What all of these commodities have in common is that they are representatives of varying quantities of this average social labour, just as objects have in common that they occupy varying positions, and amounts of space-time. When, therefore, Bailey attempts to equate value and exchange-value, by insisting that the value of one commodity can only exist relative to other commodities, in the same way that objects' position can only be defined in similarly relative terms, he is on unsafe ground.
It is true that the position of object A can only be determined relative to object B ( and indeed, C, D etc.) but, in order for this relative position to be established, what both A and B have in common must first be established. That is that they are both objects existing in space-time. Only on this basis can the question of their relative position, one to another, even be considered. And, the same is true with exchange-value. The only basis upon which the exchange relation between A and B can be considered is that both A and B have some commonality. That is that they are both values, and it is the comparison of the relative size of those values that determines the exchange value.
“If we speak of the distance as a relation between two things, we presuppose something “intrinsic”, some “property” of the things themselves, which enables them to be distant from each other. What is the distance between the syllable A and a table? The question would be nonsensical. In speaking of the distance of two things, we speak of their difference in space. Thus we suppose both of them to be contained in space, to be points of space. Thus we equalise them as being both existences of space, and only after having them equalised sub specie spatii we distinguish them as different points of space. To belong to space is their unity.” (p 143)
But, Bailey fails to identify anything common between commodities, which can act as basis for establishing their relation one to another, in the way that has to be done in establishing that objects have in common that they exist in space-time, before their relative positions can thereby be established.
By reducing the matter to a comparison of the actual exchange between two commodities, Bailey believes that this exposes the purely relative nature of value. A similar line is put forward in relation to the development of indifference curves, whereby the consumer is supposed to hypothetically have in their mind a multitude of alternative bundles of two commodities, which provide them with equal amounts of marginal utility. On this basis, and given a budget constraint, and the relative prices of the two commodities, an optimal position can thereby be determined at the point where this budget constraint line is tangent to the highest indifference curve. But, there is clearly a circular argument here. In order to determine this optimal position, the prices of the two commodities must be known, yet, according to neoclassical theory, the market price of commodities is determined by the intersection of supply and demand. This is then determining price on the basis of price. Moreover, it is rather absurd to believe that each individual consumer, in deciding whether to buy a Mars Bar, first has in their mind the trillions of alternative scenarios of the marginal utility of the £0.50 in their pocket, as against every other potential bundle of choices available to them. On that grounds, at least, the neo-Austrian argument simply that “people act”, is far more realistic.
But, that dictum, as with Bailey, leaves the neo-Austrians with no basis upon which to explain exchange-values.
“As if it were not just as necessary to say, in connection with [two] commodities which exchange with one another—two products which are related to one another as commodities—in what they are identical, as it would be in the case of a thousand. For that matter, if only two products existed, the products would never become commodities, and consequently the exchange-value of commodities would never evolve either. The necessity for the labour in product I to manifest itself as social labour would not arise. Because the product is not produced as an immediate object of consumption for the producers, but only as a bearer of value, as a claim, so to speak, to a certain quantity of all materialised social labour, all products as values are compelled to assume a form of existence distinct from their existence as use-values.” (p 144-5)
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