All of this sought to determine the basis of the value of commodities, but commodities are commodities because they are produced to be exchanged for other commodities or money, and so also have an exchange-value. Marx now examines this in relation to Proudhon's definition of “constituted value”.
“Let us note in the first place that the single phrase “relative or exchange value” implies the idea of some relation in which products are exchanged reciprocally. By giving the name “proportional relation” to this relation, no change is made in the relative value, except in the expression. Neither the depreciation nor the enhancement of the value of a product destroys its quality of being in some “proportional relation” with the other products which constitute wealth.
Why then this new term, which introduces no new idea?” (p 57)
If the value of a metre of linen falls from 10 hours of labour to 8 hours of labour this does not change the fact that, as a commodity, it stands in a proportional relation to a litre of wine, which has a value of 10 hours of labour. It only changes the proportions of the relation.
““Proportional relation” suggests many other economic relations, such as proportionality in production, the true proportion between supply and demand, etc., and M. Proudhon is thinking of all that when he formulates this didactic paraphrase of marketable value.” (p 57)
Value is an absolute measure based upon the labour-time required to produce a given quantity of a product/commodity. For a product, it is a measure of individual value, and, for the commodity it is its social value or market-value, determined, via competition, by the average of these individual values. But, exchange-value is a relative measure of value. It is the value of one commodity measured in terms of a quantity of some other commodity. For example, a metre of cloth has an exchange value of a litre of wine, or 20 kilos of potatoes. Value is measured directly by labour-time, but only indirectly as exchange-value, by some other commodity.
As Marx sets out in Theories of Surplus Value, Chapter 20, it is impossible to derive exchange-value without first having derived value, because exchange value is simply the proportional relation between the values of different commodities. You cannot arrive at the conclusion that 1 metre of cloth has an exchange-value of 1 litre wine, unless, first, you know that 1 metre of cloth has a value, say, of 10 hours of universal labour, and so does a litre of wine.
“The rate at which two commodities exchange does not determine their value, but their value determines the rate at which they exchange. If value were nothing more than the quantity of commodities for which commodity A is accidentally exchanged, how is it possible to express the value of A in terms of commodity B, or C, etc.? Because then, since there is no immanent measure common to the two commodities, the value of A could not be expressed in terms of B before it had been exchanged against B...
Relative value means first of all magnitude of value in contradistinction to the quality of having value at all. For this reason, the latter is not something absolute. It means, secondly, the value of one commodity expressed in the use-value of another commodity. This is only a relative expression of its value, namely, in relation to the commodity in which it is expressed. The value of a pound of coffee is only relatively expressed in tea; to express it absolutely—even in a relative way, that is to say, not in regard to labour-time, but to other commodities—it ought to be expressed in an infinite series of equations with all other commodities. This would be an absolute expression of its relative value; its absolute expression would be its expression in terms of labour-time and this absolute expression would express it as something relative, but in the absolute relation, by which it is value.”
(Theories of Surplus Value, Chapter 20)
This does not mean that, in terms of market prices, these proportional relations will apply, for the simple reason that market prices are determined by supply and demand. If the demand for commodity A exceeds the supply, its market price will rise above this exchange-value, until the supply rises to satisfy the demand, and vice versa. Setting aside the question of prices of production, as against exchange-values, the exchange-value acts as the fulcrum, the equilibrium price of orthodox economics, around which those market prices fluctuate, so that, if we assume that supply and demand is in balance, this is the price at which the commodity is sold.
“M. Proudhon inverts the order of things. Begin, he says, by measuring the relative value of a product by the quantity of labour embodied in it, and supply and demand will infallibly balance one another. Production will correspond to consumption, the product will always be exchangeable. Its current price will express exactly its true value. Instead of saying like everyone else: when the weather is fine, a lot of people are to be seen going out for a walk. M. Proudhon makes his people go out for a walk in order to be able to ensure them fine weather.” (p 57-8)
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