Episode 25: Dialogue with Patrick Murray on the Value-Form Paradigm, Part 1
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Brendan and Andrew welcome Patrick Murray, the noted value-form theorist, onto the podcast. (The value-form paradigm is a Marx-inspired strand of political economy that focuses on the market.) Patrick responds to the recent, two-episode RFH discussion––“The Value-Form Paradigm vs. Marx’s ‘Capital’”––and enters into extended dialogue with the co-hosts. Much of the discussion focuses on whether, in Marx’s theory, a commodity’s value is only potential before it is sold; whether “co-constitutive” value-form theory collapses into a more extreme version in which actual values are ultimately determined only in exchange; and whether Marx held that the magnitude of a commodity’s value is determined exclusively by the amount of labor that is socially necessary to produce it. (Part 2 of this discussion will be released in the near future.) Throughout the discussion, frequent reference is made to: a published symposium on the value-form paradigm, in which Andrew and others criticized the paradigm, while Patrick responded to them; Part 1 and Part 2 of the recent RFH discussion, in which Andrew replied to Patrick; and Marx’s Capital, especially chapter 1 and chapter 3 of volume 1. Plus: current-events segment on the Republican and Democratic national conventions—or, perhaps, infomercials. Radio Free Humanity is a podcast covering news, politics and philosophy from a Marxist-Humanist perspective. It is co-hosted by Brendan Cooney and Andrew Kliman. We intend to release new episodes every two weeks. Radio Free Humanity is sponsored by MHI, but the views expressed by the co-hosts and guests of Radio Free Humanity are their own. They do not necessarily reflect the views and positions of MHI. We welcome and encourage listeners’ comments, posted on this episode’s page. Please visit MHI’s online print publication, With Sober Senses, for further news, commentary, and analysis. |
Is Murray just saying that one cannot or doesn’t know if a commodity has Value UNLESS AND UNTIL it is sold in the market; therefore, prices and Values are codetermined and there is no explanatory or ontological priority to either individually? That sounds like neoclassical simultaneity with a twist, not Marxism.
Marx says that only socially useful work creates value.
What is socially useful is not determined by words like “That is really very useful!”, but only confirmed by purchasing the product.
Without sale resp. purchase, the product of labor (which, according to Marx, only becomes a commodity when it becomes the use value of others through exchange) remains the private property of the entrepreneur and is therefore at most only useful privately.
“Is Murray just saying that one cannot or doesn’t know if a commodity has Value UNLESS AND UNTIL it is sold in the market; therefore, prices and Values are codetermined.”
That certainly seems to be one argument of his. The argument is illogical (the “therefore” doesn’t hold), since, as I said on the podcast, it confuses and conflates “what is” with “what is known.” Might as well say that we didn’t know, before Pasteur’s experiments, that germs cause disease, so they have caused disease only since then.
As far as I can tell, Murray’s view is that things actually acquire value (become values) only by being sold, and only for that moment. Before and after that moment, they only potentially have value (are only potentially values). But it was hard to get clarification of this during the discussion, perhaps because this formulation makes clear that it’s the same view that Samuel Bailey had: “Value is a relation between contemporary commodities, because such only admit of being exchanged for each other.” https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch20.htm
As you suggest, Marx’s view was the very opposite. He defined capital as follows:
I’ve read Murray’s Mismeasure of Wealth, and it’s an excellent book. Everyone that takes Marx seriously should own a copy with marginalia notes, highlights, etc.
However, my memory – which is hardly impeccable – was not very keen on one essay, and that was his defense of value form theory, Chapter 15, titled ‘avoided bad abstractions’. I seem to remember that in his essay he gave a series of defenses as to why Kliman’s characterization of value form theory were a strawman, or at least, not wholly accurate, but I don’t remember any *positive* arguments put forward as to why we should *accept* or *prefer* value form theory (Kliman’s reading that value and surplus value arise from production strikes me as the correct reading of Marx). Hence, the essay spends a lot of time explaining what critics get wrong about the theory, but as far as I remember, spent little to no time arguing why critics should *accept* the theory.
But again, my memory is hardly impeccable.
I think chap. 15 of Murray’s book is a republication of his essay, also entitled “Avoiding Bad Abstractions,” in the value-form symposium we discuss. The link to “Patrick” in this ep’s description, above, takes you to the symposium essay.
Yes, it’s that exact essay.
Again, I highly recommend the book overall, it’s *excellent*, but that essay did stand out as the most vexing in the lot.
At 33:22 Murray makes, to my mind, a mistake in his argument, if he’s claiming that value form theory *is* Marx’s theory, which I think he is claiming. He states that a commodity can be produced according to SNLT, but if it doesn’t have a use value it won’t sell. But that has the order in reverse. In order for there to be SNLT – the SOCIAL part – i.e., that deals with use values, is already obtaining. So the commodity must first be recognized as a use value before it can be produced in conformity with SNLT.
Now Murray could respond with his *epistemological* charge, that what if by the new by SNLT new coke comes to market, Diabetes-CORONA hits and no one wants it? Fine, but that wouldn’t change the fact that *initially* value was engendered in production, but subsequently failed to be realized in sale, and that value in general was unrealized. Still, the value was first engendered in production.
In re the 1st para. (by CB, on Sept. 11) I agree. It’s a point I stressed a few times during the segment. I think the most straightforward way to put it is this: If there’s no demand for a thing, it’s not a use-value; hence it’s not a commodity and isn’t a value / doesn’t have value (as distinct from having a value of 0). And hence, Marx’s theory of what determines commodities’ values just doesn’t apply to it.
On the second point–maybe, but very unlikely. More likely, the thing never had value / never was a value, because there wasn’t demand for it, etc. Or it did have value initially, because there was demand for it, etc. But later, there was no demand for it. Hence, it was no longer a use-value or value, and so it lost the value it had–prior to going to market. This is not a case of something having a value that isn’t realized thru sale.
Economics is not about absolute use values, but about “use values for others”, because economics is about production and sales.
For example, if a hammer is not sold, it has no real use value, only an expected one. This could then only be used by the manufacturer, but production for personal use would not create value, even according to Marx.
However, if this hammer is never used by anyone, it will never become a real use value for anyone – the use value would only exist potentially.
Andrew,
I believe my typo and quick response failed to capture your second paragraph, which is what I was trying to say. A product could be produced, have value from production, and not be realized (for myriad reasons), or a product could be produced, at the time of production have no value, but when it comes time to sell it, it’s value could be determined by the rePRODUCTION times required to rePRODUCE it (Something G.A. Cohen missed entirely in his ‘famous’ refutation of the LTV).
So unless I’m misunderstanding something, I don’t see how ‘new pepsi/coke’, Murray’s preferred example, de facto lend credence to his value form theory. They fit either explication. At the very least, I still can’t see how or why Murray thinks this is Marx’s theory.
Great discussion though!
Right. The key point that underlies the discussion, and which crops up over and over again, is the difference between “What is?” (= ontology) and “What do we know?” (= epistemology). Conflating the two, as Patrick does, reflects a desire to say “only that which we are certain about exists” (or is actual, i.e., matters).
IMO, Andrew is right on this point. That’s because a producer takes into consideration the usefulness (utility) of the product to the customer BEFORE new units are produced. So the point of sale simply constitutes a test, as follows.
1) In terms of usefulness:
i) product does sell, so the producer’s consideration was correct. Selling, therefore, reveals but does not create — the product DID HAVE utility before the point of sale. In other words, sale simply turns “not knowing” into “knowing”, but does not create utility.
ii) product does not sell, so the producer’s consideration was incorrect. Selling also reveals this by turning “not knowing” into “knowing”.
2) In terms of socially necessary labor, crystallized as product: same thing. Sale simply reveals whether the amount of labor expended is part of what is socially necessary. Sale again turns “not knowing” into “knowing”, but does not create or alter the amount of labor expended in production. The dynamic interplay between supply and demand does not create new abstract labor. Hence, when demand and supply differ, then this simply reveals what amount of socially necessary labor should have been expended during production. Again, this turns “not knowing” into “knowing” without creating anything.
Let me illustrate the difference between ontology and epistemology using Karl Popper’s black swans hypothesis. H: “all swans are white”. So we go out and test, and eventually will find black swans. Question: was the hypothesis wrong already at the point is was established, or did the hypothesis become wrong at the point when black swans were discovered? Answer: it was wrong already at the point when it was established BECAUSE black swans existed at that point — we just didn’t know about them. The act of discovering black swans does not create black swans; hence, this argument does not conflate ontology with epistemology. If, instead, one argued that the act of discovering creates black swans then one would make that conflation.
Finally, I am glad that Schrödinger’s Cat was mentioned. It is an illustration of how the Copenhagen Interpretation explains Quantum Mechanics. The Copenhagen Interpretation holds that a particle exists in all possible states at once before we observe it (Schrödinger’s Cat is both alive and dead before we open the box and look). IMO, Copenhagen also conflates ontology with epistemology. But there is another interpretation of Quantum Mechanics that does not conflate: de Broglie – Bohm, or Bohmian Mechanics. There are differences between the two, but both agree that there is a definite state of a particle BEFORE we observe it. The difficulty is, and this is why de Broglie – Bohm has been rejected so far, that we cannot determine the state of the particle before it is observed. That’s mainly because, as I understand it, the maths have not been worked out. So we have an explanation without definitive measurement, but researchers keep working on the underlying maths.
To 1)
Did the product really have any use before you bought it?
I think no!
In economics, the question is not whether a product can be useful in principle, i.e. whether it is potentially useful.
Economics is about benefit at the societal level. It doesn’t matter whether someone builds something privately, whether they do it alone or have it made by 10 people from their relatives. If the product is not exchanged at the social level, i.e. in the economic area of society, it is not useful for society.
According to Marx, value is only about usefulness on a social level. If a product is not socially useful, the work put into it was not useful and therefore not value-creating.
usefulness on the social level is not determined by words like “This is really very useful!”, but only by exchange.
The product itself is not changed by the exchange, but the social meaning is changed – it becomes useful to someone else through the exchange for a value equivalent. This is the point in time at which value formation occurs.
The value therefore corresponds to the “appreciation” of the expenses incurred for the product.
Regarding 2) Quote: “In terms of socially necessary labor, crystallized as product: same thing. “Sale simply reveals whether the amount of labor expended is part of what is socially necessary.”
Is that really the case?
In my view, the “socially necessary work has not yet been done” before the product is sold.
A certain amount of working time is required for the product, regardless of whether it is sold.
Suppose it takes two hours to produce the product.
One hour of expenditure should be accomplished by machines, one hour by human work (not labor yet).
The average hourly wage of the human workforce should be $50, the “hourly wage” of the machines, the costs of building use, of supplier products, etc. should also be $50 (electricity, maintenance, wear and tear, grease, water, repairs, use of the building, “further training”, i.e. reprogramming etc.).
This means a cost of $100 per hour in which a product is manufactured.
The entrepreneur estimates that he can generate $20 in surplus value under current market conditions.
Case A: A buyer buys the product at $120 and pays the expected surplus value of $20.
The socially necessary labor hours can then be calculated:
These two hours of labor cost the contractor $100; the buyer will reimburse him in full and pay an additional $20.
This appears as if this product only cost the entrepreneur $80, i.e. the buyer pays 1/5 of the 2 hour labor time, i.e. 120 minutes / 5 = 24 minutes.
The socially necessary labor time is therefore 120 minutes – 24 minutes = 96 minutes. The so-called “unpaid labor time or overtime” is 24 minutes.
However, the working resp. labor time can only be divided after (!) the products have been sold, because before the sale there is no socially necessary labor time and no additional labor. The entire working time is private working time in the area of the entrepreneur’s property.
Case B: The entrepreneur fails to realize the expected surplus value for his second product of this type; he can only sell the product for $110.
This means the buyer only pays 1/10 of the cost as surplus value, i.e. $10. This corresponds to only 1/10 of the labor time.
As a result, there is a socially necessary labor time of 108 minutes and additional labor of 12 minutes.
Case C: The entrepreneur only manages to get the costs reimbursed from the buyer with the sale of his third product of this type, but without any surplus value. This means that the entire working time for this product is socially necessary and there is no unpaid labor time.
If these are the only three products of this type of company, then the average socially necessary labor time for this product can be calculated from these three different socially necessary labor times: (96 + 108 + 120) minutes / 3 = 108 minutes.
The achieved average socially labor overtime can be calculated from the three different overtime periods; (24 + 12 + 0) minutes / 3 = 12 minutes.
If this product is also produced in other branches, their sales results would also have to be included in the average values.
In other words: socially necessary and surplus labor does not exist before the products are sold. One can only estimate how these employment relationships can be divided after the products have been sold. As a result, there are only expected values for the products before they are sold.
Rainer, you wrote, “The product … becomes useful to someone else through the exchange for a value equivalent. This is the point in time at which value formation occurs.” But this contradicts the *correct* statement that “if this hammer is never used by anyone, it will never become a real use value for anyone – the use value would only exist potentially.”
Thus, if you want to claim that value formation occurs when the product becomes useful, you are logically committed to the position that the product’s value is formed if and when it is used, not before. As well as the position that sales of products are sales of things that do not have value when they are sold.
Value is formed as a relationship between buyer and seller in the market. Marx formulates that value is a social relationship.
As such, it must contain subjective elements because it is formed via human consciousness processes. But it must also include objective elements because it goes beyond a single individual and works between buyer and seller as well as between the two and society.
Marx formulated the formation of value with a formula: W = c + v + m.
W value per product
c constant capital (in Marx the proportional costs for buildings, machines, raw materials, electricity, etc.)
v variable capital (the proportional costs of labor, in Marx only those of human beings)
s added value
Marx applies this formula to the production side of commodity society because for him the market has no significance for the formation of value. But this formula is clearly wrong, because there is still no surplus value on the production side – Marx is wrong when he writes that surplus value would be produced.
The surplus value can only be paid by the buyer on the market and only if he first completely replaces the costs c + v and then pays even more, the surplus value.
You can only produce the prerequisites for surplus value payments, but not the surplus value itself.
Since surplus value is part of value, there can be no value on the production side of the commodity society.
On the production side, the entrepreneur can only estimate what surplus value he can achieve under the given market conditions and his goals.
If his products are not sold, he does not receive any surplus value.
The entrepreneur calculates an expected value for his product from the costs c + v and the expected surplus value. The value formula needs to be specified for the production side:
W|expected = c|cost factor, replacement expected + v|cost factor, replacement expected + s|expected.
When a buyer on the market buys the product, the value is formed at the value equivalent.
If the entrepreneur manages to get the buyer to pay him the expected added value, then this means that the buyer first completely replaces the costs c + v and also pays the expected added value. In this case, the real value will coincide with the expected value.
This is what happens in the market. The value formula must also be specified for the market:
W|real = c|cost replacing + v|cost replacing + s|real.
The offer price reflects the expected value and the purchase price reflects the real value.
This makes it clear that the value of work products corresponds to the recognition of expenses, but also that the value is only created on the market.
When a buyer on the market buys the product, the value is formed in the value of the value equivalent.
If the entrepreneur manages to get the buyer to pay him the expected surplus value, then this means that the buyer first completely replaces the costs c + v and also pays the expected surplus value. In this case, the real value will coincide with the expected value.
This is what happens in the market. The value formula must also be specified for the market:
W|real = c|cost replacing + v|cost replacing + s|real.
The value is formed in the value of the value equivalent – only to this extent are the expenses recognized as socially useful.
This makes it clear that the value of work products corresponds to the recognition of expenses, but also that the value is only created on the market.
The most important objective element of value is the common value agreed upon by the buyer and seller for the exchange.
In the bazaar they come to an agreement through dialogue, in the department store through the buyer’s unilateral adjustment to the seller’s specifications.
If you cannot agree, there will be no exchange – the purchase contract/invoice cannot contain an offer price and a purchase price that deviates from it.
The subjective elements of value include the subjective reflections of the objective value in both exchange partners. Before the exchange, these are usually of different sizes.