Two things such as coffee and cotton may have a relation between them, but this relation need not be expressed as an equality. For example, it might be said that 1kg. of coffee is greater than 3 kg. of cotton, i.e. 1 kg coffee > 3 kg. cotton. Or it might be said that 1 kg. coffee < 5 kg. cotton. These all represent relationships between coffee and cotton, just as much as the relation 1 kg. coffee = 4 kg. cotton.
“But what is then the word “relation” supposed to mean? Coffee in itself has no “intrinsic positive” quality which determines the rate at which it exchanges for cotton. It is not a relation which is determined by any kind of determinant intrinsic to coffee and separate from real exchange. What is then the purpose of the word “relation”? What is the relation? The quantity of cotton against which a quantity of coffee is exchanged. Then one could not speak of a relation in which it exchanges but only of a relation in which it is or has been exchanged. For if the relation were determined before the exchange, then the exchange would be determined by “the relation” and not the relation by the exchange. We must therefore drop the relation as signifying something which stands over and above the coffee and the cotton and is distinct from them.” (p 142)
In other words, if coffee and cotton only stand in a relation to each other to the extent that this relation is nothing more than the proportions in which they have actually exchanged, it makes no sense to talk about a relation, because any relation between them is only very transitory; it only exists in the moment of any actual exchange. But, if the relation between them is the basis upon which the exchange takes place, then this relation must be separate from, and antecedent to, and determined by some other factor than exchange.
“Thus the passage from Bailey cited above takes the following form:
“If the value of an object is the quantity of another object exchanged with it, value denotes, consequently, nothing but the quantity of the other object exchanged with it.”” (p 142)
Bailey, like all modern orthodox economists believed that the commodity has no independent value, apart from what can be obtained in exchange for it. There was a basis for such a belief when products first began to be exchanged as occasional and accidental surpluses, but there is no basis for that even under petty commodity production and exchange, let alone capitalist production. And, this is essentially the answer to the argument put forward by Bohm-Bawerk.
Take the example of Robinson Crusoe, or of any peasant producer, producing for their own consumption. Assume they produce only two products carrots and potatoes. It takes 100 days of their labour to produce either 100 kg of potatoes or 200 kg. of carrots. No matter how much more utility they might obtain from potatoes as opposed to carrots, the inescapable fact is that 1 kg. of potatoes exchanges for 2 kg. of carrots. If they want to produce and consume 1 kg. of potatoes, they have to use 1 day of labour-time to do so, and, in the process, they have to give up 2 kg. of carrots they could have produced and consumed in that time.
It does not matter whether they like potatoes twice as much, or ten times as much as carrots; the exchange relation remains the same, as 1 kg of potatoes = 2 kg. of carrots. All that the relative preference can determine here, given those values, and the exchange relation that derives from them, is how much labour-time will be devoted to producing potatoes as opposed to carrots. As Marx puts it, supply is a function of value, whereas demand is a function of use value. The interaction of the two determines the allocation of available social labour-time, even where society consists only of one and the same Robinson.
Now, if this producer finds that they have an accidental surplus of potatoes, they may exchange this surplus with a hunter, who provides them with a quantity of rabbits. Because the potatoes were produced as an accidental surplus, the producer may have little regard for what amount they give up, in exchange for rabbits, but the situation is different where the producer produces commodities for the express purpose of exchange.
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