“The feudal middle ages also developed in its womb the class which was destined in the future course of its evolution to be the standard-bearer of the modern demand for equality: the bourgeoisie. Itself in its origin one of the ‘estates’ of the feudal order, the bourgeoisie developed the predominantly handicraft industry and the exchange of products within feudal society to a relatively high level, when at the end of the fifteenth century the great maritime discoveries opened to it a new and more far-reaching career. Trade beyond the confines of Europe, which had previously been carried on only between Italy and the Levant, was now extended to America and India, and soon surpassed in importance both the mutual exchange between the various European countries and the internal trade within each separate country. American gold and silver flooded Europe and forced its way like a disintegrating element into every fissure, hole and pore of feudal society. Handicraft industry could no longer satisfy the rising demand; in the leading industries of the most advanced countries it was replaced by manufacture.It is very clear that Engels is thinking here of modern capitalism of the 19th century: capitalism culminates in the “law of value,” where commodities exchange at their labour values. But by the time of Engels’ “Supplement and Addendum” to Volume 3 of Capital in 1895 he had changed his tune: now the “law of value” in this sense only applied to the premodern world of commodity exchange (see here).
But this mighty revolution in the economic conditions of society was not followed by any immediate corresponding change in its political structure. The state order remained feudal, while society became more and more bourgeois. Trade on a large scale, that is to say, international and, even more, world trade, requires free owners of commodities who are unrestricted in their movements and have equal rights as traders to exchange their commodities on the basis of laws that are equal for them all, at least in each separate place. The transition from handicraft to manufacture presupposes the existence of a number of free workers—free on the one hand from the fetters of the guild and on the other from the means whereby they could themselves utilise their labour power: workers who can contract with their employers for the hire of their labour power, and as parties to the contract have rights equal with his. And finally the equality and equal status of all human labour, because and in so far as it is human labour, found its unconscious but clearest expression in the law of value of modern bourgeois economy, according to which the value of a commodity is measured by the socially necessary labour embodied in it.” (Engels : 120–121).
“The ‘exchange of labour against labour on the principle of equal value,’ in so far as it has any meaning, that is to say, the exchangeability against each other of products of equal social labour, that is to say, the law of value, is precisely the fundamental law of commodity production, hence also of its highest form, capitalist production. It manifests itself in existing society in the only way in which economic laws can manifest themselves in a society of individual producers: as a law of Nature inherent in things and in external conditions, independent of the will or intentions of the producers, working blindly.” (Engels : 349).
Marx in volume 3 of Capital would describe this law of value 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).Engels in the Anti-Dühring (first published in 1878) thought that the law of value in this sense applied to 19th century capitalism, just as Marx had said in volume 1 of Capital.
But after Marx’s death in 1883 as the transformation problem became a serious issue and he edited the draft of volume 3 of Capital, Engels was forced to recognise that Marx had used a different theory of price determination in volume 3 and that Marx even suggested the strict law of value in volume 1 only applied to the pre-modern world, a solution which Engels himself adopted by 1895 in his defence of Marx’s law of value in volume 1 as still an empirical theory in some sense.
This is further evidence of how misguided and ignorant are many modern Marxists in their inability to understand the deep incoherence of Marx’s thinking on the labour theory of value.
Engels, Friedrich. . Herr Eugen Dühring’s Revolution in Science (trans. Emile Burns from 1894 edn.). International Publishers, New York.
Engels, F. 1991 . “Supplement and Addendum” to Volume 3 of Capital,” in Karl Marx, Capital. A Critique of Political Economy. Volume Three (trans. David Fernbach). Penguin Books, London.
Marx, Karl. 1909. Capital. A Critique of Political Economy (vol. 3; trans. Ernst Untermann from 1st German edn.). Charles H. Kerr & Co., Chicago.