#commodity exchange

“Where I am now” in terms of trying to explain Rosdolsky’s interpretation of Marx on “the transition [from value and money] to capital” (chapter 11 in “Making Capital”) — if that is at all possible and the attempt further suggesting that I’m wrong or at least too simplistic — is that, in order to develop capital from money, “selling in order to buy” (C-M-C), must pass over to “buying in order to sell” (M-C-M). “Only under these conditions i.e. if the circuit C-M-C turns into the circuit M-C-M, can money become self-preserving and self-augmenting value, become capital” (p. 188).

In the simple commodity circuit “C-M-C”, a commodity owner begins by exchanging a commodity for its equal in money. Next, our commodity owner exchanges this money for an equivalent value in new commodities. Thinking qualitatively, i.e. in terms of use value, the owner exchanges a commodity which is not a use value for him for another commodity which is useful for him, via the universal equivalent — money. Considered quantitatively, there is no increase or expansion of value and the exchanges values of each commodity are equal.. which is also equivalent to the value of the money involved. We notice commodities are exchanged for their equivalent in money form. And money is exchanged for its equivalent commodity form of value. This means that simple commodity exchange is a process of exchanging equivalent exchange values with a view on consumption, not increasing exchange value.

“One commodity is ultimately exchanged for another commodity… and the circulation itself only served, on the one hand to allow use values to change hands according to need, and on the other to allow them to change hands to the extent to which labor time is contained in them… and to the extent to which they are factors of equal weight in general social labor time”. (p. 185). But “Value does not emerge from value; rather, value is thrown into circulation in the form of a commodity… The same magnitude of value which previously existed in the form of the commodity, now exists in the form of money” (pp. 186-187).

Already, we see how simple commodity exchange — selling in order to buy — is determined by the use value of a commodity. At this stage of economic development, exchange value has not yet thrown use value into the dustbin. However, dominance of exchange value.. “where exchange value as such becomes further developed” (p. 186).. “the form wherein exchange value is the point of departure” (p. 184)… is the basis of the capitalist mode of production. “Capital must be understood as self-augmenting value… And for this purpose it is necessary to proceed… from ‘exchange value’” (p. 185). But capital is not simply “self-reproducing exchange value” (p. 184). That is, cannot be accumulated unless commodities are exchanged for an increase in money.

In the capital exchange circuit, “M-C-M”, value only becomes capital and the owner of money a capitalist because the commodities are produced with a view towards exchanging them for a greater exchange value than the original exchange value of “M”. In this circuit, in its complete form, the function of labor power is not only useful but becomes essential. And thus we arrive at the core of capitalist society — commodity exchange of labor power for wages.

Getting ready for Easter dinner.. and hopefully more intense reading tonight. If you haven’t already, be sure to put Rosdolsky’s “Making Capital” on your list. Still struggling through “the actuality of the law of value” toward the middle of Vol. I. Some amazing gems from Marx there… as always:

“What Marx says here on the category of labor also applies of course to the category of value as determined by labor. This category also had an “antediluvian existence”, it too existed historically long before capitalist production, and by no means “penetrated all economic relations”. To this extent, “it is quite appropriate to regard the values of commodities as not only theoretically, but also historically prior to the prices of production”. However, the category of value only appears in its developed form in capitalist society, since only in this society does commodity production become the general form of production”.

- Roman Rosdolsky, “The Making of Marx’s Capital”, Vol. I, trans. Pete Burgess, London: Pluto Press, 1980, pp. 172-173.

An addition to the debate on simple and capitalist commodity production — and a couple points to consider Marx’s theories on “value” and “surplus value”:

The argument forged by Marx suggests that relations of simple production of commodities (ie values/ exchange values) and the law of commodity exchange (ie the law of value) do not in themselves produce surplus value. Capitalism, as opposed to simple (ie, pre capitalist) commodity production, can only begin with production of surplus value. Conditions of production — and expansion — of surplus value defines capitalism. This constitutes its identifying feature.

As understood by Marx, accumulation of surplus value is a necessary function of capital; “necessary” in as much as representing its source of profit; and requires that workers produce more than the value equivalent of the daily average of commodities required for their subsistence — thus exploitation. Nevertheless, the initial laws of simple commodity exchange and relations associated with value obtain within capitalism — albeit, in a modified form — which Marx called the “average rate of profit” — such that production of commodities and exchange of equivalent values results in a greater sum of values — surplus value — profit — bestowed upon capital. Thus, as Marx indicates, equality of value form/ commodity owners coincides with exploiting workers and wage labor under capitalism.

As explained above, profits on capital in accordance with the law of value is one of the most glaring contradictions of capitalism. And the solution to the paradox lies in the unique capacity of labor power to produce more exchange value than its own. But still leaves us with, as we witness, the blind mechanisms of commodity production — which continue to interfere with satisfying human need.

Discussing value in terms of Engels; exchange of non/ pre capitalist commodities precedes emergence of capitalism. Although this is a historical development, we may also conceptually disentangle simple and capitalist commodity production. Insofar as “value” in itself is part and parcel of the process that comprises production of capital, capitalism does require simple exchange at an “abstract” level.

However, if we accept evidence cited by Engels, Marx’s account of simple and capitalist commodity production unavoidably involves a “historical” transition (ie, the undeveloped or simple form of value leads to value in full force as capital). In other words, production and exchange of equal value becomes an attempt to produce and realize surplus value. Thus Marx states that, in the form of capital, value acquires capacity to self increase — through struggle to wrest surplus value from direct producers deprived from means of production.

From the outset of Marx’s discussion, the distinguishing feature of capital is that it is a developed form of value aiming to expand its own value in excess of the costs of production. In terms of the “transformation debate”, cost prices (price without surplus value) are replaced by prices of production (cost + surplus value (profit) ). Development of this surplus value aspect stands in clear contrast to the “part of value” in simple commodity production oriented to “metamorphosis” of use values and replacement of labor time. As it turns out, surplus value becomes the only permissible reason for creation of value and exchange of commodities in capitalism. In this sense, the law of value is not renounced but rather “inverted” by capital. Marx’s conclusion is thus to dissolve the simple form of exchange — ie buying and selling commodities/ compensating based on labor time — in addition to the developed form of value/ capital.