Raya Dunayevskaya, September 1945
Source: American Economic Review, September 1945 pp. 660-4;
Republished: News & Letters, November-December 2005 under the title “The Law of Value in Capitalist Society”;
Formatted: for Maxists Internet Archived by Damon Maxwell 2009;
Editor’s note: A crucial issue in radical theory remains how to eliminate capitalist value production. The following article, written in 1945, represented an historic intervention into that debate. In 1943 an article in the Russian journal Under The Banner of Marxism declared that the law of value – which Marx had always said defines capitalism – operates under “socialism.” Dunayevskaya translated the essay and published a critique of it in the American Economic Review (AER) of September 1944, entitled “A New Revision of Marxian Economics.” It was reprinted in the April 2004 News & Letters. Her critique drew responses from the radical economists Paul Baran (AER, December 1944) and Oscar Lange and Leo Rogin (AER, March 1945). Her rejoinder, published in the September 1945 issue of the AER, is reprinted here for the first time. All page numbers are to the original articles in the AER. The footnotes are abbreviated. The original can be found in The Raya Dunayevskaya Collection, 213-217.
Professors Oscar Lange and Leo Rogin and Mr. Paul A. Baran have challenged my contention that the recent Soviet article from Under The Banner of Marxism marks a radical departure from orthodox Marxism. Although these economists apparently agree that the article is not a revision, but a reaffirmation, of Marxism, they, nevertheless, reach different, even directly contradictory, conclusions on the principal point of theory in the Soviet statement, namely, that the law of value operates under “socialism.”
Lange affirms positively that Marx “held the view that the theory of value applies to a socialist economy” (p. 128). Baran states categorically that the law of value is a “principle ruling the working of a capitalistic society” and that the only consequence of trying to apply that notion to socialism “is to deprive the ‘law of value” of all its meaning and significance” (p. 869). Rogin avoids any discussion of the concept of value. The confusion among these learned minds suggests the necessity of a restatement of the law of value in its Marxian sense.
Lange arrives at the conclusion that the law of value operates in a socialist society through an erroneous construction of two quotations from Capital. In the first, from p. 90 of Vol. I, where Marx is describing “a community of free individuals,” he carefully refrains from any use of the word “value.” The quintessential point of that whole section on “The Fetishism of Commodities” is to prove that “to stamp an object of utility as a value is just as much a social product as language”;[1] it is the language of “bourgeois economy.” Hence, when Marx “by way of a change” speaks of a society other than capitalist, he uses, not the word “value” but the expression “labor time.”
In the second quotation, from p. 992 of Vol. III, Marx uses the phrase “determination of value” (Wertbestimmung) in the general or descriptive sense meaning evaluation and not in the categoric sense of a theory or a law of value. Marx had nothing but contempt for those who, like A. Wagner, tried to lift the theory of value out of its capitalistic context and transform it into a “universal theory of value.”
As I showed in my commentary (p. 561), he castigates “the presupposition that the theory of value, developed for the explanation of bourgeois society, has validity for the ‘socialist state of Marx.’” He reiterated time and again that “in the analysis of value I had in view bourgeois relations and not an application of this theory of value to a ‘socialist state.’”[2] In Anti-Duhring Engels stated that in a socialist society: “People will be able to manage everything very simply without the intervention of the famous value.”[3]
In contrast to Marx and Engels, Lange not only asserts that the law of value applies to a socialist society but further stretches the meaning of “law of value”[4] by saying that in its “pure form” (p. 129). Marx considered it applicable “only under conditions of ‘simple commodity production.’” In reality, Marx criticized Adam Smith for just that assertion. Smith, he explains fell into that error because he had “abstracted [the law of value] from capitalistic production and precisely because of this it appears as if it were invalid.”[5]
Starting with the labor theory of value of Smith-Ricardo, he showed that the unequal exchange between the capitalist and the worker was not a “deviation” from the law, but its very basis. He transformed the classical labor theory of value into the theory of surplus value. Value, he wrote, was a social relation of production “specifically capitalistic.”[6] Marx’s theory of value is his theory of surplus value.
Lange confuses the law of value with the formation of price through a misinterpretation of the Marxian thesis that the lower the stage of production the more do prices reflect values; the higher the stage of production the more do they deviate from value. He considers that if value and prices do not correspond, the law of value does not function in its “pure form” (p. 129). Marx, on the other hand, maintained that the deviation of price from value is not an aberration of the law of value but only its manifestation; no matter how individual prices deviate from value, the sum of all prices, according to Marx, is equal to the sum of all values. The law of value remains dominant.
Marx treated market phenomena only as manifestations of the production relationship between capitalist and worker. The organic composition of individual capital, as well as market competition, affects the division of profit among capitalists, but not the surplus value itself. Surplus value is a given magnitude arising only from the process of production. Marx insisted that the struggle among capitalists to effect what he called “capitalist communism” was of no concern to the worker. He analyzed these market phenomena only in order to prove the oppressively dominant position of “self-expanding value,”[7] or the primacy of the production relationship. Lange is much too preoccupied with the formation of price. Marx did not write 4,000 odd pages – the Theories of Surplus Value Marx intended as part of Vol. III of Capital – as an essay in price analysis. Capital is an analysis of the capitalist process of production, the capitalist process of circulation and capitalist production “taken as a whole.” It is an analysis of no other system.
Lange, on the one hand, assumes that the USSR is a socialist, that is, non-exploitative order, and, on the other hand, that the dominant economic law of capitalism operates there. By abstracting the exploitative content of the Marxian theory of value, Professor Lange has indeed deprived that theory “of all meaning and significance.”
Rogin”s central thesis is equally incorrect, although his error is more difficult to isolate because he completely ignores the concept of value and considers only the distributive principle under socialism. Because I called attention to the traditional Marxist principle, “From each according to his ability, to each according to his need,” Rogin intimates (p. 138) that I have fallen into the error of “vulgar socialism,” which, as Marx has stated, considers “distribution as independent of production, thereby representing socialism as turning principally on distribution.” However, my only purpose in referring to the slogan was to show the contradiction between the Soviet doctrine that socialism has been “irrevocably established” in the USSR, and the repudiation of that slogan for that country.
Worse than that, the Soviet economists reject another Marxist formula – the payment of labor according to the “natural measure of labor”: Time – which was postulated for a society “As it emerges from capitalist society,” that is, one still tainted “with the hereditary diseases of the old society” (p. 138). For both these formulas the Soviet economists substitute the principle of “distribution according to labor.”
Professor Rogin apparently accepts the identity of the “natural measure of labor,” time, with the new formula, which is explicitly based on the instrumentality of money, the price expression of value. Time and value, however, are not equivalents. To Marx value is not a quantitative relationship but a qualitative relationship, that is, a class relationship. He asserted that the analysis of the contradiction between use-value and value in the labor of the worker, considered as a commodity, is his original contribution to political economy, and the pivot around which political economy revolves.[8] According to Marx, it is the use-value of the specific commodity, labor power, that creates surplus value. This is what the Soviet economists have restored for Russia. This is not a “distributive” principle, nor is distribution the specific concern of the Soviet economists. They know that where labor has created no new value, not even a “socialist society” can appropriate and distribute.
The new Soviet formula for distribution is in reality a euphemism for the realities of production. Class relations[9] in Russia compel them to make “surplus labor” the main aim of production. The Soviet economists are only stating in theoretical language that economic reality which was given mathematical exactitude by Academician and Chairman of the State Planning Commission, N. Voznessensky, in his speech to the 18th All-Union Conference of the Russian Communist Party just before the outbreak of the Russo-German war. “The plan for 1941,” he said bluntly, “provides for a 12% increase in productivity of labor and a 6.5% increase in average wage per worker.”[10] By assuming the existence of “socialism” in the USSR, and accepting at the same time the principle of “distribution according to labor,” Rogin is, in reality, accepting the applicability of the law of value under “socialism.”
Here likewise Baran makes his error. He avers that the Soviet economists” acceptance of the law of value under “socialism” is merely the result of a “terminological muddle surrounding the notion of ‘law”” (p. 861). The Russians, however, are not muddleheads. They have deliberately accepted the validity of the law of value for the Soviet Union because in the economic categories used by Marx in CAPITAL they have found the theoretical reflection of economic reality. Since, however, Marx”s entire analysis of the law of value is based upon its specifically capitalistic content, the Soviet economists were constrained either to revise the concept that the Soviet Union is a “socialist society,” or to revise the concept that the law of value is dominant only in a capitalist society. It is not surprising that they chose to revise Marx instead of the Soviet Constitution.
The Soviet economists have solved their dilemma. It is up to Baran to solve his dilemma of assuming, on the one hand, that Russia is a “socialist society” and, on the other hand, asserting that the law of value is dominant only in a capitalist society.
He has deepened his contradictory position by approving the proposal that in the future teachings of political economy the structure of Capital be not followed in order that factual information be introduced to “form the backbone of the course” (p. 863). It is not merely a question of supplying factual information--Volume I, the most abstract volume of Capital, is full of historical and statistical data. It is a question of severing the indissoluble connection between the dialectical method of Marx and his political economy. It follows inexorably from the break with the Marxian concept of the law of value. Soviet economic theory finally reflects economic reality. Does Baran propose instead that the reality and the theory reflect his presupposition that Russia is a “socialist society”?
1. p. 85. All references to Capital are to the Kerr edition.
2. Arkhiv Marksa-Engelsa (Moskva, 1930), T. V., c. 386.
3. Herr Eugen Duhring’s Revolution In Science (New York, International Publishers), p. 346.
4 Lange’s promiscuous use of quotation marks for value and law of value, where no such expression is used by Marx, seriously distorts Marx’s meaning (cf. p. 129).
5. Teorii Pribavochnoi Stoimosti (Moskva, 1932), T. III, ch. 3, c. 55 (Theories Of Surplus Value).
6. Arkhiv Marksa-Engelsa (Moskva, 1933) T. II (VII), c. 7.
7. Capital, Vol. II, p. 120.
8. Capital, Vol. I, p. 48.
9. Baran questions (pp. 869-70) my “gratuitous” assertion that classes exist in Russia since the material he has read points in the “opposite direction.” He therefore assumes that I base my conclusion on the wide differentials in income. Income differentials in the USSR are not sublimated from all exploitative vices; they too are only a manifestation of the actual production relations. If Baran cannot accept the evidence of the existence of class differentiations from English works, such as The Real Soviet Russia, by J. Dallin (New Haven, Yale Univ. Press, 1944), the chapter on plant managers by Dr. Schwarz in Management In Russian Industry And Agriculture by Bienstock, Schwarz and Yugov (New York, Oxford Univ. Press, 1944), and Workers Before And After Lenin by Manya Gordon (New York, Dutton, 1941), let him consult the original documents on the 1939 population census and the analysis of the occupational classifications, especially of the “classless” group known as the “intelligentsia” by V. Molotoff, the results of the Five Year Plans and the analysis by J. Stalin, as well as the minutes of the congresses and conferences of the Russian Communist Party. All of these offer a fertile field for reflection.
10. N. Voznessensky, The Growing Prosperity Of The Soviet Union (New York, International Publishers, 1941), p. 40.