The Real Movement

Communism is free time and nothing else!

Month: August, 2018

The Left will have to deal with Trump economic success

According to the BBC:

“The Commerce Department’s second estimate for the April-June period put growth at an annualised 4.2%, slightly up from the previous figure of 4.1%.

“It was the best quarterly figure for nearly four years and put the economy on track to hit Donald Trump’s goal of 3% annual growth.”

Trump is making the Left his bitch. He owns the so-called “bread and butter” issues.

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Twelfth note on Moseley’s “Money and Totality” (continued)

It has to be emphasized that the production of value and the realization of value in the form of money-prices have nothing whatsoever to do with one another. The conditions governing the production of value are distinct and separate from the condition governing the realization of the value created by labor power. The sole connection between the conditions governing the two acts is the money commodity, i.e., exchange value.

Twelfth note on Moseley’s “Money and Totality”

Although Moseley seems to think there is only a single system here, I would suggest Marx actually argued the reverse.

As my evidence for this particular reading of Marx’s theory I offer this passage from Capital, v3, ch.15:

“The creation of this surplus-value makes up the direct process of production… As soon as all the surplus-labour it was possible to squeeze out has been embodied in commodities, surplus-value has been produced. But this production of surplus-value completes but the first act of the capitalist process of production — the direct production process. Capital has absorbed so and so much unpaid labour… The entire mass of commodities, i.e. , the total product, including the portion which replaces the constant and variable capital, and that representing surplus-value, must be sold… The conditions of direct exploitation, and those of realising it, are not identical. They diverge not only in place and time, but also logically.”

Perhaps I am missing something here, but it appears that Marx argue the conditions governing the production of values differ from those that govern realization of the value in the form of money-prices. Moreover, in this passage, Marx appears to suggest the production of value precedes the realization of those values in the form of money-prices. Thus, it would appear that a conversion has to take place wherein labor values are converted into prices of production.

There is indeed a single mode of production, but this mode is divided into two distinct and separate acts. Which is to say, the production of values does not in any way imply their realization. Although production of value has been accomplished, the condition governing the realization of this value may not be met.

A conversion of values into prices of production does in fact take place.

Eleventh note on Moseley’s “Money and Totality”

In my previous post, I asked this question:

“What might clue us in that the magnitude of value in the labor power is the same as (or different from) the magnitude of value in the money?”

The answer, of course, is that we would not know. In theory, at least, we are unable to apprehend the value of either object.

As Marx argued in a quote I cited in a previous post, as soon as value is converted into price, the relation between value and price is more or less accidental. The exchange-ratio between a commodity and money may express a commodity’s value, or it may diverge from that value. It follows that the price of a commodity in a particular transaction may have nothing to do with its actual value.

Contrary to Moseley, there is indeed two ‘systems’ here: a ‘value system’ — that “expresses the connexion that necessarily exists between a certain article and the portion of the total labour-time of society required to produce it” — and a ‘price system’ — that may or may not express this material connection in any given transaction.

The relation between the value of a commodity and its money-price is forcibly imposed on social actors only after the fact and by continuous fluctuations in the price of a commodity that compensate for deviations between the price of the commodity and its actual value.

These fluctuations of the prices of commodities around their values are similar to the perturbations in the path of a distant star by an unseen companion. Just as we can deduce the existence of the planetary companion by the perturbations of the star’s path, so we can deduce value from the apparently random fluctuations of prices.

But, in the case of stars and their companions, we assume both the star and companion share a common characteristic: namely, that of having mass. In the case of a commodity’s value and its money-price, Marx proposed that each — money and the commodity — must be the product of human labor.

Moseley disagrees with Marx on this point; which is why he concludes there is no transformation problem.

 

A tenth note on Moseley’s “Money and Totality”

Moseley makes this charge against the so-called standard interpretation of Marx’s transformation problem:

Bortkiewicz and Sweezy interpret Marx’s theory as composed of ‘two systems’: (1) a hypothetical ‘value system’ in which commodities exchange at their values, and (2) the actual ‘price system’ in which commodities exchange at prices of production (both of these as equilibrium tendencies). They argue that Marx attempted to derive prices of production in the ‘price system’ from the values in the ‘value system’, but that he failed to do so, because his theory of prices of production assumed that the inputs are purchased at their values. But it is obviously impossible for inputs to exchange at values and outputs to exchange at prices of production, because the inputs for some industries are at the same time outputs of other industries.

Moseley suggests, contrary to both Marx and Bortkiewicz/Sweezy, that there are not two systems, values and prices, but a single system:

However, I argue that this ‘dual system’ interpretation is a misinterpretation of Marx’s logical method. Marx’s theory is a ‘single system’ theory … The givens in Marx’s theory of prices of production … are instead the actual quantities of money capital advanced and consumed in each industry … which are taken as given as initial data, and the actual price rate of profit as determined by the prior macro theory of the total surplus-value. The given Mi’s in Marx’s theory of prices of production are the same actual quantities as the total M which are taken as given in the prior macro analysis of the total surplus-value and general rate of profit; the only difference is that the Mi’s are disaggregated to industry levels. Therefore, Marx did not ‘fail to transform the inputs’ from values to prices of production in his theory of prices of production; there is no such transformation of the inputs to be made.

In other words, according to Moseley, in discussing the capitalist mode of production, Marx refers only to prices of production, not values. There is no need to transform the values of commodities into their prices of production because, from the first, we are only dealing with prices. There is no transformation problem because Marx begins with money (and thus prices), not values.

Okay, fine. But bear with me a moment as I contest this idea.

The initial purchase of means of production and labor power are indeed transacted at their prices. But, in Marx’s theory, these prices are assumed to be their actual values. Which is to say, the capitalist exchanges value in one form — money — for value in another form — labor power. Here, the money-name of this value is irrelevant. What is relevant is that a certain magnitude of value in one form is exchange for a commodity having the same magnitude of value.

How do we know that the value of the money paid for the labor power is equal to the value of the labor power? We cannot see nor in any way apprehend the value of the labor power or even the value of the money paid for the labor power. We can, of course, make the assumption that the two commodities — labor power and money — contain the same magnitude of value, but this is just an assumption. We could, as easily, assume neither has any value at all.

What might clue us in that the magnitude of value in the labor power is the same as (or different from) the magnitude of value in the money?

According to Moseley, this question is not important.

A ninth note on Moseley’s “Money and Totality”

Moseley appears to forget that, strictly speaking, direct capitalist production itself has no prices of any sort. We can visualize this fact by examining the expanded circuit of money capital:

M – C … P… C’ – (M + ΔM)

In the above circuit, M and (M + ΔM) are not, strictly speaking, concerned with production, but with exchange. The actual production process is:

C … P… C’

Assume, for the sake of demonstrating my point, that this portion of the circuit of capital brought together the labors of 1000 producers. Unlike the case for simple commodity production, these labors are carried on without exchange. Considered separately, the product of the labors of the individuals composing the capital do not take the form of commodities. They are directly social labors, the labors of a single social producer, even if undertaken under the despotic control of the capitalist. Moreover, there is no limit to how many producers this particular capital can embrace: ten workers, a thousand or a million.

The size of the capital, how many producers it encompasses, has no impact on this. Only the final product of their labors, C’, appears on the market and is sold as commodities for M’ — i.e., for (M + ΔM). The extension of the capitalist mode of production, therefore, is the progressive annulment of exchange relations among producers. With its spread as a mode of production within commodity production generally, capital progressively abolishes commodity production.

Certainly, capital begins with M and ends with M’. This is what makes it a form of commodity production. Yet, between M and M’ there is no commodity production. All production is directly cooperative and carried on according to the despotic plan of capital. (Dunayevskaya) Moreover, with the advance of this peculiar form of commodity production, commodity production is itself progressively abolished.

So, is the capitalist mode of production a single system throughout, as Moseley asserts. And, if so, is it just another form of commodity production or a form of directly social, cooperative production.

Obviously, it is both.

An eighth note on Moseley’s “Money and Totality”

In the last note, I implied that Moseley, by reason of his insistent that we begin the analysis of capital with money and not with commodity, as was the case for Marx’s Capital, had adopted the bourgeois point of view.

Let me now go a step further and explicitly accuse Moseley of doing just this.

In note 6, I pointed to Marx’s assertion that a transaction where the worker sells her labor power to the capitalist for money has a contradictory appearance depending on whose view you adopt in analyzing the transaction:

“As capitalist, I buy commodities from A and sell them again to B, but as a simple owner of commodities, I sell them to B and then purchase fresh ones from A. A and B see no difference between the two sets of transactions. They are merely buyers or sellers. And I on each occasion meet them as a mere owner of either money or commodities, as a buyer or a seller, and, what is more, in both sets of transactions, I am opposed to A only as a buyer and to B only as a seller, to the one only as money, to the other only as commodities, and to neither of them as capital or a capitalist, or as representative of anything that is more than money or commodities, or that can produce any effect beyond what money and commodities can. For me the purchase from A and the sale to B are part of a series. But the connexion between the two acts exists for me alone.” (Capital, v1, ch.5)

However, Marx goes further than mere appearance. He argues that the transaction is contradictory depending on your point of view:

“The circuit C-M-C starts with one commodity, and finishes with another, which falls out of circulation and into consumption. Consumption, the satisfaction of wants, in one word, use-value, is its end and aim. The circuit M-C-M, on the contrary, commences with money and ends with money. Its leading motive, and the goal that attracts it, is therefore mere exchange-value.” (Capital, v1, ch.4)

In the above passage, Marx suggest the aim of the capitalist is exchange-value. By contrast, he argues, the aim of the worker is use-value, consumption, the satisfaction of wants.

Now why might this obscure quotation be relevant to the transformation problem?

Interestingly enough, in the Grundrisse, Marx argues that the development of the productive forces abolishes the relation between exchange-value and use-value:

“As soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure, and hence exchange value [must cease to be the measure] of use value. The surplus labour of the mass has ceased to be the condition for the development of general wealth, just as the non-labour of the few, for the development of the general powers of the human head. With that, production based on exchange value breaks down, and the direct, material production process is stripped of the form of penury and antithesis.” (Grundrisse: Notebook VII)

Marx is clearly preparing to argue that capital itself leads to its own abolition. This self-abolition is already given in the wage relation itself and requires no other premise than the wage labor relation, i.e., the relation whereby exchange-value is the measure of use-value, consumption, the satisfaction of wants.

A seventh note on Moseley’s “Money and Totality”

It should be clear from the foregoing note that as communists we should follow Marx’s methodology and begin our analysis of the capitalist mode of production with the commodity, not money. If we begin our analysis with money, as Moseley suggests, we necessarily adopt the bourgeois point of view in the relation between wage labor and capital.

A sixth note on Moseley’s “Money and Totality”

I don’t want to be too dismissive of Moseley’s argument, so let’s assume that he is at least partially correct to say, “the subject of the theory is not ‘two systems’, but is instead a single system throughout – the actual capitalist economy”. (Moseley, p.3)

There is a sense in which Moseley is correct. Let me give an example of how his assertion at least might appear to be true:

Two people meet in the market to complete a transaction. The actual transaction is a single exchange of a commodity for some amount of money. There is only one transaction, yet in labor theory, this single exchange has altogether different properties depending on which side of the transaction one is on. The buyer employs his money to buy a commodity. At the same time the seller sells her commodity for money.

To paraphrase Moseley, this is a single transaction throughout — an actual capitalist transaction.

However, insofar as the buyer is concerned there is nothing to this transaction but the circulation of his capital, conversion of its value from the money form to the commodity form. Insofar as seller is concerned there is nothing but the sale of her commodity, labor power, i.e., the conversion of the value in her labor power into its money form.

The worker sells a commodity; while the capitalist converts his money into variable capital. Although it appears that this basic capitalist transaction has nothing about it that is remarkable, Marx explains it this way:

“As capitalist, I buy commodities from A and sell them again to B, but as a simple owner of commodities, I sell them to B and then purchase fresh ones from A. A and B see no difference between the two sets of transactions. They are merely buyers or sellers. And I on each occasion meet them as a mere owner of either money or commodities, as a buyer or a seller, and, what is more, in both sets of transactions, I am opposed to A only as a buyer and to B only as a seller, to the one only as money, to the other only as commodities, and to neither of them as capital or a capitalist, or as representative of anything that is more than money or commodities, or that can produce any effect beyond what money and commodities can. For me the purchase from A and the sale to B are part of a series. But the connexion between the two acts exists for me alone.” (Capital, v1, ch.5)

So, is the transaction simply a phase in the circulation of commodities, or is it a phase in the circuit of capital. Of course, although there is only a single transaction described here, this single transaction is both the simple circulation of commodities and the circuit of capital. Both the laws of simple commodity circulation and the laws of capitalist accumulation must be satisfied.

A fifth note on Moseley’s “Money and Totality”

Given the four notes previous to this one, it now becomes obvious why, in his introduction to Money and Totality, Moseley introduces this quote from Marx:

“The method of analysis which I have employed, and which had not been previously applied to economic subjects, makes the reading of the first chapters rather arduous …”

Moseley appears to offer this as evidence that objections to Marx’s theory arise from misunderstanding or misreading of Marx’s theory. So what is this misunderstanding that might arise from the first chapters of Capital?

In the first chapters of Capital, Marx begins by describing the capitalist mode of production as “an immense accumulation of commodities”. Marx argues that, as useful objects, these commodities seem to have little in common with one another. However, Marx then goes on to explain that these commodities do have something in common: first, they are all products of human labor; and, second, they must be useful for someone other than the producer who created them.

Yet, even as socially useful products of human labor, commodities are not all alike: while almost all commodities serve directly as useful objects, one commodity, money, has no directly useful function. This commodity serves instead as the material to express the values of the other commodities in transactions among members of the community of commodity producers. Another commodity, labor power, is unique in that it is the source of the values of all of the other commodities.

What Moseley fails to mention about part one of Capital is the distinction to be made between money and labor power. In Marx’s approach, labor power imparts values to commodities; while money imparts their prices. From the very beginning of Capital, therefore, value and price are entirely distinct and separate things. The whole of the objections to Marx’s approach thus hinge on the rejection of his argument that labor power is the source of value, while money-price is merely the expression of the value of commodities.

It is important to insist that prices and values are in no way identical to one another as categories in Marx’s analysis. I think Moseley violates a basic assumption of Marx’s theory when Moseley suggests, (but never actually states, at least at this point), that prices and values don’t diverge in Marx’s theoretical model of the mode of production. In the opening chapters of Capital, Marx’s model insists that values and prices can and do diverge from one another:

“Magnitude of value expresses a relation of social production, it expresses the connexion that necessarily exists between a certain article and the portion of the total labour-time of society required to produce it. As soon as magnitude of value is converted into price, the above necessary relation takes the shape of a more or less accidental exchange-ratio between a single commodity and another, the money-commodity. But this exchange-ratio may express either the real magnitude of that commodity’s value, or the quantity of gold deviating from that value, for which, according to circumstances, it may be parted with. The possibility, therefore, of quantitative incongruity between price and magnitude of value, or the deviation of the former from the latter, is inherent in the price-form itself. This is no defect, but, on the contrary, admirably adapts the price-form to a mode of production whose inherent laws impose themselves only as the mean of apparently lawless irregularities that compensate one another.”

The objections by Bortkiewicz, Sweezy, Morishima and Steedman to Marx’s theory that,

“(2) The rate of profit changes in the transformation of values into prices of production, so that there are two rates of profit in Marx’s theory – the ‘price rate of profit’ and the ‘value rate of profit’ – which are not equal and which may have divergent trends.”

is actually no objection to his theory at all.

Marx assumes from the outset that prices and values of commodities can and do diverge. He insists on this because it will eventually be fundamental to his entire argument that capitalist accumulation progressively undermines the premises of simple commodity production.

A correct reading of Marx’s theory, therefore, begins with the assumption that prices and values can and do diverge. Marx’s theory has so long been vulgarized to the statement, “price equals value”, that most Marxist theorists today no longer realize that he actually argued the opposite applied to the capitalistic mode of commodity production:

Prices of commodities actually have no direct relation to their values in the capitalist mode of production.