“... value can neither rise nor fall, for this always involves comparing the value of a commodity at one time with its value at another. A commodity cannot be sold below its value any more than above it, for its value is what it is sold for. Value and market price are identical. In fact one cannot speak either of “contemporary” commodities, or of present values, but only of past ones. What is the value of 1 quarter of wheat? The £1 for which it was sold yesterday. For its value is only what one gets in exchange for it, and as long as it is not exchanged, its “relation to money” is only imaginary. But as soon as the exchange has been transacted, we have £1 instead of the quarter of wheat and we can no longer speak of the value of the quarter of wheat.” (p 154)
When Bailey talks about a comparison of commodity values, what he means is the comparison of the prices of commodities, such as corn, in the 16th and 18th centuries. In other words, academic studies of price movements over long periods. As Marx points out, this confuses price with value, and runs into the problem of changes in the value of money. And, emphasising the point I made above, Marx says,
“But what a fool he is! Is it not a fact that, in the process of circulation or the process of reproduction of capital, the value of one period is constantly compared with that of another period, an operation upon which production itself is based?” (p 154)
In other words, how can you determine whether you have made €x of surplus value, as opposed to only €x-y surplus value, along with €y of capital gain, as a result of a change in the value of your constant capital? How could you then, accurately, calculate your real rate of profit, and potential for accumulation, unless you were able to separate out this capital gain, and the difference between the historic price, and current replacement cost of your capital?
Bailey confuses a labour theory of value, with a cost of production theory of value. In other words, he cannot distinguish between the determination of value, on the basis of the quantity of labour-time required for production, and the determination of value on the basis of the value of the labour-power (wages) used in production. He shares that confusion with Malthus, and also, at times, Smith. It comes down to his need to measure value on the basis of some external metric. Such an external measure can only itself be a commodity, whether that commodity is labour-power (mistakenly confused by Smith, Malthus, Ricardo and Bailey with labour) or a money-commodity.
As seen earlier, that led Ricardo, and his followers, to look for some commodity which would act as an invariable measure. It was one positive thing that Bailey did, in showing that, for such an external measure of value, such invariability is not necessary, and, as Marx demonstrates, such invariability is impossible, because all such commodities must themselves be values, and value, by its nature, is continually variable, as social productivity is itself continually changing.
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