We have seen in the previous note that Capital “A”, employed 30 hours of labor power in its production of widgets and created 30 hours of surplus value, while capital “C” employed no labor power in its production and produced no surplus value.
Despite this fact, the commodities sold by capital “C” realize a price in the market for its commodities above their value, while the widgets sold by capital “A” realize a price below their value.
The commodities sold by capitals “A”and “B” are thus sold not at their respective values, but at their prices of production. The commodities sold by capital “C” are sold at their value, but only because the organic composition of capital are the average for the three.
As noted by Moseley in a footnote on page 39, Bohm-Bawerk, who, apparently could read as well as (or perhaps better than) any Marxist, saw this bizarre result and remarked on it:
“Böhm-Bawerk 1949 criticised Marx for assuming that prices are equal to values (in Volumes I and II) and that prices are equal to prices of production (in Volume III), which he said is contradictory: prices cannot both equal values and not equal values. But Böhm-Bawerk did not understand Marx’s logical method of the two levels of abstraction – the total economy and individual industries. In Marx’s theory, total price = total value, but individual prices = prices of production. There is no contradiction with Marx’s logical structure of the two levels of abstraction.”
In this footnote, three issues are being conflated:
- Is there a contradiction in the formation of capitalist prices of production?
- Is Marx talking only about the total economy?
- Is there a contradiction in Marx’s logical method?
Let’s take the second issue first, because it is easiest to to dismiss: as Thomas Lord notes in an earlier comment, Marx is not simply talking about the ‘total economy’ — whatever that means. The same principles Marx describes should generally hold as true between departments of a single capital, an industry, a region, a national economy or the world market as a whole. To be clear, there is no reason to assume this relationship holds for, say, a national economy or a certain industry, but not for a regional bloc, (like the EU), or the world market. Lenin’s superprofits can as easily be explained by Marx’s transformation of values into prices of production as by Lenin’s imperialist division of the world market.
So, is there a contradiction between the values of commodities and the formation of their capitalist prices of production or are we just seeing Marx’s labor theory of value going badly off the rails?
In first place, we know Marx was not the first theorist to encounter this conundrum. Ricardo and Smith ran into it as well. This would suggest that either labor theory suffers an intractable flaw that cannot be expunged, or that it is accurately revealing a more fundamental — and, for our purposes, more significant — flaw in the mode of production itself.
What flaw could this be?
While it generally holds true that the sum of prices equals the sum of values and the sum profits equals the sum of surplus value, this relation is no longer true in the case of any actual commodity.
Of course, under simple commodity production this is already true to some extent. Fluctuations in the market prices of commodities owing to supply and demand and other influences mean that only over the long-run will these prices reflect the value of the commodity on average. But under the capitalist mode of commodity production, the prices of commodities no longer equal their values even in the long-run. Individual prices and individual values have become permanently detached.
At the individual level, the relationship between labor values and prices have already begun to disintegrate.