Wednesday, August 12, 2015

Engels’ View of the Theory of Value in Volume 1 of Capital in the 1890s

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 in the theory of value (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) (that is, in modern terms, a non-empirical and “analytic” concept true by definition and proposed as an identity or definition).

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. In fact, 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 – and as the death blow to the Marxist cult – 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.

As a matter of fact, and as I have noted before, Piero Sraffa examined this question in the late 1920s by studying the anthropological and historical literature of his day, such as F. R. Eldridge’s Oriental Trade Methods (1923), Karl Bücher’s Industrial Evolution, Raymond Firth’s Primitive Economics of the New Zealand Maori (1929), and E. E. Hoyt’s Primitive Trade. Its Psychology and Economics (1926) and other works (Kurz and Salvadori 2010: 200–202). Sraffa found no evidence that time and labour played the fundamental role in determining exchange value in non-Western and less economically-developed societies (Kurz and Salvadori 2010: 200–201).

Bücher (1907: 19), for example, noted that in the absence of modern time-keeping methods, tribal societies seem to face severe difficulties even properly measuring time. How, then, can they have relied on labour time as the fundamental determinant of exchange value in the distant past?

Admittedly, I have not done a detailed survey of the most recent anthropological and historical literature on this question, but a quick look suggests that modern anthropology seems to confirm what Sraffa found, and that subjective utility, reciprocal satisfaction, ceremonial exchange, and fairness play the fundamental role in ancient, medieval and non-Western exchange of commodities, not labour time (e.g., Sahlins 1972; Firth 1965: 342; Gregory 2002). Indeed, the practice of “silent trade” where the parties do not even meet directly (Dale 2010: 91) appears to make a nonsense of the idea that pre-modern people engaged in commodity production determined exchange values in real commodity exchange by labour time.

If the modern literature upholds what Sraffa found, then not even Marx and Engels’ weak attempt to salvage the labour theory of value in volume 1 can be taken seriously.

Finally, we can see how the Temporal Single System Interpretation (TSSI) Marxists are engaged in an intellectually dishonest and contemptible perversion of Marx’s thought. One wonders whether these people have the slightest concern with what Marx actually wrote and thought rather than their own fantasy world readings of Marx.

BIBLIOGRAPHY
Bücher, Karl. 1907. Industrial Evolution (trans. S Morley Wickett from 3rd German edn.). Henry Holt and Company, New York.

Dale, Gareth. 2010. Karl Polanyi: The Limits of the Market. Polity, Cambridge.

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

Firth, Raymond. 1929. Primitive Economics of the New Zealand Maori. G. Routledge & Sons, London.

Firth, Raymond. 1965. Primitive Polynesian Economy (2nd edn.). Routledge & K. Paul, London.

Gregory, C. A. 2002. “Exchange and Reciprocity,” in Tim Ingold (ed.), Companion Encyclopedia of Anthropology. Routledge, London and New York. 911–930.

Kurz, Heinz D. and Neri Salvadori. 2010. “Sraffa and the Labour Theory of Value: A Few Observations,” in John Vint et al. (eds.), Economic Theory and Economic Thought: Essays in Honour of Ian Steedman. Routledge, London and New York. 189–215.

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.

Sahlins, Marshall David. 1972. Stone Age Economics. Aldine-Atherton, Chicago.

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.

32 comments:

  1. Right at the beginning of this supplement, Engels notes that people such as Achille Loria had pointed to the [imaginary] contradiction

    "And what did Engels say about these people?" It's rather telling that you refuse to include a link so people can go have a look for themselves. What hucksterism.

    It is particularly interesting to note how Marx specifically described the theory of value in volume 1 as follows:

    What's the problem here? He's correct; the assumption of exchange at value essentially sets value equal to price of production. How on earth are you interpreting this?

    I feel like I'm chasing a cartoonish toddler around a construction site, doing my utmost to keep it from coming into some harm. But perhaps it's futile; you'll make a mess of whatever text of Marx's you touch for no other reason than you wish to. You're not a scientist; you're a propagandist.

    Clearly Marx did even in volume 3 of Capital apply it to the capitalist system in an empirical sense, but to those historical periods

    Yeah, but NOT in volume 1. In volume 1 it is only presented as a law in isolation, without consideration of this. Again, you're not demonstrating anything you think you are; you're just tripping on a staircase and then declaring, "ah-ha! As we can see, Marx is a poor designer of ramps!"

    Moreover – and as the death blow to the Marxist cult – 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.

    This is the only point of any potential worth in this whole rambling diatribe, and even then it's questionable because it's not clear that you're actually distinguishing commodity production from other modes. If commodity production assumes a subordinate or marginal role in a society, then the law of value is only of any use to that small extent. If you can't even be taxonomically coherent, then you should find some other way to spend your time. Perhaps watercolors?

    Finally, we can see how the Temporal Single System Interpretation (TSSI) Marxists are engaged in an intellectually dishonest and contemptible perversion of Marx’s thought.

    And here we have it. The au jus for this excrement sandwich -- indisputable proof that you're just a bitter propagandist with an axe to grind. TSSI has literally *nothing* to do with anything you've written here. Singling it out illustrates your ignorance. I suppose when NI people dismiss your claimed contradiction, they're right? What about SSSI people? What about SI people? We all agree on this point, you ass.

    "One wonders whether these people have the slightest concern with what Marx actually wrote and thought rather than their own fantasy world readings of Marx." - a demonstrated liar with a penchant for omitting passages that contradict his narrative

    In the last half year, your blog has morphed into the most grotesque perversion of science I've ever had the displeasure of seeing unfold in real time. I was a fool to think I could help, thinking this was an honest inquiry rather than an endless hatchet job.

    Never fear, though; I'll stick around. This is all working out to be excellent fodder for the Marxist FAQ I'm writing.

    ReplyDelete
    Replies
    1. Hedlund,

      Your major claim over the last few months is this:

      (1) Marx never said or thought that individual commodities regularly exchange for their pure labour values anywhere, not even in vol. 1.

      This has now been totally refuted by the evidence from vol. 3 of Capital where Marx says that this really DID happen historically but 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. Certainly Engels believed this at the end of life and interpreted this passage of Marx in this way.

      Also, if Marx was totally consistent through his life, then clearly he MUST have held this view also in vol. 1 of Capital.

      No doubt you will utterly refuse to recognise these facts because they explode your major claim above and show you do not understand Marx’s theory.

      Delete
    2. Oh my god look at all these responses. Maybe next time take a moment to gather your thoughts first.

      Your major claim over the last few months is this:

      If you can find where I phrased it exactly like that, then I'll gladly retract it. I seriously doubt you will, because my argument has been that price=value is introduced in volume I as a simplifying assumption for the sake of the discussion of capital, which inevitably leads us to a discussion of the actually existing economy (i.e., developed capitalism). The historical content is not expounded in depth in V1, save for some relatively shallow references to, e.g., barter, simple value form or simple commodity exchange. Rather than historical points, however, they're presented more like transcendental arguments (i.e., if we're working backwards, we'd ask something like "what must be the case for X to be true?").

      To give a sense of why commodities could have, at some point in history, tended towards values instead of prices of production has to do with the development of the means of production. Before the industrial revolution, for example, technical progress was by and large extremely slow, at least where commodities were concerned. As such, the variation between different productive techniques was much smaller than it is in a developed capitalist economy. Whereas differences in the organic composition of capital are what determine the divergence of value from the prices of production, it follows that commodity production with a roughly flat OCC would have a tendency for price to equal value, since value would equal PoP.

      Clearer now?

      If not, don't worry about it.

      No doubt you will utterly refuse to recognise these facts because they explode your major claim above and show you do not understand Marx’s theory.

      Yes, more bluster, more posturing, please. I never get enough of that from you. It's like debating a professional wrestler.

      Delete
    3. (1) "Whereas differences in the organic composition of capital are what determine the divergence of value from the prices of production, it follows that commodity production with a roughly flat OCC would have a tendency for price to equal value, since value would equal PoP."

      So you agree that Marx and Engels thought that in early modern or medieval commodity exchange before about the 15th century commodities did tend to exchange at pure labour values where labour values were the anchor for the price system?

      Yes or no?

      (2) If you say no, you are an intellectual fraud and fool, who clearly does not understand Marx.

      (3) if yes, then all of your B.S. over the last few months has collapsed, for then it is clearly the case that Marx's statements in vol. 1 about commodity exchanges tending to be at labour values were either (1) meant to be applied to contemporary capitalism by him (and Marx retreated from this view later) or (2) about the early modern or medieval commodity exchange before about the 15th century.

      When Marx says:

      “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).

      he cannot be just making a "simplifying assumption" for that is EXACTLY the view he and Engels were endorsing in vol. 3 as applying to the pre-modern capitalist commodity exchange.

      Delete
    4. And yet another thing: it is very clear from the context and explicit statements in Engels' comments in the "Supplement" to Volume 3 that **he is speaking of the theory of value/law of value in vol. 1 of Capital**, for that is the whole point of his attempt to answer Achille Loria's criticisms: to say that, yes, it did apply to real past of capitalism.

      But a bloody idiot like you continues to deny what is blatantly obvious to every other reasonable person. It doesn't matter how much evidence you get that the law of value in vol. 1 is not some "simplifying assumption", you'll never renounce your religious fundamentalism because you are stuck in your Marxist cult.

      Delete
    5. Somehow my response wound up down below. Oh well. Blogger is a bad platform, what can you do.

      And yet another thing: it is very clear from the context and explicit statements in Engels' comments in the "Supplement" to Volume 3 that **he is speaking of the theory of value/law of value in vol. 1 of Capital**, for that is the whole point of his attempt to answer Achille Loria's criticisms: to say that, yes, it did apply to real past of capitalism.

      Hahaha, okay, and what was the supposed "contradiction" again? You're almost there...

      But a bloody idiot like you

      It's all basically white noise when you get to this part of every single comment. Just this reaction, forever.

      Delete
    6. "okay, and what was the supposed "contradiction" again? "

      So now you are so stupid or more likely dishonest that you pretend you don't understand that Engels was trying to refute Loria's claim that commodities do not and cannot ever have tended to exchange at pure labour values if the theory of value in vol. 3 were true?

      Delete
  2. " He's correct; the assumption of exchange at value essentially sets value equal to price of production. How on earth are you interpreting this?"

    In the quotation of Marx in question, the context is exchange of commodities BEFORE the modern period when prices of production have come to dominate the price system as anchors.

    Yet again: you are bloody ignorant of the texts we are dealing with.

    ReplyDelete
  3. "Yeah, but NOT in volume 1. In volume 1 it is only presented as a law in isolation, without consideration of this."

    So Marx in vol. 3 thought that there was a pre-modern period when commodities did tend to exchange at pure labour values, but he never held this view in vol. 1??

    So you are saying that Marx's work was internally contradictory and inconsistent?

    ReplyDelete
  4. "TSSI has literally *nothing* to do with anything you've written here."

    TSSI has nothing to do with the theory of value in Capital and says nothing about whether commodities exchange at pure labour values??

    You are clearly such an idiot, you're breaking new records.

    ReplyDelete
  5. " If commodity production assumes a subordinate or marginal role in a society, then the law of value is only of any use to that small extent. If you can't even be taxonomically coherent, then you should find some other way to spend your time."

    The division of the past into the various periods of commodity production in which there is one where commodities tend to exchange at pure labour values is Engels ' view, not mine. He says it occurred right up until the 15th century after simple commodity exchange became the norm.

    Presumably, you think Engels couldn't "even be taxonomically coherent"?

    ReplyDelete
    Replies
    1. *sad_trombone.wav*

      Delete
    2. The comment of an idiot troll, hedlund.

      If you can't sensibly answer serious question here, then sod off.

      Delete
    3. Yes or no?

      So sick of you asking these intense "YES OR NO" questions, just to retread ground I literally just walked. I've already answered. Use "reading" to find the answer.

      Or, as I said, "don't worry about it."

      (2) No, sorry, you can occupy that lofty perch all on your lonesome.

      (3) Ah, yes, my B.S. such as "" or "". Or that one time I said "". All my ruses, undone.

      he cannot be just making a "simplifying assumption" for that is EXACTLY the view he and Engels were endorsing in vol. 3 as applying to the pre-modern capitalist commodity exchange.

      So your tactic is "refuse to understand the thing your opponent just said until they get bored and go do something else, and then you're the winner"?

      It IS *presented as* a simplifying assumption in Volume I, because a) the focus is on the present day and b) in order for it to be a historical argument, you need *historical argumentation,* which is light to nonexistent in Volume I. If you think he actually did make such argumentation, then perhaps that's a case you can make and maybe even not look like a fool, if you do it well enough. But right now you're not having much luck on that front. And even if it were presented as a purely historical argument, there would STILL need to be a simplifying assumption, since prices tending towards value is not the same thing as prices equaling value, and the latter is the case in V1's examples.

      As a favor to me: Please try to understand anything at all I've said. Thanks.

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    4. (1) so, first you won't give a straight answer to the question.

      (2) as I said above, it is very clear from the context and explicit statements in Engels' comments in the "Supplement" to Volume 3 that Engels is speaking of the theory of value/law of value in vol. 1 of Capital and trying prove it true in an historical sense, for that is the whole point of his attempt to answer Achille Loria's criticisms.

      (3) "It IS *presented as* a simplifying assumption in Volume I, because a) the focus is on the present day"

      you actually admit that the "focus is on the present day" in vol. 1 but refuse to admit that the most probable view is that it WAS intended as a real theory for contemporary price determination by Marx, who refused to publish vol. 3 knowing full well he had sketched a different theory of value there and he had to make it compatible with 1 (which he never did).

      Also, you totally refuse to address why Engels felt bound to defend the law of value in vol. 1 as an historically true theory in his "Supplement".

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    5. (1) Because I already did, and am bored of repeating myself.

      (2) Irrelevant to what I've said. Are we done with this part? Also boring.

      (3) "Most probable"? Not even close. I mean, I guess it must seem that way to you because the things you like are all True and the things you dislike, False. But no, it's not even close to most probable. Not even top ten. The reason is because you have to, as I keep saying, literally omit all context and several important passages of the text itself for your way to make sense.

      But you do you, buddy.

      Also, you totally refuse to address why Engels felt bound to defend the law of value in vol. 1 as an historically true theory in his "Supplement".

      Uh, okay. What would you like me to address about it?

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    6. (2) on this alone, your refusal to engage with it shows you are just trolling this blog.

      I repeat: it is very clear from the context and explicit statements in Engels' comments in the "Supplement" to Volume 3 that Engels is speaking of the theory of value/law of value in vol. 1 of Capital and trying to prove it true in an historical sense, for that is the whole point of his attempt to answer Achille Loria's criticisms.

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    7. Yeah, I heard you. Just not seeing what point you're using it to make.

      Like, here, I'll engage with it:

      "Yup. Engels sure, uh... Engels sure did that thing he did there. Yup."

      And?

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    8. Engels:
      “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. ….

      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.
      (Marx 1991: 1034–1038).

      This destroys your claim that the law of value in vol. 1 was only ever meant to be a “simplifying assumption” and never applied to the real world. For Engels says explicitly that the “law of value … as presented in Part One of Capital Volume 1” really described the commodity exchange down to the 15th century.

      So now you are either:

      (1) so stupid you cannot see how this refutes you, or (or more likely)

      (2) being pathologically dishonest and pretending you can’t see the problem.

      Either way, you have lost this debate, Hedlund.

      Your view is utterly refuted and destroyed.

      Apparently, the only thing you can do here now is lie or troll the comments section.

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    9. Nah, I've never lied. Nor am I the only one who's called you out on your invincible cognitive biases, fwiw.

      Yes, I've never disputed that there is a historical element to M&W's idea, but that's not the claim we're (supposedly) arguing about right now.

      Until you actually address the constructive points I raised above, you can keep quoting Engels on the matter, and I will continue to agree, and it will all continue to be very much aside from the point.

      The LK Cafe, serving up red herring salad -- all day, every day.

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    10. One last chance. Do you accept that

      (1) Engels in his supplement says that the law of value as "presented in Part One of Capital Volume 1" "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"? and

      (2) that obviously Engels CANNOT have thought that the law of value in vol. 1 was a mere “simplifying assumption”?

      I want clear yes/no answers to these questions. No evasions. No red herrings. No irrelevant nonsense. Just answers.

      Otherwise, it is very clear you are incapable if any honest, clear and serious debate, and that you are just a laughable troll who has been totally refuted and defeated in this debate.

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    11. Hedlund,

      I'm not sure I understand how calling Marx's equating of price and value in Volume I a 'simplifying assumption' helps smooth out the inconsistency.

      In Volume I Marx lays out his conception of capitalism's most basic 'laws of motion'. It's in Volume I where he defines how (relative and absolute) surplus value is created, how commodity fetishism works, the "general law of capitalist accumulation", etc.

      These concepts and laws of motion are used as a basis for the theoretical conclusions Marx reaches in Volume III. But you seem to agree that in Volume III the 'simplifying assumption' upon which the concepts in Volume I were built is gone.

      How can this be theoretically coherent without Marx going back and rearticulating the basic concepts and 'laws of motion' outlined in Volume I with that simplifying assumption stripped away? Without that it seems to me one ends up with a set of concepts based on another set of concepts that contain conflicting assumptions--which is *not* the same thing as a set of concepts synthesized from the dialectical resolution of two contradictory conceptual frameworks. (the latter, as you know, being how legitimate dialectical reasoning is supposed to work) And so far as I can tell Marx doesn't perform that key conceptual revisiting. I don't recall Kliman's work on the TSSI addressing this either. Do you (and/or Kliman and the TSSI) argue these crucial reiterations are in 'Capital'? If so where? Or if not, what am I missing here?

      Personally, I think that from a purely pragmatic standpoint the issue of coherence isn't necessarily as big as it's made out to be--even if a theory isn't totally consistent, it doesn't mean one can't utilize certain useful concepts or insights that it contains in one's own empirical and theoretical analyses. But since we're discussing it, I thought I'd ask.

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    12. LachMinsky:

      I'm not sure I understand how calling Marx's equating of price and value in Volume I a 'simplifying assumption' helps smooth out the inconsistency.

      Well, this is easy.

      Any inconsistency must be demonstrable, and the inconsistency argument currently under scrutiny hinges on relative price=value as a theoretical tenet rather than a simplifying assumption.

      So far, we have numerous examples in volume 1 of Marx describing the need to proceed on the grounds of equal exchange to explain certain other phenomena. He similarly refers to it as an "assumption" within the first paragraphs of chapter 1 of Volume 2, and furthermore in the opening chapters of volume 3. The final paragraphs of chapter 8 are particularly important; as is well known, Vol 3 Ch 9 is where the value/price equality is finally relaxed, and chapter 8 takes care to spell out that all analysis up to that point has held it as an assumption.

      So, it absolutely is an assumption, and therefore the stated inconsistency is not demonstrable. It is very unfortunate that LK refuses to acknowledge the passages in question, but this is not a point that any Marxist scholar I know of disputes.

      How can this be theoretically coherent without Marx going back and rearticulating the basic concepts and 'laws of motion' outlined in Volume I with that simplifying assumption stripped away?

      Why would this be necessary? That is to say, how would it be theoretically *in*coherent to simply move on with new numerical examples, such as those in volume 3? All of the principles expounded continue to hold, with the sole exception that some commodities exchange above (and others below) their values. I'm not sure what you mean about the concepts that "contain conflicting assumptions"; they're the same concepts, albeit in one case with a particular assumption, and in another case without. It's the sort of thing one would find in virtually any science -- utterly straightforward.

      Perhaps I'm missing your point?

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    13. "So, it absolutely is an assumption, and therefore the stated inconsistency is not demonstrable."

      (1) Despite the fact that Marx says explicitly in Chapter 10 of volume 3 that

      “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.

      He then explicitly limits it to early capitalist commodity exchange, and even says point blank:

      "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).

      (2) This is EXACTLY how Engels understands the law of value in vol.1 in his Supplement to vol. 3.

      In other words, Hedlund is guilty of the most incredible dishonesty here: and notice how he refuses to answer straight questions on this point.

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    14. "Hedlund won't answer my questions!" - the blogger who won't publish when I answer his questions. Who's the liar?

      He then explicitly limits it to early capitalist commodity exchange, and even says point blank:

      Oh, he says that point blank, does he? "The assumption," point blank?

      Okay, then. Thanks for clearing that up.

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    15. Correct, no more trolling nonsense by you will be published here.

      However, I will give you another chance. Do you accept that

      (1) Engels in his supplement says that the law of value as "presented in Part One of Capital Volume 1" "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"? and

      (2) that obviously in this case Engels CANNOT have thought that the law of value in vol. 1 was a mere “simplifying assumption”?

      I want clear yes/no answers to these questions. No evasions. No red herrings. No irrelevant nonsense. Just answers.

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    16. As I said last time I answered both of these, when you did not post my reply:

      (1) Yes.

      (2) No, for two reasons I've already spelled out above, but I shall again, because I am apparently a masochist:

      (A) As you yourself quote above: Even the acceptance of price tending towards value as the general case does not presuppose that price WILL equal value, and therefore the assumption of equality is required to simplify examples.

      (B) Volume 1 situates itself in the present (at the time of its authorship), with the exception of very scant few historical gestures. By 1867, the means of production had long since progressed to the point where prices of production ceased to equal values, therefore in order to make the historically specific case of pre-capitalist commodity exchange into the general case (for simplicity), an assumption is required.

      Which is why Marx himself explicitly specifies the work of Capital as containing the "assumption" (his own word!) of price and value equality for the bulk of the explanation.

      I have never "trolled." I have never given you a red herring. I have never wasted your time with irrelevancies. The closest I've come is being a little combative in a comment or two -- amid actual constructive content, still -- after literal MONTHS of abuse from your corner: daily rudeness, insults, smears, and censorship. Sometimes I think you may not even realize how completely over-the-top you've been, consistently.

      Further: You have never once apologized, nor retracted -- even as your own argument has evolved to exclude points on which we previously disagreed.

      If you're willing to put a cork on all that nonsense, I'm willing to put it in the past. But as things stand, I don't think you've shown any sign of arguing in good faith.

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    17. So you accept:

      (1) that the theory of value in vol. 1 is an empirical theory that was meant to describe real world pre-modern capitalist commodity exchange (before the 15th century), but

      (2) you continue to peddle this "simplifying assumption" rubbish as if the theory was never meant to be applied to the real world at all.

      If you admit (1), you cannot claim the law of value in vol. 1 is just a totally abstract "simplifying assumption".

      "As you yourself quote above: Even the acceptance of price tending towards value as the general case does not presuppose that price WILL equal value, "

      I do not make the claim that Marx thought price always equals value. You continue to spew your idiotic pathological lies.

      What I said is that Marx (at least in vol. 3) thought that SNLT as described in the vol. 1 is the anchor for the price system in pre-modern capitalist commodity exchange: although prices often diverge from values, they are driven back towards them in a type of equilibrium process as Marx himself says:

      '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).

      " By 1867, the means of production had long since progressed to the point where prices of production ceased to equal values, therefore in order to make the historically specific case of pre-capitalist commodity exchange into the general case (for simplicity), an assumption is required."

      The idea that Marx stated in vol. 1 that his law of value was only meant to be applied to pre-capitalist commodity exchange is B.S. He never says any such thing. The first time he says this is in vol. 3.

      Rather, Marx implies again and again in vol. 1 that the theory is meant to apply to modern 19th century capitalism. That is how many Marxists understood him at the time.

      And it is clear that Engels was desperately trying to defend the vol. 1 law of value as an empirical theory in his supplement from Marx's own reinterpretation of it in vol. 3: Engels can cite NO evidence from vol. 1 that the law of value was only meant to apply to pre-capitalist commodity exchange.

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    18. I think the problem is that you're holding to a stark black/white perspective, maintaining that these two categories -- "empirical argument limited to a subset of all historical cases" / "simplifying assumption for a more general theory" -- are somehow mutually exclusive. However, I don't see how this follows, since the text is absolutely explicit that it is both.

      This is seen, for example, where you insist that I say the theory was "never meant to be applied to the real world at all." Of course I do no such thing, but I can understand how you might believe I do, given the hard dichotomy you believe we're examining.

      See? I'm giving you the benefit of the doubt.

      Meanwhile, in return, I get accused of "idiotic pathological lies." What was my lie? That I said "[LK] make[s] the claim that Marx thought price always equals value." Of course I did not say this in the above exchange; I was referring to the quote you shared which explicitly referred to it as an "assumption." I may have said that you believed this of Marx at one time, in the past, but when you explained otherwise, I apologized and stood corrected, and I have not made the charge since.

      Do you see why I say it doesn't seem like you're interested in a good-faith exchange? Stuff like this gets really frustrating. Please, try to meet me halfway. Ok?

      The idea that Marx stated in vol. 1 that his law of value was only meant to be applied to pre-capitalist commodity exchange is B.S. He never says any such thing.

      Correct. This is why I've stated above, quite a few times, that volume 1 does not contain enough historical argumentation to regard the price-value assumption on its historical terms.

      Before you reply, consider how that statement relates to my point above about it being both; it was still both at this time, but we're only seeing it, in this particular context (i.e., within an analysis of capitalism in particular, rather than commodity exchange in general), as an assumption.

      Rather, Marx implies again and again in vol. 1 that the theory is meant to apply to modern 19th century capitalism.

      Right. Hence the assumption. As you well know, he did not hold that price tended to value for the developed subject matter of volume 1, and he explicitly calls out this crucial difference from, e.g., Smith, within volume 1.

      At the end of the day, the work of Capital was always meant to apply first and foremost to capitalism — and he felt so strongly about it, he stuck it right there in the title. Obviously, he starts his analysis with commodity exchange, which predates capitalism, and out of which the latter grows, but make no mistake, it's a work analyzing capitalism.

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    19. An axiom is an axiom is an axiom is an axiom. If I use axiom A in my argument it does not matter if I call A a principle, a postulate, an axiom, or a simplifying assumption. If A is false my argument is unsound no matter what I call it.

      Another dodge is on display here. Hedlund demands a contradiction be explicitly displayed. Well and good if the argument is explicitly displayed, which Hedlund's is not. Informal demonstrations of a contradiction must suffice then.

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  6. “If the modern literature upholds what Sraffa found, then not even Marx and Engels’ weak attempt to salvage the labour theory of value in volume 1 can be taken seriously.”

    Lolz, the post Keynesian perspective sounds very reactionary and with an hidden agenda
    I have read only these lines since the anti KM crusade (the greatest economist ever since and the only one who has understood capitalism) is quite boring and nonsense, and the above statement is totally unfounded since the PS logic model for its great limits cant attempt anything unless confirm the KM point view. Which btw is the PS’s intention.
    Maiko

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