichheit; i.e. that they are not identical (else the exchange would leave things exactly where it found them), and that they are different manifestations or forms of a common something (else they could not be equated against each other). In other words, things which are exchangeable must be dissimilar in quality, but yet they must have some common measure, by reduction to which the equivalent portions of each will be seen to be identical in quantity.
Now with regard to the qualitative dissimilarity, I do not see that there is any room for difference of opinion. It consists in the divergent nature of the services rendered by the respective wares. Cast-iron nails and new-laid eggs differ in respect to their ‘value in use.’ They serve different purposes. Even a red and a blue ribbon, though they both serve purposes of adornment, are capable each of rendering some particular services of adornment under circumstances which would make the other a mere disfigurement. I agree with Marx, then, that the Verschiedenheit of the wares is to be found in the respective Gebrauchswerth of each, or, as I should express it, commodities differ one from another in their specific utilities.
But in what does the Gleichheit consist? What is the common something of which each ware is a more or less? Marx replies that to get at this something, whatever it is, we must obviously set on one side all geometrical, physical, chemical and other natural properties of the several wares, for it is precisely in these that they differ from one another, and we are seeking that in which they are all identical. Now in setting aside all these natural properties, we are setting aside all that gives the wares a value in use, and there is nothing left them but the single property of being products of labour. But the wares, as they stand, are the products of many different kinds of labour, each of which was engaged in conferring upon them the special physical properties in virtue of which they possess specific utilities. Now to get at that in which all wares are identical we have been obliged to strip off all these physical properties in which they differ, so that if we still regard them as products of labour, it must be labour that has no specific character or direction, mere ‘abstract and indifferent human labour,’ the expenditure of so much human brain and muscle, etc. The Gleichheit, then, of the several wares consists in the fact that they are all products of abstract human labour, and the equation x of ware A = y of ware B, holds in virtue of the fact that it requires the same amount of abstract human labour to produce x of ware A or y of ware B … .
Now the leap by which this reasoning lands us in labour as the sole constituent element of value appears to me so surprising that I am prepared to learn that the yet unpublished portions of Das Kapital contain supplementary or elucidatory matter which may set it in a new light. Meanwhile the analysis appears to be given as complete and adequate, so far as it goes, and I can, therefore, only take it as I find it and try to test its validity. But instead of directly confronting it with what seems to be the true analysis of the phenomenon of exchange, I will follow it out a little further, and we shall see that Marx himself introduces a modification into his result (or develops a half-latent implication in it), in such a way as to vitiate the very analysis on which that result is founded, and to lead us, if we work it out, to what I regard as the true solution of the problem.
A few pages, then, after we have been told that wares regarded as ‘valuables’ must be stripped of all their physical attributes, i.e. of everything that gives them their value in use, and reduced to one identical spectral objectivity, as mere jellies of undistinguishable abstract human labour, and that it is this abstract human labour which constitutes them valuables, we find the important statement that the labour does not count unless it is useful (pp. 15, 16, 64 [16a, 35a]). Simple and obvious as this seems, it in reality surrenders the whole of the previous analysis, for if it is only useful labour that counts, then in stripping the wares of all the specific properties conferred upon them by specific kinds of useful work, we must not be supposed to have stripped them of the abstract utility, conferred upon them by abstractly useful work. If only useful labour counts, then when the wares are reduced to mere indifferent products of such labour in the abstract, they are still useful in the abstract, and therefore it is not true that ‘nothing remains to them but the one attribute of being products of labour’ (p. 12 ), for the attribute of being useful also remains to them. In this all wares are alike.” (Wicksteed 1933: 710–712 = Wicksteed 1884).
Moreover, Wicksteed’s criticism of Marx’s argument for the labour theory and his broader critique was so influential that George Bernard Shaw (1856–1950) abandoned his early flirtation with Marxism (Shaw 1885 = Shaw 1933), and was one of the many factors that caused the emerging British socialist movement to largely free itself from Marxist dogma.
Furthermore, as Wicksteed points out, under Marx’s initial argument, we could just as easily argue that there is indeed a common basis for a commodity exchange, and this is that both goods exchanged have subjective utility to the people receiving them in the trade:
“The exchange of two wares implies a heterogeneity (Verschiedenheit) and a homogeneity (Gleichheit). This is implied in the fact that they are exchangeable. And here I must challenge the attention of students of Das Kapital to the fact that the analysis by which ‘labour’ is reached as the ultimate constituent element of (exchange) value, starts from the naked fact of exchangeability and is said to be involved in that fact. It is true that in the instances given by Marx the articles exchanged are wares (i.e. commodities which have been produced for the express purpose of exchange), and moreover wares which can practically be produced in almost unlimited quantities. It is true also that Marx elsewhere virtually defines value so as to make it essentially dependent upon human labour (p. 81 [43a]). But for all that his analysis is based on the bare fact of exchangeability. This fact alone establishes Verschiedenkeit and Gleichheit, heterogeneity and homogeneity. Any two things which normally exchange for each other, whether products of labour or not, whether they have, or have not, what we choose to call value, must have that ‘common something’ in virtue of which things exchange and can be equated with each other; and all legitimate inferences as to wares which are drawn from the bare fact of exchange must be equally legitimate when applied to other exchangeable things.Although Wicksteed is wrong to go on from this to Jevonian marginal utility analysis with a quantitative measure of utility, he is still correct in one respect: you could just as easily conclude, contrary to Marx, that some kind of subjective utility is the common, underlying and necessary element of the exchange of commodities, though there does not need to be an equality of subjective utility. Rather, when one person exchanges one good for another, it seems likely that in most cases he values the good he receives more highly than the good he gives up in the trade, and the same thing can be said of the other person in the trade.
Now the ‘common something,’ which all exchangeable things contain, is neither more nor less than abstract utility, i.e. power of satisfying human desires.” (Wicksteed 1933: 710–712 = Wicksteed 1884).
Indeed Marx’s argument in Capital here as it stands is badly flawed:
“Let us take two commodities, e. g., corn and iron. The proportions in which they are exchangeable, whatever those proportions may be, can always be represented by an equation in which a given quantity of corn is equated to some quantity of iron: e. g., 1 quarter corn=x cwt. iron. What does this equation tell us? It tells us that in two different things—in 1 quarter of corn and x cwt. of iron, there exists in equal quantities something common to both. The two things must therefore be equal to a third, which in itself is neither the one nor the other. Each of them, so far as it is exchange value, must therefore be reducible to this third.” (Marx 1906: 43–44).Now in a barter exchange, there is an equality in the sense in which, say, 2 sheep might exchange for 1 cow, and only two sheep and nothing more are exchanged, and vice versa. But this is trivial sense of equality. There is no further and obvious logical or empirical sense that the exchange is an equality of some third quantity, such as abstract socially-necessary labour time.
Marx’s leap to the conclusion that there must be an additional, fundamental unit in which both commodities can be measured quantitatively and by which they can both be shown to be equivalent simply does not follow. It is a non sequitur. Marx’s argument was shoddy and commits a straightforward logical fallacy.
Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.
Shaw, George Bernard. 1885. “The Jevonian Criticism of Marx,” To-day n.s. 3 (January): 22–26.
Shaw, George Bernard. 1933. “The Jevonian Criticism of Marx,” in Philip H. Wicksteed, The Common Sense of Political Economy and Selected Papers and Reviews on Economic Theory. Routledge & Kegan Paul Ltd, London. 724–730.
Wicksteed, Philip H. 1884. “The Marxian Theory of Value. Das Kapital: A Criticism,” To-Day n.s. 2 (October): 388–409.
Wicksteed, Philip H. 1933. The Common Sense of Political Economy and Selected Papers and Reviews on Economic Theory. Routledge & Kegan Paul Ltd, London.
If useful labor is labor that outputs a use-value, then socially necessary labor time, being a measure of value under capitalist (commodity) production, is necessarily useful labor.ReplyDelete
Wicksteed says we must still consider "abstract utility." Cool thought. Let's examine it, shall we?
Let's start with the distinction between abstract and concrete labor. Concrete labor, as we know, is a particular qualitative sort of labor (carving, stitching, etc), and abstract labor is labor qua labor — a category to which all concrete labors belong, and which cannot exist independently of concrete labor.
Now, let's do the same thing on the consumptive side as the productive side: an object of utility is a good that satisfies certain concrete desires (a toothbrush, a lawnmower, etc.). An abstraction that forms a suitable parallel would therefore have to refer to an overarching category that is only expressed through its members.
As it happens, we already have just such a thing! "Use-value," we call this category. Just as one cannot aggregate baking and painting unless one abstracts from them as labor qua labor measured in time, one cannot aggregate toothbrushes and lawnmowers unless one abstracts from them as use-values qua use-values, measured in the number of goods.
In other words, this is already addressed in this theory.
I suspect Wicksteed missed this distinction; notice how he never uses the abstraction of "use-value," instead referring to a good's "value in use" as a property of said good, rather than as a unit.
Rather, when one person exchanges one good for another, it seems likely that in most cases he values the good he receives more highly than the good he gives up in the trade, and the same thing can be said of the other person in the trade.
Of course. The whole phenomenon of trade is predicated on this truism, and thus it's implied in Marx's value theory.
There is no further and obvious logical or empirical sense that the exchange is an equality of some third quantity, such as abstract socially-necessary labour time.
Interesting! So first you argue that the "third thing" is abstract utility, and then follow up by saying there is no third thing. Shotgun approach, I guess?
Anyway, your "non sequitur" only works as such if quote Marx out of context. Check the paragraph immediately before the one you pulled:
"A given commodity, e.g., a quarter of wheat is exchanged for x blacking, y silk, or z gold, &c. – in short, for other commodities in the most different proportions. Instead of one exchange value, the wheat has, therefore, a great many. But since x blacking, y silk, or z gold &c., each represents the exchange value of one quarter of wheat, x blacking, y silk, z gold, &c., must, as exchange values, be replaceable by each other, or equal to each other. Therefore, first: the valid exchange values of a given commodity express something equal; secondly, exchange value, generally, is only the mode of expression, the phenomenal form, of something contained in it, yet distinguishable from it."
In other words, in a market with stable prices such that x amount of A trades for y amount of B, if I could trade a chair for either a shovel or a barrel, then these three things are "equal." It suggests that a shovel also trades for a barrel.
Consider the alternative: a chair trades for a barrel or a shovel, but a shovel trades for two barrels. Market participants trade a shovel for two barrels, use these to trade for two chairs, and trade that for two shovels, and trade that for four chairs...
Put another way, 1 shovel trades for 2 shovels.
In order to argue that 1X = 2X is a stable ratio, we'd need to assume either that X=0 or that we've gotten something from nothing (1=2). If you're prepared to make the latter argument, I can definitely see how you might disagree with Marx that equality should be supposed in the case of market exchange.
">There is no further and obvious logical orDelete
>empirical sense that the exchange is an
>equality of some third quantity, such
> as abstract socially-necessary labour time.
Interesting! So first you argue that the "third thing" is abstract utility, and then follow up by saying there is no third thing"
I deny that there is "no further and obvious logical or empirical sense that the exchange is an equality of some third quantity." Note the word "equality": that there is a common element (subjective utility) is what I said, NOT that it is an equality of subjective utility (which I deny above).
There is no contradiction here. You have merely failed to understand the argument.
(2) Your Marx quote does not show anything has been taken out of context at all. It fits right in with the meaning of the passage after it: according to Marx, there is (supposedly) a third quantity called abstract labour which when equal explains the alleged "equality" of exchange values.
In short, once again there is no contradiction.
I deny that there is "no further and obvious logical or empirical sense that the exchange is an equality of some third quantity." Note the word "equality": that there is a common element (subjective utility) is what I said, NOT that it is an equality of subjective utility (which I deny above).Delete
Wait, so now you deny the passage I quoted? Or did you mean to omit the "no"?
Fair enough to say that subjective utility involves a double inequality, but the thing you're missing is that the double (subjective) inequality coincides with an (objective) equality. This can be shown, as I did in my example, without even making reference to value as such.
(2) Yes, the two fit together contextually, that is precisely the point I sought to make. Your passage made it seem as though Marx only introduced corn and iron, and then said (apparently apropos of nothing) that there must be a Third Thing, which to an unfamiliar reader may appear to be a non sequitur. Yet the paragraph immediately before makes it clearer that he is referring to this occurring in the broader context of a set of market prices, where multiple commodities all come into relation and therefore stable, non-arbitrary exchange rates emerge. Hence, equality. Thus, equality can be established prior to any discussion of labor.
"the double (subjective) inequality coincides with an (objective) equality"Delete
Only in equilibrium though, right?
Philippe: No. Changes in supply and demand would have no bearing on this, as it's a more fundamental aspect of market pricing.Delete
Consider my last example, which I never even specified as "equilibrium." But let's say it was. Now say there's a shortage of shovels, and thus shovels now trade for 2 barrels or 2 chairs each. If you trade a shovel for 2 barrels at that price, then trade them back for shovels, you'll only get 1. Similarly, if you trade them for 2 chairs, they also will get you 1 shovel. Just like that, the same phenomenon is witnessed out of equilibrium. And yet somehow, I doubt any of this comes as a surprise to you; it's pretty commonsense stuff, really.
in equilibrium (in which supply and demand are equal) a hour of labour-time exchanges for an hour of labour-time, right?Delete
If, instead, demand is higher than supply, then an hour of labour-time must exchange for less than a hour of labour-time, due to the scarcity of the commodity demanded.
in equilibrium (in which supply and demand are equal) a hour of labour-time exchanges for an hour of labour-time, right?Delete
Well, first of all, labor is not the thing that is bought and sold directly. The thing that a capitalist buys is not labor but labor-power, the capacity to labor for a given period of time. They then seek to get the most labor out of that period as they can, and the difference between the two is the unpaid labor, or surplus value.
Incidentally, Marx refers to labor under capitalism as "indirectly social" for this reason.
In terms of commodity exchange (which is direct), then even if they're exchanged at "equilibrium prices," that is not the same thing as trading at value, because of the differences in capital to labor employed. (Ironically, for this exact reason, prices that realize more or less than the average rate of profit may nevertheless still realize their exact value! I.e., a higher-than-average OOC with a higher-than-average profitability may equalize s and p.)
You are correct that exchange may yield different quantities of average labor trading for one another (a point I make somewhere under basically ever post), but as far as the direct objects of exchange go, you will never find a stable 1=2 relationship for identical commodities, whether they be shovels, couches, barrels, computer monitors, guitar picks, or hang gliders, for no reason more complicated than "we don't have magic Star Trek matter replicators."
(Unless there's something you want to tell me!)
Yes. It all comes down to focusing on one-side of the dialectic while ignoring the other. Labour creates value. But only assuming that the thing produced is desired ('useful' seems to me a term that is normatively loaded and veers toward utilitarianism). Clearly there is both a production and a consumption side to the creation of value.ReplyDelete
Regarding the British socialist movement freeing itself from Marx, I'm not sure that this was a good thing at the time. The Fabians in the early 20th century really had nothing of interest to say because of their lack of an economic framework. By contrast the German moderate Marxists were far more hard-headed in their approach -- the Erhard program in particular which Marx directly influenced via Kautsky.
It was only during and after the war when the Labour Party adopted left Keynesianism that they became a force to be reckoned with. But in the early 20th century I would have taken the Marxist social democrats in Germany over the Fabians any day. While the former were trying to figure out how to restructure the economy, the latter were obsessed with eugenics and all sorts of rubbish.
Clearly there is both a production and a consumption side to the creation of value.Delete
As Iain notes below, this is very much the case with Marx, as with others.
I don't usually recommend the Grundrisse to people, since it's rambly and at times partially formed, probably apt to obscure more than it clarifies. However, the exception to this is the Introduction to it, which I usually recommend people read as a standalone essay, mainly because it states clearly a few things that rarely become explicit in much of the finished work — in particular, it includes a section on the relationship of consumption to production that makes it abundantly clear that he was keyed into exactly what you're saying, and that this is what the value/use-value distinction is expressing.
It was only during and after the war when the Labour Party adopted left Keynesianism that they became a force to be reckoned with.
Until this recent SNP hullabaloo, at least...
Erfurt program. Excuse me. Erhard was the post-war German neoliberal finance minister.ReplyDelete
I would add to Wicksteed's critique that in a capitalist system you decidedly do *not* need a 'common something' between differing commodities to make them exchangeable, be it utility or abstract labor or something else, because capitalism already has a 'common something' built into the act of exchange, and that is the price itself.ReplyDelete
Positing that there is some 'common element' in commodities beyond their ability to be expressed quantitatively in prices is not necessary, and whatever 'common element' you dream up is subject to Occam's razor. Prices themselves (and by extension the price system) are the universal quanta what allow for qualitatively different, heterogeneous commodities to enter into a homogenous quantitative relationship. No further unit is needed to explain the act of exchange.
Surely you can see how this begs the question?Delete
But then again, maybe appearance is all there is to reality. Maybe exchange doesn't imply commensurability. Maybe...
This is all very silly. The Labour Theory of Value is an attempt to explain the process by which products exchange. As such, it is a theory of exchange value -- exchange can only exist when a good has a use value, a utility for someone else. Without this then there would be no exchange.ReplyDelete
This explains why Ricardo, Proudhon, Marx, Smith, etc. all state very clearly that a commodity must have a use-value, a utility, in order to have a price, an exchange value.
The labour theory of value then seeks to explain the dynamics of exchange value, of price. They do this by focusing on production, the price it takes to produce something. This is not the same as the market price although production price (or "natural" price in Smith) regulates the market price by, via higher/lower profits, decreasing/increasing the amount of goods on the market.
As such, the labour theory of value is a theory of price dynamics -- it points of what Proudhon called "the law of value", namely that without production the market process cannot be understood.
Neoclassical economics did precisely that -- ignore time and production. They took as given all goods at a snap shot and discovered their prices within that abstraction. They did so because socialists were using classical theory to critique capitalism as exploitative (neo-classical marginal productivity theory was developed by Clarke explicitly to defend capitalism against socialist criticism).
So in terms of a commodity needing a use-value, this does not contradict the labour theory of value as its whole point is to understand exchange!
In terms of Marx, he did indeed make a relatively simple notion much harder -- Ricardo's book is far better in giving the context Marx takes for granted.
An Anarchist FAQ
I think you make an interesting point on the distinction between value, which amounts to use-value for Marx, and exchange value - the exchange ratio or PRICE of a good, which Marx considers to be abstract labor value - but you're insight masks the irrelevance of Marx's whole endeavor. I think you and some of the above comments fail to recognize the main point of the above author that Marx's search for the COMMON quality or process to all goods is a foolish pursuit in and of itself. It is utterly unnecessary.Delete
Things do not need a common quality or process in order for things to arrive at a particular exchange ratio. Any ratio arises because at least TWO SEPARATE INDIVIDUALS HAVE TWO DIFFERENT ASSESSMENTS OF VALUE. Marx ignores the fact that there are two different perspectives within an exchange. Marx ignores the human actors involved in the exchange. If Marx wasn't searching for some ghostly metaphysical substance he would have realized that it is the difference between the goods' use-values that allows an exchange ratio to occur at all. Each person sees the good they are selling at that ratio as LESS valuable than the other person's goods. So it is the very fact that things are different that allows for an exchange ratio to exist. You don't need any other explanation to arrive at an exchange ratio. You don't need Marx's universal, common abstract substance to explain price. Marx creates the need to find a common substance universal to all goods out of whole cloth.