P8475423 at vmsuser.acsu.unsw.EDU.AU P8475423 at vmsuser.acsu.unsw.EDU.AU
Wed Aug 2 17:13:21 MDT 1995

Rakesh comments that he found
|most interesting Steve's history of the development of the Marxian
|dialectic as a critique of Proudhon's attempt to forge a dialectical
|understanding of political economy. About this I would like to hear


Well Rakesh, you're about to hear much more! This is a long post.

The material is largely in the thesis, and I'd appreciate knowing
what difficulties you have had accessing it from the Web site; I
have also recently removed most of the formatting commands from it
to produce a "pure text" document, and I'm not sure whether this
is the version on the archives. Anyway, to Proudhon.

Marx, as you might be aware, was originally quite enamoured of
Proudhon. My history may be a bit skewiff here (I couldn't locate
a couple of key references this morning), but from memory one of
the objects of Marx's time in Paris was to meet with Proudhon and
teach him dialectics. Marx at one time said that a true
revolutionary consciousness would combine German philosophy,
English political economy and French politics, and Proudhon--up
to a point--was to Marx a representative of the last.

The publication of Proudhon's _The philosophy of poverty_
made Marx realise that the attempt to teach Proudhon dialectics
had failed, because what Proudhon coughed up in that book was
not dialectics as Marx understood it, but a combination of
Hegel's idealism and Fichte's methodology. Nonetheless, what
Proudhon did do--which Marx himself did not do for another
20 years--was juxtapose use-value and exchange-value.

Citing Proudhon (from Marx's quotes; I was unable to find a
copy of Proudhon's book in Sydney), what he argued was that:

"`The economists have very well explained the double character of
value; but what they have not set out with equal clearness if its
*contradictory nature*;... It is a small matter to have
signalised in utility-value and exchange value this astonishing
contrast, in which the economists are accustomed to seeing
nothing but the most simple matter; it is necessary to show how
this pretended simplicity hides a profound mystery which it is
our duty to penetrate... In technical terms use-value and
exchange value are in inverse ratio the one to the
other.'" (Marx 1846, p. 37.)

The gist of Proudhon's argument, according to Marx, is that
things of no utility have the highest value, while those with the
highest utility have no value; in other words, he ignores the
issue of demand. He quotes Proudhon as saying that "`the things
which are most necessary as articles of use, and whose quantity
is infinite can be had for nothing, and those of which the
utility is nil and which are extremely scarce will have an
inestimable price. To increase the difficulty, actual practice
does not admit these extremes; on the one side, no human product
ever attains the infinite in magnitude; on the other the most
scarce things have need of some degree of utility in order to be
possessed of any value. Use-value and exchange value are thus
fatally chained to each other, although by their nature they
continually tend to exclude each other.'"(pp. 39-40.)

Marx comments "What is it which adds to the difficulty of M.
Proudhon? It is simply that he has forgotten the *demand*,
and that a thing can only be scarce or abundant according as it
is in demand. Demand once set aside he assimilates exchange value
to *scarcity* and use-value to *abundance*." (p.40.)

Thus Proudhon equates exchange value with scarcity; Marx
next accuses him of identifying use-value with supply and
exchange value with demand. "`Supply and demand,' he says, `are
nothing but two *ceremonial forms* serving to set before each
other use-value and exchange value, and to effect their
reconciliation.'". (pp. 45-46.) The reconciliation is
affected by the cost of production, which he regards as "the
synthesis between use-value and exchange value".(p.

Marx sums up this attempt at dialectics as being
"substituting for use-value and exchange value, for supply and
demand, some abstract and contradictory notion, such as scarcity
and abundance, utility and choice, *a* producer and *a*
consumer... And to what, as the result of all this, does he
come? To arrange the means of introducing later one of the
elements which he has excluded, the *cost of production*, as
the synthesis between use-value and exchange value. It is thus
that in his eyes the cost of production constitutes *synthetic
value*, or constituted value.". (p. 46.)

Proudhon thus sees "constituted value" as the "dialectical"
reconciliation of use-value with exchange value. Marx predictably
derides this as simply dressing up in complicated terms the
propositions of Smith and Ricardo that labour value determines
exchange value. "We will leave the reader to compare the
precise, clear, and simple language of Ricardo with the
rhetorical efforts made by M. Proudhon in order to arrive at the
determination of relative value by labour-time. Ricardo shows us
the real movement of bourgeois production which constitutes value
value. M. Proudhon makes abstraction of this movement,
`struggles' to invent new processes in order to regulate the
world according to a professedly new formula which is only the
theoretical expression of the real existing movement so well
propounded by Ricardo. Ricardo takes for his point of departure
existing society to demonstrate to us how it constitutes value.
M. Proudhon takes for his point of departure constituted value,
in order to constitute a new social order by means of this
value.... The determination of value by labour-time is for
Ricardo the law of exchange value; for M. Proudhon it is the
synthesis of use-value and exchange value." (pp. 52-53.)

Wilde's commentary on Marx's dialectics and its relation to
Hegel's is useful here. Wilde argues that one flaw in Hegel,
as Marx saw it, was putting into dialectical opposition things
which were either essentially opposed, or illusorily opposed, whereas
Marx described *three* kinds of opposition: essential, existential
and illusory. He argued that Hegel "had not perceived essential
oppositions, i.e. entities with distinct essences which opposed
each other and could not be mediated precisely because their
essences were different" (Wilde, p. 21.) Existential
oppositions "involved a `difference of existence' within the
same essence. As examples Marx cited north and south as opposite
aspects of the polar essence, and men and women as opposite
genders of the human essence. In these cases mediations were
necessary". (p. 21.)

The illusory type is "when a concept is taken in abstraction
and then opposed by an equally abstract concept" (p. 22.), and
this type "annoyed Marx when he saw it recurring in
Hegel's work". (p. 22.) Obviously, it also annoyed him--even
more so, perhaps--when he saw it as above in Proudhon.

As Proudhon had employed the terms, there was nothing
existential in the opposition he concocted between use-value
and exchange-value: they were two abstract terms, one of which
Proudhon labelled "thesis", the other "antithesis", and then
later pulled a third concept out of the air, labor-value,
to call this the "synthesis", in the manner of Fichte,
thus seeing a successful mediation occurring in existing
society, in the idealist manner of Hegel.

For the 20 years between the writing of The Poverty of
Philosophy and the Grundrisse, Marx continued to base his
political economy, as he did in his critique of Proudhon,
on a refinement of Ricardo's methodology. But while
writing the Grundrisse, he "by chance" re-read Hegel's
_Logic_, and, reminded of his roots, starts to bring the
dialectical method more to the fore--with, I surmise,
Proudhon's conjectures somewhere in the back of his head.

His initial application continues to be rooted in Ricardo's
method, which focuses upon exchange-value to the exclusion
of use-value. Thus Marx makes exchange-value his unity,
and looks for its foreground and background aspects:

"The transition from simple exchange-value and its circulation to
capital can also be expressed in this way: Within circulation,
exchange-value appears double: once as commodity, again as money.
If it is in one aspect, it is not in the other. But the wholeness
of circulation, regarded in itself, lies in the fact that the
same exchange-value, exchange-value as subject, posits itself
once as commodity, another time as money, and that it is just
this movement of positing itself in this dual character and of
preserving itself in each of them as its opposite, in the
commodity as money and in money as commodity." (p. 266)

But clearly he thinks this is clumsy, so he tries to move on from
this formulation by considering a key example:

"Let us analyse first the simple aspects contained in the
relation of capital and labor, in order by this means to arrive
at the inner connection not only of these aspects, but also of
their further development from the earlier ones." (p. 266)

He begins by positing capital and labor as opposites: "The first
presupposition is that capital stands on one side and labor on
the other, both as independent forms relative to each other..."
(p. 266)

But as he develops the argument, he stumbles across an old
concept--use-value--and its companion, exchange-value:

"In the first positing of simple exchange-value, labor was
structured in such a way that the product was not a direct
use-value for the laborer, not a direct means of subsistence.
This was the general condition for the creation of an
exchange-value and of exchange in general." (p. 266)

Now the concepts of exchange-value and use-value start to
dominate Marx's argument. He has moved on from perceiving
exchange-value as the unity, and money and the commodity as its
foreground and background aspects, to seeing exchange-value and
use-value as the foreground and background aspects--but of what?
What is the essential unity uniting exchange-value and use-value?

Suddenly it occurs to Marx, and there follows the longest footnote
in the Grundrisse (in the midst of which, he refers to Proudhon's
botched dialectics):

"Is not value to be conceived as the unity of use-value and exchange

value? In and for itself, is value as such the general form, in
opposition to use-value and exchange value as particular forms of
it? **Does this have significance in economics?* ... The word
*ware* [commodity] (German *Guter* [goods] perhaps as *denree*
[good] as distinct from *marchandise* [commodity]?) contains the
connection... **This is not in the slightest contradicted by the
fact that exchange value is the predominant aspect... this is to
be examined with exactitude in the examination of value, and
not, as Ricardo does, to be entirely abstracted from, nor like
the dull Say, who puffs himself up with the mere presupposition
of the word `utility'. Above all it will and must become clear
in the development of the individual sections to what extent
use-value exists not only as presupposed matter, outside
economics and its forms, but to what extent it enters into
it.* Proudhon's nonsense, see the Misere'...(Grundrisse,
footnote pp. 267-68. Boldface emphases added.)

This dialectical insight--that the essential unity is the
commodity, and that its foreground and background aspects
under capitalism are respectively exchange-value and
use-value--meant that something which Marx had either
ignored (in the classical manner) or derided (in abusing
the "neoclassical" concept of utility) had to be properly
analysed. From this point on, the concept of use-value
becomes almost infinitely more important to Marx (and this
is one reason that I want to do a "word frequency"
analysis--to show just how much more Marx employed the
term after this moment than before). As I argued in my
thesis and papers, Marx went on to make the unity of
the commodity, and its dialectic between exchange-value
and use-value, the fulcrum of his economic analysis.

So I believe that Proudhon deserves some credit for planting the
seed which later germinated in the Grundrisse: there was an
essential unity whose foreground and background aspects were
exchange-value and use-value respectively; it just took Marx a
while to escape from the English political economy exclusive
focus upon exchange-value, to properly marry it with his
heritage of dialectics.

Steve Keen

Marx, 1846, *The Poverty of Philosophy*, Charles Kerr, Chicago
(No date given.).

1857, *Grundrisse*, Penguin, Middlesex, 1973.

Wilde, L., *Marx and Contradiction*, Avebury, Aldershot, 1989.

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