Sunday, November 29, 2015

Marx and Engels’ Attempt to Salvage the Law of Value in Volume 1 of Capital

I cannot stress enough how important this issue is for clarifying and refuting Marx’s economic theory. Though I have said much of what is below before, it bears repeating with some new observations.

In essence, Marx published volume 1 of Capital in German in 1867, but only volume 1 of Capital was published in Marx’s lifetime. The other volumes were edited and published by Engels (for an extended discussion of this, see here). For some reason, Marx refused to publish volumes 2 and 3.

In volume 1, Marx set out a law of value based on the labour theory of value, in which socially necessary labour time was the anchor for the price system in modern capitalism. There is no convincing evidence that (1) Marx regarded this law of value as a totally abstract “simplifying assumption” or that (2) he did not mean to apply it to the advanced industrial capitalism of the 19th century as an empirical explanation of price determination.

But when volume 3 of Capital was edited and published by Engels critics quickly pointed out that the theory of value in volume 3 was radically inconsistent with that of volume 1.

This devastating problem clearly worried Engels, and this can be seen in an article Engels wrote in May 1895 for the Neue Zeit (Marx 1991: 1027, n.), which is available as the “Supplement and Addendum” to Volume 3 of Capital in Marx (1991: 1027–1047).

Right at the beginning of this supplement, Engels notes that people such as Achille Loria had pointed to the devastating contradiction between volume 1 and volume 3 of Capital (Marx 1991: 1027–1028).

Next, Engels mentions that Werner Sombart, in a review of Marx’s work (Sombart 1894), declared that the labour theory of value as presented in volume 1 of Capital could not be empirically supported and was a mere “logical” concept (Marx 1991: 1032).

So, too, Conrad Schmidt in an 1895 review of volume 3 (Schmidt 1895) had also declared that the labour theory of value was a “necessary fiction” (Marx 1991: 1032). Engels describes Schmidt’s criticisms:
“Schmidt, too, has his formal reservations about the law of value. He calls it a scientific hypothesis put forward to explain the actual exchange process, which proves the necessary theoretical point of departure, illuminating and indispensable even for the phenomena of prices under competition, which appear completely to contradict it. Without the law of value, in his opinion too, any theoretical insight into the economic mechanism of capitalist reality is impossible. In a personal letter which he has allowed me to mention, Schmidt declares that the law of value in the capitalist form of production is a fiction, though a theoretically necessary one.” (Marx 1991: 1032).
Now it is clear that Engels’ “law of value” here is referring to the idea that commodities tend to exchange at their pure labour values.

Engels was well aware that hostile critics of Marx had declared that volume 3 of Capital utterly contradicted and overthrew the theory of value in volume 1. It seems that Conrad Schmidt was actually one of the first to point out the contradiction between commodities tending to exchange at their labour values and an average rate of profit in his 1889 work Die Durchschnittsprofitrate auf Grundlage des Marxschen Wertgesetzes [The Average Rate of Profit on the basis of Marx’s Law of Value] (Stuttgart, 1889) (see Böhm-Bawerk 1949: 28, with n. 2).

Engels desperately sought a solution and found a passage in volume 3 of Capital where Marx himself was trying to salvage the theory of value in volume 1, which had been overthrown by that in volume 3.

That passage of Marx comes in Chapter 10 of volume 3 and is as follows:
“The exchange of commodities at their values, or approximately at their values, requires, therefore, a much lower stage than their exchange at their prices of production, which requires a relatively high development of capitalist production.

Whatever may be the way in which the prices of the various commodities are first fixed or mutually regulated, the law of value always dominates their movements. If the labor time required for the production of these commodities is reduced, prices fall; if it is increased, prices rise, other circumstances remaining the same.

Aside from the fact that prices and their movements are dominated by the law of value, it is quite appropriate, under these circumstances, to regard the value of commodities not only theoretically, but also historically, as existing prior to the prices of production. This applies to conditions, in which the laborer owns his means of production, and this is the condition of the land-owning farmer and of the craftsman in the old world as well as the new. This agrees also with the view formerly expressed by me that the development of product into commodities arises through the exchange between different communes, not through that between the members of the same commune. It applies not only to this primitive condition, but also to subsequent conditions based on slavery or serfdom, and to the guild organisation of handicrafts, so long as the means of production installed in one line of production cannot be transferred to another line except under difficulties, so that the various lines of production maintain, to a certain degree, the same mutual relations as foreign countries or communistic groups.

In order that the prices at which commodities are exchanged with one another may correspond approximately to their values, no other conditions are required but the following: 1) The exchange of the various commodities must no longer be accidental or occasional, 2) So far as the direct exchange of commodities is concerned, these commodities must be produced on both sides in sufficient quantities to meet mutual requirements, a thing easily learned by experience in trading, and therefore a natural outgrowth of continued trading, 3) So far as selling is concerned, there must be no accidental or artificial monopoly which may enable either of the contracting sides to sell commodities above their value or compel others to sell below value. An accidental monopoly is one which a buyer or seller acquires by an accidental proportion of supply to demand.

The assumption that the commodities of the various spheres of production are sold at their value implies, of course, only that their value is the center of gravity around which prices fluctuate, and around which their rise and fall tends to an equilibrium.”
(Marx 1909: 208–210).
So here Marx was saying that the theory of value in volume 1 – that commodities tend to exchange at their pure labour values which are anchors for the price system – was a historically contingent phenomenon existing in the “lower stage … of capitalist production” and before the emergence of a higher stage of capitalism where Ricardo’s prices of production are the anchors for the price system.

It is particularly interesting to note how Marx specifically described the theory of value in volume 1 as follows:
“The assumption that the commodities of the various spheres of production are sold at their value implies, of course, only that their value is the center of gravity around which prices fluctuate, and around which their rise and fall tends to an equilibrium.” (Marx 1909: 208–210).
This and Marx’s whole discussion around the passage clearly damn and refute all those pathetic Marxist hacks who want to tell us that the law of value in volume 1 – namely, that commodities tend to exchange at their pure labour values which are anchors for the price system – is only a “simplifying assumption” or some highly abstract system never intended to apply to the real world.

Clearly Marx did even in volume 3 of Capital apply it to the capitalist system in an empirical sense, but to those historical periods at a “lower stage … of capitalist production” confined to the older medieval and pre-modern eras. Crucially, this is exactly how Engels interpreted the passage, as we can see below in a quotation from Engels’ supplement to volume 3.

Engels cites the passage I have quoted above from volume 3 of Capital and says this:
“If Marx had been able to go through the third volume again, he would undoubtedly have elaborated this passage significantly. As it stands, it gives only an outline sketch of what needs to be said on the point in question. Let us therefore go into the matter somewhat more closely.

We all know that at the beginnings of society products are used by the producers themselves, these producers living in indigenous communities that are organized more or less on a communist basis; that the exchange of their surplus products with foreigners, which introduces the transformation of products into commodities, is of later date. It takes place first of all simply between individual communities of different tribes and only later does it come to prevail within the community, where it makes a decisive contribution to the dissolution of this community into larger or smaller family groups. Even after this dissolution, however, the family heads who exchange with one another remain working peasant farmers, who produce almost all their requirements on their own holdings, with the aid of their families, and obtain only a small portion of the items they need from outside, in exchange for their own surplus product. Not only does the family pursue agriculture and stock-raising, it also works up the products of these activities into finished articles of use, still doing its own milling in places with their hand mill, baking bread, spinning, dyeing, weaving flax and wool, curing leather, erecting and repairing wooden buildings, producing tools and equipment, and often doing its own carpentry and metalwork too; so that the family or family group is basically self-sufficient.

Now the little that such a family has to obtain from others by exchange, or buy, consisted right up to the early nineteenth century, in Germany, predominantly of objects of handicraft production, i.e. things whose mode of production was in no way strange to the peasant and which he himself failed to produce only because either the raw material was unavailable or the purchased article was much better or very much cheaper. For the peasant of the Middle Ages, therefore, the labour-time needed to reproduce the objects he obtained in exchange was quite accurately known. The village smith and cartwright were at work under his very eyes; similarly the tailor and shoemaker, who in my own youth still travelled round to our Rhineland peasants in turn, working up materials provided into clothes and shoes. Both the peasant and the people from whom he bought were workers themselves, and the articles exchanged were their own products. What had they applied in the production of these articles? Labour, and labour alone: to replace tools, to produce raw material and work it up, all they spent was their own labour-power; how else then could they exchange these products of theirs with those of other working producers than in proportion to the labour applied to them? The labour-time applied to these products, then, was more than just the most suitable measure for the quantitative determination of the magnitudes to be exchanged; no other measure was possible. Or are we to believe that peasant and village artisan were so stupid that one of them would part with the product of ten hours’ labour for that of a single hour? For the entire period of natural peasant economy, no other exchange is possible except that in which the amounts of commodities exchanged tend more and more to be measured according to the amounts of labour embodied in them. From the moment money penetrates into this economic mode, the tendency of adaptation to the law of value (Marx’s formulation, nota bene!) becomes more explicit, though it is already infringed by the interventions of usurer’s capital and fiscal extortion, so that the periods over which prices approximate on average to values, down to a negligible difference in magnitude, already become more drawn out.

The same applies to exchange between the products of peasants and those of urban artisans. At the beginning, this takes place directly, without the mediation of the merchant, on the town market-days when the peasant sells and makes his purchases. Here, too, the artisan’s conditions of labour are known to the peasant, and the peasant’s to the artisan. He is himself still one part peasant, and not only has his kitchen-garden and orchard but also very often a bit of a field, one or two cows, pigs, fowl, etc. People in the Middle Ages were thus in a position to reckon up each other’s production costs in raw and ancillary materials, and in labour-time, with a fair degree of accuracy – at least as far as articles of general daily use were concerned.

But how could the amount of labour be reckoned, even indirectly and relatively, when this served as the measure of exchange for products that required more prolonged labour, interrupted and at irregular intervals, and uncertain in its results, products like corn or cattle, for instance? And, moreover, with people who were unable to count? Evidently, only by a lengthy process of zig-zag approximation, often groping back and forth in the dark, in which, as in other things, wisdom was attained only by painful accident. But the need for each person to have a rough idea of his own costs helped time and again in the correct direction, and the small number of types of article coming into exchange, as well as the stable mode of their production, often over centuries, made the goal more easily attainable. That it in no way took so long until the relative values of these products were established with a fair degree of accuracy is shown by the simple fact that the commodity in which this seems most difficult on account of the long production time of the individual item, i.e. cattle, was the first fairly generally recognized money commodity. In order to arrive at the value of cattle, its exchange ratio with a whole series of other commodities must already have won established recognition to a relatively unusual degree, it must be unchallenged over an area of several tribes. And the people of that time were certainly clever enough – the cattle-breeders as well as their customers – not to part with the labour-time they had spent without an equivalent in exchange. On the contrary, the closer people stand to the original state of commodity production – e.g. Russians and Orientals – the more time they still spend today in extracting full compensation for the labour-time spent on a product by long and stubborn haggling.

Proceeding from this determination of value by labour-time, commodity production as a whole, and with it the manifold relationships in which the different aspects of the law of value make themselves felt, now develops as presented in Part One of Capital Volume 1; therefore, in particular, the conditions become established under which labour is value-forming. These conditions, moreover, prevail although those involved do not become aware of them, so that they can be abstracted from everyday practice only by tedious theoretical analysis; they operate in the form of a natural law, which as Marx showed followed necessarily from the nature of commodity production. The most important and incisive progress was the transition to metal money, but this had the consequence that the determination of value by labour-time was no longer visibly apparent on the surface of commodity exchange. Money became the decisive measure of value for practical purposes, and all the more so, the more diverse were the commodities coming into trade, the more they originated from distant countries, and the less therefore the labour-time needed for their production could be checked. Even the money itself came mostly from abroad at first; and when it was obtained in a particular country as precious metal, the peasant and artisan were in no position to assess even approximately the labour applied to it, while their own awareness of the value-measuring property of labour was also pretty well obscured by the custom of reckoning in money; money came to represent absolute value in the popular conception.

To sum up, Marx’s law of value applies universally, as much as any economic laws do apply, for the entire period of simple commodity production, i.e. up to the time at which this undergoes a modification by the onset of the capitalist form of production. Up till then, prices gravitate to the values determined by Marx’s law and oscillate around these values, so that the more completely simple commodity production develops, the more do average prices coincide with values for longer periods when not interrupted by external violent disturbances, and with the insignificant variations we mentioned earlier. Thus the Marxian law of value has a universal economic validity for an era lasting from the beginning of the exchange that transforms products into commodities down to the fifteenth century of our epoch.
But commodity exchange dates from a time before any written history, going back to at least 3500 B.C. in Egypt, and 4000 B.C. or maybe even 6000 B.C. in Babylon; thus the law of value prevailed for a period of some five to seven millennia. We may now admire the profundity of Mr Loria in calling the value that was generally and directly prevalent throughout this time a value at which commodities never were sold nor could be sold, and which no economist will ever bother himself with if he has a glimmer of healthy common sense!” (Marx 1991: 1034–1038).
The passage in yellow highlighting is crucial: this is how Engels understood the theory of value in volume 1 of Capital at the end of his life.

This view is that commodities did historically tend to exchange at pure labour values in less developed forms of capitalism up until about the 15th century. That is, it actually happened in the pre-modern “period of simple commodity production” (Marx 1991: 1037).

Then what happened was that the “transition to metal money” obscured exchange at pure labour values:
“The most important and incisive progress was the transition to metal money, but this had the consequence that the determination of value by labour-time was no longer visibly apparent on the surface of commodity exchange. Money became the decisive measure of value for practical purposes, and all the more so, the more diverse were the commodities coming into trade, the more they originated from distant countries, and the less therefore the labour-time needed for their production could be checked. Even the money itself came mostly from abroad at first; and when it was obtained in a particular country as precious metal, the peasant and artisan were in no position to assess even approximately the labour applied to it, while their own awareness of the value-measuring property of labour was also pretty well obscured by the custom of reckoning in money; money came to represent absolute value in the popular conception.” (Marx 1991: 1037).
After this point, the advanced form of modern capitalist production developed and prices of production replaced labour values as the anchors for the price system.

This view of Engels is splendidly confirmed in a letter he wrote to Werner Sombart (1863–1941) on March 11, 1895 about the labour theory of value (on which, see here), which was a response to a hostile review of volume 3 of Capital by Sombart (1894).

The crucial passage from this letter of Engels is below:
“When commodity exchange began, when products gradually turned into commodities, they were exchanged approximately according to their value. It was the amount of labour expended on two objects which provided the only standard for their quantitative comparison. Thus value had a direct and real existence at that time. We know that this direct realisation of value in exchange ceased and that now it no longer happens. And I believe that it won’t be particularly difficult for you to trace the intermediate links, at least in general outline, that lead from directly real value to the value of the capitalist mode of production, which is so thoroughly hidden that our economists can calmly deny its existence. A genuinely historical exposition of these processes, which does indeed require thorough research but in return promises amply rewarding results, would be a very valuable supplement to Capital.”
Letter, Engels to W. Sombart, from London, March 11, 1895
https://www.marxists.org/archive/marx/works/1895/letters/95_03_11.htm
Unfortunately, Engels’ attempt to save the law of value in volume 1 – which was undoubtedly a development of Marx’s own desperate attempt to save it as we have seen above – is still a feeble and unconvincing theory.

Why? The reason is that Marx, in volume 1, never makes any such qualifications or limitations to the law of value. In fact, in volume 1, Marx states that money prices depend on the labour value embodied in units of gold or silver, so that long-run prices are determined by abstract socially-necessary labour time needed to produce relevant units of the money commodity (Marx 1906: 108, 111). But Marx says nothing about the rise of commodity money overthrowing his law of value in modern capitalist production.

At the same time, Marx thinks that the second mechanism driving prices is the fluctuation of labour values of commodities as against money (Marx 1906: 111). This is succinctly summed up in what Marx calls the “laws of the exchange of commodities” in Chapter 5 of volume 1:
“It is true, commodities may be sold at prices deviating from their values, but these deviations are to be considered as infractions of the laws of the exchange of commodities, which, in its normal state is an exchange of equivalents, consequently, no method for increasing value.” (Marx 1906: 176–177).
So either (1) Marx meant to apply this to modern capitalism in its contemporary form or (2) he was so incompetent and useless he never told his readers how the theory had to be strictly limited to pre-modern times. Either way Marx is damned.

Moreover, as I argued in the original version of this post, there is no convincing empirical evidence for Marx’s and Engels’ attempt to salvage the law of value in volume 1 by restricting it to the past. Once we realise this, it is the death blow to the Marxist labour theory of value.

The final view of Engels, then, was that the law of value in volume 1 of Capital had to be restricted to the pre-modern world of commodity exchange, but we have no good reason to accept that the theory properly describes price determination in that era. In volume 3 of Capital as edited by Engels, Classical long-run equilibrium prices of production are the anchors for the price system, not socially necessary labour time values. This is an admission that the law of value in volume 1 is irrelevant to the modern world.

Instead, the Marxism of the volume 3 of Capital, like modern Sraffianism, sees long-run equilibrium prices, based on cost of production and a uniform rate of profit, as the anchors or centres of gravity for the price system around which prices fluctuate.

Unfortunately, even this concept of a tendency to long-run equilibrium prices in modern capitalism has grave difficulties, and in the end such an idea should be regarded as an unrealistic assumption in an overly analytic, abstract model set in logical time (Lee and Jo 2011: 868–869), where ultimately it can only be assumed by definition to be true (on this issue, see here).

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.

Engels, F. 1895. Letter, Engels to Conrad Schmidt, March 12, 1895
https://www.marxists.org/archive/marx/works/1895/letters/95_03_12.htm

Engels, F. 1895. Supplement to Capital, Volume III
https://www.marxists.org/archive/marx/works/1894-c3/supp.htm

Lee, Frederic S. and Tae-Hee Jo. 2011. “Social Surplus Approach and Heterodox Economics,” Journal of Economic Issues 45.4: 857–875.

Marx, Karl. 1909. Capital. A Critique of Political Economy (vol. 3; trans. Ernst Untermann from 1st German edn.). Charles H. Kerr & Co., Chicago.

Marx, Karl. 1991. Capital. A Critique of Political Economy. Volume Three (trans. David Fernbach). Penguin Books, London.

Schmidt, Conrad. 1889. Die Durchschnittsprofitrate auf Grundlage des Marxschen Wertgesetzes [The Average Rate of Profit on the basis of Marx’s Law of Value]. Stuttgart.

Schmidt, Conrad. 1895. “Der dritte Band des Kapital,” Sozialpolitisches Zentralblatt 22 (25th February): 254–258.

Sombart, Werner. 1894. “Zur Kritik des ökonomischen Systems von Karl Marx” [Toward a Critique of the Economic System of Karl Marx], Archiv für soziale Gesetzgebung und Statistik 7: 555–594.

27 comments:

  1. Hi Lord Keynes,
    Sorry for putting this as a comment, I tried searching for an email address, without success.

    The largest forum in Ireland, which I frequent and which has a problem with restricting views on economic theory, I've managed to convince people to setup a sub-forum dedicated to Political-Economics/Political-Economy, to resolve these restrictions.

    Would you be able to help the sub-forum, define what Political Economics covers?
    www.boards.ie/vbulletin/showthread.php?t=2057529618

    I'm trying to take as pluralistic an approach to this as possible, and back that it covers the status/validity/history of all economic theories, and how they have contributed to shaping the world economic/socially/politically - based on Kingston Universities course - but it's a very broad term, and it's hard to pin down.

    Given your extensive research on these topics, I figure you may have something to add - maybe even would be interested in discussion in the sub-forum in general :) (I can't guarantee a high quality of debate though - the wider forum has long had a poor quality of debate on economic topics, which I hope this forum helps with - same on most forums I imagine though)

    ReplyDelete
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    1. Will try and have a look. cheers.

      Delete
    2. Thanks! In addition, the subforum may have trouble generating popular/layman interest (I'm having trouble thinking of less-technical topics) - so anything you can think of, that may be a popular draw as a thread in the wider forum, is welcome too!
      www.boards.ie/vbulletin/forumdisplay.php?f=1727

      Delete
  2. I cannot stress enough how important it is to correctly understand the role of the law of value in Marx's theory -- whether one's aim is to apply, defend, or rebut it, one cannot do so without a proper understanding of the theory. Let's begin:

    there is no convincing evidence that (1) Marx regarded this law of value as a totally abstract “simplifying assumption”...

    The most important word in the above quote is "convincing." To assert that there is *no* evidence would be flatly wrong, as I have demonstrated beneath previous posts. However, whether one is "convinced" by said evidence is purely subjective.

    In a scientific discussion, we should strive for objectivity. So, here's a simple but important question: What standard of evidence would you find convincing?

    Right at the beginning of this supplement, Engels notes that people such as Achille Loria had pointed to the devastating contradiction between volume 1 and volume 3 of Capital.

    This is a tendentious reading at best, since Engels did not consider the alleged contradiction to be valid, let alone something "devastating"; in fact, he wrote a lengthy rebuttal of Loria's misunderstanding. Your summary makes no mention of this.

    (A small nitpick before questing further. In a discussion about Marxian economics, one would expect people to use terms associated with it. So why muddy them up by saying things like "pure labor values" when you simply mean "values"? It's just a pleonasm.)

    It seems that Conrad Schmidt was actually one of the first to point out...

    Doubtful, since Marx himself pointed as much out at least as early as 1867.

    Engels desperately sought a solution

    Similarly unlikely that there was any "desperation," in light of the above. Also, attributing negative emotional states for rhetorical purposes is generally considered a gauche move.

    This and Marx’s whole discussion around the passage clearly damn and refute all those pathetic Marxist hacks

    Leaving aside the needless invective, exactly how does this passage that specifically calls it an "assumption" somehow refute the idea that it is an assumption? You leave this unexplained, which is a shame; it's bound to be a grand tale.

    The reason is that Marx, in volume 1, never makes any such qualifications or limitations to the law of value.

    You're a bit less careful here than you were at first. It would have been safer to say "I am not convinced that Marx..." etc. Hope that helps.

    But Marx says nothing about the rise of commodity money overthrowing his law of value in modern capitalist production.

    Right, because it doesn't overthrow it. If any part of this is unclear, let me know, and I'll gladly explain. But space is limited in this comment already.

    Either way Marx is damned.

    You've left out of your options the possibility that you yourself have misinterpreted the theory. Is this not even possible?

    Moreover, as I argued in the original version of this post...

    Thankfully, under that selfsame post there is a lengthy discussion in which a handsome commenter attempts to shed light on the matter. Now, by that point the discussion had been ongoing for months and all parties appear quite short on patience. That said, the content is solid.

    If there's anything else unclear, let me know. I remain, as ever, willing to dispel confusions on this text, mystified as it is by over a century of very vocal misinterpreters.

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    1. First, you have substantive questions you need to answer:

      (1) do you agree that Marx and Engels at least the end of the lives restricted the law of value in volume 1 of Capital to the pre-modern world of commodity exchange? Yes or
      no?

      (2) If "yes" then what is your evidence that Marx also held this view when he published vol. 1? Where is this evidence?

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  3. ">But Marx says nothing about the rise of
    >commodity money overthrowing his law of value in
    >modern capitalist production.

    Right, because it doesn't overthrow it.


    False. Yes, it does. And Engels says so. See the quote above.

    In modern capitalism prices of production became the anchors for the price system, whereas in vol. 1 the law of value is

    “The assumption that the commodities of the various spheres of production are sold at their value implies, of course, only that their value is the center of gravity around which prices fluctuate, and around which their rise and fall tends to an equilibrium.” (Marx 1909: 208–210).

    That is replaced in modern capitalism by prices of production, and as Engels says the use of gold from different countries with totally different SNLT, unknown to users of that gold in Europe, was a fundamental part of the end of the law of value as sketched in vol. 1.

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  4. "Leaving aside the needless invective, exactly how does this passage that specifically calls it an "assumption" somehow refute the idea that it is an assumption? You leave this unexplained, which is a shame; it's bound to be a grand tale."

    lol... Because nowhere does Marx say that it is a totally unreal assumption never meant to apply to the real world. Marx is clearly using the word "assumption" in a different sense from you.

    The whole point of Engels' discussion of this passage is that he understood Marx to be arguing that the law of value in vol. 1 -- "The assumption that the commodities of the various spheres of production are sold at their value implies, of course, only that their value is the center of gravity around which prices fluctuate, and around which their rise and fall tends to an equilibrium" -- really happened in the pre-modern world of commodity exchange "down to the fifteenth century of our epoch."

    This is stated explicitly. You are guilty of the most laughable dishonesty.

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  5. As for the rest of your comment, it is laughable nickpicking pedantry.

    "So why muddy them up by saying things like "pure labor values" when you simply mean "values"? It's just a pleonasm.)"

    Because "pure labour values" has the virtue of being clear and communicating the right idea to the reader.

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    1. Indeed. Not to do would be muddying. The point of contention is precisely whether "value" is the apt word for some imagined labor content. If I asserted that the value of a book was determined by the number of occurrences of the letter e in it, and announced the e theory of value wouldn't a refutation that was careful about distinguishing "B's e value" from any other use of the word value be useful? Clearly.
      You are too patient LK.

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  6. It's rather annoying to split up the discussion all over the place, so I'll just attend to it here.

    (1) do you agree that Marx and Engels at least the end of the lives restricted the law of value in volume 1 of Capital to the pre-modern world of commodity exchange? Yes or no.

    No, but it depends on your meaning. If I were to answer "yes," I'd only be correct if we mean that the real functioning of the law of value were also the exclusive empirical case, unmodified by the effect of great variation in the composition of capital spurred by the development of technology via capitalism. Answering "no" would thus be more generally accurate, since this second factor is acting *in addition* to the law of value -- similar to how other we're able to fly around in airplanes through the operation of other laws acting in tandem with gravity, rather than defying it per se.

    As a realist, it is important for one to distinguish between the domain of the empirical (phenomena capable of being experienced with the senses), the actual (a superset of the empirical that also contains unexperienced events), and the real (a superset of the actual that also includes unactualized mechanisms). A function of scientific experiment is to create conditions that enable us to bring these three into alignment, such that a mechanism is actualized and observable in its direct operation. While this was close to being the case in pre-capitalist commodity exchange, the water is muddied by other factors in our more developed world. But the gravity is still there.

    False. Yes, it does. And Engels says so. See the quote above.

    No, he definitely doesn't. The greater use of metal money "had the consequence that the determination of value by labour-time was no longer visibly apparent on the surface of commodity exchange." See my remarks above about the real/actual/empirical distinction.

    lol... Because nowhere does Marx say that it is a totally unreal assumption never meant to apply to the real world.

    Nor do I, contrary to your assertion. You're already calling me dishonest when it's clear, per the above, that you've misunderstood. In essence, you're invoking a sort of Humean actualism, that "laws" are nothing more than constant conjunctions of events. So: *are* you a realist? Yes or no.

    Because "pure labour values" has the virtue of being clear and communicating the right idea to the reader.

    Considering it departs from the theory you purport to discuss, I disagree.

    The point of contention is precisely whether "value" is the apt word for some imagined labor content.

    No. The point is to discuss a scientific theory that has already defined its terms, in which case the semantics have already been settled. Departing from this only leaves open the door to equivocation, as we've seen numerous times here.

    By the by, Ken, in case you missed it: http://socialdemocracy21stcentury.blogspot.com/2015/11/when-left-becomes-laughing-stock.html?showComment=1448490060202#c2863022930562152094

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    1. (1) "No, but it depends on your meaning. If I were to answer "yes," I'd only be correct if we mean that the real functioning ...

      In other words, you are unable to even answer the question without violating the law of non-contradiction.

      Your answer is incoherent.

      (2) also, I notice you totally ignore the second question: If "yes", then what is your evidence that Marx also held this view when he published vol. 1? Where is this evidence?

      You have said "yes" (admittedly, in your incoherence) so you should be able to say where the evidence is that Marx in vol.1 clearly restricted the law of value there to the pre-modern world of commodity exchange.

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    2. In other words, you are unable to even answer the question without violating the law of non-contradiction.

      No, that implies that I'm trying to claim both P and -P for the same parameter P, when in fact the sense in which it is "yes" assumes one parameter, and the sense in which it is "no" assumes another. In other words, I'm violating non-contradiction if and only if you're committing the fallacy of equivocation by eliding the differences between the two possible readings of your question.

      This is why I insist on clarity of terms; because if we equivocate, we leave open the door to trap questions like yours. If I had simply said "yes" without qualification, you could have said "aha, but then the law of value does not apply generally, contrary to M&E"; if I had simply said "no," you could say "aha, but empirically it is not the case that prices gravitate towards values under modern capitalism!" So, I was absolutely clear about both possible readings, and now you've stuck your foot in your mouth in your haste to find some other "gotcha."

      I'm pretty sure this is not what Aristotle would have wanted.

      (2) also, I notice you totally ignore the second question: If "yes", then what is your evidence that Marx also held this view when he published vol. 1? Where is this evidence?

      I invite you to read the first word of my answer to (1). If the answer is not "yes," then I don't have to answer (2). And the answer can only be "yes" in a way heavily qualified to address your mistaken notion about the ontological status of the law. I say purge the mistake rather than build upon it.

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    3. (1) You're the one continuing to use laughable fallacies of equivocation here. But you seem to have given the dishonest game away below in the latest comments.

      (2) More idiot evasion and dishonesty.

      Delete
  7. ">False. Yes, it does. And Engels says so. See the
    >quote above.

    No, he definitely doesn't.


    Once again, false. Your dishonesty is breathtaking.

    See Engels:

    “When commodity exchange began, when products gradually turned into commodities, they were exchanged approximately according to their value. It was the amount of labour expended on two objects which provided the only standard for their quantitative comparison. Thus value had a direct and real existence at that time. We know that this direct realisation of value in exchange ceased and that now it no longer happens.”
    Letter, Engels to W. Sombart, from London, March 11, 1895
    https://www.marxists.org/archive/marx/works/1895/letters/95_03_11.htm

    Your dishonesty is contemptible beyond words. Your views have been refuted and hang out to dry. No doubt this is why your comments on this blog have rapidly descended into comical incoherence.

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    1. Again, you're misunderstanding. Please hold your breathless accusations of dishonesty until you understand what is under discussion.

      The passage you bolded says much the same as the one I bolded: that the movements of value are no longer directly measurable as surface phenomena -- specifically because value and price diverge. That's literally it.

      Please be more careful going forward.

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    2. As I just said below:

      So you agree that in commodity exchange until the 15th century commodities "exchanged approximately according to their value" but -- as Engels says -- "[w]e know that this direct realisation of value in exchange ceased and that now it no longer happens.”

      That is, so you agree that modern capitalism no longer has a state of affairs where commodities tend to exchange at true labour values and that labour values are not anchors for the price system?

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    3. If by "true labor values" you mean "values" and not something else, then yep.

      Incidentally, are you going to answer the very simple yes/no question I asked? I know those are your favorite, so I figured you'd jump at the chance.

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    4. (1) So you agree with my statements above, and now

      (2) you need to explain what evidence there is in vol. 1 that Marx explicitly held this view too.

      What is your evidence that Marx in his statements in vol. 1 argued that in commodity exchange until the 15th century commodities "exchanged approximately according to their value" but -- as Engels later argued -- "[w]e know that this direct realisation of value in exchange ceased and that now it no longer happens.”

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    5. So you're asking for a Vol 1 quote that says, explicitly, "in early commodity exchange, the law of value was apparent at the surface level, but under modern capitalism it is not"?

      That phrasing is not in there, to my knowledge. Nevertheless, I can demonstrate that, as of the publication of Vol 1, he holds the same theory and historical perspective that appears in the published third volume:

      Proposition 1: Prices of production are not the same thing as values. [Supporting evidence: "average prices do not directly coincide with the values of commodities, as Adam Smith, Ricardo, and others believe." (vol. 1, footnote 24, ch 5)]

      Proposition 2: Prices of production and values differ according to their divergence from the average organic composition of capital. [Supporting evidence: Omitting the published Vol 3, we still have it in from around 1864-1865, the 1863 manuscripts for Theories of Surplus Value, and even older letters. Example: "competition reduces commodities not to their value, but to the cost price [defined here as he later defines price of production], which, depending on the organic composition of the respective capitals, is either above, below or = to their values" (2 August 1862 letter to Engels).]

      Proposition 3: Pre-capitalist commodity exchange featured a high ratio of variable capital to constant capital, and very little variation in the organic composition of capital. [Supporting evidence: "The class of wage labourers, which arose in the latter half of the 14th century, formed then and in the following century only a very small part of the population. ... The subordination of labour to capital was only formal – i.e., the mode of production itself had as yet no specific capitalistic character. Variable capital preponderated greatly over constant. The demand for wage labour grew, therefore, rapidly with every accumulation of capital, whilst the supply of wage labour followed but slowly." (vol 1, chapter 28)]

      From these three premises, we can deduce exactly what I've claimed. Because early commodity exchange had no specific capitalistic character, the growth of constant capital via commodified means of production was severely restricted. OCC varied little as a consequence, which means prices of production were more directly in line with values. Therefore, the law of value was apparent as a surface-level regulator of price. As capitalism develops, differing capital intensities mean increasing OCC variance, and therefore a greater distance between prices of production and values. QED, using sources from the 1860's, without reference to anything Engels touched.

      So, the absence of the requested phrase is a matter of presentation, rather than content. I will argue the presentation is also warranted, as it would be outside the stated scope of vol 1. As he says in the preface to the first edition, the aim of vol 1 is to provide a general theory -- "not a question of the higher or lower degree of development of the social antagonisms that result from the natural laws of capitalist production," but "a question of these laws themselves, of these tendencies working with iron necessity towards inevitable results."

      He continues: "Here individuals are dealt with only in so far as they are the personifications of economic categories, embodiments of particular class relations and class-interests."

      In contrast, Vol 2 deals with "the process of the circulation of capital" while Vol 3 "the varied forms assumed by capital in the course of its development." So from the get-go, it makes sense that the statement you're looking for should be in Vol 3 instead of 1.

      You are of course free to argue that this is was a poor decision on aesthetic grounds. I won't push back on that; de gustibus non est disputandum.

      I hope we can finally lay this matter to rest.

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    6. (1) "That phrasing is not in there, to my knowledge."

      Bingo. Not a shred of clear and explicit evidence that he intended the law of value in vol. 1 to be restricted to an earlier period.

      (2) Footnote 24 in chapter 5 does not prove your point and merely proves mine:

      http://socialdemocracy21stcentury.blogspot.com/2015/08/two-instances-where-marxs-theory-of.html

      (3) a citation from his private correspondence with Engels does not prove your point at all, for you need clear citation in vol. 1 and we know well that he was already mulling over this inconsistent and contradictory view of price determination in his draft of vol. 3. The issue is whether he explicitly stated the later restriction of the law of value in vol. 1 to the period before the 15th century.

      (4) the quote on variable capital once again does not prove your point.

      (5) your deduction that this is what Marx believed is refuted by the many other explicit statements throughout vol. 1 implying that the law of value is valid for the 19th century.

      (6) moreover, the fact that people were scrambling to solve the transformation problem after vol. 1 proves that he never explicitly made his view clear. The fact that he never wanted vols. 2 and 3 published in his lifetime also strongly suggests he realised that vol. 1 would be contradicted by his prices of production theory already sketched in the draft of vol. 3.

      (7) you also show a great deal of naiveté in thinking that Marx could never be guilty of cognitive dissonance, of holding at different times views on price determination incompatible with one another.

      In short, you have not laid the matter to rest but demonstrated that my view is better.

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    7. I think any honest observer can see you haven't actually rebutted my argument.

      (1) As the evidence I presented shows, this is a matter of presentation and not content. Perhaps you missed it, but I definitely said as much.

      (2) Proposition 1 is virtually a direct quote out of Footnote 24, and it is merely one of the premises I use for my proof, not the proof in and of itself. Your link does not dispute it as I have used it, and framing it as some slip-up is not consistent with the evidence I've shared, since it's clear his thinking on this was consistent with the Vol 3 story at least as far back as 1862.

      (3) It most certainly does prove my point, which is that Marx's views in the 1860's were in accord with Engels' portrayal of them in volume 3. Its absence from volume 1 is consistent with the stated aim of the book.

      In order to include it explicitly, he'd need to also include a discussion about the general rate of profit and prices of production, both of which were also absent from volume 1. By your reading, does this mean he did not have a place in his theory for a general rate of profit or prices of production in the 1860's? Keynes never uses the phrase "I am not a Nazi" in the General Theory; what should we conclude from this?

      (4) Have you got an argument, or is this just a "because LK says so" thing?

      (5) How so? Marx's position was that the law of value *is* valid for the 19th century, and indeed all centuries in which commodity exchange exists, because it is an emergent law of commodity exchange itself. It doesn't go away under capitalism; it moves from a surface-level phenomenon to an underlying one. You must pay attention to where Marx uses words like "apparent," "form of appearance," etc., because this meant to contrast with the real processes underlying. It's one of the crucial planks of scientific realism to which both he and most modern Post Keynesians subscribe.

      (6) I give you deduction from demonstrable premises, you reply with "strongly suggests." No, no one was "scrambling to solve the transformation problem after vol. 1" because the figures in question were not published in vol 1. It's clear you're just making things up as you go, at this point.

      (7) This is completely irrelevant. I never said the man is immune to cognitive dissonance or anything else of the sort; merely that his theory does not change between volumes 1 and 3. I really don't care beyond that; attribute whatever traits to him you please.

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  8. ">lol... Because nowhere does Marx say that it is a
    >totally unreal assumption never meant to apply to the
    >real world.

    Nor do I, contrary to your assertion. You're "


    Wait, so now you agree that the theory of value in vol. 1 was understood as an empirical theory describing the real world before the 15th century by Engels in his "Supplement to Capital, Volume III"? Yes or no?

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    1. This "yes or no" trick-question nonsense is without question your most unpleasant tic, even beyond your neverending insults and defamatory accusations.

      I agree with Engels in his supplement.

      I disagree with aspects of your reading of said supplement.

      The law of value was empirical in the 15th century, and furthermore that it continues to describe the real world even if its actualization is no longer directly visible as it once was. Under modern capitalism, further analysis is required to glean movements of value from movements of prices.

      Clear yet?

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    2. "The law of value was empirical in the 15th century, and furthermore that it continues to describe the real world even if its actualization is no longer directly visible as it once was. Under modern capitalism, further analysis is required to glean movements of value from movements of prices."

      So you agree that in commodity exchange until the 15th century commodities "exchanged approximately according to their value" but -- as Engels says -- "[w]e know that this direct realisation of value in exchange ceased and that now it no longer happens.”

      That is, so you agree that modern capitalism no longer has a state of affairs where commodities tend to exchange at true labour values and that labour values are not anchors for the price system?

      Delete
    3. [Note: My response appears where the same question was asked above.]

      Delete


  9. Hedlund: "Weren't you the one just saying the other day that the absence of an explicit statement in volume
    I means we're free to assume that Marx thought the law of value had no empirical expression in history? "
    LK: Not what I said.
    Hedlund supplied a link to a comment from LK. This seems the only possibly relevant passage from that link: LK:
    "Bingo. Not a shred of clear and explicit evidence that he intended the law of value in vol. 1
    to be restricted to an earlier period."

    If this is Hedlund's rebuttal it's hopeless.
    LK's position is that Marx intended no restriction on the applicability of his purported law,
    not that it was restricted to just an earlier period.
    Demanding evidence for some imagined revision of what Marx plainly stated is not remotely the claim that absent an
    explicit statement we can apply Marx's general statement in a direct place and time. The general statement applies, absent a limitation.

    Imagine I say "all life evolved". You claim "Ken B only meant all non-human life."
    LK could rightly demand you prove the caveat, and the lack of an explicit statement from me would undermine your claim.
    It would then be weird to say "LK, didn't you just argue that absent an explicit statement we can't claim Ken B
    meant his statement to apply to any particular animal."

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    1. Just because LK the sophist is unable to comprehend Hedlund's argument doesn't make his argument incorrect. It's fairly obvious to anyone who's read Capital (which of course, LK refuses to do and would rather quote mine Marx using critiques crafted by better people), that Marx is structuring volume 1 to illustrate the basic laws of commodity production and to then extrapolate from there. He mentions over and over again in the book that "we are assuming commodities trade at their value".

      LK of course, refuses to read what he critiques and this leads me to believe his portrayal of Austrian economics is probably built on strawmen as well. What a shame LK, what a shame.

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