Thursday, 9 July 2015

Capital III, Chapter 10 - Part 5

Marx then sets out the conditions for commodities to exchange at their values.

“For prices at which commodities are exchanged to approximately correspond to their values, nothing more is necessary than 1) for the exchange of the various commodities to cease being purely accidental or only occasional; 2) so far as direct exchange of commodities is concerned, for these commodities to be produced on both sides in approximately sufficient quantities to meet mutual requirements, something learned from mutual experience in trading and therefore a natural outgrowth of continued trading; and 3) so far as selling is concerned, for no natural or artificial monopoly to enable either of the contracting sides to sell commodities above their value or to compel them to undersell. By accidental monopoly we mean a monopoly which a buyer or seller acquires through an accidental state of supply and demand.” (p 178)

In other words, these are basically the assumptions used by orthodox economics in relation to competition in a large, liquid market. As products evolve into commodities, the individual value of these products is manifest as their exchange-value as commodities. The more these commodities, of the same kind, are brought into comparison with one another, the more develops a single 'market-value' for each commodity.

“The individual value of some of these commodities will be below their market-value (that is, less labour time is required for their production than expressed in the market value) while that of others will exceed the market-value. On the one hand, market-value is to be viewed as the average value of commodities produced in a single sphere, and, on the other, as the individual value of the commodities produced under average conditions of their respective sphere and forming the bulk of the products of that sphere.” (p 178)

Marx sets out a number of definitions important for understanding this process of formation, through competition, of an average rate of profit. These can also be set out in an historical as well as logical sequence. So, even prior to the development of commodity exchange, societies produce use values – products. As products of labour they have value. The fact that this value is not manifest, i.e. is not stamped upon the product, in the manner of a price, does not at all change the fact that these products have value. The only reason this value is not manifest in this way is precisely because these products remain simply use values directly consumed by their producers.

But, the possession of value by these products is a logical and historical necessity for these products to be compared with one another, i.e. for them to evolve from being products to becoming commodities, and for their value to become visible in the form of their exchange value.

“Every product of labour is, in all states of society, a use value; but it is only at a definite historical epoch in a society’s development that such a product becomes a commodity, viz., at the epoch when the labour spent on the production of a useful article becomes expressed as one of the objective qualities of that article, i.e., as its value. It therefore follows that the elementary value form is also the primitive form under which a product of labour appears historically as a commodity, and that the gradual transformation of such products into commodities, proceeds pari passu with the development of the value form.” (Capital I, Chapter 1) 

But, a further distinction and process is required, even for this to be possible. If tribe A produces woollen cloth, for example, it will be actually produced by a number of its members, each of which will have different levels of skill, work under different conditions etc. In other words, the actual labour-time, used in the production of this cloth, will vary from one producer to another. Indeed, the same producer might require more labour-time, on one day, to produce a given quantity of cloth, than required on another, for a whole variety of reasons from working with poorer quality material to, the lack of humidity causing the thread to break more often, to the producer themselves simply feeling more lethargic.

In other words, each piece of cloth, each product, will have its own individual value, determined by the actual labour-time used for its production. Before any rational basis of exchange can be developed, these individual values must become a social value, an average value that encompasses the total labour-time expended by all producers for all of this total product.

“What competition, first in a single sphere, achieves is a single market-value and market-price derived from the various individual values of commodities...

First, the different individual values must be equalized at one social value, the above-named market value, and this implies competition among producers of the same kind of commodities and, likewise, the existence of a common market in which they offer their articles for sale. For the market-price of identical commodities, each, however, produced under different individual circumstances, to correspond to the market-value and not to deviate from it either by rising above or falling below it, it is necessary that the pressure exerted by different sellers upon one another be sufficient to bring enough commodities to market to fill the social requirements, i.e., a quantity for which society is capable of paying the market-value...

The matter will be most readily pictured by regarding this whole mass of commodities, produced by one branch of industry, as one commodity, and the sum of the prices of the many identical commodities as one price. Then, whatever has been said of a single commodity applies literally to the mass of commodities of an entire branch of production available in the market. The requirement that the individual value of a commodity should correspond to its social value is now realised, or further determined, in that the mass contains social labour necessary for its production, and that the value of this mass is equal to its market-value.” (p 180-2)

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