value: Silver is not Ahab

Steve.Keen at unsw.EDU.AU Steve.Keen at unsw.EDU.AU
Wed Nov 1 15:23:28 MST 1995

Juan, ages ago when you were responding to my email postings with your
Hegelian phraseology, I asked you to read my published works or my
thesis, and you refused. I now find that, since then, you have read
my thesis, and for that seriousness of intent to refute me, I thank
you. [By the way, I continued to presume you hadn't read my documents
because you firstly said you wouldn't, and subsequently (until now)
never said that you had.]

I might also add that this last post of yours was the first that
I have not found a linguistic torture to read; in fact, it was
quite readable. If this is to be a permanent change in the way you
communicate on this list, I welcome that too.

I now find that your critique of my most recent email revolves around
the words I have excluded from Marx's Grundrisse in the cite concerning
what constitutes the "opposite" of capital. It appears that you believe
excluding what you initially describe as a "slight difference" for
the sake of brevity has completely obscured the meaning of the quote.
Below I excerpt the passage, in much the same way as I presented
it in my thesis; beneath that is the segment I omitted, which you claim
completely changes the meaning of the cite:

|"... The only use-value, i.e. usefulness, which can stand opposite capital
|as such is that which increases, multiplies and hence preserves it as
|        the opposite of capital cannot itself be a particular commodity,
|for as such it would form no opposition to capital, since the substance of
|capital is itself use-value; it is not this commodity or that commodity,
|but every commodity. The communal substance of all commodities, i.e.,
|*their substance not as material stuff*, as physical character, but their
|communal substance as _commodities_ and hence _exchange values_, is this,
|that they are _objectified labor_. The only thing that is opposed to
|_objectified labor_ is _non-ovjectified_ labor, ..., _labor_ as
|_subjectivity_. ... The only use value, therefore, which can form the
|opposite term to capital is _labor (to be exact, value-creating labor, that
|is, productive labor_." (Grundrisse, Dietz Verlag, pp. 182-183) (*emphasis
|added* [by Juan])

And the bit omitted:

| In the second place. Capital is money, by definition, but money
|that does not any longer exists under its simple form of gold and silver,
|nor even as money in opposition to circulation, but under the form of all
|substances: commodities. Therefore, thus far, capital does not contradict
|use-value, but, beyond money, it only exists in use-values. These
|substances that belong to it are now, therefore, perishable, they would not
|even have exchange value at all if they have no use-value; *as use-values*
|they lose their value, they dissolve themselves through merely natural
|physicochemical processes if they are not really used, or they completely
|disappear if they are really used. *From this point of view (Nach dieser

You then claim that the part omitted shows that Marx was talking about
"the material production process of capital", which you then claim means
that this process of "material opposition" precedes the appearance of
labor power "as a specific commodity which, as its use-value is to
produce exchange-value, is in itself the realization of that, up to
then, not yet developed 'use-value determined by exchange value itself'".

Well Juan, you apparently think that the "from this point of view"
component means that the section where Marx says the opposite of
capital must be "all commodities" is a passingly trivial section,
entirely separate from the really important bit where we identify
labor-power as the opposite of capital. We draw an important distinction
which, thank god, saves the labor theory of value.

I know that I am not going to change your mind on this, but I simply
don't see the distinction. I see that section as a fairly natural
whole, and not a clear-cut case of Marx saying "in this guise, this
is unimportant, while in this other guise, this is vital". While
clumsy, this is I think a very apt way to characterise the following
misquote of Marx, with which I'm sure we're both familiar:

"Use-value is an expression of a certain relation between the consumer and
the object consumed. Political economy, on the other hand, is a social
science of the relations between people. It follows that `use-value as such
lies outside the sphere of investigation of political economy'"

That of course was Sweezy on the role of use-value in Marx, citing The
Contribution, where the relevant passage was in fact:

"To be a use-value is evidently a necessary pre-requisite of the commodity,
but it is immaterial to the use-value whether it is a commodity. Use-value as
such, since it is independent of the determinate economic form, lies outside
the sphere of investigation of political economy. *It belongs in this sphere
only when it is itself a determinate form*".(*Contribution*, p. 28. Emphasis

That blatantly obvious misquote was one of the two I was referring to when
I said that the practice of omitting segments from Marx when quoting him
was common, and had not always been carried out in good faith beforehand.
As Rosdolsky first pointed out, that misquote (where Sweezy simply followed
Hilferding's practice beforehand) was a blatant one, which substantially
and obviously changed the meaning of the passage.

You obviously believe that my omission amounts to as substantial and
as obvious a misquote. Fine, but I simply can't see it.

It also is of interest to me that, after having apparently dismissed
the logical approach that I use--after all, if the fact that capital
is opposite to all use-values is of no relevance, then one might think
you to believe that the opposition I use between use-value and
exchange-value is of no relevance--you then state that:

|So only after this stage in
|the development of commodities as the unit of use-value and value is
|reached, does labor-power appear determined as a specific commodity (which,
|as its use-value is to produce exchange value, is in itself the realization
|of that, up to then, not yet developed "use-value determined by exchange
|value itself"). From the point of view of the material production process,
|capital is opposed to every commodity. From the point of view of the
|valorization process (that is, capital as such) capital is opposed to the
|very specific commodity whose use-value is socially determined as the
|capacity to produce the corresponding general social relationship, i.e.,
|value: labor power.

And there's the phrase: "its use-value is to produce exchange value".
Well, I ask, on what grounds do we know that it is the only commodity
with that use-value? If we work within the concepts of the opposition
of use-value and exchange-value itself, I find the grounds fallacious;
every defence of the proposition that it is the only such commodity
has relied on the unique characteristics of the commodity labor-power,
in other words, on an "argument of exclusion", as Bohm-Bawerk
characterised it.

Juan, John Ernst's ripost to you is really the gist of why I undertook
my research in the first place. If all was well with the assertion
that labor is the only source of value--if it led to a form of
analysis which was free of internal contradictions--then there would
be no problem with it. Those of you who work in philosophy, cultural
studies, or activism, may feel that there are no problems. Unfortunately,
those of us who work in economics have found otherwise. As soon as
we try to analyse a multi-commodity economy--the only kind that exists,
of course--we find what appear to be contradictions, in what is
known as the transformation problem.

There have, of course, been many "solutions" to this problem, but
none has gained any real currency over the others. Instead, it
seems that what defines someone as a "marxian" economists these
days is that they have a "solution" to the transformation problem,
which is slightly different from all other "solutions".

Likewise, the sole major economic prediction of the labor theory
of value is the tendency for the rate of profit to fall. It is now
almost one and a half centuries since Marx first identified the
"tendency". Are we going to have to wait as long for its manifestation
as christians have for the Second Coming? John Ernst's 1982 RRPE paper
sets out very nicely the conditions under which the tendency (assuming
the validity of the LTV) can be kept in check; are we to believe that
these rather delicate conditions have been met for two centuries now--
or is it just possible that there's an erroneous assumption in the
logic behind the TRPF?

The washup is that, whereas once Marxists and marxian economics
dominated the critical analysis of capitalism, now marxian economics
is largely irrelevant compared to the other non-mainstream branches
of heterodox economics, Post Keynesian and Sraffian economics. Both
these schools, by and large, ignore Marx, since they, like Jim
Miller, believe that invalidating the labor theory of value "rips
the heart" out of Marx's economics, and since they believe the
LTV is invalid, they believe they have nothing to learn from

I find myself in the middle in this dispute--and therefore
attacked by both sides (though Post Keynesians are quite prepared
to respect my work when I don't explicitly acknowledge its foundation
in Marx). I believe that the LTV is invalid, but I also don't believe
that it was "the heart" of Marx. What I see as the heart leads, in
fact, to an analysis very much like that which Post Keynesians have
developed in isolation from labor theory of value Marxism (with
Kalecki being a major conduit of Marx's analysis devoid of its
labor theory of value component).

Now I have no doubt that you're going to continue believing in
the labor theory of value, and to continue believing that I've
distorted Marx in my attempt to invalidate it. Fine; I have no
problems with agreeing to disagree. But, given that you support
the labor theory of value, I, like John Ernst, would like to
know how you solve the transformation problem, and how you
explain the failure, to date, of the tendency for the rate of
profit to manifest itself. Your analysis of credit might also
be of interest...

In other words, Juan, you appear to believe that establishing
that labor is the only source of value is the end of the matter.
But, from an economic point of view, that is just the beginning.
Turning that perspective into a cogent and compelling analysis of
modern capitalism is a task which, to date, no marxian economist
has managed, since and including Marx.

Steve Keen

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