Exchange Value

[VeritablyV]

My teacher described Exchanged Value but I can't help but think this is a poor description in itself. Essentially, "what was needed for the existence of this item and its cost(labor, material) and it determines the price of said item"(My account via notes of how he described it).

However from what I've been reading it has to do with it's relation to other commodities on the market. "[FONT=Verdana]Exchange-value refers to the ratio at which one commodity can be exchanged with another. In certain quantities all commodities can be exchanged for other other commodities. Even the most worthless commodity, when taken in big enough quantities, can be exchanged for the most valuable of commodities. Thus, a large quantity of corn or apples can be exchanged for a diamond."

[/FONT][FONT=Verdana]Is the first a narrow view? Or are both these descriptions saying it in different ways? If the latter, then it seems rather circular to say exchange value determines the price of commodities but is itself determined by its relationship to other commodities? In this case, how would the first price be determined? Via use value?

Sorry if this is silly.
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[mikelepore]

[FONT=Verdana]rather circular to say exchange value determines the price of commodities but is itself determined by its relationship to other commodities[/FONT]

The competitive marketplace determines the prices of commodities, but, after it does that, the numbers that it usually settles on are in proportion to how much human labor time must go into producing each commodity.

If you check a few examples, restricting your check to continuously-produced generic commodities, you will find this to be true.

More human labor time must be invested to make an airplane than the amount that must be invested to make a pencil, and, therefore, the evaluation that is used for all exchange purposes is greater for the airplane than for the pencil. If it were the other way around -- a million dollar pencil and a five cent airplane, the related industries and markets wouldn't be able to exist.

[VeritablyV]

To note, exchange value in Marx's own theory, whether or not thats incorrect(now or when he wrote it).

The competitive marketplace determines the prices of commodities,

You mean it's determined based on how the same good is priced on the market? Ex: Walmart is selling tables for 10 each, and a smaller store is selling tables for, say, 15 dollars so then the smaller store must compete with Walmarts prices or cease selling that commodity?

[VeritablyV]

I understand, now. Sorry for any confusion.

[mikelepore]

Consider what would happen if the prices of several commodities were significantly out of proportion to the labor time materialized in each of them.

Suppose that article A took 1 hour to produce, having few production steps, and it sold for $100, and article B took 6 hours to produce, having more production steps, and it also sold for $100.

In that case, most investors of capital would abandon the production of B, and would start making more of A. Then the abundance of A on the market would cause a lowering of its price, and the undersupply of B would cause a rise in its price. The prices would find a new balance when they are in proportion to the difficulty involved in producing each of them.

Marx said:

"We see how capital continually emigrates out of the province of one industry and immigrates into that of another. The high price produces an excessive immigration, and the low price an excessive emigration .... the fluctuation of supply and demand always bring the price of a commodity back to its cost of production."

--- Marx, _Wage-Labor and Capital_

Engels said:

"The value of commodities is determined by the labour required for their production. But now it turns out that in this imperfect world commodities are sold sometimes above, sometimes below their value, and indeed not only as a result of ups and downs in competition. The rate of profit tends just as much to balance out at the same level for all capitalists as the price of commodities does to become reduced to the labour value by agency of supply and demand."

--- Engels, preface to the first German edition of Marx, _The Poverty of Philosophy_