The neoclassical economists go beyond this superficiality of Bailey, in trying to identify some quality that each commodity has in common, which can then act as a third term, which can then be evaluated in purely quantitative terms, so as to measure how much of this third term each possesses. They settled upon utility as that third term, in opposition to labour, as adopted by the classical economists. Perhaps the best advocacy of that, as against Marx and the classical economists, is still to be found in the work of Eugene Bohm-Bawerk, and the Austrian School. I will deal with them separately.
Marx quotes the following passage from Bailey, which he says, sums up his entire wisdom,
““If the value of an object is its power of purchasing, there must be something to purchase. Value denotes consequently nothing positive or intrinsic, but merely the relation in which two objects stand to each other as exchangeable commodities” ([Samuel Bailey, A Critical Dissertation on the Nature, Measures, and Causes of Value, London, 1825,] pp. 4-5).” (p 140)
Marx dissects Bailey's comment. The term “purchasing” here is wrong, because what it disguises is an exchange of money for commodities. It presupposes, therefore, the existence of value, because the money is nothing more than a quantity of such value, which is exchanged for a commodity/ies of equal value.
Marx says,
“It is quite superfluous to say that “there must be something to purchase”. If the “object” was to be consumed by its producers as a use-value, if it was not merely a means of appropriating other objects, not a “commodity”, then obviously there could be no question of value.” (p 140)
But, he should really say exchange-value here, not value. Any product, i.e. use value produced by labour, has value. Whether it is a commodity or whether it is directly consumed. That was the point Marx made in Capital I, in discussing the way the activities of Robinson Crusoe tell us everything we need to know about the law of value. If such products do not have value, how would it be possible for Robinson, or some future communist society, to balance use value against value, so as to draw up a rational plan, as to how to allocate available social labour-time, so as to maximise welfare? Moreover, unless such directly consumed use values have value, then Marx would have to concur with Rodbertus that the seeds etc. produced by the farmer, and directly consumed as constant capital, have no value, and thereby constitute no cost of production. Such products have value, but that value is only manifest as exchange-value when the product is compared with the value of some other product for the purpose of their mutual exchange.
“First, it is a matter of objects. But then the relation “in which two objects stand to each other” is transformed into “the relation in which two objects stand to each other as exchangeable commodities”. After all, the objects stand only in relation of exchange or as exchangeable objects to each other. That is why they are “commodities”, which is something different from “objects”. On the other hand, the “relation of exchangeable commodities” is either nonsense, since “not exchangeable objects” are not commodities, or Mr. Bailey has beaten himself. The objects are not to be exchanged in any arbitrary proportion, but are to be exchanged as commodities, that is, they are to stand to one another as exchangeable commodities, that is, as objects each of which has a value, and which are to be exchanged with one another in proportion to their equivalence.” (p 140)
Which, of course, means that these commodities, before they can be commodities, must be products/objects, which possess value, because unless they already possess this value, determined by its intrinsic measure, social labour-time, there is nothing about them that can be compared, so as to establish a proportional relation, and basis for exchange.
“Bailey thereby admits that the rate at which they are exchanged, that is, the power of each of the commodities to purchase the other, is determined by its value, but this value however is not determined by this power, which is merely a corollary.” (p 140-1)
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