Tuesday, 14 April 2015

Capital III, Introduction - Part 2

Before examining Volume III itself, I want to also examine some of the points raised by Engels in his Preface, in relation to the theory and the disputes over it.

Engels begins by referring to the fact that, in his Preface to Volume II, he had issued a challenge to the supporters of Rodbertus, who had claimed that he had discovered the secret of the average rate of profit ahead of Marx, to show "in which way an equal average rate of profit can and must come about, not only without a violation of the law of value, but on the very basis of it" (p 8)

They had failed, but Professor Willhelm Lexis had stepped forward in his critique of Volume II.

Engels comments in response to Lexis,

“It is evident that the problem has not in any way been solved here, but has, though somewhat loosely and shallowly, been on the whole correctly formulated.” (p 9) 

Lexis had argued that the problem could not be resolved on the basis of the Law of Value, if the matter was considered at the level of individual commodities, but could only be resolved at the level of social production. In that case, the value of the total social product is determined in accordance with the Law of Value, i.e. its value is equal to the total amount of abstract labour-time required for its production. By the same token, because prices are only values expressed as an exchange value against money/money tokens, it is tautologically true that the totality of prices must always be equal to the totality of values. If money/money tokens are devalued because the value of money falls, or more money tokens are produced, or credit is created, this causes the totality of prices to rise, but it also causes the totality of values to rise because that value is likewise measured in the same money/money tokens.

Once the problem is viewed from this perspective of total social production, it becomes clear that this total social product is divided between workers on the one hand, and other classes on the other, i.e. of a necessary product and a surplus product. The capitalists can then divide up the surplus product/value on the basis of the amount of capital they have contributed, proportionate to the total social capital.

But, although, as Engels says, this is to correctly formulate the problem, it is not to demonstrate how that problem is to be resolved, i.e. what the mechanism is by which this process of sharing is to be accomplished.

In terms of the means by which the surplus value itself arises, Lexis returns to the idea previously propounded that the capitalists sell their products at prices above their cost of production. Marx had previously shown that this could not be the source of surplus value, because if everyone sells their commodity at 10% above its cost/value it is the same as if they had all sold at cost/value. But, Lexis says that the only group that cannot sell above cost/value are workers, who have to sell at cost/value, because they essentially lack market power. However, as Engels points out, this is essentially to make exactly the same argument as Marx, but simply posed differently and more clumsily.

The essence of Marx’s argument is that, although workers are paid the value of their labour-power, they are exploited because, in terms of the amount of labour they perform, they are paid for part of that time, and not paid for another. Lexis merely puts this another way, by saying that workers are exploited because they are the only people who do not overcharge for what they sell, which is the same thing as saying they have provided something for which they have been underpaid. In fact, so close is Lexis to Marx that Engels is prompted to write,

“Lexis is an extremely cautious man in the choice of his terms. He does not say anywhere outright that the above is his own conception. But if it is, it is plain as day that we are not dealing with one of those ordinary vulgar economists, of whom he says himself that every one of them is 'at best only a hopeless idiot' in Marx’s eyes, but with a Marxist disguised as a vulgar economist.” (p 10)

Engels also notes that, on the basis of this vulgar economics, of workers being swindled by overcharging, it would be possible to also develop 'vulgar socialism', in the way the Fabians had used the ideas of the Austrian School of Karl Menger, and of Jevons, based on marginal utility.

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