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Tuesday, April 12, 2016

Eduard Bernstein on Engels’ Historical Defence of the Law of Value in Volume 1 of Capital

Eduard Bernstein in Evolutionary Socialism: A Criticism and Affirmation (1909) describes Friedrich Engels’ attempt to defend the idea that the law of value in volume 1 of Capital was both empirical and historical:
“According to the Marxist theory surplus value is, as we have seen, the pivot of the economy of a capitalist society. But in order to understand surplus value one must first know what value is. The Marxist representation of history and of the course of development of capitalist society begins therefore with the analysis of value.

In modern society, according to Marx, the value of commodities consists in the socially necessary labour spent on them measured according to time. But with the analysis of this measure of value quite a series of abstractions and reductions is necessary. First, the pure exchange value must be found; that is, we must leave aside the special use values of the particular commodities. Then—in forming the concept of general or abstract human labour—we must allow for the peculiarities of particular kinds of labour (reducing higher or complex labour to simple or abstract labour). Then, in order to attain to the socially necessary time of work as a measure of the value of labour, we must allow for the differences in diligence, activity, equipment of the individual workers; and, further (as soon as we are concerned with the transformation of value into market value, or price), for the socially necessary labour time required for the particular commodities separately. But the value of labour thus gained demands a new reduction. In a capitalistic developed society commodities, as has already been mentioned, are sold not according to their individual value but according to their price of production—that is, the actual cost price plus an average proportional rate of profit whose degree is determined by the ratio of the total value of the whole social production to the total wage of human labour power expended in producing, exchanging, etc. At the same time the ground rent must be deducted from the total value, and the division of the capital into industrial, commercial, and bank capital must be taken into the calculation.

In this way, as far as single commodities or a category of commodities comes into consideration, value loses every concrete quality and becomes a pure abstract concept. But what becomes of the surplus value under these circumstances? This consists, according to the Marxist theory, of the difference between the labour value of the products and the payment for the labour force spent in their production by the workers. It is therefore evident that at the moment when labour value can claim acceptance only as a speculative formula or scientific hypothesis, surplus value would all the more become a pure formula—a formula which rests on an hypothesis.

As is known, Friedrich Engels in an essay left behind him which was published in the Neue Zeit of the year 1895–96, pointed out a solution of the problem through the historical consideration of the process. Accordingly the law of value was of a directly determining power, it directly governed the exchange of commodities in the period of exchange and barter of commodities preceding the capitalist order of society.

Engels seeks to prove this in connection with a passage in the third volume of Capital by a short description of the historic evolution of economics. But although he presents the rise and development of the rate of profit so brilliantly, the essay fails in convincing strength of proof just where it deals with the question of value. According to Engels’ representation the Marxist law of value ruled generally as an economic law from five to seven thousand years, from the beginning of exchanging products as commodities (in Babylon, Egypt, etc.) up to the beginning of the era of capitalist production. Parvus, in a number of Neue Zeit of the same year, made good some conclusive objections to this view by pointing to a series of facts (feudal relations, undifferentiated agriculture, monopolies of guilds, etc.) which hindered the conception of a general exchange value founded on the labour time of the producers. It is quite clear that exchange on the basis of labour value cannot be a general rule so long as production for exchange is only an auxiliary branch of the industrial units, viz., the utilisation of surplus labour, etc., and as long as the conditions under which the exchanging producers take part in the act of exchange are fundamentally different. The problem of Labour forming exchange value and the connected problems of value and surplus value is no clearer at that stage of industry than it is to-day.” (Bernstein 1909: 29–31).
As we can see, Bernstein rejected Engels’ apologetics in the “Supplement and Addendum to Volume 3 of Capital” (Engels 1895).

For Bernstein the law of value in volume 1 of Capital – that commodities tend to exchange at true labour values – was a “pure abstract concept.”

This apologetic Marxist tactic – in contrast to Engels’ defence of the law of value as a real empirical and historical phenomenon confined to the pre-capitalist world of commodity exchange – was adopted early on after the publication of volume 3 of Capital by Werner Sombart, Conrad Schmidt, and Wilhelm Lexis.

Let’s review their views:
(1) Werner Sombart argued in 1894 that the law of value was not empirical fact but an “ideal” or “logical” one (Sombart 1894).

(2) Conrad Schmidt argued in 1895 that the law of value is just a “necessary theoretical point of departure” but not something empirically present in the “phenomena of prices under competition” (Schmidt 1895: 258).

(3) Wilhelm Lexis in 1895 argued the following:
“Value, as conceived by Marx, is thus a purely theoretical conception. The thing is never to be found in reality, neither in the normal exchanges of commodities nor in the consciousness of the individuals who take part in these exchanges.” (Lexis 1895: 11–12).
Benedetto Croce later argued something similar, that labour value was a mere ideal concept from which reality departs (Croce 1915: 52–57).

But Engels vehemently rejected the view that the law of value was totally abstract or non-empirical.

For Engels, the law of value in volume 1 was a real empirical and historical phenomenon, to be applied to the pre-modern world of commodity exchange (Engels 1991 [1895).

But, as we see, many Marxists rejected even this, and went for the apologetics of Conrad Schmidt and Werner Sombart.

BIBLIOGRAPHY
Bernstein, Eduard. 1909. Evolutionary Socialism: A Criticism and Affirmation (trans. Edith C. Harvey). B. W. Huebsch, New York.

Croce, Benedetto. 1915. Historical Materialism and the Economics of Karl Marx (trans. C. M. Meredith). Allen & Unwin, London.

Engels, F. 1991 [1895]. “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. 1027–1047.

Lexis, W. 1895. “The Concluding Volume of Marx’s Capital,” Quarterly Journal of Economics 10 (October): 1–33.

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.

8 comments:

  1. Hedlund,

    Before you get any more comments published here, you need to admit that you too defended the view that the law of value in vol. 1 – that commodities tend to exchange at true labour values – was totally non-empirical and a “simplifying assumption that does not reflect reality.”

    Before you throw up more lies, we can see your opinions right here:

    “>In vol. 1, goods have at least a
    >tendency to exchange at pure labour
    >values

    We've been over this a hundred times. It's a simplification for pedagogical purposes that is explicitly unrealistic.

    http://socialdemocracy21stcentury.blogspot.com/2015/08/marxs-capital-volume-1-chapter-8.html?showComment=1438715789086#c514791626841157667

    “In volume 1 he holds value and exchange value equal as a simplifying assumption that does not reflect reality, as I have demonstrated. If you dispute this, you are persisting in an obvious error that has been explained to you in detail.”
    http://socialdemocracy21stcentury.blogspot.com/2015/04/ricardo-on-utility-and-non-reproducible.html?showComment=1427993604960#c1399545658175421920
    -------------------
    Unless you admit you were wrong, there is no point in debating some pathological lying cultist.

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  2. Interested to see your response here Hedlund, I feel you usually have interesting and valid criticisms to make. LK I also find you make very good points.

    (Though instead of blocking a person, trying to make a person admit to something before allowing their comments to appear, despite what their free-speech may have been... seems a bit... **clears throat**)

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    Replies
    1. No, it is perfectly reasonable to stop abusive and pathologically dishonest trolls hijacking the comments section. It doesn't matter whether they are Rothbardian or Marxist trolls.

      If Hedlund accepted Engels' historical defence of the law of value in vol. 1, then he would have said so last year when he had numerous occasions to clarify his views.

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    2. Oh, and his response was that he totally stands by his assertion that law of value in vol. 1 was "explicitly unrealistic” and just "a simplifying assumption that does not reflect reality" -- even though this claim totally contradicts his claim now that he accepts that Engels was right to say the law of value was true in an empirical and historical sense and true of the world of pre-modern commodity exchange.

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  3. Now that you've had your little power trip, please respond to the content of my response. Your preconditions ("I wont talk to u unless u admit ur wrong...") are absurd, and your constant accusations of falsehood only suggest that you don't even believe honest disagreement is possible. If I'm wrong, show me. And do it without equivocation, straw men, or other confusions.

    ---

    I stand by what I said. Follow along:

    (1) Volume 1 treats price as equal to value. [See your own remarks]
    (2) Individual goods rarely trade at their value under capitalism. [If you dispute this, then your entire claim makes no sense, so I imagine we can take this as given.]
    (2a) We know for a fact that Marx understood (2) well in advance of 1867, and had worked out the organic composition issue. [See here]
    (3) Volume 1 is focused on *capitalist-era* examples, technologies, problems, and social struggles; it is a work of theory that aims to explain the present: the stage of human social development at which the capitalist mode of production predominates. [See here]
    (4) In light of (2) and (3), (1) is unrealistic.
    (5) Works of theory (per (3)) abstract away from details of their objects of study. [See here]
    (5a) Idealization does not necessarily subtract from the efficacy of its causal story. [See here]
    (6) Marx used this same technique throughout Capital. [E.g., From (3)'s link: "In the analysis of economic forms, moreover, neither microscopes nor chemical reagents are of use. The force of abstraction must replace both." For the scope of the usage of simplifying assumption, one might literally just use ctrl+F and look for "assume" or "assumption" on a given chapter of any of the three volumes to see the constant usage of the technique.]
    (6a) One such abstraction is (1). [See here (e.g., the final paragraph and its corresponding footnote). Or here. Similar clarifications assumptions can be found throughout later volumes: e.g., "we have assumed that commodities are bought and sold at their values" (vol 2 ch 6), "These statements hold good on the assumption which has been the basis of all our analyses so far, namely that the commodities are sold at their values" (vol 3 ch 8, shortly before the assumption is for the first time dropped in the subsequent chapter).

    Your reading of volume 1 as having a distinct theory of value requires acknowledging (1) and half of (3), and none of the rest.

    Finally, to my original remark:

    "Engels’ defence of the law of value as a real empirical and historical phenomenon confined to the pre-capitalist world of commodity exchange" is false, because of the philosophical basis being employed: namely, in a scientific realist system, "real" is not the same thing as "empirical." One concerns a thing's ontological status, the other concerns its experiential status.

    In pre-capitalist commodity exchange, because price of production was the same as value, values were manifest in average prices. THIS is the "universal" or "general" applicability Engels was describing. Under capitalism, organic compositions vary, and this experiential quality disappears, but the law of value is still real and still exerts itself in the last instance as a systemic constraint.

    If you cannot respond to the substance of this, then you need to own up to it. Otherwise, you'll only ever dig yourself in deeper.

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  4. The same contemptible B.S. characteristic of someone brainwashed by a cult. You’ve already made it clear you actually think there are no errors or contradictions or failed predictions anywhere in the 3 volumes of Capital (even though we could list half a dozen easily). In other words, Capital is your religious fundamentalist text, and if you acknowledged even one error, presumably your whole mad Marxist cult-like world would implode.

    And now to your comments:

    (1) (1) Volume 1 treats price as equal to value. [See your own remarks]

    No, you bloody idiot. Volume 1 regards commodity prices as *tending* towards true labour values in an equilibrium process. He states this explicitly in Chapter 5:

    “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).

    And in Chapter 1:

    “… in the midst of all the accidental and ever fluctuating exchange-relations between the products, the labour-time socially necessary for their production forcibly asserts itself like an over-riding law of nature. The law of gravity thus asserts itself when a house falls about our ears. The determination of the magnitude of value by labour-time is therefore a secret, hidden under the apparent fluctuations in the relative values of commodities.” (Marx 1906: 86–87).

    He states very clearly that this is how the law is meant to be interpreted in vol. 3:

    “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 is an empirical claim of the theory and Marx is clearly applying it to 19th century capitalism in vol. 1. If he did not and it was only a simplifying assumption, then Marx should have stated so early on in the first chapter and explicitly in the text.

    Occasionally, Marx in some chapters assumes for convenience that in his examples the commodities *always* exchange for equal labour value so does not need to deal with the equilibrium process that drives them there. You seize on this with typical dishonesty and pretend that law of value as stated elsewhere – “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” – in not meant to be empirical at all.

    A reading of volume 1 shows how Marx repeatedly explains 19th century capitalism as supposedly conforming to this law.

    E.g., in chapter 22, Marx’s “law of value” applies empirically to international trade to explain commodity prices. In Chapter 3, Marx explains general price inflation and deflation in terms of labour values under the law of value.

    Marx also 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. In chapter 17, the laws of movements of S and V require that commodities tend to exchange at true labour values.

    Marx states in Chapter 1 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), but that makes no sense unless Marx really believes that commodities tend to exchange at pure labour values in the real world.

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  5. (2) “We know for a fact that Marx understood (2) well in advance of 1867, and had worked out the organic composition issue.”

    We know he stretched the contradictory prices of production theory there, but NOT that he followed that theory consistently throughout his life. In reality, Marx was perfectly capable of holding contradictory theories and especially for polemical or propagandistic purposes.

    Volume 1 is a work of communist propaganda and your problem is you cannot accept your cult leader was quite capable of dissembling, intellectual dishonesty and adopting politically useful theories for polemical or propagandistic purposes. The fact that Marx never wanted to publish vol. 3 in his lifetime is telling.

    (3) finally your attempt to say that Engels’ re-writing of history in his “Supplement and Addendum” to Volume 3 of Capital by saying that the law of value there only applied to the pre-modern world of commodity exchange is not “empirical” (“is false”) is about as stupid as it gets. So Engels meant to apply it to the real world of pre-modern world of commodity exchange, but this is not “empirical”? lol.

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  6. >>Hedlund: “But you don't have to take my word for it: Can you find me a single mathematical example in volume 1 that treats price as different from value (if tending towards it)?

    Of course you can, idiot.

    E.g., in chapter 5:

    “To sell commodities above their value to such a class, is only to crib back again a part of the money previously given to it. .... A may be clever enough to get the advantage of B or C without their being able to retaliate. A sells wine worth £40 to B, and obtains from him in exchange corn to the value of £50. A has converted his £40 into £50, has made more money out of less, and has converted his commodities into capital. Let us examine this a little more closely. Before the exchange we had £40 worth of wine in the hands of A, and £50 worth of corn in those of B, a total value of £90. After the exchange we have still the same total value of £90. The value in circulation has not increased by one iota, it is only distributed differently between A and B.”
    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. pp. 180–181.
    ----------------------------
    So Marx here refers to occasions where sellers sell commodities above their labour values as “swindling”, because they obtain more value in exchange than what they have given: this assumes that exchange at labour values is the honest state of affairs and the tendency of capitalism, just as his law explicitly states in Chapter 5:

    “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).

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