Value and Price Q&A


I have been looking forward to finally putting together a script for a video on Value and Price. As a preparation for that task I’ve written the following: an attempted summary of my understanding the topic. The text is peppered with paraphrases of questions that I have been asked by readers/viewers recently (and some I made up). I find these questions help focus the text and make the direction of inquiry relevant. There is a lot here. I wanted to get everything down so that I can then figure out how to distill it all into a video script. Please let me know what you think of the material, especially if there are unanswered questions or problematic formulations.

Q: Mudpies take labor to produce but they don’t have any value. Therefore everything Karl Marx wrote is a pile of shit. Why do you read that shit?

A: So the first thing we must do is to rid our mind of everything we’ve been told about Marx and the “labor theory of value” (a term Max never used.) The fundamental misconception that must be eliminated if we are to understand the value-price relation is the misconception that Marx thought that labor time and price were the same thing. Stumbling through the blogs and chat rooms one comes across this fallacy again and again. Marx did not think that every product of labor is magically imbued with a price tag equivalent of that labor. In fact, Marx was interested in explaining the opposite phenomenon, the phenomenon where labor sometimes produces nothing of value, sometimes produces a commodity that sells at its value, and sometimes produces a commodity that sells at more than its value. It is the “non-identity” of value and price that is of interest to Marx.

Often times in Capital Marx asks his readers to assume that price=value for this or that commodity so that he can more clearly discuss topics like exploitation and surplus value. Sometimes readers have misinterpreted this to mean that Marx thinks that value always equals price, or that Marx has some notion of long-run equilibrium price where value fluctuates around price. But this is not the case. In many places in Capital Marx states, as a matter of fact, that value and price rarely equal each other and that if they do it is only a manner of chance, an accident. These comments fly in the face of the common value=price misrepresentation of Marx.

Q: If there are so many exceptions where labor time deviates from price what is Marx’s point?
A: Such deviations are no exceptions. They are the phenomena to be explained. When we punch our time-card in the morning and go about our day’s work how do we know that the product of our labor will find a social use? How do we know that our labor will be efficient enough to compete with the workers in other firms? We don’t know these things for certain. We only find out after we have finished working, when the product of our labor enters the market to be compared with the products of everyone else’s labor.

Marx calls this unique way of organizing labor “indirectly social”. Rather than operating on some sort of plan where we decide how much labor should go into the production of various things our labor is distributed indirectly through the price signals of the market. We perform private labor. This labor is not social labor when we are performing it. It only becomes social after we finish working when the products of our labor meet in the market. Here in the market we find out if our labor has been socially useful and if it has been performed at the average level of efficiency. If our private labor has been efficient and put toward a useful end our firm/boss/capitalist is rewarded for our effort. If our private labor has not been put toward a useful end or if we haven’t worked efficiently enough our firm/boss/capitalist is punished by the market. These price signals then act to change the distribution of labor in society. People are hired and fired. The labor process is redesigned to make it more efficient. People are replaced by machines. etc.

Obviously this process couldn’t take place if there wasn’t some relation between the labor time that went into commodities and the prices of these commodities. But equally obvious is the fact that this labor time cannot exactly equal the price of commodities. If it did then there could be no price signals to punish or reward firms. Firms that are producing useless things or not producing efficiently are punished by the market. Better firms are be rewarded. So the simple picture of Marx’s value theory that we are sometimes given, that the labor that goes into production is exactly equal to the prices of commodities cannot be correct. There must be more to it if we are to understand the distinct way in which labor is distributed in a capitalist society.

Q: What do you mean by “social labor”? Aren’t there lots of types of individual labors that are not social at all? What about Robinson Crusoe’s labor?

A: If I make a turkey sandwich for myself and eat it this is privately labor only. My labor does not become social unless I am doing it for someone else. Whenever the products of our labor are exchanged we have done social labor. The fact that we are exchanging products points to an underlying distribution of relations of production. The fact that I need something someone else has produced (the fact that I have not produced it myself) means that there is a developed division of labor in society. The very act of exchange implies that there is a social organization of labor in which the private labors of different people are already socially dependent on one another. If there wasn’t this social aspect to our labor there would be no reason to exchange the products of out labor.

The distribution of labor and the products of labor in our society is based on a prior distribution of means of production in the hands of the capitalist class, depriving the rest of society of their own means of subsistence. Deprived of means of production, the working class must enter the market to purchase their subsistence and enter the market to sell their labor power to the capitalist class. Thus, the distribution of labor takes the form of wage-labor and the distribution of the products of labor take the form of commodity exchange. It is the quantitative value relations between commodities in the market that act back upon production, regulating the social division of labor. But this regulation only happens after the labor has happened: We work, the products of our labor enter the market, and then price signals act back upon production. This gives our investigation unique aspects that differentiate it from other societies based on a different distribution of means of production.

Q: If value and price are not always equal then what exactly is value? Sometimes it seems like “value” means labor time. Sometimes it seems like it means “price”. What is it?

A: Marx’s terms have an elastic quality. In different places they stretch or constrict to contain more or less content.  This is because Marx understands things (and processes) only relationally. Things only have meaning in how they relate to other things. Depending upon the context we may want to refer to more or less aspects of the inter-related parts of value relations. Value is a particularly elastic term because it sits at the very center of capitalist social relations. Sometimes when Marx says “value” he is talking about the exchange value of commodities, sometimes he is talking about the labor that goes into a commodity, sometimes he is talking about the form of social relations unique to a capitalist society. Understanding value theory requires that we are aware of what particular aspect of value is being referred to in a specific context.

Value theory has both qualitative and quantitative dimensions. It’s a theory of social relations that take on a quantitative form. In contrast to predecessors who treated categories like capital and labor only at the level of content, Marx was concerned with the form social relations take in a market society. In a market society they take the form of value relations between commodities and these involve certain laws that regulate and constrain the social relations. These are all the qualitative aspects of value theory, in many ways the most crucial aspects of his theory to understand for formulating an understanding of the radical challenges of anti-capitalist politics.
But value theory also has a quantitative dimension which comes to the foreground when we look at the value-price dimension. At times in the 20th century, due to the persistent myth that there was something internally inconsistent with the quantitative side of Marx’s value theory, Marxists have attempted to distance themselves from the quantitative aspects of value theory, instead developing approaches which attempted to side-step these quantitative aspects by focussing only on the qualitative aspects of the theory. This is no longer necessary: see my video on Transformation Problem.
When it comes to the quantitative aspects of value theory we are primarily concerned with the distribution of labor and the products of this labor throughout society.

Q: So I understand that price signals are the only means of coordinating the division of labor in a market society, but how exactly does this work? It seems there must be some relation between labor and price for this to happen. But there also seem to be lots of other factors that effect price like consumer demand, monopoly, etc. So how is this all understood by Marx?

A: Ok. Let’s get into it. First we should review the concept of Socially Necessary Labor Time, and then see how this relates to demand and supply. Following this Q&A form I’ll break the topics into questions.

Q: What is Socially Necessary Labor Time?

A: I deal with this in my Socially Necessary Labor Time (SNLT) video (Law of Value 6). There we saw that the social value of a commodity is not the amount of time it takes any individual to make a commodity but the average amount of time it takes society to make it. If I take way too long to make a pie this doesn’t mean I can sell it for more than the average pie. The average productivity of society imposes this social value over my individual value. If I produce at less than the socially necessary labor time it means my individual value is less than the social value. This allows me to make a super-profit when I sell at the social value. I haven’t created this super-profit. It was transferred to me in exchange, by people paying me the social value of my pies and not their individual value.

Firms don’t know whether they are producing at the SNLT until they meet in the market to compare their products. But this doesn’t mean that value is being created in the market. All of the value creation has already happened by the time the firms come to market. In fact, if we had some sort of omnipotent information on the productivity of each firm, we could predict that outcome of that market process before the products actually came to market. But we don’t have that information because we live in a capitalist society, so we must use the market to figure it out.

Q: Is SNLT just measuring the value of commodities within one industry? How do we determine value between industries?

A: The SNLT refers to the labor time required to produce a particular type of commodity. Obviously a basketball can have different colors and name brands but its value is still determined by a comparison with all of the other brands and colors of basketballs. This SNLT is the exchange value which basketballs have with money. Since all other commodities measure their SNLT in money as well we can use money prices to compare the SNLT of different types of commodities (basketballs, cars, etc.)

Q: What does it mean to say that value is transferred in exchange?

A: If I sell my product at exactly its value then I have exchanged, say, a beer worth $5 for $5. There is been no net gain or loss of value for myself or the buyer. In Marx’s terms I have “realized” the value of the beer. I have transformed it into its value equivalent. But let’s say I am an inefficient beer brewer and I would need to sell my beer at $8 to realize its value even though the firms producing at the SNLT sell their beer for $5. This would cause me to lose value in the market. I would either have to sell my beer at the SNLT of $5 and take a hit of $3 every time I sold a beer, or I would have to keep my beer at $8 and settle for selling less of them. The opposite happens if I produce under the SNLT. This allows me to make a super-profit in the market.

This idea of value being transferred in exchange is crucial to understanding the price-value relation. There are two different types of value being discussed: the individual value, or the amount of time a private producer spent making something, and the social value, or the SNLT, or the actual amount of money a commodity is sold for in the market. All producers sell at the social value but some lose value in this process while others gain value.

With this understanding we can also begin to conceptualize other price-value deviations. Anytime price is greater than individual value the seller is gaining value in exchange. Anytime price is lower than individual value the seller is losing value.

Q: You seem to be using labor time and value interchangeably here. You say the individual value is the labor time the private producer took to make a commodity but you say the social value is the amount of money the commodity sells at. And then you say that we can compare the two quantities to see the winners and losers. How do we compare hours and dollars?

A: This is a super important question. To answer it fully would require an in-depth discussion of Marx’s theory of money, but for now we can cover the basics. Marx sees money as the embodiment of labor time in the abstract. He builds this theory directly from his theory of the commodity. Commodities have both a use-value and an exchange-value. The use-value is a specific dimension of the commodity particular to each object and their various uses. Exchange-value is a universal, abstract dimension of the commodity. It is the empty quantitative relations between a commodity and all other commodities. It is numbers, not qualities. This leads to the separation of use and exchange value. Use-value stays in the bodily form of the commodity while exchange-value separates itself from the commodity in the form of money. Money becomes the commodity that all other commodities measure themselves against. As such it is the universal measure of value and the universal measure of abstract labor.

Q: OK, but how much labor does it measure? How do we know the relation between an hour of work and an amount of money?

A: Marx begins his discussion of money with the money commodity. The labor that goes into the production of gold becomes the standard against which all other labors are compared. So if an ounce of gold takes one hour of labor to make, then an ounce of gold=1 hour of abstract labor. If a commodity sells for 5 ounces of gold then its social value is 5 hours of abstract labor.

Q: Does this means that Marx’s theory of value rests on the concept of commodity money?

A: You will find a wide divergence of answers to this question amongst contemporary Marxists. I tend to agree with Marx’s own comments on the issue when he says that even though money originates as a commodity, it does not always have to be a commodity to perform its various functions of measure of value, standard of price, unit of account, means of payment, etc. It can be replaced by mere tokens of value like pieces of paper. However, there are times, especially in a crisis, where there arises a need to revert to the commodity form of money. In these cases we see the people flocking to forms of money which have some commodity basis.

Q: If money is not necessarily a commodity then how do we know how much labor time it represents?

A: I like the modern formulation of “Monetary Expression of Labor Time” or MELT (in case you need more jargon in your life). MELT is not a term used by Marx but I believe you can find instances where he uses a similar procedure. To answer your question MELT is found by taking the total amount of commodity prices in a given period and dividing them by the total number of hours worked. If $1000 of commodities have circulated in a year and 1000 hours of work went into them then 1 hour of labor equals 1 dollar.

(MELT is sometimes critiqued for different reasons, not all of which I have studied, but to anticipate some criticism I think it is worth noting that MELT does not imply specific direction of causality between the amount of money in the economy and the amount of labor performed. This is crucial because sometimes it is debated that the value of commodities determines the amount of money in circulation (Marx often argues this) and sometimes it is argued that the amount of money in circulation determines the level of prices. MELT doesn’t say anything about what determines what. It is merely a device for measuring the relation of money to labor time (see this paper on the topic.) It is used by some Marxists to perform calculations and form empirical observations about things like profit rates.)

Q: Your discussion of SNLT makes it sound like the various levels of productivity in an industry determine the social value of a commodity, but doesn’t consumer demand have a role in this price formation as well? What if there is a rise in demand for the products of an industry? Doesn’t this increase the price, the social value, of a product above the SNLT?

A: I get variations of this question all of the time. The short answer is, “Yes. The level of demand effects the social value of the commodity.” But there is more to it than the short answer.

First, there is the basic supply and demand question. When demand rises faster than supply can rise to meet this demand then prices rise. The speed at which supply can adjust to this new level of demand depends on the particular structure of the industry. In some situations it is easy to increase production to new levels without adding to the unit cost of a commodity. In other situations increasing supply involves new investments in plant and equipment, redesigning the labor process, even moving the location of production. These sorts of “inelastic” situations can cause supply to take a period of time to adjust to demand.

But eventually, given no other barriers to investment, supply can adjust to demand. When this happens supply and demand “cancel each other out” as Marx would say, and they cease to explain anything. Once again only SNLT can explain the exchange values between commodities.

When demand causes prices to rise this does not mean that demand is creating value. It is merely causing one industry to appropriate value in exchange. In order for, say, basketballs to sell above their value, other commodities would have to sell for under their value. This is because there is only a given amount of value in the economy at any time since only a specific amount of labor has been performed. This value can be moved around in response to changes in demand, etc. but it can’t be created just through the process of exchange. For more on this topic see my blog post “Value Can’t Be Created In Exchange”.

Q: Does this mean that Marx has an equilibrium theory of price where demand and supply eventually meet in the long run, or where there are long-run fluctuations around an average equilibrium point?

A: Many times you will see Marx’s value theory characterized in this way. This would give it a parallel with bourgeois general equilibrium theory. If we abstract away from changes in productivity then we can imagine a model where demand and supply balance and the price equals the value of a commodity. But if we consider that one of the most consistent themes in Marx is the constant revolution in the value of commodities due to the constant changes in the productivity of labor, then we have to drop this notion of equilibrium. Changes in productivity are driven forward by the capitalist’s quest for surplus value. And these changes constantly create disturbances in the relation of supply to demand as prices change. Rather than equilibrium, Marx’s theory of value and price points towards a constant state of disequilibrium. I have found Alan Freeman’s essay on this subject “An Invasive Metaphor: The Concept of Center of Gravity in Economics” to be illuminating.

Q: Is SNLT based on mean productivity, modal productivity or median productivity?

A: Modal. In math, a you find the mode of a set of numbers by observing which numbers occur most frequently. Within an industry the force of competition over SNLT moves most firms toward a modal level of productivity. But at a given moment there are still some firms which have yet to catch up to this modal level while there are still others that are racing forward to produce under the modal level.

When supply and demand are in balance SNLT is set by this modal level of productivity. But what if demand rises quickly? Then the modal firms cannot produce enough meet demand and the less efficient firms find that their supply becomes crucial to meeting demand. Rather than selling at a loss they find that they now set the SNLT. This is a different way to see the change in price due to a change in demand. Rather than demand just randomly changing prices it selects between different existing levels of productivity.

Q: I’m confused about the prices of clothing. I can buy two shirts of identical quality, obviously made under the same conditions of production, but with substantially different prices depending on the brand name. How is this possible within the labor theory of value.

A: If value can be appropriated in exchange, if value and price can and do diverge all the time, then it is easy to understand the role of other factors that influence price. Monopolies constrain the ability of price to reapportion labor. They artificially bolster up prices, keeping labor from flowing into those industries to bring down prices. The degree of monopoly determines the degree of price-value divergence…

Many companies can mark-up their products above values because they have a monopoly on a certain brand/image. They spend a lot of time, money and labor to create a brand and this gives them exclusive use of this brand. This monopoly over a brand gives them the ability to mark-up prices without fear of being under-cut by competition.

Since value can’t be created in exchange, any time one firm or industry gains super-profit in the market, someone else is losing value.

Q: Why is art work so expensive? What determines the value of art work? What about antiques? Is this a case for the usefulness of Marginal Utility theory?

A: Art and antiques are not freely reproducible commodities. They do not respond to the laws of supply and demand because their supply cannot be altered, their supply does not respond to price signals. There can be no reapportioning of labor time because they can only be produced once. Therefore the only thing that can determine their price is demand relative to their limited supply.

I can imagine this might sound like a concession to the primacy of other factors in ultimately determining price. On the contrary I think this actually brings out the important defining characteristics of Marx’s value theory and shows its superiority to marginalism.

Marginalism makes sense of the economy by abstracting away from production. People form consumer preferences based on a pre-existing world of commodities. These preferences are then considered all we need to know to understand price. This abstraction is much like the market for art or antiques where the commodity already exists as a static supply and all that matters in terms of prices formation is the level of demand for one commodity relative to another. I have criticized marginalism in several previous posts so I will not go into that here (see “simon clarke: Marx Marginalism and Sociology”, “Subject/Object”, “Script for a video that may never be produced“, etc.)

But the majority of the commodities produced are reproducible. Their production is sensitive to changes in price. This sensitivity triggers all of the above mentioned rules of value. We could just as easily posit the opposite situation where the demand for a commodity is static and supply determines the price. (hmmm… example?)

Regardless, when one buys expensive antiques the seller is not making a killing because value has been created in exchange. There has just been a transfer of value in exchange. This value only exists in the first place because it was created in production. The money that buys the antiques exists within a society in which money is the measure of abstract labor. In this way the logic of commodity production subsumes/engulfs all other forms of interchange.

Q: What is this term super-profit you keep using?

A: Marx never actually used the term and it has been used a few different ways by different Marxists. I use it to mean the additional profit a firm can make by selling a commodity above its value. This is different than surplus-value which is the profit the capitalist makes by exploiting their workers. I’ll assume that the concept of exploitation is already understood but a brief summary on the relevant points is probably useful:

Since value can’t be created in exchange the only way to make a profit is to pay workers less than the value they create. Now super-profit can be made by some by selling above value, but not all firms can do this. There is no way to increase the aggregate (overall) profit just by buying and selling. Without the profit proper that comes from exploiting workers there would be no reason for capitalists to invest in the first place. Assuming exploitation is successful, all capitalists make a profit. Some make a super-profit in addition to this.

Q: But a commodity’s price isn’t just the value created by labor. There are also costs of production like machinery and raw materials.

A: Yes Marx considers the total value of the commodity to consist of three parts: wages, costs of inputs, surplus value, or has he calls them “variable capital”, “constant capital” and “surplus value”. Inputs, or “constant capital” are called “constant” because their value is fixed at the time or purchase. The capitalist must transfer their value into the price of the finished product or else take a loss. Constant capital is, of course, the product of previous labor processes and its value is entirely the product of labor and nothing else.

“Variable capital”, or wages, is the called “variable” in order to emphasize the grey line between surplus value and variable capital. You are paid to work a 40 hour week. How much of that time are you producing value equivalent to the value of your wage and how much of that time are you producing surplus value (profit) for your boss? It is hard to say. It is a matter of class struggle. Capitalist constantly strive to increase the amount of surplus they can squeeze from the worker.

Q: What about a fully automated factory? This produced no value at all yet still has an exchange value. What gives?

A: First, an automated factory still has costs which they must pass on to the consumer. These are the costs of raw materials and machines. These are constant capital, just like in a normal factory. The real question is where the profit comes from in an automated factory. Nobody would invest in an automated factory if all they could do was receive the cost of their investment back. People invest for profit. In an automated factory there can be no surplus value production. All profit must be appropriated in exchange ã la super-profit.

We live in a highly mechanized society. Machines do many tasks that people used to do. When people did them they created value. When machines do them they create no value. In some examples this makes intuitive sense. Take the jobs that computers do calculating and duplicating information. Where we used to have to pay someone to set type and manually print a book now we can just duplicate it with a click of a button. No labor is involved. Hence this task no longer produces exchange value.

But take a camera factory that replaces all of its workers with robots  When humans worked there the capitalist added up the costs of production (wages+other inputs) and added the average expected rate of profit to this figure to form the price. When robots replace the humans the capitalist uses the same logic: add up costs of production and add the average expected rate of profit. This makes it seem like the presence or lack of human labor has no bearing on the formation of price.

Sometimes Marxists have responded to this problem by appealing to specifically unique characteristics of human labor. They say, “well robots may be able to turn screws and pull levers but they will never be able to do X” (where X is usually something like “think creatively” to “perceive beauty”.) I think such a defense is really problematic. Given the incredibly fast development of cybernetics I think it is risky to base ones theory of value on some arbitrarily chosen essence of human labor. (I was surprised to hear this argument made recently in a debate on the OPE listserve… I expected better from professional marxists.)

What actually differentiates human labor from robot labor is quite simple: humans have the ability to refuse work. This element of choice makes their labor a social matter. The inter-relations of human labor are social relations. In order to make humans work they must be dependent on the market for their survival. Their lives must be caught up in the consumption and production of commodities. This consuming and producing involves choices, the measuring of choices against each other, seeking personal advantage. The distribution of this labor and consuming is organized through the value relations between commodities.

Now if all production in society were full automated there would be no need for exchange value. Society would just be one big factory where production was carried out according to one big equation. (I should probably explain this more fully.)

Conversely, if robots ever developed enough intelligence to refuse work then their labor would become a social relation like human labor and would be value creating.

Q: What was that thing you were saying about an average rate of profit?

A: Aha! Now we get down to the really interesting stuff. You are an investor. You notice the the profit rate in Industry A is higher than the profit rate in Industry B. You decide to invest in Industry A, as do other people. As more money flows into Industry A this cuts into profits. Why? Because there are more competitors producing more goods. The increased supply doesn’t mean more demand, just lower rates of return. The opposite happens in Industry B. Investment flows out of the industry, supplies lower relative to demand. This brings prices above values and profit rates rise. This process causes a tendency toward an average profit rate.

But this causes a conundrum. If profit is total price minus the total cost of production then we would expect profit rates to be higher in industries with lots of workers and little constant capital costs than in industries with fewer workers and lots of constant capital costs (machines, etc.) Why? Because price is c+v+s (constant capital+variable capital+surplus value). And the rate of profit is s/(v+c+). This means that the lower c is, the higher the rate of profit, given v stays the same. Remember only workers can produce surplus value. So we’d think that having lots of workers is good for profit and replacing workers with machines would be bad for profit. When you replace workers with machines you have high costs of production but you don’t produce much value. This was scene as a paradox to adherents to the ‘labor theory of value’  (LTV) prior to Marx because it conflicts with the notion of an average profit rate. The LTV predicts higher profits for low ratios of machines to workers, but we also know there is a tendency for profit rates to become the same between industries regardless of the particular mix of workers to machines. It seems like profit is just an average return on investment and has nothing to do with labor being a unique source of value. It seems like machines can create value and surplus value just as well as workers. This leads Sraffian economists like Steven Keen to argue that the LTV is wrong and that commodities can produce value on their own.

But we can already anticipate Marx’s response to this notion based on what we already know about the transfer of value in exchange. For Marx the tendency toward an average rate of profit involves some firms losing surplus value in exchange and others gaining it so that firms with a low ratio of machines to workers (c/v) make the same rate of profit as the firms with a high ratio. Some sell at prices below values. Some sell at prices above values. These new prices Marx calls “prices of production”.

Q: So rather than the social value of a commodity involving SNLT now the social value just comes from adding the average rate of profit to the cost of production? Have we just replaced labor values altogether with a different theory?

A: This has been one historic criticism of Marx’s theory of price. Bohm-Bawerk accused Marx of literally contradicting himself on the issue. But there is no contradiction. We have seen that even the elementary theory of SNLT involves the deviation of value from price and the redistribution of profit in through exchange. The same happens with the theory of prices of production.

But what of the more general charge that there is no necessary role for labor as the source of value in the theory of prices of production? Even though there is a systematic deviation of prices from value this deviation is still related to labor times. What is the average rate of profit? It is the individual rates of profit of each industry averaged together. The average rate of profit is still determined by the total amount of surplus value produced by the working class as a whole. Thus the capitalist class literally exploits the working class as whole, not just as individuals.

Marx famously held three equalities to be true for the economy as a whole:

1. total value equals total price
2. total surplus value equals total profit
3. total value rate of profit equals total money rate of profit

Bohm-Bawerk responded that these were just tautologies that prove nothing. But they are not meant to prove anything. They merely frame the contours of what value is. Value is not a phenomenon where every commodity is going to magically appear with an exact measure of its labor time. The economy is much to complex for that. Rather, price, though formed wholly of the substance of value, is always a refracted measure of value, reflecting at any moment a number of different determinations.

Q: What if there are barriers to an average rate of profit? Then do commodities trade at their values?

A: Some people argue that the tendency to an average rate of profit is weak, constrained by lots of barriers to entry in industries, and that therefore commodities can be considered at trading, within fluctuations, at their values, not their prices of production. I think this is failed reasoning. It doesn’t matter that the tendency toward an average rate of profit is a weak tendency. It still must fit into a theoretical framework. We can’t just ignore it on empirical grounds. And even if profit rates weren’t equalized perfectly between industries this doesn’t mean that the profits of automated industries would automatically plummet while the profits of labor intensive firms would shoot up. In the practical world of investment and pricing capitalists expect an average return on their investment relative to their cost of production.

Q: But you said that the point of price was to allocate labor. If prices of production obscure the difference between humans and machines then how can labor be allocated in any sane way?

A: Prices of Production still allocate labor because wages and surplus value are still involved in the prices of commodities. But, yes this allocation doesn’t happen as smoothly as it would in a world with no average rate of profit. In fact we already know that there is a systematic tendency in capitalism for capitalists to replace workers with machines. This increases the productivity of the remaining workers, allowing capitalists to produce below the SNLT and thus gain super-profits in exchange. Prices of production allow capitalists to continue to automate production without being punished for producing at a lower individual rate of profit.

But if firms are replacing more and more workers with machines then less and less surplus value is being produced relative to the cost of all those machines. This leads to a Falling Rate of Profit in the economy as a whole. This is why in vol. 3 of Kapital Marx immediately moves from the discussion of Prices of Production to the theory of the Falling Rate of Profit. The tendency of the rate of profit to fall can lead to crisis, like the one we are in now. The rate of profit is only restored once enough capital value (ie the costs of production: workers, inputs) has been destroyed or devalued. See my video on the Falling Rate of Profit or any of my coverage of Kliman.

Q; I heard/read about this thing called the Transformation Problem that means that Marx’s theory of prices of production is all messed up.

A: See my video on the Transformation Problem and/or the Math Supplement to the video.

Q: I heard about this Okishio Theorem which invalidates Marx’s theory of the tendency of the rate of profit to fall.

A: Read this: Okishio, an obituary, by Andrew Kliman

In summarizing I’d like to say something very important. I hope that I have just shown that Marx’s theory of value is entirely coherent and logically sound. There are no unexplained phenomena. There are no nasty little exceptions that destabilize his argument. We are often told about the existence of all sorts of persistent myths about how this or that exception ruins his value theory. The vast majority of these accusations consist of trying to find examples of instances where prices deviate from individual values, whether that be in Mud Pies, automated factories, prices of production, or antiques. I hope that I have demonstrated that these are misguided attacks.

Just because Marx’s value theory is consistent, rigorous, and holds up to the basic requirements of logic doesn’t mean that it is correct. There is still an argument to be had over whether his theory actually explains the way the world actually works. Sometimes people confuse the two issues.

Steven Keen, for instance, argues that Marx is wrong to say that only labor can produce value. He does this by pointing to a supposed logical mistake in Marx’s description of exploitation. Marx says that the use value of labor-power is that it can produce value. Workers produce more value than they cost. But Machines can do the same thing, Keen argues. Marx ignored that machines can produce more value than they create. If Keen wants to argue for a theory of machines creating value that’s fine, but he shouldn’t do so by acting like he’s found some brilliant little hole in Marx’s logical argument. Keen acts as if he wants Marx, in the discussion of exploitation, to furnish some knock-down proof that machines can’t create value. But by this point in the argument Marx has already established that only labor can crate value. He is merely explaining the logical implications of such a theory. Elaborating on implications of a premise need not prove the premise. I’d almost be willing to say that they can’t prove the premise because you have to assume a premise to elaborate on its implications.

I feel like Keen’s argument is an obnoxious attempt to imitate what seems to be a trend: one makes up nonexistent problems regarding the logical structure of Marx’s argument and then uses these “discoveries” as material for riffing on one’s own theory of capitalism which has no relation to Marx at all. Keen would be better off just debating premises, and the basic questions of what a value theory is and what it means to express social productive relations through commodity exchange rather than to go on a fools errand to find some flaw in Marx’s own structure of argument.

I also want to stress that absolutely none of the qualitative aspects of value theory are effected negatively by the deviation of value from profit. I also do not believe that Marx’s method of deriving labor as the content of value is effected at all by the derivation of value from profit. In many ways, these qualitative and methodological questions are the important ones to have.

Price theory is not the goal of Marxist economics. The important take away is that Marx’s price theory does not contain some poison that destabilizes the rest of his understanding of capitalist social relations.

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42 Responses to Value and Price Q&A

  1. Julia says:

    I was going to ask you about your opinion’s on Keen’s assumptions regarding Marx’s ideas on value, but you already answered them. Nicely done, and I look forward to the video.

  2. dola says:

    Brendan you haven’t answered the main question though: what is the SNLT of mudpies in 2012? ;)

    It’s 5am so I’m not going to read this now but I can tell there’s gonna be a lot to learn/chew on. Yay for the FAQ format btw.

  3. Danny Jacobs says:

    Awesome Job, Brendan. Its good to just have something where you lay out a lot of the common objections. Keep writing as more of this needs to exist.

    Three things

    1) Keen’s argument is just directly wrong. The reason why “surplus-value” comes from labor is because of its dual-nature i.e. as both worker AND consumer. They turn around and realize (some) of the surplus – hence, another reason why its necessary for “free” labor under capital.

    Machines do not turn around and become one of the consumers that haunt me at bed, bath and beyond (my work). Keen is confusing the peculiarity of surplus value with a general accounting statement. Actually, profit itself is not necessarily even surplus-value (another confusion) – if you make a profit of 100 dollars in a period, its logically possible (and totally consistent with Marx), to have 90$ of it as a direct representation of surplus-value and 10$ from simple overpaying/”accidental” as Marx calls it (and he says the same about Artwork, another standard argument about Marx and “exploding his fallacies” or some shit. The auctioning of unique items existed in Ancient Babylon and Rome, usually for slaves. Commodity reproduction did not).

    Value is a really, really, really difficult concept to understand, especially for those who would like to walk along the “royal road to science” instead of raising their critical inquiry on par. I advise anyone to reread the first chapter (“commodity”) of das Kapital 100x and the Preface of the Phenomenology of Spirit 100x. Marx is describing Value dialectically, as a Hegalian substance. IT IS NOT SOMETHING that walks up to you and tells you its number (pun intended). It gains expression through its connection with other social necessaries and thus, is suprasensible to the individual level.

    2) Marx shows the limits of Value. Not just epistemologically but also how it becomes anachronistic to the material world that it exists within. When someone says “well, what about those factories that have only machines!” ask them if they can finally see how capitalism points beyond itself.

    3) I have recently (while reading this) seen Walter Block claim that “socially necessary labor time” is circular reasoning.

    ” Its well-known refutation goes as follows: If labor and labor alone determines the value of an item, what of the fact that a cherry pie and a mud pie contain the same number of labor hours, and yet
    the former is far more valuable than the latter? The response of the unsophisticated Marxist5 is that what he has in mind is not labor per se, but rather “socially necessary labor,” or some such…But to define “socially necessary labor” as that which is correlated with value (the cherry pie has more of it than the mud pie, which, it turns out, has none), is to leave unexplained its genesis. Why is it that the cherry pie has lots, and the mud pie little or none?
    Could it be, possibly, that the cherry pie has socially necessary labor and not the mud pie because people like to eat the former and not the latter? Of course this is true. But if so, this is to argue in a circle, since we can never know what is “socially necessary” and what is not until and unless we know consumer values, a very different, and far more
    Austrian, explanation of price” – pg 36

    Besides the first sentence being wrong (labor alone does not determine the value), his “zing” moment is stupid. Something can be useful and NOT socially necessary – see point 1. End.

    http://mises.org/journals/jls/20_1/20_1_4.pdf

    Good job, once again.

    • dl says:

      Good points, Danny. In response to Walter Block’s fatuous ‘refutation’, it would more correct to concede the point about the ‘circular logic’ of Marx’s labor theory of value, adding, however, that this is in fact its particular virtue. The logic is circular in that it accounts for value in terms of the mediation of individual(s) and the totality by means of a ‘metabolic unit': the commodity. The Austrians need to give an answer to the same problem of mediation, and they give the idealist answer (“consumer values”). That’s why for Marx, society is irrational or contradictory (even down to the contradictory form of the commodity), and for the Austrians, society is rational but men are contradictory or irrational. For Marx, the presentation of capitalism would be at the same time its critique, while for the Austrians, the presentation is an injunction to restore the ideal essence of the system (“‘really’ free trade”).

      Marx was faced with the problem of accounting for the origin of surplus value. The dilemma was this: if we assume equals are traded for equals in exchange, profit is impossible. “To explain the general nature of profits, you must start from the theorem that, on an average, commodities are sold at their real values, and that profits are derived from selling them at their values. If you cannot explain profit upon this supposition, you cannot explain it at all.” The Austrians would seem to follow the Ricardian Socialists in explaining the origin of profit by pointing to the accidental divergences from real values that might happen in exchange, e.g. better bargaining, lack of competition, etc. This is clearly inadequate, for not only does it rely on problematic metaphysical suppositions, but even with these, fails to resolve the problem. Everyone is at once a producer and consumer, atomized and running around ‘ordering’ values whose commensurability is unexplained, and from this emerges an always changing general ordering expressed by the price system, but it remains a mere colligation of the parts. How this colligation is achieved exactly is unexplained, they simply point to the existence of the price system and think the problem is solved–obviously geography, time, etc. would be structural determinants that need to be explained alongside the black box of individual preferences. The point is that they have the problem of the mediation of the macro and micro inverted–where the locus of mediation for Marx is neither confined to production or consumption alone (hence the difference in the first place between value and price, or why on the market “values woo at the prices they hope to attain”), the Austrians confine it to consumption alone, putting it in individuals minds (the idealism is an always available alternative to, or regression from, Marx’s materialism). Marx had dismissed this in passing as dubiously supposing that “all men have an encyclopedic knowledge of commodities” at the moment they “rationally act”. There’s no notion of a retroactive realization of value as in Marx, for the Austrians value (price) is always being instantaneously realized in an ideal spontaneous order, of which the price system is an imperfect reflection.

      The point Marx would later make in Capital, leading up the section “Contradictions in the General Formula”, is that if we assume commodities are sold at their real values, you end with a (negative) “double result” or contradiction: capital cannot originate in circulation, but at the same time cannot arise apart from circulation. From here labor-power comes on the scene as the solution in practice to the (ideal) riddle, but the contradiction at the ideal level *remains unresolved*.

      • Danny jacobs says:

        Hey,

        Yes, I think I basically agree with much of what you said. Its not subjective or objective, but the dialectic between both.

        Unless I am mistaken by what you mean by “retroactive realization of value,” I would say that Marx indeed did have a notion of this. He and Engels (in the preface to the philosophy of poverty) constantly remark about the dictums of the market being the manner in which the law of value comes into perception. Hence, production of surplus value literally happens “behind our backs” because we cannot see it or meaningfully understand it until it shows itself to us in the manner of profits or prices, etc. In this way, the Austrians are partially correct – usually the individual sides are one-sidely correct.

        The modern theory of profits to Austrians, as given by Mises in his “profit and loss” little essay, is actually quite similar to Marx’s idea of surplus-profits. They see profit as arising from arbitrage or an entrepreneur exploiting a discrepancy in consumer-producer valuations i.e. profit, once again, is a variation on the buy cheap and sell dear but in this case, the dear is at the “natural” level.

        Otherwise, I think I basically agree with you.

  4. RNL says:

    I’ve actually been wondering who it was who first used the term “labour theory of value”. I have a feeling it originates with the marginalists, is that right? It collapses all “labour theories of value” into one category, and then allows them to debunk Marx by only critiquing Ricardian value theory. Who was the first to use the term though, do you know?

    • I think the term may predate Marx though I’m not actually sure about this. I think Ricardo used the term “labor theory of price” (that factoid from Jim Devine’s blog.). I would be interested to know if other readers can identify the first use of the term. Regardless I would assume that it was the marginalist revolution that resulted in Smith, Ricardo, Marx, etc. all being grouped together as “labor theory of value” despite the differences in their theories.

      • RNL says:

        Devine also says there that Marx used the phrase to descibe others’ theories. Interesting. I wonder if that’s accurate (I haven’t read “Theories of Surplus Value”).

  5. Danny Jacobs says:

    They were the first to also set everything as “objective” vs “subjective” value. Unfortunately, Hilferding and Bukharin jumped on this bandwagon with their “rejoinders.”

  6. JeevesBond says:

    I posted this to Reddit’s Debate a Communist group:

    http://www.reddit.com/r/DebateaCommunist/comments/yi8e7/for_all_debaters_brendan_cooney_has_requested/

    There are a few interesting posts on there. Might be an idea to also post it in r/socialism and (if you’re really brave) r/communism, I don’t venture into those sub-reddits, personally.

    I’ll post it in r/Marxism in a minute, too.

  7. stefan says:

    concerning the issue of “social labor”, where you defined it in relation to exchange:
    i don’t actually have my copy of das capital here so i can’t have exact references, but if i understood it correctly, shouldn’t making a sandwich for yourself also be considered social labor on the grounds that you are investing labor in your self-sustainment ?
    i.e. shouldn’t the labor that you put in reproducing yourself as a labor force also be considered socially necessary?
    not wishing to nitpick or anything, just as a point of clarification (for myself and potentially others)

  8. Paul says:

    I’m new to this blog (well i’ve seen the videos…). Although i claim to have understood the LVT quite well, i do have some questions/thoughts.

    1)
    I have recently stumbled across another “anti-Marx-LVT” argument claiming that Marx’ assumption “only human labour can create value” was a purely moral one. The argument was like this:

    “Well, if crop is a commodity and labour is a commodity, it is arbitrary to argue the the surplus originates from labour. Why do we know that its labour and not crop that delivers the surplus…”

    Then the speaker told something about the book “production of commodities by means of commodities” by Piero Sraffa….

    I thought about that and came to the conclusion that the presumption that leads to this “problem” is wrong. There is a major difference between the commodity “crop” and “labour”, which is that labour takes TIME. (beside the fact that surplus per definition is something that doesn’t exist before the production process and therefore cannot be “in the crop”.. But otherwise, “per definition” is problematic for any theory, i would say…)

    So measuring the “amount” of labour actually means refering back to a measurement of time, which is a rational quantity (and not a moral one…).
    Since all commodities are products of labour – which is pretty much an empirical fact i would say – and labour takes time, NEW commodities (…surplus) can only originate from a process that takes time, which of course is labour again.

    Would you agree that this is a helpful definition of “what is so special about labour that it must be the ultimate source of value” or do i just terribly complicate things….

    2)
    “Only HUMAN labour creates value”

    Is it right to say that labour is the sole source of value, and since we live in an economy where human beings perform labour (and not crop or animals…), it is just rational to argue that HUMAN labour is the source of value?

    In other words, could any labour be the source of value?
    I mean if the value of a worker is defind by the labour that it takes to reproduce him and the surplus is the value he produces after he has reproduced his own value, who cares what actually performs this labour?
    If I let monkeys do work for me, paying them the food they need to reproduce themselves, but let them work longer (lets say carrying things from A to B, coals out of a mine f.ex…) until they produce a surplus and i can make a profit out of their labour, wouldn’t that be exactly the same thing as if I payed the food to human beings and let them carry things from A to B?

    Maybe these questions are purely academic, but I’m an academic you you…;-)

    And if I still have strong misconceptions with the LVT, please feel free to straighten me out…

  9. Paul says:

    LTV, not LVT. Sorry for that.

  10. Great post Brendan.

    I saw on reddit that you were looking for feedback. Here’s some from a rookie marxist economist.

    1) It might be useful to distinguish private and personal labor. At work you sell your private labor and while at home you use your personal labor. Also, it might be useful to make a small flow chart or something on how private labor becomes social labor. Maybe I’m just an overly visual learner.

    2) I like the term “value realization” a lor to distinguish between creation and realization.

    3) I’d be nice if you went more into how unimportant non-commodity form money is. I’ve heard people tell me Marxism is wrong because we don’t use commodity based money anymore.

    4) “Rather than selling at a loss they find that they now set the SNLT.”

    I really like this bit here and the logic you use to get there. Sold.

    5) “Since value can’t be created in exchange, any time one firm or industry gains super-profit in the market, someone else is losing value.”

    This is very unclear. Where is the value coming from? From cheaper shirts?

    6) ” We could just as easily posit the opposite situation where the demand for a commodity is static and supply determines the price. (hmmm… example?)”

    How about power production. It keeps up with growth but average consumption isn’t much higher over the years, right? The only other constant consumer based demand I can think of is housing but manipulations of the housing market make any real analysis impossible.

    7) Maybe clarify superprofits but saying that superprofits is anything made above the exploitation of labor.

    8) “We live in a highly mechanized society. Machines do many tasks that people used to do. When people did them they created value. When machines do them they create no value.”

    I always thought that machines passed the labor time embedded in them during their creation. When a bit breaks down it literally transfers x about of the labor used to create it until all of it’s value has been depleted.

    As always, good work. You also need to copy edit it some for small typos and the like.

  11. Myles says:

    Brendan, there is a case of utility directly affecting value that I have experienced; A tonne of feed wheat is significantly more expensive than a tonne of barley (due to the nutritional content of the crops), even though they both require exactly the same amount of labour to produce. Is this an example of marginal utility, or is it because the labour incolved is more useful in society, like the mudpie argument, or what? Another example is the case of land which required no labour to create, but contains value for the property holder, and the value also varies depending on chemical properties, location etc. To me this appears to be dependent on supply and demand and to be completely seperate from labour value. Your thoughts?

    • Daniel Jacobs says:

      Myles, I thought I would just answer this myself

      1) Marx’s value is not just the literal amount of labor in time i.e. just because both a tonne of barley and tonne of wheat can be produced in x hours, does not imply that they should be the same price. For you have also not even listed what the constant capital is for making both i.e. the fertilizer might be significantly greater for barley. So there is no reason to even assume they have the same value

      Secondly, even if they did have the exact same value per item, price is an expression on the market, influenced by the average rates of profits in their own spheres (wheat and barley first) and then influencing each other. I don’t know the extent of your experience with the price trends, but an experience of price for barley being greater than wheat say in January, could flip by May. Marx thinks of value as the law which regulates the immediate supply and demand dips and pulls.

      2) Marx actually has an entire 1/4 of Vol 3 of Das Kapital dedicated to land and differential rent. Land doesn’t create value but provides a super-profit i.e. above the average profits of the market. This is because qualitatively better land allows for conditions of production and reproduction better than that of rival competition. Actually, Marx even talks about the marginal quality of land i.e. virgin soil losing its benefit over time.

      3) The problem with most approaches to understanding Marx’s view on Value is that they approach from the view of value = preferences. The real question that Marx asks – and this is clear in his immanent Critique of Say’s Law (which he points out is a rip-off of the Physiocrats) – is why is it that “labor is expressed in value, and why the measurement of labor by its duration is expressed in the magnitude of the value of the product” (Kapital I: 174). That is there exists a contradiction between the manner in which Capital values products of society and the manner in which we literally value things. That is, to point out how say Marx’s value doesn’t explain everything ever that ever existed and was bought and this unnecessary thing and this artwork and this virgin forest and this bomb, is to actually express the fundamental contradiction of Capital.

      Returning to Say, Marx rightfully calls his “law” tautological i.e. “there can exist no general overproduction” because “overproduction” only exists relative to value under capital. Hence, we can have overproduction of houses (and wrongly explain it via the ABCT, even though Rothbard clearly states in Man economy and State that credit to consumers i.e. subprime mortgages, cannot be the cause for the ABCT) and people homeless. That is the real central contradiction that Marx states – not proleteriat and capitalist, a veil if anything – but between means and ends.

      • Myles says:

        Thanks for the quick reply. I have all the input prices and the respective rate of profits for both feed wheat and feed barley. All the figures I used were taken from the John Nix Farm Management Pocketbook and refer to the average 2010-2011 prices, I calculated the production costs myself and will find them and email them to you if you want. However, feed wheat is consistantly more valuable than feed Barley, if you don’t believe me you can check the Prices and Trends segment of http://www.fwi.co.uk I gaurantee that Wheat will hold more value than barley, and I assume this price difference is universal in the US as well. Profit rates are higher in wheat production as well. Even though costs in labour and constant capital is almost identical (apart from seed costs obviously). I will find the calculations and upload them here as well.

  12. Danny jacobs says:

    Myles,

    I don’t doubt that the prices are higher, so I “believ e you.” In fact, I simply asked if you knew what the “value,” not price, of constant capital. These are two different things, something that marginalists conflate. Prices almost always diverge from their values in face of social production but (and I see you have already looked into this), an average can help

    Hell I don’t even doubt that the variable capital and constant capital costs could be “almost identical.”

    2) You can email me how you calculated the “production costs” or you can just tell us immediately here as you already have given hints. Actually, one of things you listed that “labor and constant capital is identical (apart from seed costs obviously)” already contains some perspective into at least one cause of divergence i.e. seed costs. Seed costs figure (either) into fixed or circulating capital, depending on the manner in which value is transferred to the product.

    3) In the case that you stated Wheat almost always “holds more value,” do you mean in the Marxist or marginalist sense? If it was in the Marxist sense, then yet another thing to consider.

    It could be that Wheat has been consistently higher because of the fires in Russia that plagued Wheat Production. In the case that Scarcity is a factor, than the same mass of value, say 100, is expressed differently in 10 wheat than 20 barley. Hence, price is expressed for each of them, dare I say on the margin, differently.

    I think the problem is you are viewing the input costs as immediate determinates of the commodity i.e. labor was x price + constant capital y price + average profit rate x= the price it must be or Marx’s fallacy is “exploded” but nothing could be further from how Marx saw price. Marx understands “subjective valuation” of goods just as much as the Mount Perlin society but he understands the manner in which it is expressed socially i.e. our valuation of wheat vs barely in capitalism takes on a “socially objective” character. When I decide I want wheat over barley, this realization of value effects the entire commodity mass, from bedspreads at Bed Bath and Beyond to this differential equations book next to me. Its because as socially necessary labor is realized i.e. becomes perceptible, it plays back upon the relative exchange ratios of all commodities(through the universal equivalent, money). Subjective valuation under feudal society, was personal and private i.e. today I am going to slaughter this cow and avoid the black plague.

    Now someone anxious to “explode” my “fallacy” might ask if I just proved the “subjective value theory” as I just appeared to give an example of value arising from preferences alone and “imputing” all the way up the factors of input. But no, because it misses the specific unique character of wage labor – surplus labor is not unique to capital, as Marx explains trade arising from surplus products between primitive communities. But the difference with free, wage labor, is that this labor also produces the “social consciousness” i.e. not just produces a surplus on the productive side but also determines, through acts of voluntary anti-coercive preference valuation subjective scales, what is considered “socially necessary labor time.” They also produce literally the standard of social value. Capitalism is not “class domination” hence the “hitherto” in the Manifesto.Its social domination. Marx is neither a “subjectivist” or “objectivist” (or fucking Ricardian, which I don’t know why everyone keeps saying that) – he sees Value as a Self-Moving Substance i.e. consciously expanding itself. Value arises from both production and circulation; it arises from both our objective reality (labor, competition, material progress,etc) and from our subjective reality (i.e. in the case that Value was simply objective, it would imply that it was impossible for humans to change it i.e. in the sense that gravity is objective. Although anti-gravity exists. bad example :(

    Sorry about ranting Brendan.

    • Myles says:

      OK I’ve found the data, like I said this is data collected by professor John Nix, an agrarian who headed agriculture studies at, I believe, Cambridge Uni. The Farm Management Pocketbook is now in it’s 42nd edition so I may go and look at early editions to see if the price (or value?) relations have always been the same, as I suspect them to be. All the information is based on aggragate figures, obviously individual performance will deviate depending on a variety of factors, in different enterprises, but the overall relationship between the commodities should be measurable, especially as most arable farms include both crops in their rotation. I laid out the data in a spreadsheet format so it may be difficult to convey the information in an accessible way, but I will do my best to simplify the calcultaions I made.

      So, you are correct in assuming I have detailed input costs as seperate determinates (or “ingredients”) of the finished commodity/value. However I just see this as appropriate to Marx’s own explanation of how value is created ie. Constant + Variable capital + surplus value (or value extracted from labour by the capitalist) if I find these values surely that is all that is needed to quantify the total value of a commodity? (before value is transformed into prices of production, through the outside influence of the market).

      Following this line of thinking I divided inputs into categories of: bought in materials ( e.g. Seed, Fertiliser, pesticides etc., Operations (the labour time required to complete one hectare of land) and machinery maintainance (which would consist of both constant and variable capital). All these values were calculated on a per hectare basis.

      • Danny jacobs says:

        Calculating via Marx’s “equation” is an infamous little branch of Marxism, of which I am sure Brendan knows much, much more than I about and of which has a history with people like Anwar Shaikh. I will do my best to see if any of the following can help but don’t take this as the “word” but my opinion:

        1) “price (or value?)” – its going to be price, not value. Price is the form in which value is expressed, in the Hegalian sense of the actua. In most cases, more value is produced than is realized and I believe the tendency in capitalism is towards more production of value over realization (although, I know not all crises can be explained as such). To put it in concrete terms, I currently work in retail and the difference between my store and our competitors is not the price, variety or quality of products – manufactures sell to all of the competitive retail and then see who realizes it the best (i.e. through advertising, competition).

        “Following this line of thinking I divided inputs into categories of: bought in materials ( e.g. Seed, Fertiliser, pesticides etc., Operations (the labour time required to complete one hectare of land) and machinery maintainance (which would consist of both constant and variable capital). All these values were calculated on a per hectare basis.” –

        So I mentioned this two comments ago. Its hard to base socially necessary time on productivity as you have stated “(the labor time required to complete one hectare of land.” For one, socially necessary labor can remain absolutely constant but productivity shift all over the place i.e. 100 value could be expressed in 1000 tones or 100 lbs. It might still be possible to figure out the average productivity and guesstimate from there.

        Secondly, the value of variable capital that enters in is based on the reproduction of labor, not on the operations. Once again, its not simply “he put in 5 hours and he put in 10 hours, the latter is more expensive” or “he produces 100 wheat in 2 hours, the latter in 10 hours, thus the former is more socially necessary labor.” Plus, I have forgot to mention the obvious – even if two groups have the exact same working period, surplus rates could be entirely different.

        Thirdly, there is some Smithian/Ricardian confusion over variable and circulating capital in your presentation. First off, fertilizer is fixed capital but is treated here as “materials” along with pesticide (which might count as maintenance) and seed (which could be fixed or circulating – are seeds being sold completely or are they being planted?). This affects the manner in which value is transferred to the product – for even in mainstream economics, would take into account that I don’t pay for all the feritilizer dumped on the land everytime I buy a houseplant.

        Fourthly, there is a problem with the maintenance section. Maintenance doesn’t enter into the product, for in the case that it did, value would be transferred twice. Furthermore, you would have to prove that maintenance happens at the exact same rate as value is transferred to the product from the fixed capital. Even more so, does the variable capital that you mention coming from the workers who already are there or specific engineers hired for the purpose of maintenance?

        Fifthly, Marx’s value is given abstracted from things like rents and taxes. You would have to consider the rent of the lands upon which wheat and barley were grown as well, in their respective countries.

        But to end on this note, surely if you could “find the values” you could know the value of the commodity before prices of production and etc, but I think this view of Marx’s Das Kapital is hopelessly lost. Marx specifically writes in the Grundrisse that one should not approach this text as an economic text – the point is not a positivist one. Marx is not interested in given an equation account of the price, in the manner at least that science creates equations to predict quantitatively. Marx is critiquing the categories of economic thought (i.e. constant capital, value, price, surplus value, EXPLOITATION etc) – these are by no means his own thoughts. Not even the infamous “exploitation” of “greedy” capitalists – these originate in Ricardo and Smith. Instead Marx is showing political economy to itself, to realize the contradiction that it has come into being with reality i.e. that the “LTV” cannot explain certain facets of reality that we all experience. Look back to the post I had two posts ago – that crises are relative to the mode of production.

        Finally:

        “We here meet one of the most important principles of the dialectical logic, and one that has been consistently misunderstood, vilified or lied about. Dialectic for Hegel was a strictly scientific method. He might speak of inevitable laws, but he insists from the beginning that the proof of dialectic as scientific method is that the laws prove their correspondence with reality. Marx’s dialectic is of the same character. Thus he excluded what later became The Critique of Political Economy from Capital because it took for granted what only the detailed argument and logical development of Capital could prove. Still more specifically, in his famous letter to Kugelmann on the theory of value, he ridiculed the idea of having to “prove” the labour theory of value. If the labour theory of value proved to be the means whereby the real relations of bourgeois society could be demonstrated in their movement, where they came from, what they were, and where they were going, that was the proof of the theory. Neither Hegel nor Marx understood any other scientific proof.” – CLR James

    • Myles says:

      You were also correct that fertiliser application rates were greater for Wheat production as were sprays but not enough to balance inputs and out puts of both enterprises. C capital came to 496 pound stering per hectare for feed wheat, and £446 for barley.
      The labour for cultivations, fert, sprays harvest and baling is just over £69 per hectare on average for wheat and £70 for barley (assuming an average of £8.00 an hour for primary labourers, I matched all the data up with standard contractor rates to ensure I made accurate estimations. Machinery costs were £192 for Wheat and £211 for Barley. This means an average input cost off £756/ha and £671/ha respectively and finished output of £1169 per ha for wheat and only £932/ha for barley. A discrepancy of £152 profit or 58%.

      • Myles says:

        Actually, the only place I may have messed up is that the yeild in tonnage may be different in wheat and barley, so I will check to see the variation in yeild weight/ tonnage but again this would be a qualitative difference in terms of production performance and, I assume, not be relevant as we are talking labour time, per hectare of production, or the socially necessary labour time for the production of fodder from a hectare of arable land (maybe it could be classified as innovation, i.e. wheat cereal is bread to yeild more than barley and thus improve efficiancy, gaining an advantage over barley production).

        I think the more realistic answer, and the solution I am now coming to is that of the mud pie debate. If we assume that labour must be useful, i.e. fulfill a social function in order to create value, and that a commodity must fullfill a use value or utility in order to be considered a commodity, then I should also assume that in the case of two commodities created to fulfil the same, or a similar function then the commodity that fulfills this utility better or more efficiently, will have greater demand and therefore hold a higher value than the inferior product. So if wheat contains higher nutrition and can be used in lesser quantity to fulfill the livestocks productive needs, it will therefore contain fetch a higher price and provide greater surplus value than the nutritionally inferior barley crop.

        So in this way it is aparant that utility also effects value when comparing different commodities even if the same labour is used to create them. Now does that contradict the LT of V? I’m sure Marx must have come to that conclusion and made it clear somewhere but I’m still trying to chew my way through Vol. 1 as I am just a layman of this fancy pants economics.

      • Danny jacobs says:

        “then I should also assume that in the case of two commodities created to fulfil the same, or a similar function then the commodity that fulfills this utility better or more efficiently, will have greater demand and therefore hold a higher value than the inferior product. So if wheat contains higher nutrition and can be used in lesser quantity to fulfill the livestocks productive needs, it will therefore contain fetch a higher price and provide greater surplus value than the nutritionally inferior barley crop.”

        Utility by no means contradicts Marx, by any means. It can simply represent a distribution of value. Let me give an example from my life – once again, retail. All of our competitors sell the same products, at the same price (in fact our policy and theirs is to match any price), we accept competitor coupons, have the same variety, order the same products, have more than enough in stock, etc. So literally what plays a significant role in distribution on the market – customer service. It seems really stupid but having attractive sales representatives, who make people laugh, cause them to compulsorily buy (not me – im short and they hide me in the warehouse). Can one really say all exchanges are 100% utility? Or even expected utility? Furthermore, what would this signifiy, this character of retail?

        The last line I agree with but I would write “realize more of its surplus value.” Marginal utility has been a distraction for 100 years. Its not holding a “higher value” but its realizing it. How do I know? Because when that inferior barley isn’t bought, real objective changes happen to the entrepreneurs of the barley business. If they take a major haircut, they have to sell some of their machines – they reproduce less. Marx’s value is “socially necessary” value for reproduction. A certain amount must be realized in order that Society, as a coercive force, allows the reproduction of the “objective” reproduction of your production inputs. Having a high value is not necessarily a “good” thing – so making lots of profit does not mean necessarily the products had “higher” value. If anything, products with a lower value could be reproduced, at least out pocket, easier.

        I think use-values create a veil that a lot of people have a hard time of getting out of – Marx always talks about comparison of commodities in their “natural form” or by their utility.

      • Danny jacobs says:

        “So in this way it is aparant that utility also effects value when comparing different commodities even if the same labour is used to create them. Now does that contradict the LT of V? I’m sure Marx must have come to that conclusion and made it clear somewhere but I’m still trying to chew my way through Vol. 1 as I am just a layman of this fancy pants economics.”

        – I don’t know what you mean by “same labour.” Barley production usually happens in warmer climates vs Wheat production.

  13. Myles says:

    Sorry I meant “bred” not “bread” as in ” genetically bread for superior yeild”.

    BTW I realise I’m being a MASSIVE pedant about this issue but I feel it’s important to try hard and find gaps or contradictions, or logical fallacies in any theory that I might prescribe to.

    • Danny jacobs says:

      That’s fine – you don’t have to prescribe to the theory but you should consider its implications. Of course Marx’s theory is incomplete – he was planning on 10 volumes of capital! At this year’s Left Forum, I specifically called for Left’s return to the manner in which Marx critique political economy – for the very reason that there exists HUGE GAPS.

      I myself, personally, and I am sure Brendan, because he is a smart man and awesome pianist, have continued the developing what I think is necessary in this field. At the very minimum, the development of marginalism has happened since Marx’s death – while I am still convinced that his critique of political economy in general remains convincing, I strongly feel if he was alive today he would have appropriated the categories of Mises, Hayek, Keynes and Friedman in the same manner that he appropriated his contemporaries categories. In this sense, his critique is outdated but not in the sense that 99.9999% of the profession thinks so.

      “The reform of consciousness consists only in making the world aware of its own consciousness, in awakening it out of its dream about itself, in explaining to it the meaning of its own actions. Our whole object can only be – as is also the case in Feuerbach’s criticism of religion – to give religious and philosophical questions the form corresponding to man who has become conscious of himself.” – from the Ruthless Critique of Everything Existing

      Another from Rosa Luxembourg on Bernstein

      “When Bernstein rejects the economic doctrine of Marx in order to swear by the teachings of Bretano, Boehm-Bawerk, Jevons, Say and Julius Wolff, he exchanges the scientific base of the emancipation of the working class for the apologetics of the bourgeoise…” – Reform or Revolution

      Marx saw the potential for Capital to free humanity from proleterian labor – in a vulgar sense, we could work a lot less during the day and have more time to be free to do the shit that we want.

      • Myles says:

        Cheers Dan, great discussion and your last comment I think I understood pretty well. I agree that “realize more of its surplus value.” is more accurate, and that even while a certain commodity would still represent, or contain labour value, it’s inferior utility, and by extension, lack of demand would inable it to achieve or “realize” this labour value. And therefore production would shift away from this commodity and labour “re-allocated” to more profitable ventures. Again thanks for the input and your right it is sometimes very difficult to get my head around some of these concepts as they seem very abstract, but I must say Brendan Mcoony’s videos have been very valuable in helping me to visualise the complex array of interaction between people and commodities. Also I’ll wait and see if I get a response from Brendan, I’m sure he probably has a lot more imput to make.

  14. Myles says:

    I mean same quantity of homogenous labour and spring barley and winter wheat can both be produced in temperate climates like we have in the UK.

    • Danny jacobs says:

      What is homogenous labor? Are you mentioning the working period or the production period? If winter wheat grows easier in the winter than in warmer climates, what allows the same quantity of labor or quantity of wheat to be produced in temperate quantities? Could it be the accumulation of capital?

      I hate to beat the same thing but, and with no personal representation of you, I just find that your argument is along the lines of “Marx gave x as a determinate. I am going to keep throwing a counter example to x until one hits.” When in fact, he didn’t give a determinate x – he applauded political economy for recognizing that value is expressed as social labor but then asked them (in the first chapter of Kapital) why that’s so (its a speculative question, almost one along the line of a Korean Buddhist koan – one which should create some sort of self-criticism)? In fact, he sort of asks the same question that Bohm-Bawerk asks Marx (“why is labor and not gravity!?”) but Eugen didn’t get it. This is part of the criticism – there is nothing “good” about labor being the source of “social” (not INDIVIDUAL) value. It is the manner in which society “plans” as understood by Marx (which does not translate into command economy).

      • Myles says:

        Yes I meant the same working period, the production will be the same for both crops. Labour time can be broken down into several operation: Ploughing, cultivation, drilling, fertiliser applications, combining, carting grain and grain storage and bailing. Some of these operations can be fitted together and carried out at the same time , but the labour requirements are the same for both products: over 8 hours per hectare and I assumed a wage of £8.00 an hour as this is the standard wage of a “craftsman status” farm labourer. I don’t think I follow your earlier statement of –
        ‘Secondly, the value of variable capital that enters in is based on the reproduction of labor, not on the operations. Once again, its not simply “he put in 5 hours and he put in 10 hours, the latter is more expensive” or “he produces 100 wheat in 2 hours, the latter in 10 hours, thus the former is more socially necessary labor.” Plus, I have forgot to mention the obvious – even if two groups have the exact same working period, surplus rates could be entirely different.’

        If you can make your labour work harder than the socially necesary labour time, surely you are producing more value than the average capitalist?

        From my perspective the main problems in my assertions are that wheat yeilds greater product than barley, but this is again a qualitative difference in the commodity the quantity of human labour (Homogenous in the sense that according to Marx the individual type of labour involved in production is irrelevant provided the same quantity and magnitude of labour is exherted) per hectare of corn cultivated remains the same between them, and the even same type of labour as the operations are identical for both commodities. The other problem is I am looking at this production as occuring in the United Kingdom, in isolation from the rest of the world (the figures are aggregate values for the entire nation) it is hard to calculate the effects on the UK of worldwide prodduction and the resulting supply and demand fluctuation. However I assume that British farmers are achieving Socially Necessary Labour time as, due to advanced mechanization, and possibly EU regulations we seem to compete pretty well in global production. Your right as well , that I am being pedantic and trying to find a gap in the logic of LTV even though Marx never said that Labour is the one and only arbiter of value for every single commodity that has ever and will ever exist, and used the concept to explain the role of competition and exploitation in capitalist prduction, and I don’t think this data contradicts or invalidates the labour theory of value whatsoever. I simply worked out the numbers last year in a different job and after learning a bit about Marxian economics (and finding Marx’s work totally satisfying as well) I wanted to try and make sense of them.

      • Danny jacobs says:

        “Yes I meant the same working period, the production will be the same for both crops.” – No, this is not true. Production period is total time in production vs working period, total time labor is active. Cultiviation periods are not necessarily the same, with wheat often able to be harvested a month to two months before barley, when planted both in spring (april-may) (i.e. spring barley vs spring wheat and/or durum wheat). This can result in a significant difference in the capital advanced, especially fixed capital value transferred, even if you have identical twins with the same reproduction work the exact same seconds of the day for the exact same working period with the exact same intensity with the exact same productivity in the exact same spheres with exact same turnover periods (another I forgot) with the exact same homogenous labor. Ah but perhaps you will say “but in the Uk here, we have barley and wheat planted exactly on the same day and then harvested exactly on the same day with the exact same homogenous labor [figured out by productivity, which is not what is not at all a determinate of socially necessary labor as I have now stated], same working period, with the exact same surplus rates and exact same constant capital, with the exact same average rates of profits with the exact same tax rate and exact same rent and thus, it is EXACTLY marginal utility that must account for the difference in these because I have shown that for the last 5 years wheat has maintained a constantly higher price on margin than barley but then I have realized that it is assumed under Marginalism that price movements follow exactly in the path of marginal utility, something impossible to prove if utility is intersubjective but something, as Von Mises states in ‘Human Action,’ we must take to be or the science of economics comes to a nil.”

        Even then, I would highly doubt that the organic composition was truly equivalent and would have to be pulled by my nose through the numbers, for if barley has a tendency (not pedantically always) to take longer to grow than wheat, then it would be through the accumulation of capital that the production times were equaled.

        “…the turnover period can often be shortened to a greater or lesser extent by the artificial shortening of the production time” – Marx, volume 2, 337.

        “If you can make your labour work harder than the socially necesary labour time, surely you are producing more value than the average capitalist?” – You are conflating about 3 things – socially necessary labor (the expression of value), productivity (the amount produced in an hour) and intensity (could mean quality if you want to throw in another chance to conclude marginal utility).”

        “From my perspective the main problems in my assertions are that wheat yeilds greater product than barley, but this is again a qualitative difference in the commodity the quantity of human labour (Homogenous in the sense that according to Marx the individual type of labour involved in production is irrelevant provided the same quantity and magnitude of labour is exherted) per hectare of corn cultivated remains the same between them, and the even same type of labour as the operations are identical for both commodities.” – Another thing to consider is the merchant upon which the item is sold to. Once merchant capital and later retail capital, grows to a significant amount, their profit rates influence the prices of the commodities i.e. they add onto the production prices. But its not quantity and magnitude in the sense

        If Wheat returns more per acre, then the same amount of value, if it remains constant (and usually, via the methods that increase productivity, it doesn’t unless every single person is moving concomitantly), is being expressed in more wheat i.e. each wheat has, everything else considered, less value. There is not a direct relationship between value and price, because its with respect to the economic sphere (right so you can have the same value in commodities between capitalist A with 50 c + 50 V + 10 S and capitalist B with 90 C + 10 V +10 S and then you equivate their productivity exactly but surplus rates are different or you have surplus rates the same but then value is different, etc). Chapter 9 of vol 3, the tables shows how this relationship is not apriori but with respect to the average profit rates.

        Marx’s big thing was to show, contrary to what Bohm-Bawerk thought he was showing marx, that an exchange does exist between capital and labor (and i don’t say capitalist/labor, because capitalist is personification of capital and as Marx rightfully attacked Proudhoun in Poverty of Philosophy, eliminating this relation just causes the worker to dominate himself, as both capitalist and laborer) but its one of time. So working days and working periods are probably nearly or exactly identical, as competition keeps us from simply working until the immediate job is done but instead seeks to get an infinite amount done.

  15. superman says:

    Utility for Marx means the physical body of the commodity. For subjectivists utility is just preference. Problem with subjectivists is that people exchange commodities (physical things) not preferences.

  16. Myles says:

    I meant earlier that the production period, in the sense that the time to complete one harvest and remove or incorporate residues, will be the same for Winter Wheat VS Winter Barley, and for Spring Wheat VS Spring Barley. The production cycle is identical for both corns.

    • Danny jacobs says:

      I guess my finally question would be – what is trying to be shown? I have given enough variables that I think have not at all been accounted for, going back 3-4 posts ago. But maybe all of them are so insignificant, that by comparing the wheat prices and barley prices in England over the last decade, it has been shown that Marx’s idea was complete drivel to be discarded, ignored and instead, turn to marginalism as the apodictic science of human action.

      • Myles says:

        Haha no that is not what I am saying or what I feel at all. I feel (and this may be obvious to most, like I said I am a layman) there is an interaction between social labour, which produces value and the relationship between labour and values can be tracked through time in the falling rate of profit, and the subjective realm of utility, which determines how valuable a commodity actually (physically) is. Or, to put it another way, whether the labour value contained in a commodity is realized, if it is not considered of acceptable utility then the corresponding price signals will indicate labour should be allocated in the production of commodities of a superior utility. So for instance in the case of wheat vs barley, wheat is more productive in yeild/hectare and in the energy and nutrients required for livestock fattening, the wheat has superior use value, as constant capital it improves efficiency (to farmers: “feed to food ratio”) this in turn allows livestock enterprises to improve their labour time. This superior utility is reflected in its price and how much value can be realized in exchange. Barley is still produced obviously as it provides other factors, crop rotation, productiveness in inferior land. Of course there are many variables and my figures are most probably not bulletproof, but on the aggragate, over a long period, the value ratio and difference in gross margin are consistent. So while only labour can create value, and I accept that neither machines, nor equivelant exchange, nor exchange of any kind can create value, it is ultimately social needs, requirements and utility that determine where production should be directed and what commodities represent value. Within that, labour time, exploitation, competition, increased efficiency all stand as modus operandi of capitalist production, and as the core determinants of the exchange values of commodities and the relations between the forces of production. But new commodities, inventions etc. sink or swim on their utility, or at least, percieved utility.

        I was also going to raise the question.
        ‘Q: Why is art work so expensive? What determines the value of art work? What about antiques? Is this a case for the usefulness of Marginal Utility theory?’ and thought the answer given was very satisfactory and one I hadn’t considered. I would add though, in the case of antiques, is it possible that the utility of the commodity has changed, increased over time? While agreeing that “the only thing that can determine their price is demand relative to their limited supply.” If the commodity is considered now (say in the case of an historic artifact, treasured remnants of long lost civilizations etc.) more useful than in its original intention, and thus increasing the demand relative to the limited/fixed supply, this would be a case of an entirely subjective utilty affecting value? After all the objective utility of peices of history, pottery, masonry etc is totally and completely non-existant. It is merely a construct of the human, egotistical as it may be, mind. Again, of course, this is an isolated case and just exposes itself as an exception to the rules of the greater world of commodity production were capitalist compete to produce the same reproducable commodities at less labour time, but it shows agin that “subjective” utility plays a role in value theory. Art work as well is totally subjective what might be worth a million to one person is worth less than toilet paper to another man, of course the art work still holds an objective price tag, but this is determined by demand and is usually (for phillistines like me) over the labour value of the work and is subject, potentially, to change.

  17. Danny jacobs says:

    “there is an interaction between social labour, which produces value and the relationship between labour and values can be tracked through time in the falling rate of profit, and the subjective realm of utility, which determines how valuable a commodity actually (physically) is.” – I have already said this. Look at my second post. Value takes on a different expression socially under capital than feudal society.

    ” Of course there are many variables and my figures are most probably not bulletproof, but on the aggragate, over a long period, the value ratio and difference in gross margin are consistent.” – I don’t think they are, I don’t think you have demonstrated that. Secondly, to state that utility determines what is made is to already say what Marx had wrote.

    The question of Art-work and these isolated cases are problems of conflating socially necessary labor and utility. Something can be useful and not socially necessary.

    Walter Benjamin has an essay called the “The Work of Art in the Age of Mechanical Reproduction.”

    http://www.marxists.org/reference/subject/philosophy/works/ge/benjamin.htm

    He goes through the manner in which use-value and value have changed expression with respect to Art throughout changes in reproduction. Despite the terms, I would be careful about reading this as an economic text.

    Read this chapter

    http://www.marxists.org/archive/marx/works/1857/grundrisse/ch01.htm

    Prices, capital, subjective value, labor, property, money, rent, etc, all are categories that have existed throughout human history. But they come into a specific form (fur sich) under capital. The proleteriat is the coming to be of former developments in these economic categories i.e. labor (surplus labor), money, subjective value (As it plays a role in the appraisal of goods), property, commodity (labor power), etc. This is what is meant by Marx’s historical materialism, not “historicism” which simply states, metaphysically, that things exist and then don’t based on the historical period. Historical materialism is Hegalian, the development of the Notion (the actua and potenta together).

    There doesn’t need to be a case for “subjective value” because it is already there. There doesn’t need to be made a case for objective.

    SUBJECT-OBJECT DIALECTIC. NEITHER PURELY SUBJECTIVE OR OBJECTIVE.

    I will accept every praxeological category of diminishing utility and preference scales but it doesn’t express the actuality. Its like describing human beings as cells, as after all, thats what they are!

    Kapital is a sociological critique of economic categories, not an economic book.

    • Myles says:

      Yea … sorry :S

      • Danny jacobs says:

        You mentioned working, doing something in agricultural economics.

        The point is, in order to live, you had to “produce” something for society. The manner in which society decided what you could have, was based on your labor, what ever the determinate ultimately is. The point is that your life is dominated by this logic (both literally in work and in your private life -> i would turn to adorno for this). The logic of capital is such that it has a potential to emancipate you from this, so that you could do more of what you would like to do. I’ll stop there. It was this realization that literally made me into a marxist.

  18. Myles says:

    Yes, that’s fine. And I’m not in any disagreement with you on any of the fundemental principals behind marxian thinking. I think our dialogue has been exhausted, at least for me – thank you.

    Myles Django.

  19. D says:

    Hello, Brendan! A reader from Sweden here..

    Good and informative post all in all! So good job on that.

    I would like to point out one thing though. It is this quote;

    “What actually differentiates human labor from robot labor is quite simple: humans have the ability to refuse work. This element of choice makes their labor a social matter. The inter-relations of human labor are social relations. In order to make humans work they must be dependent on the market for their survival. Their lives must be caught up in the consumption and production of commodities. This consuming and producing involves choices, the measuring of choices against each other, seeking personal advantage. The distribution of this labor and consuming is organized through the value relations between commodities.”

    I do agree that the ability to revolt is the foundation of why humans create value and not machines (or rather change rules of social relations in the long run; if it is enough with a very instantaneous revolt wouldn’t work-animals produce value also?). But then you go into have they must be dependent on the market and involves choices. With that kind of definition slaves in a capitalist society won’t produce value. From what I understand from your other posts you do hold that slaves produce value and Marx is on the same page. So I think it is a small contradiction there.

    (Marx on the value-creation by slaves for example in Capital volume 1. Chapter 10. The working day, part 2; “as soon as people, whose production still moves within the lower forms of slave-labour, corvée-labour, &c., are drawn into the whirlpool of an international market dominated by the capitalistic mode of production, the sale of their products for export becoming their principal interest, the civilised horrors of over-work are grafted on the barbaric horrors of slavery, serfdom, &c. Hence the negro labour in the Southern States of the American Union preserved something of a patriarchal character, so long as production was chiefly directed to immediate local consumption. But in proportion, as the export of cotton became of vital interest to these states, the over-working of the negro and sometimes the using up of his life in 7 years of labour became a factor in a calculated and calculating system. It was no longer a question of obtaining from him a certain quantity of useful products. It was now a question of production of surplus-labour itself”)

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