Bailey writes,
““… I beg not to be understood as contending, either that the values of commodities are to each other as the quantities of labour necessary for their production, or that the values of commodities are to each other as the values of the labour: all that I intend to insist upon is, that if the former is true, the latter cannot be false…” (op. cit., p. 92).” (p 154-5)
The only invariable measure of value is one that is not an external measure, and is not itself a value. That measure is labour. Marx sets out the difference between these two cases, the first where value is measured externally, i.e. as exchange-value against some other commodity, secondly where it is measured intrinsically on the basis of the quantity of labour-time.
“In the first case, it is a question of a measure of the value of commodities, that is, in fact, of money, of a commodity in which the other commodities express their value. In order that this can happen, the values of the commodities must already be presupposed. The commodity which measures as well as that to be measured must have a third element in common. In the second case, this identity itself is first established; later it is expressed in the price, either money price or any other price.” (p 155)
In other words, this again restates the difference between value and exchange-value, and the primacy of the former. Unless products exist, not just as use values, but also as values, representatives, initially, of individual value, but increasingly of social value, as these product values are compared across a range of communities engaged in their production, it is impossible for for these products to be transformed into commodities, as a consequence of increasing trade, and for the value of these commodities to take the form of exchange-value. It is only because value already exists as the third term, that exchange values can be established. It is impossible to determine that 1A exchanges for 2B, unless I first know the value of A and B. Unless I know that product A (10 metres of linen) is equal to 100 hours of labour-time, and product B (10 litres of wine) is equal to 50 hours of labour-time, there is no objective basis upon which it can be established that 1A=2B.
It may take some time for the individual values of such products to manifest themselves, and become social values, as trade is infrequent, sporadic and the basis of exchange haphazard. However, as trade expands, and these products begin to be produced specifically for the purpose of exchange, that ceases, and the social values of these commodities are thereby established as the objective basis of their exchange relation. But, the value of products/commodities constantly changes, because social productivity constantly changes. It may not be a rise in productivity in weaving that changes the value of cloth, but changes in productivity in yarn production, or in wool, cotton or flax production will still change the amount of labour-time required to produce 10 metres of cloth. Similarly, because the value of labour-power is determined by the values of the commodities required for its production, its value is also constantly changing. The same is true for a money-commodity such as gold. The search for an invariable, external measure of value, is, therefore, a fool's errand.
“The term “invariable” expresses the fact that the immanent measure of value must not itself be a commodity, a value, but rather something which constitutes value and which is therefore also the immanent measure of value. Bailey demonstrates that commodity values can find a monetary expression and that, if the value relation of commodities is given, all commodities can express their value in one commodity, although the value of this commodity may change. But it nevertheless always remains the same for the other commodities at a given time, since it changes simultaneously in relation to all of them. From this he concludes that no value relation between commodities is necessary nor is there any need to look for one. Because he finds it reflected in the monetary expression, he does not need to “understand” how this expression becomes possible, how it is determined, and what in fact it expresses.” (p 155)
Some Marxist economists have arrived at a similar conclusion as Bailey, arguing that it is impossible to measure value intrinsically, on the basis of labour-time, and that, therefore, it's only possible to measure it externally, on the basis of a money-commodity, i.e. gold. On the one hand, they, therefore, fall into the same trap as Bailey, because it is only possible to measure value externally, i.e. exchange value, if first you are able to measure value intrinsically, on the basis of labour-time. Unless I know that 10 metres of linen = 100 hours of labour-time, and 1 gram of gold equals 100 hours of labour-time, how can I equate 10 metres of linen with 1 gram of gold? I would end up, like Bailey, defining value simply on the basis of actual exchange relations – here with varying quantities of gold. That is just a form of commodity fetishism, which, here, confuses the money-commodity with money, i.e. it defines money as gold, giving gold some unique property, in that respect, in the way the Monetary School once did, and the way the gold bugs, and sections of the neo-Austrian School do, as part of their explanation of crises based upon credit expansion, and the crack-up boom.
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