Re: [OPE-L] monetary macro interpretation

[Rakesh Bhandari <bhandari@xxxxxxxxxxxx>]

Title: Re: [OPE-L] monetary macro interpretation

So, Fred and others, here is Engels'

well known comments on Lexis in the preface to third volume

of Marx's Capital. I don't understand why Engels insists

that Lexis has not solved but only correctly formulated the problem.

Would Marx have agreed? I don't think so.

Yours, Rakesh

In his critique of the second volume (Conrads jahrbücher, XI, 1885, S. 452-65), Professor Lexis took up the question, although he did not care to offer a direct solution. He says: "The solution of the contradiction" (between the Ricardo-Marxian law of value and an equal average rate of profit) "is impossible if the various classes of commodities are considered individually and if their value is to be equal to their exchange-value, and the latter equal or proportional to their price." According to him, the solution is only possible if "we cease measuring the value of individual commodities according to labour, and consider only the production of commodities as a whole and their distribution among the aggregate classes of capitalists and workers.... The working class receives but a certain portion of the total product,... the other portion, which falls to the share of the capitalist class, represents the surplus-product in the Marxian sense, and accordingly ... the surplus-value. Then the members of the capitalist class divide this total surplus-value among themselves not in accordance with the number of workers employed by them, but in proportion to the capital invested by each, the land also being accounted for as capital-value." The Marxian ideal values determined by units of labour incorporated in the commodities do not correspond to prices but may be "regarded as points of departure of a shift which leads to the actual prices. The latter depend on the fact that equal sums of capital demand equal profits." For this reason some capitalists will secure prices higher than the ideal values for their commodities, and others will secure lower prices. "But since the losses and gains of surplus-value balance one another within the capitalist class, the total amount of the surplus-value is the same as it would be if all prices were proportional to the ideal values."
It is evident that the problem has not in any way been solved here, but has, though somewhat loosely and shallowly, been on the whole correctly formulated. And this is, indeed, more than we could have expected from a man who, like the above author, takes a certain pride in being a "vulgar economist". It is really surprising when compared with the handiwork of other vulgar economists, which we shall later discuss. Lexis's vulgar economy is, anyhow, in a class of its own. He says that capital gains might, at any rate, be derived in the way indicated by Marx, but that nothing compels one to accept this view. On the contrary. Vulgar economy, he says, has at least a more plausible explanation, namely: "The capitalist sellers, such as the producer of raw materials, the manufacturer, the wholesale dealer, and the retail dealer, all make a gain on their transactions by selling at a price higher than the purchase price, thus adding a certain percentage to the price they themselves pay for the commodity. The worker alone is unable to obtain a similar additional value for his commodity; he is compelled by reason of his unfavourable condition vis-à-vis the capitalist to sell his labour at the price it costs him, that is to say, for the essential means of his subsistence.... Thus, these additions to prices retain their full impact with regard to the buying worker, and cause the transfer of a part of the value of the total product to the capitalist class."
One need not strain his thinking powers to see that this explanation for the profits of capital, as advanced by "vulgar economy," amounts in practice to the same thing as the Marxian theory of surplus-value; that the workers are in just the same "unfavourable condition" according to Lexis as according to Marx; that they are just as much the victims of swindle because every non-worker can sell commodities above price, while the worker cannot do so; and that it is just as easy to build up an at least equally plausible vulgar socialism on the basis of this theory, as that built in England on the foundation of Jevons's and Menger's theory of use-value and marginal utility. I even suspect that if Mr. George Bernard Shaw had been familiar with this theory of profit, he would have likely fallen to with both hands, discarding Jevons and Karl Menger, to build anew the Fabian church of the future upon this rock.

In reality, however, this theory is merely a paraphrase of the Marxian. What defrays all the price additions? It is the workers' "total product". And this is due to the fact that the commodity "labour", or, as Marx has it, labour-power, has to be sold below its price. For if it is a common property of all commodities to be sold at a price higher than their cost of production, with labour being the sole exception since it is always sold at the cost of production, then labour is simply sold below the price that rules in this world of vulgar economy. Hence the resultant extra profit accruing to the capitalist, or capitalist class, arises, and can only arise, in the last analysis, from the fact that the worker, after reproducing the equivalent for the price of his labour-power, must produce an additional product for which he is not paid - i.e., a surplus-product, a product of unpaid labour, or surplus-value. Lexis is an extremely cautious man in the choice of his terms. He does not say anywhere outright that the above is his own conception. But if it is, it is plain as day that we are not dealing with one of those ordinary vulgar economists, of whom he says himself that every one of them is "at best only a hopeless idiot" in Marx's eyes, but with a Marxist disguised as a vulgar economist. Whether this disguise has occurred consciously or unconsciously is a psychological question which does not interest us at this point. Whoever would care to investigate this, might also probe how a man as shrewd as Lexis undoubtedly is, could at one time defend such nonsense as bimetallism.