Value and Price

[Questionable]

I'm having a hard time comprehending the difference between value and price. I know price is set in relation to the money-commodity, and the price of the money-commodity is in relation to the total amount of commodities, but in that case, isn't supply and demand the sole determinant of price? Or am I totally misunderstanding what I've read (I was reading Kautsky's "Economic Doctrines of Karl Marx")?

Here's the section I'm struggling with right now, in case anyone is curious:
http://www.marxists.org/archive/kautsky/1903/economic/ch02.htm

[MarxSchmarx]

Probably someone who is better read with kautsky can help you more with that passage (DNZ perhaps?), but you're in a sense right that because price is transient at the point of exchange supply and demand plays a huge role. In this sense, price is a special kind of value, namely, exchange value. By contrast value broadly conceived is not merely an instrument of exchange; commodities can have use-values, for instance, that are quite independent of their status in the exchange process. There are a lot of other differences, but perhaps getting some insight from people who know the Kautsky passage might be more useful.


I'm having a hard time comprehending the difference between value and price. I know price is set in relation to the money-commodity, and the price of the money-commodity is in relation to the total amount of commodities, but in that case, isn't supply and demand the sole determinant of price? Or am I totally misunderstanding what I've read (I was reading Kautsky's "Economic Doctrines of Karl Marx")?

Here's the section I'm struggling with right now, in case anyone is curious:
http://www.marxists.org/archive/kautsky/1903/economic/ch02.htm

[Blake's Baby]

'Value' as a concept has no real meaning in Marxism. When Marx refers to value he then says 'of course I mean 'exchange value''.

The exchange value of a thing, which is in turn determined by its socially-necessary labour time, is the value around which prices fluctuate, yes. But that doesn't mean exchange value is identical to price.

If there are two spoons produced by two factories and they are the same for all practical purposes (you can use both for measuring sugar and stirring tea and eating strawberries and cream) and are the same from the point of view of production (one worker can produce 30 of them per hour given x-amount of metal and the spoon-making machine), then the exchange value' of those two spoons is the same because the use value is the same and the labour and other inputs that have gone into them are the same. Their 'values' are the same, they cost (let's say) 60c each to produce.

But one of these spoons is made by Krapp's McSpoonulike and has a logo that looks like a turd on it and the word 'Krapp' in blocky letters. The other is made by Hugh D'Jerly-Toffington's Prestige Spoonsmiths and Cutlewrights, Est. 1739, By Appointment to HM the Queen, The Pope and The Dalai Lama, and has a logo stamped on the handle that indicates as much.

Which will sell for more, do you think? The two spoons cost the same to produce - their socially necessary labour time and all other imputs are the same; so their value is the same; but is their price?

Supply and demand is important; Marx says when deriving the labour theory of value that he is assuming that there is no possibility that any buyers or sellers are in a monopoly position (in other words, he strips out some of the main complications of the sytem in order to derive LTV and actually assumes that capitalism work more efficiently than it actually does). In the spoon example it's obvious that the higher price for the 'quality' spoons (there is of course no difference in quality in the example, just in the perception of quality) would be a matter of demand; the demand for the Krapp spoons is lower and the demand for the Prestige spoons is higher. But this has nothing to do with 'value' per se, as their 'value' is 60c each.

Is this going any way to allowing you to see a way out of your confusion?

[Questionable]

'Value' as a concept has no real meaning in Marxism. When Marx refers to value he then says 'of course I mean 'exchange value''.

The exchange value of a thing, which is in turn determined by its socially-necessary labour time, is the value around which prices fluctuate, yes. But that doesn't mean exchange value is identical to price.

If there are two spoons produced by two factories and they are the same for all practical purposes (you can use both for measuring sugar and stirring tea and eating strawberries and cream) and are the same from the point of view of production (one worker can produce 30 of them per hour given x-amount of metal and the spoon-making machine), then the exchange value' of those two spoons is the same because the use value is the same and the labour and other inputs that have gone into them are the same. Their 'values' are the same, they cost (let's say) 60c each to produce.

But one of these spoons is made by Krapp's McSpoonulike and has a logo that looks like a turd on it and the word 'Krapp' in blocky letters. The other is made by Hugh D'Jerly-Toffington's Prestige Spoonsmiths and Cutlewrights, Est. 1739, By Appointment to HM the Queen, The Pope and The Dalai Lama, and has a logo stamped on the handle that indicates as much.

Which will sell for more, do you think? The two spoons cost the same to produce - their socially necessary labour time and all other imputs are the same; so their value is the same; but is their price?

Supply and demand is important; Marx says when deriving the labour theory of value that he is assuming that there is no possibility that any buyers or sellers are in a monopoly position (in other words, he strips out some of the main complications of the sytem in order to derive LTV and actually assumes that capitalism work more efficiently than it actually does). In the spoon example it's obvious that the higher price for the 'quality' spoons (there is of course no difference in quality in the example, just in the perception of quality) would be a matter of demand; the demand for the Krapp spoons is lower and the demand for the Prestige spoons is higher. But this has nothing to do with 'value' per se, as their 'value' is 60c each.

Is this going any way to allowing you to see a way out of your confusion?

Sorry it took me forever to respond to this, but I've been busy.

If this is the case, why do we even need to take labor time into consideration? If supply and demand determine price, why not focus exclusively on those and ignore labor? At first I thought socially-necessary labor time was expressed in the labor time used to make currency and the labor time used to make the product, but supply/demand factor into that as well.

[Blake's Baby]

Because we need to determine why air has no exchange-value even though it's got a lot of use-value. Because we need to explain why diamonds in the ground aren't as valuable as diamonds in a shop. Because we need to explain why coal needs to be mined, pigs need to be turned into sausages, trees need to be turned into chairs, etc.

Marx started from the proposition that in his explanation, neither buyers nor sellers were in a monopoly position. In other words, in a harmonious (unreal) capitalism where supply and demand are balanced, where does value come from?

In the real world there is definitely supply/demand disequilibrium. But saying that tells us nothing other than capitalism doesn't work very well. Marx stripped out the messiness to get to the core of what was happening, pretended it worked better than it did, and said 'even if capitalism worked perfectly - which it doesn't - value comes from labour'.

Just because it rains one day, and is sunny the next, it doesn't mean there's no such thing as a weather pattern, and just because some things are over-produced and some things are under-produced, it doesn't mean there isn't an underlying pattern of values. It was the underlying pattern Marx was interested in, not the froth on top. That's just a description of data - on Tuesday, chairs were worth this much, but by Friday, they'd fallen to that much - that doesn't tell us anything about why chairs have value. The state of the market at any given moment isn't the point.

[Paul Cockshott]

I'm having a hard time comprehending the difference between value and price. I know price is set in relation to the money-commodity, and the price of the money-commodity is in relation to the total amount of commodities, but in that case, isn't supply and demand the sole determinant of price? Or am I totally misunderstanding what I've read (I was reading Kautsky's "Economic Doctrines of Karl Marx")?

Here's the section I'm struggling with right now, in case anyone is curious:
http://www.marxists.org/archive/kautsky/1903/economic/ch02.htm

There are a number of distinct concepts to grasp here:

1. Value, which is what it costs society in terms of labour to produce something.

2. Value in exchange. Each commodity has many other values in exchange depending on what you chose to exchange it against. An ounce of gold can have a value in exchange for silver, - something like 24 ounces of silver at current prices, but it also has a value in exchange for oil - say 15 barrels of Brent crude at todays prices, and a value in exchange for copper - say 110 kilos at todays prices.

3. Price which is the value in exchange that a commodity has against the 'money commodity', when Marx was writing this was typically gold. So the price of oil per barrel would be 1/15 of an ounce of gold today, were the gold standard still in place. Since the early 1970s the gold standard is no longer operational, so prices are expressed in national currencies - so we have the price of Brent crude is $100 per barrel.

The big problem with trying to understand current pricing systems with Marx's analysis in Capital is the shift to unconvertible paper currencies, since these have no predefined inherent value in terms of labour. Nonetheless, the ratios of prices, between two commodities will tend to closely correspond to the ratios of the labour necessary to make them. If you look at the 80 or so commodity sectors listed in national input output tables you find that labour content explains about 95% of the variation in the monetary prices that their outputs sell for.

So although the labour theory of value does not explain absolute price levels any more, it still explains relative price levels.