Price

The price of a commodity is its exchange value expressed in terms of the money commodity. In this relation expressed in terms of Marx's value form the commodity stands in the position of the relative form of value whilst the money commodity stands in the position of equivalent form of value. In fact, Marx defines the money commodity as the Universal Equivalent Form of Value.

Marx sets out in Capital I, Chapter 3 the development of money. He does so by tracing the evolution of value into exchange value, and the evolution of Exchange Value via the Value Form until it arrives at the money form.

As Marx sets out at the beginning of Capital I, all use values, not just commodities, possess Value if they are the product of human labour. Value is labour-time. All societies from the most primitive, through to Communism allocate available labour-time to best meet their preferences i.e. to maximise their wealth/Use Values by balancing the utility obtained from those Use Values, against their Value (i.e. labour-time required for their production). This is the law of value. Marx summarised it in his Letter To Kugelmann, where he wrote,

“Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish. And every child knows, too, that the amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society’s aggregate labour. It is self-evident that this necessity of the distribution of social labour in specific proportions is certainly not abolished by the specific form of social production; it can only change its form of manifestation. Natural laws cannot be abolished at all. The only thing that can change, under historically differing conditions, is the form in which those laws assert themselves. And the form in which this proportional distribution of labour asserts itself in a state of society in which the interconnection of social labour expresses itself as the private exchange of the individual products of labour, is precisely the exchange value of these products.”

But also sets it out in its most simple form in the example of Robinson Crusoe, in Volume I, of Capital.

“Since Robinson Crusoe’s experiences are a favourite theme with political economists,let us take a look at him on his island. Moderate though he be, yet some few wants he has to satisfy, and must therefore do a little useful work of various sorts, such as making tools and furniture, taming goats, fishing and hunting. Of his prayers and the like we take no account, since they are a source of pleasure to him, and he looks upon them as so much recreation. In spite of the variety of his work, he knows that his labour, whatever its form, is but the activity of one and the same Robinson, and consequently, that it consists of nothing but different modes of human labour. Necessity itself compels him to apportion his time accurately between his different kinds of work. Whether one kind occupies a greater space in his general activity than another, depends on the difficulties, greater or less as the case may be, to be overcome in attaining the useful effect aimed at. This our friend Robinson soon learns by experience, and having rescued a watch, ledger, and pen and ink from the wreck, commences, like a true-born Briton, to keep a set of books. His stock-book contains a list of the objects of utility that belong to him, of the operations necessary for their production; and lastly, of the labour time that definite quantities of those objects have, on an average, cost him. All the relations between Robinson and the objects that form this wealth of his own creation, are here so simple and clear as to be intelligible without exertion, even to Mr. Sedley Taylor. And yet those relations contain all that is essential to the determination of value.” 

Capital I, Ch. 1. Section 4

As Marx says in his letter to Kugelmann, all that changes in different societies is the form in which this law manifests itself, and in a commodity producing society it manifests itself via the Exchange Value of those commodities. That is what Marx sets out in the Value Form – the Value of commodity A is expressed as a certain quantity (a certain amount of Use Value) B. The money commodity is originally simply that some commodity that is separated off from all other commodities solely to act as the Universal Equivalent Form of Value. In order to fulfil that function, it is divided into regular physical amounts.

So, the Value Form might take the shape of Commodity A = 1 ounce of Gold. Here gold is the Universal Equivalent Form of Value, and the PRICE of commodities is expressed in various quantities of the Use Value Gold. The Price of commodity B might be 2 ounces of Gold, and so on. As Marx describes in Chapter 3, over time, these quantities of the money commodity are given names. A pound of sterling silver, being given the name Pound, and so on. Over time, also, the monetary authorities in order to cover their debts via inflation, as well as the general wear and tear of coins, erodes the actual content of precious metal in these coins, so that their actual weight loses all connection with their nominal description.

The price of commodities then is expressed simply in terms of this nominal monetary unit – a pound, a dollar and so on – whose origin as a certain quantity of some Use Value such as Gold or Silver has now been lost in the mists of time.

The price of commodities as the monetary expression of their Exchange Value also has to be distinguished from their price of production. The Price of Production is the cost price of the commodity plus the average rate of profit, expressed in terms of Money. It has also to be distinguished from the Market Price. The Market Price of commodities fluctuates above and below its Price of Production in response to variations in Demand and Supply.