Value, Exchange-Value and Price
Inflation is an increase in the general price level resulting from a reduction in the value of the money commodity, standard of prices, or of money tokens. It is a monetary phenomenon. An increase in the general price level, i.e. of all, or most prices, resulting from this devaluation of the money commodity, standard of prices, or money tokens, is not the same as an increase in price of just some commodities, resulting from an increase in their values. Exchange-value is the value of one commodity measured, indirectly, by a quantity of some other use-value/commodity. Price is a specific form of exchange-value, i.e. it is exchange-value expressed in terms of the money commodity, or money tokens.
The exchange-value of a commodity can change, because its own value may change, or because, the value of other commodities change, or both. If the value of a metre of linen rises from 10 hours labour to 12 hours, whilst the value of a litre of wine remains constant at 10 hours labour, then the exchange value of linen rises from 1 litre to 1.2 litres, whilst the exchange value of a litre of wine falls from 1 metre of linen to 0.833 metres. If, conversely, the value of a metre of linen fell to 8 hours of labour, its exchange-value would fall to 0.8 litres of wine, if the value of wine remained constant.
If linen is the money commodity, then the prices of all commodities are expressed in quantities of linen, i.e. their exchange-value expressed in the money commodity. If say, we have, besides wine, a kilo of tea, with a value of 5 hours of labour, a bible with a value of 20 hours of labour, and a loom with a value of 30 hours labour, then the prices of all these commodities are respectively (wine) 1 metre of linen, (tea) 0.5 metres of linen, (bible) 2 metres of linen, (loom) 3 metres of linen, and when the value of linen falls to 8 hours, these prices rise to (wine) 1.25 metres, (tea) 0.625 metres, (bible) 2.50 metres, (loom) 3.75 metres.
In other words, there is no change in the value of any of these commodities, other than the money commodity itself, and the exchange value of all the commodities other than the money commodity remains constant, i.e. a litre of wine exchanges for 2 kilos of tea, just as it did before all the prices rose, and so on. It is only changes in the value of the money commodity, or money tokens, that can have this effect on all prices, as against individual prices, and is the essence of inflation as a monetary phenomenon. That is a consequence of the nature of money itself, and of money tokens. It is why the theories of inflation such as cost-push, or demand-pull are wrong, as, separated from changes in the value of the money commodity, standard of prices, or money tokens, they can only explain changes in the market price of individual commodities.
Demand-pull is said to cause inflation where aggregate demand grows faster than aggregate supply. However, an increase in aggregate demand, if it is not simply an expression of increased liquidity, means that the economy itself is expanding. As the value of constant capital is transferred to the value of current output, and likewise provides the value equivalent for its own replacement, on a like for like basis, then, as we are considering demand-pull, rather than cost-push inflation, the demand and supply for constant capital, can be discounted. Marx describes, this in the circuit of industrial capital, set out in Capital II, Chapter 2, and this also forms the basis of his schemas of reproduction set out in Chapter 20 and 21.
As, this diagram shows, we are left with, in respect of simple reproduction, only revenues to provide the aggregate demand for the final output of consumption goods. But, those revenues – wages, profits, interest, rent and taxes – are merely the value equivalents of the new value created by labour (L + c), in the current year, and so themselves represent the equivalent supply. On that basis, there is no grounds for assuming that aggregate demand exceeds aggregate supply. In the same way, as described above, demand for constant capital (means of production) does not come from revenues, but comes from capital (MP), and is the equivalent of the value transferred by constant capital to final output (C).
The same is true if we assume expanded reproduction, and accumulation of capital. As Marx's diagram indicates, the basis of this capital accumulation (of both constant and variable capital) is that a portion of profits is used for productive rather than unproductive consumption. But, again, those profits are a consequence of new value created by labour, in this current year, and so of supply created in the current year. It signifies no basis for aggregate demand to exceed the aggregate supply already created, only a change in distribution, with some revenue now forming demand for constant and variable capital, rather than being used for personal consumption by capitalists.
No comments:
Post a Comment