Help on exchange value and sale of a commodity [Archive]

View Full Version : Help on exchange value and sale of a commodity

RedMaterialist

1st October 2014, 07:53

Anglo-Saxon Philistine

1st October 2014, 12:06

I was wondering if someone could help me on this: A commodity has a use value and an exchange value. The exchange value is created by abstract social labor in the amount socially necessary for its production.

Assume the price of the commodity is $10. When I pay the ten dollars and take the commodity, I am taking possession of its use-value.

But what happens to the exchange-value? Is it absorbed in some way in the money which changes hands, or does it somehow disappear due to its abstract nature, or does the exchange value re-enter the production process as part of the profit of the seller, who then reinvests the money which is used to buy additional use-value in the form of labor?

If the exchange value of the sold commodity (now represented as a money-value) is not immediately, or as soon as possible. re-converted into the capital process, then, obviously, the system can break down.

Thank you for any help.

The exchange value is realised at the point of transaction. No transaction - no exchange value. This exchange value, in monetary form, with a certain amount of money added or subtracted due to various factors that make the price different from the exchange value, goes to the seller, usually to be used as capital (when the price of the reproduction of workers' labour is subtracted). So the monetary form of the exchange value plus or minus some small sum goes into the M' of the M-C-M' cycle.

RedMaterialist

1st October 2014, 15:53

The exchange value is realised at the point of transaction. No transaction - no exchange value. This exchange value, in monetary form, with a certain amount of money added or subtracted due to various factors that make the price different from the exchange value, goes to the seller, usually to be used as capital (when the price of the reproduction of workers' labour is subtracted). So the monetary form of the exchange value plus or minus some small sum goes into the M' of the M-C-M' cycle.

So, when a commodity comes off the production line, it has no exchange-value? Or would it be more accurate to say, No transaction = no realized exchange value? When, exactly, is exchange-value created?

Anglo-Saxon Philistine

1st October 2014, 17:13

So, when a commodity comes off the production line, it has no exchange-value? Or would it be more accurate to say, No transaction = no realized exchange value? When, exactly, is exchange-value created?

If the commodity isn't exchanged, it's not a commodity, is it? A commodity is at least potentially exchangeable, but if the object that was a commodity had been forgotten, for example, in an inaccessible warehouse, it's been taken out of circulation and doesn't participate in capitalist exchange. I'm not sure it makes sense to talk about the point where a commodity gets an exchange value - the exchange value is something we use to describe the process of commodity production.

Blake's Baby

1st October 2014, 21:13

RedMaterialist

5th October 2014, 02:52

Marx, in Chapter One, Capital:

The progress of our investigation will show that exchange value is the only form in which the value of commodities can manifest itself or be expressed.

So, don't we have value as created by socially necessary labor and exchange value as the expression of value? Value could only be produced during the process of production, by definition. ( Although it doesn't follow that this value remains constant as production can become more efficient, or the product no longer in demand, etc.)

So. We have three "things." Use-value, value, and exchange-value, the expression of value.

AT the point of sale, the buyer takes possession of the use-value, the seller takes possession of the exchange-value, money. Since "value" is abstract social labor, then doesn't this imply that when the commodity is removed from the market its value is also removed from the market? Which doesnt seem to make sense.

But if exchange-value is the expression of value, then doesn't this mean that value remains with the exchange-value, i.e. with the money. Thus, when linen is exchanged for a coat, then the use value of the linen is exchanged for the use value of the coat. But, in fully developed commodity production, money is exchanged for the coat. Which can only mean that the exchange-value and value are separated from use value.

From the point of view of sale of labor, the capitalist buys labor from the worker with money. The worker keeps the money and the dead, abstract social labor. The capitalist then uses the use-value of the worker. Since labor is the only commodity which can produce more value than it uses, then a surplus/profit is produced.

I would think that money, exchange-value, is essentially dead labor but not capital yet.

Wouldn't this mean that abstract social labor is expressed or manifested in money as soon as the commodity is sold? This might explain why bourgeois economists concentrate so heavily on money, they follow the money, so to say. It is nothing but social labor with no use-value, because it has not been converted into capital.

Does anybody know if say, Richard Wolff or Andrew Kliman, et al., teach this kind of problem in their economic classes?

RedMaterialist

5th October 2014, 03:25

The labour, which determines its exchange value, goes in before it becomes a commodity. But it is only when it is traded that it becomes a 'commodity'. I could after all take a year to make a chair, then sit on it for 30 years. So it isn't a commodity.

But isn't this because you made the chair for your own personal use rather than for sale to others, and because it was not made with socially necessary labor? (If you made it for sale and you were a master furniture maker then it would be a commodity.)

What about this? Socially necessary labor is the value of the commodity, which value is then expressed by exchange-value, its price in money. So, when a new car comes off the assembly line, it is a fully produced commodity (except maybe for transportation to a dealer.) It even has a price tag, the MSRP, its exchange-value. which, within limits is negotiable.

Of course, the owner, say, GM, has to sell it as soon as possible, otherwise its use-value and its value begin to depreciate. The use value disappears because of just sitting on the lot, and the exchange value begins to disappear because new cars are being made more cheaply than the one just made.

Creative Destruction

5th October 2014, 03:36

Commodities show their commodity form in the market - so asking when a commodity gets its exchange-value is looking at the question upside down. A product is errr, produced by applying human labour to something. This product is then traded against other products in the market. These products are 'commodities'.

The value it trades at is related to the average (socially-necessary) labour-time (so if it it takes me a year to hand-make a chair, it's not going to sell for much more than one made in minutes in a factory: the socially-necessary time to make a chair is 20 minutes).

The labour, which determines its exchange value, goes in before it becomes a commodity. But it is only when it is traded that it becomes a 'commodity'. I could after all take a year to make a chair, then sit on it for 30 years. So it isn't a commodity.

So, this is something that has always interested me about the pricing expressions of exchange value and value itself, and their relationship:

If exchange value is a mere reflection of value (that is, socially necessary labor time), then how do you count for certain marketing techniques that inflate the pricing expression of exchange value. Say, an artisan makes a "hand-made" chair that may be different in design, but not much in quality compared to a factory made counterpart. The fact that it is hand-made and advertised as such often inflates its exchange value on the market and people will buy it, out of a fetishism for "hand made" stuff.

I've noticed this same dynamic in other industries. Guitars: a Mexican made Fender Telecaster, like one I used to have, is often sold for less because it doesn't have the aura of being an "American, hand-made" guitar and it's made in a different manufacturing process. But I've played my Telecaster against American-made telecasters, and they're about the same quality at a much more inflated price.

Also, as my wife has gotten into fashion design, I've been poking around that industry to take a look and see why clothing prices are so ridiculously inflated: it has to do with a couple of things: clothing houses tend to price their items to make it attractive to rich people to buy (there is this really fucked up thing that happens, which I guess could be coined as a "Veblen effect" or whatever, where rich folks are less likely to buy a commodity if it's priced low, compared to when that same item is priced way high.)

There's an article I read that said, in addition to that, there are "middle-man" costs that inflate the price, such as retailer mark-up and what not. But at the base: in this article, I read about a pair of cargo shorts that were made from some cotton fabric that is priced high for its particular pattern design (I couldn't make out what made it so much more sought after, other than aesthetic appeal) and the fact that the designer had people in his factory using archaic methods.

This 'hand-stitched' thing added to its appeal... even though it's probably, in all practical purposes, looks like and is the same quality as a pair of cargo shorts you'd pick up at WalMart or something. But even if I were to assume that this cotton is super-special, what really seemed to drive up the exchange value was this "hand-made" factor to it.

I think Marx tried grappling with this transformation from value into final price form in Vol. III of Capital, but it was unfinished, and so an undeveloped there. I've never heard this part of the value form being developed really well. This really isn't some kind of rebuttal to your summary or anything, just something that I've always felt has been unresolved when thinking about prices and value of a commodity. I'd suppose this becomes less of an issue if you take Marx's law of value as a general rule, rather than something that explains the totality of commodity's prices or final exchange value.

RedMaterialist

5th October 2014, 04:11

Say, an artisan makes a "hand-made" chair that may be different in design, but not much in quality compared to a factory made counterpart. The fact that it is hand-made and advertised as such often inflates its exchange value on the market and people will buy it, out of a fetishism for "hand made" stuff.

There may be a temporary inflation but people will realize the "artisan" is selling junk.

I've noticed this same dynamic in other industries. Guitars: a Mexican made Fender Telecaster, like one I used to have, is often sold for less because it doesn't have the aura of being an "American, hand-made" guitar and it's made in a different manufacturing process. But I've played my Telecaster against American-made telecasters, and they're about the same quality at a much more inflated price.

That could be an issue of personal taste. A brief review of the guitars on the internet shows a lot of people liking one or the other. Some people even like the Chinese and Japanese made ones.

This 'hand-stitched' thing added to its appeal... even though it's probably, in all practical purposes, looks like and is the same quality as a pair of cargo shorts you'd pick up at WalMart or something. But even if I were to assume that this cotton is super-special, what really seemed to drive up the exchange value was this "hand-made" factor to it.

I don't know. My wal-mart cargoes are already beginning to fall apart after six months.

Creative Destruction

5th October 2014, 05:25

There may be a temporary inflation but people will realize the "artisan" is selling junk.

That's the thing, though... they're not selling junk. It's often selling high quality furniture. It's just that it is made by hand by a small group as opposed to it being more mass produced, which are often of the same or similar quality. It's not the quality that people are buying necessarily, but there is a pervading idea that "hand made" = "quality." This is partly why some food manufacturers will slap "Homemade" on their labels and see it for a premium, when it's really just the same damn thing as any other canned food.

That could be an issue of personal taste. A brief review of the guitars on the internet shows a lot of people liking one or the other. Some people even like the Chinese and Japanese made ones.

Well, when it comes to Telecasters, the only thing I noticed, as far as quality goes, is the difference between a Squire Telecaster and a Fender Telecaster. There's obvious differences in the quality, which mostly come from the materials used in the product, which are reflected in the price. When you take an American-made, Mexican-made or Japanese-made Telecaster and hook them into the same amplifier, the tone is the same, the feel of the fretboard is the same. The only real difference is the American-made Telecaster stayed in tune better, but that has to do with the tuning machine and those aren't worth the often hundreds-of-dollars price difference between the two guitars. The only other actual difference that is made tone-wise is what kind of wood is used and the different woods used to make Telecasters don't really vary. In fact, I think they're all made with Ash and Alder, which are comparably priced woods, last I checked.

The only non-negligible difference between the guitars, that I noticed anyway, is where it comes from and the manufacturing process that is used to make it. American Fenders (that aren't Squires) are made, mostly, in smaller shops with smaller teams, while they are done with larger production teams in other countries, for mass-manufacture. Sometimes the accessories -- mainly in the price of which ever brand of pick-ups are used -- will make a bump in price, but, again, not the hundreds-of-dollars difference that is often expressed in the final price.

There are a multitude of other things that would change the value of a guitar, depending on the parts you got to make it. But if you're doing a strict comparison of comparable guitars for quality and tone and the only thing that is really a difference is the origin of production, then there isn't a lot of difference. At least, there isn't any that should significantly impact the final price in the way that it does. A lot of guitarists in the U.S. exhibit the same attitude toward their guitars as car enthusiasts exhibit toward U.S. made cars vs. foreign made cars. It is "personal taste" but a lot of it is tied into some nationalistic feelings or nostalgia.

I don't know. My wal-mart cargoes are already beginning to fall apart after six months.

Clothes tend to do that, depending on their wear. Poor folks will probably wear the shit out of some $200 - $500 cargo shorts and have them fall apart just a short time later; whereas rich folks probably have enough money to have an expansive set of clothes and trade them out often.

Last year, for the first time in my life, I was able to afford what I thought were a "decent" pair of work boots compared to what I was wearing -- usually whatever I could get at Walmart or Target or something. They would usually last me about a year before they're falling apart, after constant wear. With these boots that I bought last year, it's about a year and they're starting to fall apart, too (the soles are getting torn up and there's some exterior damage that is going to get worse if I don't do anything about it.) So, really, the quality has been about the same, at double the cost. The advantage to the boots I have now is that I could go and get them repaired at the factory store for about as much as I could buy a new pair of boots from Walmart, but the company makes so much damn money that I can't see why it would even be double the cost in the first place, other than for the fact that they also have a smaller team who cobbles the boots together and dummies like me will fall for their quality schpiel every once in a while.

Technological changes that bring down the socially necessary labor time for a commodity are obviously less about quality of the commodity and more about how much capitalists can crank out to stay profitable against each other. With that said, the quality of many commodities really don't change that much, with some major exceptions. TVs, for example, have gotten a whole lot better, as have computers. But aside from tech commodities (and even then, improvements in quality are often few and far between), there's nothing to objectively say that the quality of a commodity has gotten worse with new innovations in the means of production.

Anglo-Saxon Philistine

5th October 2014, 09:42

So, this is something that has always interested me about the pricing expressions of exchange value and value itself, and their relationship:

If exchange value is a mere reflection of value (that is, socially necessary labor time), then how do you count for certain marketing techniques that inflate the pricing expression of exchange value.

Well, the exchange value is not equal to the price anyway - the money-equivalent of the exchange value is the number around which the price oscillates. People often think they can charge anything for "hand-made" goods, but in fact unless their prices are near the exchange-value they will be forced off the market.

Say, an artisan makes a "hand-made" chair that may be different in design, but not much in quality compared to a factory made counterpart. The fact that it is hand-made and advertised as such often inflates its exchange value on the market and people will buy it, out of a fetishism for "hand made" stuff.

Sure.

But also consider that the exchange value is higher here as more socially-necessary labour time needs to go into making that type of chair.

I've noticed this same dynamic in other industries. Guitars: a Mexican made Fender Telecaster, like one I used to have, is often sold for less because it doesn't have the aura of being an "American, hand-made" guitar and it's made in a different manufacturing process. But I've played my Telecaster against American-made telecasters, and they're about the same quality at a much more inflated price.

Alright, but quality doesn't have anything to do with exchange value.

RedMaterialist

5th October 2014, 16:59

Alright, but quality doesn't have anything to do with exchange value.

But isn't "quality" the use-value of a commodity? And since use-value is combined with value (expressed by exchange-value) in a commodity by definition, there would have to be some kind of connection between quality and exchange value.

Why does a BMW have a higher exchange value than a Ford?

Anglo-Saxon Philistine

5th October 2014, 17:27

But isn't "quality" the use-value of a commodity? And since use-value is combined with value (expressed by exchange-value) in a commodity by definition, there would have to be some kind of connection between quality and exchange value.

Why does a BMW have a higher exchange value than a Ford?

Does it now? I don't really drive so I can't comment.

Anyway, it is a mistake to treat use-value as some sort of number that quantifies how useful a commodity is. Use-value is something a commodity either has or has not - i.e. uranium does not have use-value in a society that has not discovered nuclear fission.

Creative Destruction

5th October 2014, 17:29

Well, the exchange value is not equal to the price anyway - the money-equivalent of the exchange value is the number around which the price oscillates.

I understand that, which is why I continually separated "price" from "exchange value" in my post.

People often think they can charge anything for "hand-made" goods, but in fact unless their prices are near the exchange-value they will be forced off the market.

This is kind of my point, though. This isn't necessarily true. Any Veblen good that has been around for a long time seems to make this exception (but I also noted at the end of my post that this could be an exception, not a disproving of the generality.) But it exists and the mechanisms for making the final price far outstrip its exchange value is what is interesting to me.

Anglo-Saxon Philistine

5th October 2014, 17:41

This is kind of my point, though. This isn't necessarily true. Any Veblen good that has been around for a long time seems to make this exception (but I also noted at the end of my post that this could be an exception, not a disproving of the generality.) But it exists and the mechanisms for making the final price far outstrip its exchange value is what is interesting to me.

I'm not sure this is the case, even for Veblen goods. Luxury commodities are often manufactured using processes that consume a lot of socially-useful labour time, often deliberately. Thus while their price is high, so is their exchange-value, even though they might not offer any additional functionality over equivalent non-luxury commodities.

I mean, the Veblen effect has its limits - you can't sell water for thousands of euros per litre, for example, no matter how luxurious it is seen as.

Dave B

14th October 2014, 19:42

I think first of all exchange value of a commodity which is like the price that the thing sells or is bought for is not theoretically the same as the as its value.

The two can be different because of oscillations in supply and demand; even if the laws of supply and demand tend to return or drive the exchange value back to equality to its value.

However the supply and demand of a commodity can be in perfect equilibrium and commodities will not exchange at their value, in fact they don’t in capitalism.

As commodities systematically exchange at above and below their value in capitalism due to the varying amounts of (fixed and constant) capital required in the relevant ‘spheres of production’.

It is a lamentable and common mistake that the ‘law of value’ operates on its own as the sole determinant of exchange value in capitalism.

The fact is that the ‘law of value’ only operates purely as a determinant of exchange value in the simple commodity production, C-M-C, as described in the opening chapter on volume one.

And that is the ‘starting point of capitalism’.

Exchange value in capitalism is systematically regulated by the average rate of profit and the socially necessary labour time required to make something.

On the other issue

There is a quote from Karl somewhere early on were he totally dismisses as a relevant argument whether or not a commodity is ‘really’ useful or not and whether or not the buyer is insane in thinking it is.

He of course, probably to illustrate that point, uses the bible as one of his commodity exchange examples.

What matters is how much labour time it takes to (re)produce a commodity not what it does or why some people might think it is useful.

You can take perhaps an instructive example of branded clothing eg T-shirts and two products one with Nike printed on it that sells for $50 and an ‘identical’ one without the label that sells for $5.

I actually think both must sell at their value; unless Nike makes an average rate of profit significantly above the average.

The premium or excess price for the Nike product is the ‘significant’ cost of advertising.

In fact the brand is a product of and the expenditure of capital investment.

This kind of advertising deludes the buyer into thinking he is just like and has something in common with the heroes of our age like Tiger Woods or whatever.

And provides the use value of making him feels better about himself and somebody more important than he really is in society etc.

I mean you can do that by buying and consuming a couple of bottles of wine, as if that kind of thing can’t make people feel like Batman as well; so who am I to criticize buyers of Nike T-shirts?

There is obviously a growing market for mind altering commodities that make us feel better about ourselves whether or not they are tangible or concrete things of themselves or not.

And there is fancy hand made furniture as well; the stuff that fetches by far the highest prices, with a chair going for $150,000 say, was made by the free access communist Shakers.

robbo203

14th October 2014, 20:28

Very useful post indeed, Dave. The impact of the process of the averaging of the rate of profit on the exchange value of commodities is often overlooked

On the question of use value and exchange value there is an interesting quote from Marx which kind of anticipates the objections later rasied by the subjectivist school of value. Here it is

With reference, therefore, to use-value, there is good ground for saying that “exchange is a transaction by which both sides gain.” It is otherwise with exchange-value...If therefore, as regards the use-values exchanged, both buyer and seller may possibly gain something, this is not the case as regards the exchange-values. Here we must rather say, “Where equality exists there can be no gain.” It is true, commodities may be sold at prices deviating from their values, but these deviations are to be considered as infractions of the laws of the exchange of commodities, which in its normal state is an exchange of equivalents, consequently, no method for increasing value. We have shown that surplus-value cannot be created by circulation, and, therefore, that in its formation, something must take place in the background, which is not apparent in the circulation itself. ( Capital Vol 1, Ch 5)

Blake's Baby

14th October 2014, 20:30

But isn't this because you made the chair for your own personal use rather than for sale to others, and because it was not made with socially necessary labor? (If you made it for sale and you were a master furniture maker then it would be a commodity.)...

Missed this before.

No. You misunderstand what a commodity is. A cheap chair produced for the market is still a commodity; a master-crafted chair that isn't sold is not a commodity.

I think you also misunderstand what socially-necessary labour is. The chair was made with 'socially-necessary labour' - and then, with some extra.

Let's stick to chairs. There is a finite number of chair-making machines in the world, and there are a few artisan master furniture-makers.

It is not possible for the demand for chairs to be filled by either of these sources alone. Most chairs are machine-made in factories, some by hand in workshops. Both kinds of production are necessary to fill the demand for chairs.

Chairs take 1 hour of production on a machine, and 100 hours by hand.

1 million chairs are produced every month. The master furniture-makers produce 100 of these chairs, the chair factories produce 999,900.

The socially-necessary labour-time to make one chair is total time on chair production (999,900x1)+(100x100) divided by the number of chairs (1,000,000).

That's 1,009,900/1,000,000 or 1.0099 hours. In other words the average time to make a chair is a little more than the time to make a chair by machine.

If there were only a couple of machine capable of producing 1,000 chairs a month in total, and thousands of master furniture makers, the numbers would be (1000x1)+(999,000x100)/1,000,000 and the socially-necessary labour-time for one chair would be 99.901 hours - just below the time necessary to hand-craft one.

In the first case, the master furniture-makers need to do a lot of convincing that their chairs are 100 times better than the machine-made chairs.

I suspect in the second case, people might take some convincing that the machine-made chairs were as good as hand-made chairs.

Either way, prices will gravitate towards (but are rarely equal to) the 'socially-necessary labour-time' expressed in terms of the cost of labour. If a chair takes just over an hour to make, then the value will be equivalent to other things that take just over an hour to make; if it's nearly 100 hours, then the cost will approximate other things that also take nearly 100 hours to make.

RedMaterialist

15th October 2014, 04:54

Missed this before.

No. You misunderstand what a commodity is. A cheap chair produced for the market is still a commodity; a master-crafted chair that isn't sold is not a commodity.

Are you saying that the master-crafted chair would become a commodity if it were sold?

RedMaterialist

15th October 2014, 05:36

It is a lamentable and common mistake that the ‘law of value’ operates on its own as the sole determinant of exchange value in capitalism

But isn't exchange value the amount which one commodity can be exchanged for another? As in, 10 yds of linen can be exchanged for 1 coat.

Exchange value in capitalism is systematically regulated by the average rate of profit and the socially necessary labour time required to make something.

It may be regulated (i.e., be brought back to its average, normal price) by the average rate of profit, while being determined by socially necessary labor time.

Does Marx say anywhere specifically that exchange value is determined by the average rate of profit as well as by the socially necessary labor time? It seems fairly basic that, say, a commodity which sells for $10, i.e. $10 is the monetary expression of the value of the commodity, and the capitalist paid $5 for the socially necessary labor-power, then the profit is $5 and the rate of profit is 100%. In other words, profit and ultimately the average rate of profit, seem to be determined by the socially necessary labor extracted by the capitalist.

There is a quote from Karl somewhere early on were he totally dismisses as a relevant argument whether or not a commodity is ‘really’ useful or not and whether or not the buyer is insane in thinking it is.

He of course, probably to illustrate that point, uses the bible as one of his commodity exchange examples.

In the illustration of the exchange of linen-money-bible, are you sure that he dismisses the question of the real utility of the bible for the linen-weaver? He may ridicule it, but the exchange is nevertheless an exchange of real commodities, of use-values combined with exchange values.

Dave B

15th October 2014, 20:44

terms

Fuc = fixed unconsumed capital

c = constant capital or raw material

Fc = consumed 'fixed capital'

s = surplus value

v = variable capital or paid labour time

Nuv = new use value

Department A

940Fuc+ 20c+20Fc +20s +20v= 940Fuc + 80Nuv

80Nuv = SNLT valueof the product/commodity/ new use-value of one weeks labour etc

Rate of profit if exchange value of the product = its value

P’ = 20s/{940Fuc+20c +20Fc+20v}

20/1000

2%

Department B

40Fuc + 20c+20Fc +20s +20v = 40Fuc + 80Nuv

Rate of profit if exchange value of product = value

P’ = 20s/{40Fuc+20c +20Fc+20v}

20/100

20%

If P’ =10%

Then exchange value of the product of department A must be 160.ie 80 above its value

Exchange value of B must be 70 ie 10 below its value.

---------------

we need to have fixed unconsumed capital on both sides of the equation otherwise it is 'repugnant' to the calculation of the rate of profit.

Now if we also reckon the remaining £1,000, which still continues in the machinery, as transferred to the product, we ought also to reckon it as part of the value advanced, and thus make it appear on both sides of our calculation. [1] (http://www.marxists.org/archive/marx/works/1867-c1/ch09.htm#1) We should, in this way, get £1,500 on one side and £1,590 on the other. The difference of these two sums, or the surplus-value, would still be £90. Throughout this Book therefore, by constant capital advanced for the production of value, we always mean, unless the context is repugnant thereto, the value of the means of production actually consumed in the process, and that value alone.

http://www.marxists.org/archive/marx/works/1867-c1/ch09.htm

Blake's Baby

15th October 2014, 21:07

Are you saying that the master-crafted chair would become a commodity if it were sold?

A commodity is something which is on the market. So, yes, for it to be a commodity, it must be for sale. The two things are equal. They mean the same thing.

Dave B

15th October 2014, 21:13

The competition of capitals among different spheres of production leads to the formation of a general, average profit rate and to the sale of commodities at production prices which are equal to costs of production plus average profit and, quantitatively, they do not coincide with the labor-value of commodities.

https://www.marxists.org/archive/rubin/value/ch18.htm

RedMaterialist

16th October 2014, 04:47

A commodity is something which is on the market. So, yes, for it to be a commodity, it must be for sale. The two things are equal. They mean the same thing.

So, a master crafted chair and a machine, mass produced chair which are both for sale are both commodities, and thus both contain use value and value?

The mass produced chair can probably be made in a few minutes, even counting the time for producing the raw materials. The master crafted chair takes maybe a hundred hrs to make.

As long as there is a market for the hand made chair, isn't the socially necessary labor time for the hand made chair a hundred hrs and for the mass produced chair a few minutes?

RedMaterialist

16th October 2014, 05:07

https://www.marxists.org/archive/rubin/value/ch18.htm

The competition of capitals among different spheres of production leads to the formation of a general, average profit rate and to the sale of commodities at production prices which are equal to costs of production plus average profit and, quantitatively, they do not coincide with the labor-value of commodities.
https://www.marxists.org/archive/rubin/value/ch18.htm

Does Rubin quote Marx on this?

This seems to say that the price of a commodity is equal to the cost of production plus average profit and that the price is not coincident with the labor value of the commodity.

This just seems to me to contradict Marx's basic theory, that exchange value (around which price fluctuates) is determined by socially necessary labor time. And that the capitalist does not pay the full value of this labor time, but appropriates the surplus time as profit.

Does Marx specifically say that his theory of profit and value is different for simple and for "complex" commodity production?

I understood Marx to say that commodity A takes, say, 1 hour labor to produce. The capitalist pays for 1/2 hour of labor. The extra half hour is ultimately where profit comes from.

RedMaterialist

16th October 2014, 05:52

If P’ =10%

Then exchange value of the product of department A must be 160.ie 80 above its value

Exchange value of B must be 70 ie 10 below its value.

If you take two different industries and average their two profits then of course you will get an average rate of profit. But it doesnt follow that the average rate of profit controls their prices.

One baseball player may have a .300 average and another may only hit .150.
The average is .225. The 'price' or value of the .300 is not determined by the average of the two players.

Exchange value, according to Marx, is something inherent in the commodity itself. (chap 1, section 1, of Captial.) Although, of course, the exchange value is not fixed but it changes as productivity increases or decreases.

Blake's Baby

17th October 2014, 00:19

So, a master crafted chair and a machine, mass produced chair which are both for sale are both commodities, and thus both contain use value and value?

The mass produced chair can probably be made in a few minutes, even counting the time for producing the raw materials. The master crafted chair takes maybe a hundred hrs to make.

As long as there is a market for the hand made chair, isn't the socially necessary labor time for the hand made chair a hundred hrs and for the mass produced chair a few minutes?

If the market for 'a hand-made chair' is different to the market for 'a machine-made chair', then the socially-necessary labour time is different yes. But if you count 'a hand-made chair' at 100hrs and 'a machine-made chair' at an hour, as both being part of the supply of a generic category of 'chair' (if the buyers don't care in other words) then the socially-necessary labour-time is weighted in favour of whatever prouces the bulk of the chairs.

Revolutionising production (introducing machinery) brings down socially-necessary labour-time.

Dave B

17th October 2014, 00:25

I think exchange value was or is a theoretical or perhaps purely logical construct of his analysis of simple commodity production .

Based on the idea that value which is inherent in the commodity is equal to the exchange value.

Thus exchange value is the phenomenological ( I think he used that expression early on) form, manifestation or for simplicity but perhaps a bit loosely the perceivable effect(s) of inherent labour time value.

I mean basically that is how science works.

You make empirical observations about relationships or equalities, or in particular two things being equal, in one way or another etc.

And say they are not in fact equal they are different manifestations of the same thing.

That goes back to ancient Greek logic, not that scientists really ever give a shit about that much.

Although it is easy for chemists; like coal is a different manifestation of diamonds.

I mean the alchemists started on that making the sense perception form of one thing change into another and back again.

And, not really believing in magic; understanding that the content must have stayed the same.

Maybe it is my imagination but these theoretical particle physicists seem to be throwing around the word ‘manifestation’ a lot recently

Karl used that kind of example in volume one with the two isomers of butyric acid or something.

Two totally different things, to the sense perceptions that is, but in fact just different rearrangement (and not much of one) of the same number of carbons hydrogen’s and oxygen’s.

Maybe it is an accident or maybe not but Karl did Democritus as part pHD thesis.

Democritus said that the complexity and the associated changes in the material world was just about changes in the arrangement of basic building blocks (elements).

No net change in ‘content’ but just forms like lego land and a mechano set.

As with Karl the labour time inherent in ‘sense perception’ or phenomena of spindles, its content, re manifests itself in cloth or whatever.

‘Sense perception’ was a big deal in the 19th century as was ‘phenomena’.

The stuff about commodities selling above and below their value because of the average rate of profit is the prices of production, and more famously the ‘transformation problem’.

The issue is that the total value of all commodities, say to be facetious, in a one stop Wallmart is equal to their total labour time value.

I actually really think that what Karl did was fine; the gas laws and the ideal gas equation never worked but except in ideal conditions but was the bedrock and launching pad of all modern science.

We plodded on constructively with the reductionist abstraction and used what we learned to explain the anomalies that we knew existed from the beginning.As Karl did.

This law clearly contradicts all experience based on appearance. Everyone knows that a cotton spinner, who, reckoning the percentage on the whole of his applied capital, employs much constant and little variable capital, does not, on account of this, pocket less profit or surplus value than a baker, who relatively sets in motion much variable and little constant capital. For the solution of this apparent contradiction, many intermediate terms are as yet wanted, as from the standpoint of elementary algebra many intermediate terms are wanted to understand that 0/0 may represent an actual magnitude.

https://www.marxists.org/archive/marx/works/1867-c1/ch11.htm

On what Karl said as opposed to experts like Rubin; which is a good point.

I think Karl started to drop the term exchange value in Volume III and started to use the term ‘market value’ instead.

Outside simply commodity production or in other words in capitalism I am not sure what the practical difference is between market value and exchange value.

You can take that or leave it

[One problem with Volume III is that it isn’t a pure chronological development of ideas; I thing Grundrisse is better despite its problems for that.]

However if you take we can have;

Capital Vol. III Part II
Conversion of Profit into Average Profit
Chapter 10. Equalisation of the General Rate of Profit Through Competition.
Market-Prices and Market-Values. Surplus-Profit

The assumption that the commodities of the various spheres of production are sold at their value merely implies, of course, that their value is the centre of gravity around which their prices fluctuate, and their continual rises and drops tend to equalise. There is also the market-value — of which later — to be distinguished from the individual value of particular commodities produced by different producers. The individual value of some of these commodities will be below their market-value (that is, less labour time is required for their production than expressed is the market value) while that of others will exceed the market-value. On the one hand, market-value is to be viewed as the average value of commodities produced in a single sphere, and, on the other, as the individual value of the commodities produced under average conditions of their respective sphere and forming the bulk of the products of that sphere. It is only in extraordinary combinations that commodities produced under the worst, or the most favourable, conditions regulate the market-value, which, in turn, forms the centre of fluctuation for market-prices. The latter, however, are the same for commodities of the same kind. If the ordinary demand is satisfied by the supply of commodities of average value, hence of a value midway between the two extremes, then the commodities whose individual value is below the market-value realise an extra surplus-value, or surplus-profit, while those, whose individual value exceeds the market-value, are unable to realise a portion of the surplus-value contained in them.

http://www.marxists.org/archive/marx/works/1894-c3/ch10.htm

That is just found from a two minute search and flick through of my highlighted volume III that I read 10 years ago.

Karl of course hacked into and analysed his own predicates like socially necessary labour time as well.

I mean if some chemists come up with an idea to produce a purple dye with a 1/000 of the labour time of producing a purple dye by another method but it requires massive amounts of as yet theoretical and un-invested capital.

What is the SNLT does it transform overnight as the result of an idea?

Why do people come up with weak ideas re hand made chairs versus factory made ones when there are better ones like Johan Vermeer paintings?

There was Dutch art dealer of Vermeer paintings operating successfully in the 1930’s onwards who was prosecuted after 1945 for selling Dutch works of art to the Nazis etc.

He pleaded innocence on the basis that they were forgeries; the use values crashed overnight.

RedMaterialist

17th October 2014, 03:39

If the market for 'a hand-made chair' is different to the market for 'a machine-made chair', then the socially-necessary labour time is different yes. But if you count 'a hand-made chair' at 100hrs and 'a machine-made chair' at an hour, as both being part of the supply of a generic category of 'chair' (if the buyers don't care in other words) then the socially-necessary labour-time is weighted in favour of whatever prouces the bulk of the chairs.

Revolutionising production (introducing machinery) brings down socially-necessary labour-time.

Well, obviously, if buyers don't care whether they get the hand-made chair or the machine-made chair then the artisan chair maker cannot possibly compete. In that case the socially necessary time for making the chair becomes the time for making the machine made chair.

But, assuming the chair is the average chair for sale on the market, then what happens to the exchange-value at the point of sale? The use-value goes to the buyer. What about the exchange-value?

Marx says the exchange-value is the expression of value, of socially necessary labor time. Once the chair leaves the market it no longer is a commodity, but the money paid for the price is still in the market.

I guess my question is how can socially necessary labor time in one instance be
an "intrinsic" part of the chair and an instant later be represented only in money? It sounds like exchange-value can get up and walk around, like a fetish. Of course, since exchange-value is a relation then this, I suppose, make sense.

Since commodity value is a social relationship there should be no reason why it can't move around or take different forms with different objects of labor.

This discussion has really helped me. Thanks

RedMaterialist

17th October 2014, 04:04

Why do people come up with weak ideas re hand made chairs versus factory made ones when there are better ones like Johan Vermeer paintings?

Well, other people have come up with ideas re coats and linen. By the way, when you say "Karl" I assume you mean Marx?

Is the Vermeer painting a commodity?

Blake's Baby

17th October 2014, 10:14

Well, obviously, if buyers don't care whether they get the hand-made chair or the machine-made chair then the artisan chair maker cannot possibly compete. In that case the socially necessary time for making the chair becomes the time for making the machine made chair...

No, it doesn't. I laid this all out really carefully several posts ago. It only becomes the socially-necessary labour-time if there are enough machines and workers to make all the necessary chairs. Marx talks about the average labourer and average machinery - these are abstractions from actual labourers and actual means of production, so I established some examples of 'actual' (hypothetical, but not abstract) conditions.

If the workers in the factories can produce all the chairs (it takes 1 worker-hour per chair) necessary, then socially-necessary labour-time = 1hr. If they can't make everything, then socially-necessary labour-time is more than 1hr, because in order to fulfil demand for chairs, craft-workers and hand-tools must be used, so Marx's 'average worker' becomes not a machine-minder but 90% machine minder ('below average skill') and 10% craftsperson ('above average skill') equalling 'average skill (of non-existent worker)' - which is why I think the 'worker of average skill' is an abstraction.

...
But, assuming the chair is the average chair for sale on the market, then what happens to the exchange-value at the point of sale? The use-value goes to the buyer. What about the exchange-value?

Marx says the exchange-value is the expression of value, of socially necessary labor time. Once the chair leaves the market it no longer is a commodity, but the money paid for the price is still in the market.

I guess my question is how can socially necessary labor time in one instance be
an "intrinsic" part of the chair and an instant later be represented only in money? It sounds like exchange-value can get up and walk around, like a fetish. Of course, since exchange-value is a relation then this, I suppose, make sense.

Since commodity value is a social relationship there should be no reason why it can't move around or take different forms with different objects of labor.

This discussion has really helped me. Thanks

I'm not sure what you're trying to get at here. The chair still has something we might think of as 'potential exchange value'. If the buyer wants to sell the chair, they can still realise the exchange-value in it. Its exchange-value is the average amount of labour to replicate it. You want a chair? You have to pay for the labour in the chair. You could buy some wood but you'd have to make the chair yourself (and it would take 100 hours, even though it only takes 1hr to make a machine-chair). If you sold it, the 100hrs of your labour would be exchanging against the 1hr of a machine-user's chair.

The exchange value doesn't 'go' anywhere. It is embodied in the commodity itself, like mass. Things don't lose mass if you put them on the floor. But you've changed (temporarily) their relationship to gravity and potential energy. The exchange value is a quality the commodity possesses. It has 'an amount' of it, which is the socially-necessary labour-time involved in its production (or, rather, replication).

RedMaterialist

17th October 2014, 18:11

The exchange value doesn't 'go' anywhere. It is embodied in the commodity itself, like mass. Things don't lose mass if you put them on the floor. But you've changed (temporarily) their relationship to gravity and potential energy. The exchange value is a quality the commodity possesses. It has 'an amount' of it, which is the socially-necessary labour-time involved in its production (or, rather, replication).

So far no chemist has ever discovered exchange value either in a pearl or a diamond...their value is realised only by exchange, that is, by means of a social process. . Marx

In other words, if you examined a commodity, you could never determine how much the exchange-value, value, or price of it was.

Yet the exchange value stays with the commodity even after the sale?

Blake's Baby

18th October 2014, 00:28

RedMaterialist

19th October 2014, 04:21

If you examined a chair outside of the market, how would you know what its exchange value was?

Exchange value is a relationship between things. Things don't 'exchange' in isolation, they exchange for or with something.

But exchange value is an inherent, intrinsic, unsubstantial reality in a commodity. And, if exchange-value is a [social] relationship between things, then what happens to the exchange-value when the commodity is sold, exchanges hands?

How is a social relationship transferred to a buyer, as happens with
use-value?

Take, for example, what happens when you buy a new car. As soon as you drive it off the dealer's lot it loses half its value. Has the original exchange-value been converted into money? Since money is a commodity, the dealer received the use-value and the exchange-value of the money?

For one thing, it is impossible to measure use-value in money. Nobody goes around thinking, "I have $20k use-value in this car, and I am using it up at $100 per day. On the other hand, people do say, "This car says that I have a higher social value than you do." Maybe that is how a social relationship is exchanged, it becomes a fetish, as Marx might have meant.

The social relationship between people is transferred onto a commodity. If that is the case, then exchange-value, the social relationship, is transferred to the buyer.

Blake's Baby

19th October 2014, 13:38

What happens to the mass of an object when I give it to you? How can the mass that I'm supprting suddenly be a mass you're supporting? It's almost like magic.

Because the mass is the gravitational attraction between the object and the earth (ie, a relationship).

The exchange value of the object is the relationship of a commodity to other commodities. It may be inherent in the object (like mass) but it is only detectable as a relationship (which is why I mention gravity).

MORE...

A car loses half its value not because there's anything intrinsically wrong with it (and really it hasn't lost exchange value) but 'a new car' is something that is rather difficult to obtain. It competes in the market against other new cars. A 'second-hand car' is competing against other second-hand cars. It's quite easy to get a second-hand car, there are loads of them, because most cars are second-hand. That's just a supply-demand thing.

RedMaterialist

22nd October 2014, 06:23

What happens to the mass of an object when I give it to you? How can the mass that I'm supprting suddenly be a mass you're supporting? It's almost like magic.

Because the mass is the gravitational attraction between the object and the earth (ie, a relationship).

I think weight is the gravitational attraction between the object and the earth. An object has the same mass where ever it is in the universe, although the mass of an object can change depending on its speed.

The exchange value of the object is the relationship of a commodity to other commodities. It may be inherent in the object (like mass) but it is only detectable as a relationship (which is why I mention gravity).

And exchange value is measured in time, or socially necessary labor time. A commodity's exchange value has a certain mass (in hours, days) and also a price which would be the measure of its exchange value. Marx says price is the monetary expression of value...price is the expression (in kg, $) of the relationship (gravity, exchange value?)

So, weight is to mass ... as price is to exchange-value, value. I wonder if Marxists have placed too little emphasis on price and monetary theory?

Blake's Baby

27th October 2014, 10:06

Why?

Price is somewhat ephemeral. It depends on all sorts of things. Supply. Demand. Fashion.

Marx carefully explains in his discussion of where profits come from that he is positing a situation in which neither supplier nor buyer is capable of unduly influencing the market (the bit that 'ancaps' and others with the 'mud pie argument' never bother to read) and getting to the nub. Yes there are 'profits' to be made from buying short and selling long but that isn't what Marx is talking about; he specifically rules out those sort of market manipulations and posits a capitalism that actually does what it claims to do (ie, be a mechanism for rationally fulfilling resource demands).

And... yeah, mass, weight - I'm not a physicist. Weight (the relationship of mass and gravity) is what I'm trying to get at. In this case the socially-necessary labour-time corresponds to the mass of an object. The weight (relationship to external universe expressed as gravitational field) is the socially-necessary labour-time in relation to other commodities. Exchange value is the relationship of the labour-time of one commodity compared to the labour-time of others. You can't look at a single commodity in isolation and say 'what is this worth, where is its socially-necessary-labour-time?' because it is only worth something in relation to other commodities.