Marx also
shows what is wrong with trying to find a solution by reducing
matters to a subjective level of the individuals involved in the
exchange.
“A may
be clever enough to get the advantage of B or C without their being
able to retaliate. A sells wine worth £40 to B, and obtains from him
in exchange corn to the value of £50. A has converted his £40 into
£50, has made more money out of less, and has converted his
commodities into capital. Let us examine this a little more closely.
Before the exchange we had £40 worth of wine in the hands of A, and
£50 worth of corn in those of B, a total value of £90. After the
exchange we have still the same total value of £90. The value in
circulation has not increased by one iota, it is only distributed
differently between A and B. What is a loss of value to B is
surplus-value to A; what is “minus” to one is “plus” to the
other. The same change would have taken place, if A, without the
formality of an exchange, had directly stolen the £10 from B. The
sum of the values in circulation can clearly not be augmented by any
change in their distribution, any more than the quantity of the
precious metals in a country by a Jew selling a Queen Anne’s
farthing for a guinea. The capitalist class, as a whole, in any
country, cannot over-reach themselves.” (p 160)
In fact,
Marx here elaborates one of the problems with the so called Temporal
Single System Interpretation (TSSI), which does reduce matters down
to the level of the individual capitalists and their respective
fortunes arising from Capital Gains and Losses. As Marx puts it,
“Turn
and twist then as we may, the fact remains unaltered. If equivalents
are exchanged, no surplus-value results, and if non-equivalents are
exchanged, still no surplus-value. Circulation, or the exchange of
commodities, begets no value.” (p 160-1)
In other
words, Marx has set out the contradiction referred to in the previous
chapter, and is in the process of resolving it in his normal manner
of an historical and logical explication.
“The
reason is now therefore plain why, in analysing the standard form of
capital, the form under which it determines the economic organisation
of modern society, we entirely left out of consideration its most
popular, and, so to say, antediluvian forms, merchants’ capital and
money-lenders’ capital.” (p 160)
“If the
transformation of merchants’ money into capital is to be explained
otherwise than by the producers being simply cheated, a long series
of intermediate steps would be necessary, which, at present, when the
simple circulation of commodities forms our only assumption, are
entirely wanting.” (p 160)
Marx then
explains that what is true of Merchants' Capital is even more true of
Usurers' Capital, which appears to derive a profit even without any
exchange taking place.
“In the
course of our investigation, we shall find that both merchants’
capital and interest-bearing capital are derivative forms, and at the
same time it will become clear, why these two forms appear in the
course of history before the modern standard form of capital.” (p
162)
Marx sets
out one of the reasons why it is not possible to create Surplus Value
so long as the producers own the means of production. That is that
the Value of their output is equivalent to the Labour-time expended
on its production, and this is also its price. But, the cost to the
producer is also the labour-time required for its production, and so
if the cost is equal to the price there can be no Surplus Value!
“Apart
from circulation, the commodity-owner is in relation only with his
own commodity. So far as regards value, that relation is limited to
this, that the commodity contains a quantity of his own labour, that
quantity being measured by a definite social standard. This quantity
is expressed by the value of the commodity, and since the value is
reckoned in money of account, this quantity is also expressed by the
price, which we will suppose to be £10. But his labour is not
represented both by the value of the commodity, and by a surplus over
that value, not by a price of 10 that is also a price of 11, not by a
value that is greater than itself. The commodity owner can, by his
labour, create value, but not self-expanding value. He can increase
the value of his commodity, by adding fresh labour, and therefore
more value to the value in hand, by making, for instance, leather
into boots. The same material has now more value, because it contains
a greater quantity of labour. The boots have therefore more value
than the leather, but the value of the leather remains what it was;
it has not expanded itself, has not, during the making of the boots,
annexed surplus-value.” (p 162-3)
“The
conversion of money into capital has to be explained on the basis of
the laws that regulate the exchange of commodities, in such a way
that the starting-point is the exchange of equivalents. Our friend,
Moneybags, who as yet is only an embryo capitalist, must buy his
commodities at their value, must sell them at their value, and yet at
the end of the process must withdraw more value from circulation than
he threw into it at starting. His development into a full-grown
capitalist must take place, both within the sphere of circulation and
without it. These are the conditions of the problem.” (p 163)
Marx is
under no misapprehension that prices and values do not deviate on several
grounds. He knows that Smith and Ricardo were wrong in believing
that market prices oscillated around Exchange Value, for instance.
He is also aware that prices can diverge due to fluctuations in
demand and supply, cheating by individual capitalists and so on.
But, these are a distraction from the analysis of the real basis of
the formation of capital, which must proceed on the basis of ignoring
these variations, and explain it on the basis of Value and the
exchange of equivalents.
“From
the foregoing investigation, the reader will see that this statement
only means that the formation of capital must be possible even though
the price and value of a commodity be the same; for its formation
cannot be attributed to any deviation of the one from the other. If
prices actually differ from values, we must, first of all, reduce the
former to the latter, in other words, treat the difference as
accidental in order that the phenomena may be observed in their
purity, and our observations not interfered with by disturbing
circumstances that have nothing to do with the process in question.
We know, moreover, that this reduction is no mere scientific process.
The continual oscillations in prices, their rising and falling,
compensate each other, and reduce themselves to an average price,
which is their hidden regulator. It forms the guiding star of the
merchant or the manufacturer in every undertaking that requires time.
He knows that when a long period of time is taken, commodities are
sold neither over nor under, but at their average price. If therefore
he thought about the matter at all, he would formulate the problem of
the formation of capital as follows: How can we account for the
origin of capital on the supposition that prices are regulated by the
average price, i. e., ultimately by the value of the commodities? I
say “ultimately,” because average prices do not directly coincide
with the values of commodities, as Adam Smith, Ricardo, and others
believe.” (Note 1, p 163)
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