I. I. Rubin's

Essays on Marx's Theory of Value

Chapter Ten
EQUALITY OF COMMODITY PRODUCERS AND EQUALITY OF COMMODITIES



The commodity-capitalist society, like every society based on a division of labor, cannot exist without a proportional distribution of labor among individual branches of production. This distribution of labor can only be created if the working activities of individuals are interconnected and mutually conditioned. This productive working connection can only be realized through the process of market exchange, through the value of commodities, if the commodity production is not socially regulated. Analysis of the process of exchange, of its social forms and its connections with the production of the commodity society, is in essence the subject of Marx's theory of value. [1]

In the first chapter of Capital, Marx tacitly assumed the sociological premises of the theory of value (which we presented earlier), and began directly by analyzing the act of exchange, where the equality of exchanged commodities is expressed. For the majority of Marx's critics, these sociological premises remained a closed book. They do not see that Marx's theory of value is a conclusion based on the analysis of social-economic relations which characterize the commodity economy. For them, this theory is nothing more than "a purely logical proof, a dialectic deduction from the very nature of exchange." [2]

We know that Marx did not in fact analyze the act of exchange as such, isolated from a determined economic structure of society. He analyzed the production relations of a determined society, namely commodity-capitalist society, and the role of exchange in that society. If anyone built a theory of value on the basis of analysis of the act of exchange as such, isolated from a determined social-economic context, it was Bohm-Bawerk, not Marx.

But though Bohm-Bawerk is wrong in saying that Marx derived the equality of exchanged goods from a purely logical analysis of the act of exchange, he is right in holding that Marx put particular emphasis on equality in his analysis of the act of exchange in the commodity economy. "Let us take two commodities, e.g., corn and iron. The proportions in which they are exchangeable, whatever those proportions may be, can always be represented by an equation in which a given quantity of corn is equated to some quantity of iron: e.g., 1 quarter corn = x cwt. iron. What does this equation tell us? It tells us that in two different things - in 1 quarter of corn and x cwt. of iron, there exists in equal quantities something common to both. The two things must therefore be equal to a third, which in itself is neither the one nor the other. Each of them, so far as it is exchange-value, must therefore be reducible to this third" (C., I, p. 37). It is this passage which Marx's critics see as the central point and only foundation of his theory of value, and it is against this passage that they direct their main blows. "I should like to remark, in passing," says Bohm-Bawerk, "that the first assumption, according to which an 'equality' must be manifested in the exchange of two things, appears to me to be very old-fashioned, which would not, however, matter much were it not also very unrealistic. In plain English, it seems to me to be a wrong idea. Where equality and exact equilibrium obtain, no change is likely to occur to disturb the balance. When, therefore, in the case of exchange the matter terminates with a change of ownership of the commodities, it points rather to the existence of some inequality or preponderance which produces the alteration." [3]

It may be superfluous to mention that Bohm-Bawerk's objections miss their target. Marx never maintained that exchange is carried out in conditions of "exact equilibrium"; he more than once pointed out that the qualitative "inequality" of commodities is the necessary result of the division of labor and represents, at the same time, a necessary stimulus of exchange. Bohm-Bawerk's attention was turned to the exchange of commodities as use values and to subjective evaluations of the utility of commodities, which stimulate exchange on the part of the individuals who take part in it. Thus he very correctly emphasized the fact of "inequality." But Marx was interested in the act of exchange as an objective social fact, and by emphasizing the equality he brought out essential characteristics of this social fact. However, he did not have in mind any kind of fantastic state of "exact equilibrium." [4]

Critics of Marx's theory of value usually see its center of gravity in its defining the quantitative equality of labor inputs which are necessary for the production of commodities, and which are equalized with each other in the act of exchange. But Marx more than once pointed to the other side of his theory of value, to the qualitative side, so to speak, as opposed to the quantitative side mentioned above. Marx was not interested in the qualitative properties of commodities as use values. But his attention was turned to the qualitative characteristics of the act of exchange as a social-economic phenomenon. It is only on the basis of these qualitative and essentially sociological characteristics that one can grasp the quantitative aspect of the act of exchange. Almost all critics of Marx's theory of value suffer from a complete ignorance of this side of Marx's theory. Their views are as one-sided as the opposite conception which holds that the phenomenon of value, as treated by Marx, is not in any way related to exchange proportions, i.e., to the quantitative side of value. [5]

Leaving aside the question of the quantitative equality of exchanged commodities, we must point out that in a commodity economy the contacts between individual private economic units are carried out in the form of purchase and sale, in the form of equalization of values given and received by individual economic units in the act of exchange. The act of exchange is an act of equalization. This equalization of exchanged commodities reflects the basic social characteristic of the commodity economy: the equality of commodity producers. We are not referring to their equality in the sense of owning equal material means of production, but to their equality as autonomous commodity producers independent from each other. No one among them can directly affect another unilaterally, without a formal agreement with the other. In other words, one producer may influence another, as an independent economic subject, through the terms of the agreement. The absence of non-economic coercion, the organization of the working activity of individuals, not on principles of public law but on the basis of civil law and so-called free contract, are the most characteristic features of the economic structure of contemporary society. In this context, the basic form of production relations among private economic units is the form of exchange, i.e., the equalization of exchanged values. The equality of commodities in exchange is the material expression of the basic production relation of contemporary society: the connection among commodity producers as equal, autonomous and independent economic subjects.

We consider the following passage in Capital to be crucial for an understanding of the ideas of Marx which have been presented: "There was, however, an important fact which prevented Aristotle from seeing that, to attribute value to commodities, is merely a mode of expressing all labor as equal human labor, and consequently as labor of equal quality. Greek society was founded upon slavery, and had, therefore, for its natural basis, the inequality of men and of their labor-powers. The secret of the expression of value, namely, that all kinds of labor are equal and equivalent, because, and so far as they are human labor in general, cannot be deciphered, until the notion of human equality has already acquired the fixity of a popular prejudice. This, however, is possible only in a society in which the great mass of the produce of labor takes the form of commodities, in which, consequently, the dominant relation between man and man, is that of owners of commodities" (C., I, pp. 59-60). [6] The equality of the autonomous and independent commodity producers is the foundation for the equality of the exchanged goods. This is the basic characteristic of the commodity economy, of its "cell structure," so to speak. The theory of value examines the process of formation of the productive unity called a social economy from separate, one might say independent, cells. It is not without reason that Marx wrote, in the preface to the first edition of the first volume of Capital, that the "commodity form of the product of labor or the form of value of the commodity is the form of the economic cell of bourgeois society." This cell structure of the commodity society represents, in itself, the totality of equal, formally independent, private economic units.

In the cited passage on Aristotle, Marx emphasizes that in slave society the concept of value could not be deduced from "the form of value itself," i.e., from the material expression of the equality of exchanged commodities. The mystery of value can only be grasped from the characteristics of the commodity economy. One should not be astonished that critics who missed the sociological character of Marx's theory of value should have interpreted the cited passage without discernment. According to Dietzel, Marx "was guided by the ethical axiom of equality." This "ethical foundation is displayed in the passage where Marx explains the shortcomings of Aristotle's theory of value by pointing out that the natural basis of Greek society was the inequality among people and among their labor-powers." [7]Dietzel does not understand that Marx is not dealing with an ethical postulate of equality, but with the equality of commodity producers as a basic social fact of the commodity economy. We repeat, not equality in the sense of equal distribution of material goods, but in the sense of independence and autonomy among economic agents who organize production.

If Dietzel transforms the society of equal commodity producers from an actual fact into an ethical postulate, Croce sees in the principle of equality a theoretically conceived type of society thought up by Marx on the basis of theoretical considerations and for the purpose of contrast and comparison with the capitalist society, which is based on inequality. The purpose of this comparison is to explain the specific characteristics of the capitalist society. The equality of commodity producers is not an ethical ideal but a theoretically conceived measure, a standard with which we measure capitalist society. Croce recalls the passage where Marx says that the nature of value can only be explained in a society where the belief in the equality of people has acquired the force of a popular prejudice. [8] Croce thinks that Marx, in order to understand value in a capitalist society, took as a type, as a theoretical standard, a different (concrete) value, namely that which would be possessed by goods which can be multiplied by labor in a society without the imperfections of capitalist society, and in which labor power would not be a commodity. From this, Croce derives the following conclusion on the logical properties of Marx's theory of value. "Marx's labor-value is not only a logical generalization, it is also a fact conceived and postulated as typical, i.e., something more than a mere logical concept." [9]

Dietzel transforms the society of equal commodity producers into an ethical postulate, while Croce makes of it a "thought-up" concrete image which confronts the capitalist society in order to explain more clearly the characteristics of this society. However, in reality this society of equal commodity producers is no more than an abstraction and a generalization of the basic characteristics of commodity economy in general and capitalist economy in particular. The theory of value and its premise of a society of equal commodity producers gives us an analysis of one side of the capitalist economy, namely the basic production relation which unites autonomous commodity producers. This relation is basic because it generates the social economy (the subject of political economy) as an unquestionable, though flexible, whole. Marx lucidly expressed the logical character of his theory of value when he said: "Up to this point we have considered men in only one economic capacity, that of owners of commodities, a capacity in which they appropriate the produce of the labor of others, by alienating that of their own labor" (C., I, pp. 108-109). The theory of value does not give us a description of phenomena in some imaginary society which is the opposite of capitalist society; it gives us a generalization of one aspect of capitalist society.

Finally, in capitalist society, production relations among people as members of different social groups are not confined to relations among them as independent commodity producers. However, relations among the members of different social groups in capitalist society are carried out in the form and on the basis of their interrelations as equal and autonomous commodity producers. The capitalist and the workers are connected to each other by production relations. Capital is the material expression of this relation. But they are connected, and enter into agreement with each other, as formally equal commodity producers. The category of value serves as an expression of this production relation, or more exactly, of this aspect of the production relation which connects them. Industrial capitalists and landlords, industrialists and financial capitalists, also enter agreements with each other as equal, autonomous commodity owners. This aspect of production relations among various social groups is expressed in the theory of value. Thus one characteristic of political economy as a science is explained. The basic concepts of politicaleconomy are built on the basis of value, and at first glance they even appear to be logical emanations of value. The first encounter with Marx's theoretical system may lead to agreement with Bohm-Bawerk's view that Marx's system is a logical-deductive development of abstract concepts and their immanent, purely logical development, by Hegel's method. By means of magical, purely logical modifications, value is transformed into money, money into capital, capital into augmented capital (i.e., capital plus surplus value), surplus value into enterprise profit, interest and rent, etc. Bohm-Bawerk, who takes apart Marx's entire theory of value, notes that the more developed parts of Marx's system are a well composed whole consistently derived from an erroneous starting point. "In this middle part of the Marxian system the logical development and connection present a really imposing closeness and intrinsic consistency.... However wrong the starting point may be, these middle parts of the system, by their extraordinary logical consistency, permanently establish the reputation of the author as an intellectual force of the first rank." [10]Coming from Bohm-Bawerk, a thinker who is prone precisely to the logical development of concepts, this represents great praise. But in reality, the power of Marx's theory does not reside in its internal logical consistency as much as in the fact that the theory is thoroughly saturated with complex, rich social-economic content taken from reality and elucidated by the power of abstract thought. In Marx's work, one concept is transformed into another, not in terms of the power of immanent logical development, but through the presence of an entire series of accompanying social-economic conditions. An enormous historical revolution (described by Marx in the chapter on primitive capitalist accumulation) was necessary for the transformation of money into capital.

But here we are not interested in that side of the question. One concept grows out of another only in the presence of determined social-economic conditions. The fact is that every later concept carries the stamp of the previous one in Marx's theory. All the basic concepts of the economic system seem like logical varieties of the concept of value. Money - this is a value which serves as a general equivalent. Capital - a value which creates surplus value. Wages-the value of the labor force. Profit, interest, rent are parts of surplus value. At first glance this logical emanation of the basic economic concepts from the concept of value seems inexplicable. But it can be explained by the fact that the production relations of capitalist society, which are expressed in the mentioned concepts (capital, wages, profit, interest, rent, etc.) appear in the form of relations among independent commodity producers, relations which are expressed through the concept of value. Capital is a variety of value because the production relation between the capitalist and the workers takes the form of a relation between equal commodity producers, i.e., autonomous economic agents. The system of economic concepts grows out of the system of production relations. The logical structure of political economy as a science expresses the social structure of capitalist society. [11]

The labor theory of value gives a theoretical formulation of the basic production relation of commodity society, a production relation between equal commodity producers. This explains the vitality of this theory, which has been at the forefront of economic science throughout the stormy current of economic ideas which replaced one another, and throughout all the attacks which were directed at it, always in new shapes and fresh formulations. Marx noted this quality of the labor theory of value in his letter to Kugelmann of July 11, 1868: "The history of the theory certainly shows that the concept of the value relation has always been the same - more or less clear, hedged more or less with illusions or scientifically more or less precise." [12]Hilferding also mentioned the vitality of this theory: "Economic theory - with the scope which Marx gives to it in his Theories of Surplus Value - is an explanation of capitalist society, which is based on commodity production. This basis of economic life, which remained unchanged through enormous and stormy development, explains the fact that economic theory reflects that development, retaining basic laws which were discovered earlier and developing them further, but not eliminating them completely. This means that the logical development of the theory accompanies the actual development of capitalism. Starting with the first formulations of the law of labor value in Petty and Franklin, and ending with the most subtle considerations of Volumes II and III of Capital, the process of development of economic theory is manifested as a logical unfolding." [13] This continuity of the historical development of the theory of value explains its central logical place in economic science. This logical place can only be understood in terms of the particular role which the basic relation among separate commodity producers as equal and autonomous economic agents plays in the system of production relations of capitalist society.

This makes obvious the inaccuracy of the attempts to consider the labor theory of value completely inapplicable to the explanation of capitalist society, and to restrict it to an imaginary society or to a simple commodity society which precedes capitalist society. Croce asks "why Marx, in analyzing the economic phenomena of the second or third sphere (i.e., the phenomena of profit and rent - I.R.), ever used concepts whose place was only in the first one" (i.e., in the sphere of labor value - I.R.). "If the correspondence between labor and value is only realized in the simplified society of the first sphere, why insist on translating the phenomena of the second into terms of the first?" [14] Similar criticisms are based on a one-sided understanding of the theory of value as an explanation of exclusively quantitative proportions of exchange in a simple commodity economy, on a total neglect of the qualitative side of the theory of value. If the law of quantitative proportions of exchange is modified in capitalist exchange, compared to simple commodity exchange, the qualitative side of exchange is the same in both economies. Only the analysis of the qualitative side makes it possible to approach and to grasp the quantitative proportions. "The expropriation of one part of society and monopoly ownership of means of production by the other part obviously modify exchange, since the inequality among the members of society can only become manifest in exchange. But since the act of exchange is a relation of equality, then inequality takes the form of equality - no longer as equality of value, but as equality of production price." [15] Hilferding should have extended his idea and translated it to the language of production relations.

The theory of value, which takes as its starting point the equality of exchanged commodities, is indispensable for the explanation of capitalist society with its inequality, because production relations between capitalists and workers take the form of relations between formally equal, independent commodity producers. All attempts to separate the theory of value from the theory of the capitalist economy are incorrect, whether or not they restrict the sphere of activity of the theory of value to an imaginary society (Croce) or to a simple commodity economy, or even to a transformation of labor value into a purely logical category (Tugan-Baranovski) - or, finally, to a sharp separation of inter-economic categories, i.e., the separation of value from social categories, like capital (Struve). (Cf, Chapter Six, "Struve on the Theory of Commodity Fetishism.")


Footnotes

[1]Simmel thinks that economic research begins, not with exchangeable things, but with the social-economic role of exchange: "Exchange is a sociological phenomenon sui generis, a primitive form and function of interindividual life; it is not in any way a logical consequence of those qualitative and quantitative properties of things which are called utility and scarcity" (Georg Simmel, Philosophie des Geldes, Leipzig: Duncker Br Humblot, 1907, p. 59).

[2]Eugen von Bohm-Bawerk, Karl Marx and the Close of his System, New York: Augustus M. Kelley, 1949, p. 68.

[3]Bohm-Bawerk, Op. Cit., p. 68.

[4] "The act of exchange itself and the price which results from it influence ... the behavior of all later buyers and sellers, and thus do not exert influence in the form of inequality, but in the form of equality, i.e., as expressions of equivalence" (Zwiedineck, "Uber den Subjektivismus in der Preislehre," Archiv fur Sozialwissenschaft u. Sozialpolitik, 1914, Vol. 38, Part II, pp. 22-23.

[5]See, for example, F. Petry, Der soziale Gehalt der Marxschen Werttheorie, Jena, 1916, pp. 27-28.

[6]Obviously here we are not interested in determining whether or not Marx understood Aristotle accurately, or if his understanding of Aristotle is a type of "scientific subjectivism," as was stated by V. Zheleznov (Ekonomicheskoe mirovozzrenie dvernih grekov [Economic Weltanschauung of the Ancient Greeks], Moskva, 1919, p. 244), without adequate grounds, in our opinion.

[7]Heinrich Dietzel, Theoretische Sozialoekonomik, Leipzig: C.F. Winter, 1895, p. 273.

[8]Benedetto Croce, Historical Materialism and the Economics of Karl Marx, London: Frank Cass & Co., 1966, pp. 60-66.

[9]Ibid., p. 56.

[10]Bohm-Bawerk, Op. Cit., pp. 88-89.

[11] F. Oppenheimer sees Marx's "methodological fall" and his basic mistake in the fact that he took the "premise of social equality among the participants in the act of exchange," which is the basis of the theory of value, as the starting point for the analysis of the capitalist society with its class inequality. He quotes, with sympathy, the following statement by Tugan-Baranovskii: "Assuming social equality among the participants in the act of exchange, we abstract from the internal structure of the society in which this act is brought about" (Franz Oppenheimer, Wert und Kapitalprofit, Jena: G. Fischer, 1916, p. 176). Oppenheimer reproaches Marx for having ignored the class inequality of capitalist society in his theory of value.

Liefmann throws an opposite objection against Marx's economic theory, namely that it "assumes beforehand the existence of determined classes" (Robert Liefmann, Grundsatze der Volkswirtschaftslehre, Stuttgart & Berlin: Deutsche Verlagsanstalt, 1920, p. 34). In essence, Liefmann is right: Marx's economic theory does assume the class inequality of capitalist society beforehand. But since the relations among classes in capitalist society take the form of relations among independent commodity producers, the starting point of analysis is value, which assumes social equality among the participants in the act of exchange. Marx's theory of value overcomes the one-sidedness of Oppenheimer and Liefmann. A detailed critique of Oppenheimer's and Liefmann's views is given in our work Sovremennye ekonomisty na Zapade (Contemporary Western Economists), 1927.

[12] Loc. cit., p. 462.

[13]Hilferding, "Aus der Vorgeschichte der Marxchen Oekonomie," Neue Zeit, 1910-1911, Vol. II.

[14]Croce, Op. Cit., p. 134.

[15]Hilferding, Das Finanzkapital, Wien, 1910 (Russian edition. 1918, p. 23.