[this was sent by mistake, before I finished it.] >>But Justin, do you accept that what you criticise as being redundant some of us would merely call a labor theory of prices?<<
Justin responds:> Not merely. Marx attempted to use value theory to do a lot of work, e.g., as part od [of?] a theory of crisis, as a component of his account of commodity fetishism, as an account of the nature of money, and, of course, as the explanation of profit, exploitation, surplus value, and the rate of these things.< That's right: Marx's Law of Value was a component of his account of commodity fetishism, or is rather implied by his whole vision of the capitalist system, which involves commodity fetishism (or the "illusions created by competition" of volume III). Like Locke before him (who developed a very non-Marxian labor theory of property), money is central to Marx's LoV. The key thing about the LoV is that it "applies" -- as a true-by-definition accounting system that's an alternative to doing one's accounting in price terms -- for the capitalist system as a whole or to the average capital (abstract capital) representing the system as a whole. >However, he correctly started from the premises that to do this work, value had to be quantity with a determinable magnitude, and price is the point of entry into that because value "appears" as price and profit in the phenonemal world. If value theory breaks down there, it's toast, as Marx also recognized, which is why he and Engels and traditional Marxism were concerned with the transformation problem.< It's surplus-value that "appears" as profit in the "phenomenal world," i.e., the world that we perceive rather than the world revealed by applying the acid of abstraction. (It's only Roemer who sees profit as in essence a scarcity price.) But no matter. Marx's concern with the so-called transformation problem (the derivation of values from prices or vice-versa) comes from his early learning from Ricardo. But then he takes the whole issue in a different direction. For Marx, as I read him, the movement from value to price (or price of production) is not mathematical as much as it is one of moving from a high level of abstraction (volume I of CAPITAL) to a lower one (volume III). In volume I, he focused on capital as a whole (as represented by the representative capitalist, Mr. Moneybags), abstracting from the heterogeneity of many capitals and the relationships amongst them. Step-by-step, he brings in aspects of the picture from which he had abstracted, until he gets to volume III, where he deals with how the "configurations of capital" "appear on the surface of society, in the action of different capitals on one another, i.e., in competition, and in the everyday consciousness of the agents of production themselves" (from the first page of text in volume III). In this light, the so-called "transformation problem" should be seen as a "disaggregation problem," going from the whole to the heterogeneous parts that make it up. In Marx's thought, the distinction between individual values and individual prices is as important as their unity. (For example, the value produced by money-lenders equals zero in Marx's theory, but they receive revenues: they are paid a price for their services.) The distinction represents the role of heterogeneity of capitals and competition, whereas the unity (represented by his equations total value = total price and total surplus-value = total profits+interest+rent) represents the fact that the heterogeneity and competition take place within a unified whole. (The revenues received by the money-lenders is a deduction from the surplus-value that the industrial capitalists have organized the production of.) >In these respect he was more intellectually honest that the latter-day defenders of value theory who want the "quantity" without being able to determine its measure.< to whom are you referring? and what does this mean? It's quite possible to measure values, though only approximately. But note that even prices can be very hard to measure, especially since the quality of diffferent products varies and the cost of buying something can involve non-monetary or hidden monetary elements. Justin continues >... I don't understand why you think you can't explain inequality with value theory. Here's Roemer['s explanation: the bourgeoisie grabbed the means of production by force or acquired them by luck, and used their ill-gotten resources to maintain their unfair advantages. Not a whisper of value, and so far as it goes a perfectly true, and indeed Marxian explanation.< In our old article in ECONMICS & PHILOSOPHY, Gary Dymski and I devastated Roemer's theory. He has no explanation of why the capitalists continue to receive profits over time. Blinkered by general equilibrium theory, he presents an equilibrium (i.e., inadequate) theory which cannot explain why the key variable in the story -- the scarcity of "capital goods" -- persists over time. That is, Roemer's theory doesn't apply when capital goods aren't scarce, as in recessions. In any event, Roemer couldn't have developed his "theory" if Marx hadn't developed it first, since all he does is attempt to translate his interpretation of Marx's ideas into respectable orthodox economic language. Some might say said that he couldn't have done so if Henry George and George Bernard Shaw hadn't developed scarcity-rent theories of exploitation. He doesn't cite these, but I doubt that he plagiarized. Rather, it's more likely a matter of the arrogance of "modernist" economic science, where there's no point in reading what the old guys or gals said because those of us who are empowered by modern math can develop better ideas. Jim Devine
