Theories of Surplus Value, Part III, Chapter 20 - Part 106

Bailey comments, 

““It is not, indeed, disputed, that the main circumstance, which determines the quantities in which articles of this class” (that is, where no monopoly exists and where it is possible to increase output by expanding industry) 

“are exchanged, is the cost of production; but our best economists do not exactly agree on the meaning to be attached to this term; some contending that the quantity of labour expended on the production of an article constitutes its cost; others, that the capital employed upon it is entitled to that appellation” (op. cit., p. 200). 

“What the labourer produces without capital, costs him his labour; what the capitalist produces costs him his capital” (p. 201).” (p 165) 

This is a point that Marx has dealt with elsewhere, which comes down to the question of cost of production for society, or for the capitalist. For society, the cost of production is the total labour expended, whereas, for the capitalist, it is only the capital they have advanced. This latter view of cost of production is put forward by Torrens. 

Bailey then proceeds to argue that the value of commodities, however, cannot be determined by the cost of production, where it is shown that two commodities requiring the same labour-time to produce, have different prices. He says, 

““Now this cannot be true if we can find any instances of the following nature: 1) Cases in which two commodities have been produced by an equal quantity of labour, and yet sell for different quantities of money. 2) Cases in which two commodities, once equal in value, have become unequal in value, without any change in the quantity of labour respectively employed in each” (p. 209).” (p 165-6) 

Bailey argues that the responses of Ricardo and Mill to these objections that the difference in the quality of labour, or skill, etc. amount to destroying the integrity of the rule. Once again, Bailey, here, confuses the quantity of labour with the price of labour. He says, 

““There are only two possible methods of comparing one quantity of labour with another; one is to compare them by the time expended, the other by the results produced” (the latter is done in the piece-rate system).” (p 166) 

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