Bailey, himself, arrives at a contradiction whereby he has to effectively recognise value as something distinct from exchange-value. In relation to labour, he says,
““… a rise or fall of labour implies an increase or decrease in the quantity of the commodity given in exchange for it” (op. cit., p. 62).” (p 150)
But, on the basis of Bailey's definition of value being nothing other than exchange-value, it makes no sense to talk about the value of labour rising or falling, because the value is always only whatever the exchange relation to other use values is at any particular time.
“[From Bailey’s standpoint] there can be no rise or fall in the value of labour, nor in the value of any other thing. For one A I get today 3 Bs, tomorrow 6 Bs and the day after tomorrow 2 Bs. But [according to Bailey] in all these cases the value of A is nothing but the quantity of B for which it has been exchanged. It was 3 Bs, it is now 6 Bs. How can its value be said to have risen or fallen? The A expressed in 3 Bs had a different value from that expressed in 6 Bs or 2 Bs. But then it is not the identical A which at the identical time has been exchanged for 3 or 2 or 6 Bs. The identical A at the identical time has always been expressed in the same quantity of B. It is only with regard to different moments of time that it could be said the value of A had changed. But it is only with “contemporaneous” commodities that A can be exchanged, and it is only the fact (not even the mere possibility of exchange) of exchange with other commodities which makes [according to Bailey] A a value. It is only the actual “relation in exchange” which constitutes its value; and the actual “relation in exchange” can of course only take place for the same A at the identical time. Bailey therefore declares the comparison of commodity values at different periods to be nonsense. But at the same time he should also have declared the rise or fall of value—which is impossible if there is no comparison between the value of a commodity at one time and its value at another time—to be nonsense and consequently, also, the “rise or fall in the value of labour”.” (p 150-1)
Here, the temporal view of value shared by Bailey and the Temporal Single System Interpretation, comes into inevitable contradiction with reality. Bailey's argument, whereby he defines the value of labour in terms of the use values that exchange for it, whilst profits are determined only in terms of a proportion of the capital employed, whose value is itself determined not according to its current reproduction cost, but on the basis of its original exchange relation, i.e. its historic price, is similar to the argument put forward by proponents of historic prices, as the basis for calculating the rate of profit. According to that model, the value of commodities, as outputs, is to be calculated on the basis of current reproduction cost, but a la Bailey, the rate of profit is to be calculated, not in terms of what that profit, i.e. the value it represents, will currently buy/exchange for, so as to reproduce the commodities comprising the constant and variable capital consumed in production, and required for a continuation of production, but in terms of what proportion those profits stand to the prices paid for the consumed capital, in the past, perhaps even the distant past!
In other words, rather as with Marx's analysis of Mill, what it does, in order to deal with what it sees as an internal inconsistency in Marx's theory, rather than deal with that apparent inconsistency, it instead is led to deny reality, and to treat the determination of value for commodities comprising inputs differently to its treatment of the determination of the value of outputs. Relating back to my discussion with the neo-Austrian supporter, my determination of whether to exchange, or the rate of exchange, is not based upon the fact that the bike found behind the barn has an historic price of zero, but is based upon what it would currently cost me to replace it
So, Bailey writes,
““Labour is an exchangeable thing, or one which commands other things in exchange; but the term profits denotes only a share or proportion of commodities, not an article which can be exchanged against other articles. When we ask whether wages have risen, we mean, whether a definite portion of labour exchanges for a greater quantity of other things than before” (loc. cit., pp. 62-63).” (p 151)
““… but when we ask whether profits have risen, we … mean … whether the gain of the capitalist bears a higher ratio to the capital employed…” (loc. cit., p. 63).
“… the value of labour does not entirely depend on the proportion of the whole produce which is given to the labourers in exchange for their labour, but also on the productiveness of […] labour” (loc. cit., pp. 63-64).
“The proposition, that when labour rises profits must fall, is true only when its rise is not owing to an increase in its productive powers” (loc. cit., p. 64).
“… if this productive power be augmented, that is, if the same labour produce more commodities in the same time, labour may rise in value without a fall, nay even with a rise of profits” (loc. cit., p. 66).” (p 151)
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