The German Debate on the Monetary Theory of Value

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Noa Rodman's picture
Noa Rodman
Joined: 4-11-09
Aug 17 2017 14:10

In A contribution Marx gave a brief reference to the "general law which regulates corn prices" in the ancient world:

The sudden and forcible transfer of hoarded money from one country to another is a specific feature of the ancient world; but the temporary lowering of the production costs of precious metals achieved in a particular country by the simple method of plunder does not affect the inherent laws of monetary circulation, any more than, for instance, the distribution of Egyptian and Sicilian corn free of charge in Rome affects the general law which regulates corn prices.

I assume he means ancient Rome.

Felix Frost's picture
Felix Frost
Joined: 30-12-05
Aug 19 2017 18:00
Noa Rodman wrote:
But again, the question is not about the existence of SCP and that it preceded (or more strongly, transitioned into) capitalism. Everyone knows that commodity production existed prior to capitalism, and that it did not encompass the whole of the economy then as it does in capitalism. SCP is not just some "category", but a historical fact. The question is whether the law of value applied in SCP. Although Rubin says that he will not consider that question:

Rubin wrote:
Here we will not be concerned with the historical controversy over whether commodities were exchanged in proportion to the labor expended on their production before the emergence of capitalism.

That's the thing: When Rubin is talking about "simple commodity production", he is talking about a theoretical abstraction that is used to explain how capitalism works, he is not talking abut a historical period preceding capitalism. So the question to what degree actual pre-capitalist production fit into the model of "simple commodity production" isn't really relevant to the subject he is studying.

Noa Rodman's picture
Noa Rodman
Joined: 4-11-09
Aug 19 2017 20:49

Like I said, I think from Rubin's other articles whose translation will soon be published, it is more clear that he did believe SCP was real and that the law of value applied in it.

Felix Frost wrote:
When Rubin is talking about "simple commodity production", he is talking about a theoretical abstraction

I too pointed out that SCP didn't exist for the whole of society, but always in combination with other modes of production, but that for the purpose of study it is permissible to abstract from those other modes. In that sense, sure, it is an abstraction that never existed. But simple commodity producers did exist for Rubin as any thinking person.

In my earlier post #4 I quoted Rubin's comparison of 3 diagrams: 1) SCP, 2) an embryonic or hypothetical capitalist economy, and 3) capitalism. Rubin stresses that only "Diagram No. 2 is not a picture of an embryonic capitalism which existed in history". But he didn't stress that No.1 never existed.

that is used to explain how capitalism works,

Again however, Dunaevsky's critique is that it is theoretically inadmissible to study the law of value under capitalism as merely a "more complex" version of it under SCP; they are fundamentally different.

Note also that Dunaevsky's critique was made in February 1928, which seems prior to the publication of the revised 3rd edition of Rubin's book upon which the English is based. I could not find this quote in it that Dunaevsky gave: 'Now that other works by Marx are available to us, – Rubin writes, – we know with certainty that Marx himself was strongly opposed to the view that the law of value was in force in the period preceding the development of capitalism."

Maybe I just couldn't find it, but it's possible that Rubin deleted this in the 3rd edition (I'm practically sure he dropped certain passages in the wake of Dashkovskij's 1926 critique).

he is not talking abut a historical period preceding capitalism

Rubin's main focus is on capitalism, but that doesn't explicitly exclude that it also applies to a historical period preceding capitalism. One doesn't exclude the other.

So the question to what degree actual pre-capitalist production fit into the model of "simple commodity production" isn't really relevant to the subject he is studying.

But why did Engels bring it up – was it just out of the blue that he felt like making a fantastical claim? It was in the context of Loria's criticism.

Felix Frost's picture
Felix Frost
Joined: 30-12-05
Aug 21 2017 11:44

The quote about Marx being "strongly opposed to the view that the law of value was in force in the period preceding the development of capitalism" is from the same section of the book that I quoted from earlier. Here he also briefly discusses why he thinks Engels and other Marxists made the claim about a historical reading of Marx's theory of value, and why he thinks they were wrong to do so.

Pennoid's picture
Joined: 18-02-12
Aug 21 2017 12:22

Felix, that's in Essays? Which part again ?

Noa Rodman's picture
Noa Rodman
Joined: 4-11-09
Aug 21 2017 12:38

yes, it's chapter 18

Felix wrote:
The quote about Marx being "strongly opposed to the view that the law of value was in force in the period preceding the development of capitalism" is from the same section of the book that I quoted from earlier.

I mistook my own footnote in Dunaevsky there as referring to the Russian (since for some quotes I couldn't find the exact pages in the English, I gave the Russian). Yes, that passage refers to Marx's comment in Theories of Surplus Value (MECW 32, pp. 264–65) on Torrens. Dunaevsky's point is that Rubin misinterpreted that Marx-passage (which btw I also pointed out, years before I even knew of Dunaevsky's text).

Rubin wrote:
Torrens held that the full development of a commodity economy, and consequently the full development of the laws which exist in that economy, is possible only in capitalism and not before. "This would mean that the law of labor-value exists in production which is not commodity production (or only partly commodity production), but it does not exist in production which is not based on the existence of products in the form of commodities. This law itself, and the commodity as the general form of products, are abstracted from capitalist production, and now supposedly cannot be applied to it" (Theorien über den Mehrwert, III, p. 80). "It now turns out that the law of value abstracted from capitalist production contradicts its phenomena" (Ibid., p. 78). These ironical notes by Marx clearly show his relation to the view of the theory of value as a law which functions in the pre-capitalist economy, but not in the capitalist economy.


Dunaevsky wrote:
In the by Rubin given quote we do not find his commentary. Why is Marx here criticising Torrens? Exclusively because 'Torrens reverts to Adam Smith,' who limited the action of the law of value to "the early period" of social development. Not a single line of Marx here refutes the action of the law of value in a society of equal commodity producers.

What is the course of Marx's arguments? Under capitalism, the commodity-form is the universal form of production relations. According to A. Smith and Torrens, the law of value 'is valid at the early stages of exchange.' Marx accuses them of inconsistency: if the law was valid under embryonic exchange relations, then how can it be invalid under capitalism, where the commodity form became the universal form of production relations.

See section titled Torrens’s Confusion in Defining the Value of Labour and the Sources of Profit, at

Dave B
Joined: 3-08-08
Aug 21 2017 17:54

A scientific law is an empirical observation of a ‘correlation’ implying some causality and from which can be derived a theory and objective scientific ‘concepts’.

The law of value, which is that commodities exchange according to the amount of labour required, was originally derived by Adam Smith from ‘simply commodity production’ and not capitalism.

The theoretical concept that Karl abstracted from it was that of ‘abstract’ labour or human effort.

It would not have been possible to obtain a law of value from capitalism because as Karl noted it did not apply or work in capitalism.

Or in other words when calculating the exchange relations in capitalism using and applying the law of value derived by Adam Smith from simple commodity production; it did not work.


This law clearly contradicts all experience based on appearance. Everyone knows that a cotton spinner, who, reckoning the percentage on the whole of his applied capital, employs much constant and little variable capital, does not, on account of this, pocket less profit or surplus-value than a baker, who relatively sets in motion much variable and little constant capital. For the solution of this apparent contradiction, many intermediate terms are as yet wanted, as from the standpoint of elementary algebra many intermediate terms are wanted to understand that 0/0 may represent an actual magnitude.

Classical economy, although not formulating the law, holds instinctively to it, because it is a necessary consequence of the general law of value. It tries to rescue the law from collision with contradictory phenomena by a violent abstraction. It will be seen later[2] how the school of Ricardo has come to grief over this stumbling block. Vulgar economy which, indeed, “has really learnt nothing,” here as everywhere sticks to appearances in opposition to the law which regulates and explains them. In opposition to Spinoza, it believes that “ignorance is a sufficient reason.”

The question then is do you throw the law of value overboard or can something be rescued from the theory or concepts that have been derived from it in simple commodity production?

Theorising that labour power becomes a commodity and, still, of all commodities exchanges at its actual value was the critical step forward.

And then capitalism, where the critical and all determinate commodity ‘in force and made general’ is labour power then “the specific development which the law of value undergoes with the formation of capital” can then be re-examined and analysed on that basis.

On Smith;

It is his theoretical strength that he feels and stresses this contradiction, just as it is his theoretical weakness that the contradiction shakes his confidence in the general law, even for simple commodity exchange; that he does not perceive how this contradiction arises, through labour-power itself becoming a commodity, and that in the case of this specific commodity its use-value—which therefore has nothing to do with its exchange-value—is precisely the energy which creates exchange-value.

Ricardo is ahead of Adam Smith in that these apparent contradictions—in their result real contradictions—do not confuse him. But he is behind Adam Smith in that he does not even suspect that this presents a problem, and therefore the specific development which the law of value undergoes with the formation of capital does not for a moment puzzle him or even attract his attention. We shall see later how what was a stroke of genius with Adam Smith becomes reactionary with Malthus as against Ricardo’s standpoint.

Pennoid's picture
Joined: 18-02-12
Aug 22 2017 01:41

Dave B, I'm a bit confused; it appears that the law of value holds; that the amount of labor time necesaary for production regulates production.

Certainly in what you quote Marx is implying that this law is developed in capitalism but nevertheless holds, no?

Noa Rodman's picture
Noa Rodman
Joined: 4-11-09
Aug 22 2017 10:49

Pennoid, the law is fundamentally changed: in capitalism it is the production price, not value, which regulates the exchange relation. This led Smith to confine the law of value (as opposed to law of production price) to simple commodity production (though "even for simple commodity exchange" it "shakes his confidence in the general law").

Pennoid's picture
Joined: 18-02-12
Aug 22 2017 12:46

Is it fundamentally changed or is it formally changed? I haven't dig through the discussions in all of marx's stuff on this, but I understood it to be somewhat similar to the "rain cycle" via snow; still precipitation but with longer and more complex steps where the preciptat takes different forms, never the less still at root governed by evaporation condensation etc.

Certainly it does imply more of a change than that between rain and snow, that labor regulates production prices (and thus disappears behind price altogether). But if that in turn is regulated by labor then it's still "constrained" as it were, by the law of value.

All of this a round about way of saying that concrete social reproduction requires a baseline amount of labor, expanded reproduction a surplus, and a lack of surplus implies contraction.

That's at the heart of the law of value as I understand it, which still holds in capitalism. Products have to exchange in line with the labor necessary for their production or else a market system could not be relied upon to meet the needs of regular let alone expanded social reproduction. Maybe I'm missing something.

Pennoid's picture
Joined: 18-02-12
Aug 22 2017 12:46

Sorry, not lack of surplus but less than baseline.

Noa Rodman's picture
Noa Rodman
Joined: 4-11-09
Aug 22 2017 19:30

I will select quotes from Dunaevsky's critique of Rubin, with my own emphasis in bold, which hopefully will make things clearer (this is primarily for myself). I leave out the footnotes:

In the exposition of the law of production price Rubin "distracts" from the basic conditions, under which the law of value can be realised in commodity society. He is silent on the central question: whether under capitalism, in one form or another, the very principle of the gravitation of the market price to labour value is preserved. Meanwhile, under what condition is the theory of value confirmed also for the capitalist society? When the study finds: the price of production – is modified labour value, variously fluctuating individual rates of profits represent a quantity of redistributed mass of labour value. Only then the law of production price will be that mechanism, through which the law of value exerts its action.

The reality of the latter under capitalism is confirmed for Rubin, evidently, by the one fact of the existing dependence of price changes, production prices – on changes of the level of labour productivity. But this dependence is manifested in the sphere of circulation. Its "empirical reality" is not denied by any representative of bourgeois economy, for whom, however, there exists no real trend of price movements toward labour value.

What does the noted dependence express by itself, if prices do not tend toward labour value? An exclusively functional dependence: labour productivity is considered as one of the factors of price formation, similar like the relation of demand and supply, "marginal utility," etc. If prices do not gravitate toward labour value, then the "basis" of the relation of demand and supply is not disclosed in the sphere of direct production.

Simple commodity and capitalist economy are studied [by Rubin] entirely independently, isolated from each other. Where is the source of this error? To what conclusions does the viewpoint lead, developed by Marx: simple commodity economy – is the historically real prius of capitalist economy? The conditions of realisation here of the law of value – are historically concretely defined. Under capitalism, commodity relations persist. That is, if the law of value takes place here, then must be preserved also the concrete-determination of the conditions of its realisation in the simple exchange society in the form of gravitation of price toward labour value.

For Rubin the formula of equilisation of labour in capitalist conditions comes out merely more complexly, than in simple commodity economy, namely, as derivative of the formula of equilisation of capitals. Equilisation in social production in the first case is set in accordance with the exchange proportions of the labour value of each industry. Equilibrium in the allocation of capital, – remarks also Rubin, – is reached under equilibrium of price by the prices of production, ie, under quantitatively inequal exchange proportions by market values, as they are driven by different organic compositions of capitals in equal-sized units in different industries. Under capitalism, therefore, the law takes a qualitatively different form of manifestation: prices tend toward prices of production, which correspond to an unequal market value.

The analysis of [Rubin's]Essays did not point to the fundamental question: in what ways under capitalism does value fulfill its function of social regulator of the distribution of social labour, if 'with the transformation of values into prices of production, the very basis for determining value is removed from view,' 'profit appears as something standing outside the immanent value of the commodity.' [Marx]

The solution to this problem is impossible without a study of the genesis of the average rate of profit. Errors in the formulation of the problem affect also the methods of its solution. The author of Essays does not point the research at the study of the character of the very process of the transformation of market values in different industries in specifically neat (отличные) prices of production.

What tasks does analysis face, apart from the obligatory quantitative determination of the law of value, if it directly can be derived from the mere fact of the dependence between changes of the labour productivity level and price movements? The entire study [according to Rubin] boils down, to trace: through what further additional links is established the above-noted dependence under capitalism, in comparison with simple commodity economy, what "complication" does the capitalist structure bring in the chain of these dependencies.

The entire problem is solved [according to Rubin] by the fact that a simple commodity economy has a 'four-term model of causal connection between the individual categories,' whereas in the capitalist economy – a six-term model, that 'the central links of the theory of the capitalist economy (price of production, distribution of capital) do not rule out the above mentioned links of the theory of value, but, on the contrary, under further analysis will inevitably lead to them, and together with them are included in a general theory of equilibrium of capitalist economy.

For Rubin it is entirely enough, that 'production price can only be explained by changes in productivity of labour or in the labour value of products.' The task of study for Marx is to prove, – that the price of production as such (an und für sich), represents a quantitative redistribution of labour value, that the basis of the origin of the average rate of profit – is the direct process of production of value.

In Essays is not displayed the very process of the formation of the average rate of profit.
'In our presentation of Marx's theory, – Rubin writes, – different rates of profit in different spheres do not serve as a necessary intermediate link for a theory of the average rate of profit.' 'We assume, – Rubin continues, – that in Marx's system the magnitude of the average rate of profit is derived from the mass of total surplus value and not from the different profit rates, as it may seem from a first reading of Marx's work.'

Rubin is not alone; a similar interpretation of the law of production price is very widespread.

How expresses in this regard the author of Capital? Marx derived the average rate of profit from the individual value rates. 'As a result of the differing organic composition of capitals, – Marx wrote, – profit rates prevailing in different production are originally very different. These different rates of profit are balanced out by competition to give a general rate of profit, which is the average of all these different rates.'

'These particular rates of profit in each sphere of ​​production, – Marx strongly emphasises, – are to be developed from the value of the commodity. In the absence of such a development, the general rate of profit (and hence also the production price of the commodity) remains a meaningless and irrational conception.' 'Here, of course, in Marx, – correctly observes M. Smit, – it is not about a simple average of group averages, but about what in algebra is called the "general average," and in statistics is termed the "weighted average." The average rate of profit, for Marx, – is the weighted average of individual rates of profit, as they are given by the different organic (technical) composition of capitals. The role of weight plays 'that relative share of the total social capital swallowed up by each particular sphere of production.'

The opposition, conducted by Rubin [between the average rate of profit – and the average weighted individual value rate], is artificial and far-fetched! In the process of circulation only is redistributed the already produced mass of surplus value. The average rate of profit, "weighted" from the value rate, 'can not be anything other than the total mass of surplus-value, distributed between the masses of capital in each sphere of production in proportion to their size.'

Mechanical opposition of sphere of circulation – to sphere of direct production.

'The specific character of Marx's theory of production price, – writes Rubin, – consists precisely of the fact that the entire question of mutual relations between surplus value and profit is transferred from individual capitals to the total social capital.' The law of production price, social-objective patterns in general are realised in the sphere of circulation. In the sphere of production, in different industries – (there are) different organic compositions of equal-sized capitals. Only by mechanical cleavage of these fields of the economy, in the study of the law production price can be "distracted" from the individual value rates of profit. For the dialectics of Marx social-objectively analysis of the "universal" must disclose the main, typical patterns of the "individual." The patterns of social capital, for Marx, express the typical patterns of processes connecting, uniting individual capitals between industries and within each.

Rubin unacceptably opposes the formation of the average rate of profit, as a magnitude derivative of the mass of total surplus value, – to its formation from different rates of profit. The author of Capital did not resolve the question as Rubin proposes to solve it. Marx did not ignore, but studied the problem of the relation between surplus value and the rate of profit of capitals of different industries of production. For Marx the law of the formation of average rate of profit expresses the patterns of these relations, the tendency of individual rates of profit toward the average rate.

Still during the life of Engels C. Schmidt and Fireman tried to "resolve the contradiction" of market value and price of production on the grounds that the prices of commodities equal the sum of labour value, and, therefore, the average profit amount is derivative of the total mass of surplus value. How Engels related to such theories, the pages of his preface to the third volume of Capital reveal well enough. 'Fireman has indeed placed his finger on the salient point, – wrote Engels, – But the undeservedly cool reception of his able article shows how many interconnecting links would still be needed even after this discovery to enable Fireman to work out a full and comprehensive solution. And this is explained, – Engels emphasised, – not only by the incomplete form in which Fireman left his discovery, but also by the undeniable faultiness of both his conception of the Marxian analysis and of his own general critique of the latter, based as it was on his misconception.

Only the theorists of the "social school of distribution without values" deal in analysis – exclusively with the "social capital," "only" with the social aggregate product of labour, "only" with the results of processes in the sphere of competition.

Essays goes past [ie skips over] the manifestation in social relations between individual capitalists of the process of the combination of the productive forces of individual businesses into a system of social production. That is why it also does not trace, how is reflected in the very law of production price the internal-contradictory process of combining individual capitalists into a single class.

Marx specially dwells on the fact that the organic composition of equal-sized capital here reflects the technical composition ('the conjunction of a certain number of workers to a certain amount of means of production'). The law of production price displays the law of motion of individual capitals in the direction of such a combination of the productive forces at equal-sized units, which creates an objective equal condition of exploitation (the rate of exploitation is everywhere the same). This pattern establishes objective intimate interdependence between individual capitalists, unites them in 'a veritable masonic fraternity in the struggle against the working-class, as a whole'.

---- [The following section in Dunaevsky is the most difficult to understand for me, so I couldn't shorten it properly: The price of production in the sphere of circulation and of direct production]
Patterns of change of technical, consequently, organic composition of capital in different branches can not be understood without examining the processes of the transfer of capital. In which periods is there a technical upgrade, massive re-equipment? When the long-term reduced demand for commodities of a given industry is not eliminated by a simple reduction in the production scale through outflow of capital into other sectors.

In its turn, the direction of capital transfers is incomprehensible if one distracts from the processes of the moves of commodity values ​​from one industry to another. Capitals rushes only into those industries that are realising high conjuncture rates of profit. The movement of flows of commodity values reflects the process of the reallocation of the mass of labour from one industry of production to another. The realising individual rates of profit are determined by the conjuncture of the market, the ratio of social demand and supply for products in the given industry. The conjuncture rates of profit, of course, do not correspond with those rates that are given organic compositions of capital in different industries. Industries of high conjuncture realise not only the produced value rate of profit, but also attract to themselves the surplus value of other industries. The capitalists of other industries are forced to buy at the high market conjuncture prices. How does this circumstance affect the realised by them at themselves profits? The latter will decrease if the volume of demand for the given commodities remains unchanged, or does not proportionally increase.

The changed relation of demand and supply creates a relatively more favourable conjuncture once for one, then for another industry! It is easy to grasp the laws of the alternating fluctuations in the moves of social labour from one industry to another. Here occurs a steady trend towards the uniform distribution of realised surplus value per unit of capital. 'The general rate of profit only ever exists, – Marx emphasised, – as a tendency, as a movement of equalization between particular rates of profit' (1981, p. 488). The price of production in the sphere of circulation acts, as a prominent tendency in the process of the distribution of the mass of social labour, the redistribution of social total mass of surplus value.

The average rate of profit in the sphere of the market can not be anything else than the average-weighted level of profit, formed from a variety of value rates. Why? The general rate of profit in the sphere of the market 'is only a late result of a long series of fluctuations, spanning a very lengthy period.' The individual links of the process are affected by the action of demand and supply, deflecting realised profits from their value sizes. But the price of production is realised, in fact, under equilibrium of social demand and supply, under which the impact of competition is decreased, eliminated, paralysed and, therefore, can not determine and account for the absolute level of the average rate of profit in the sphere of circulation.

Insofar as the price of production is established irrespective of the influences of demand and supply, the source of the average profit must be found not in the market, but in the conditions of direct production of value. Pressure of competition deflects realised profits from their value rate. It also brings closer the market price to the price of production, the conjuncture profit to the average level, weighted from the various value rates.

Rubin limits the process of the formation of the average rate of profit only to the movement of capitals. However, the latter process is only a consequence of the processes of redistribution of commodity values. Capitals move into industries of high conjuncture after, as a result of a long series of acts of sale of commodities, the process of distribution of surplus value ensures there the realisation of more profit per unit of capital.

Rubin is looking for a unified response, essentially, on two different questions: 1) how is carried out the tendency to an equal rate of profit, and 2) in which form the process occurs of the redistribution of the mass of surplus value.

The first process takes place continuously by means of the regrouping of capitals. Without this process, the tendency towards an equal rate of profit would have been replaced by permanently fixed differential levels of profit in different industries.

The process of redistribution of the total mass of surplus value can occur only through the realisation of commodities on the market, simultanously with the movement of flows of commodity values​. In what ways can this process pass through the regrouping of capitals? Because the redistribution of already produced mass of surplus value, i.e. under the already determined way of the redistributed capitals.

These places in Essays become verily a Sphinx's riddle! 'But if the relationship between the profits of two capitals engaged in different spheres of production does not correspond to the relationship between the living labors engaged by these capitals, – writes Rubin, – it does not follow that a part of surplus labor or surplus value "is transferred," "overflows," from one sphere of production to another!'

How does Rubin justify his commentary, refuting 'the representation, based on the literal interpretation of some expressions of Marx'? Let us give the word to Rubin himself: 'However, if value is not a substance which flows from one man to another, but a social relation among people, fixed, "expressed," "represented" in things, then the conception of the overflow of value from one sphere of production to another does not result from Marx's theory of value but basically contradicts Marx's theory of value as a social phenomenon.'

Here graphically, clearly the error in the definition of the object of studies affected a detachment of social equalisation of labour in the sphere of circulation from direct production. Does the movement of value not reflect the movement of a determined mass of labour? Must not the moves of the material products of labour with the stamp of commodity values be accompanied by processes of redistribution of the mass of surplus value from one branch to another? Are not all these processes manifested in the social relations of capitalists with each other? Do the real processes of redistribution of the mass of social labour through commodity values ​​have anything in common with the absurd, caricatural representation of S. Frank of value, 'as some material substance, having the property of a liquid'? All this is very elementarily. The reader may rightly wonder why these real processes of redistribution of surplus value, such a major researcher-Marxist as Rubin is, considers to be a contradiction to 'Marx's theory of value as a social phenomenon.'

The erroneous commentary of the law of production price is overturned by the same Essays in those chapters where Rubin unfolds with great force the exposition of the problem of socially-necessary labour. Here is brightly, clearly shown the role of market value, as the "basis," on which rests the very relation of demand and supply, which explains the market oscillations of profit, as processes of the moves of the mass of social labour.

What determines according to Rubin the quantity of the "actually payed social need"? It consists of nothing more than a 'product of the unit value determined by the technical conditions of production, the number of units currently located at the given value.' This mass of value reflects the amount of labour, realised under proportionality in social production. Obviously, under an increase in the market price above market value, the given industry realises more labour than it actually employed. Obviously, these masses of "foreign" labour must have been taken from other industries. Obviously, there must occur a shifting of the mass of labour, and consequently, also surplus value. Again, the chapters of Essays itself overturn the original erroneous commentary of the law of production price.

Abstracting from market value, as "intermediate link" of the process, we are not in a position to understand the internal pattern of direction in the moves of capitals, under which value conditions is stimulated the contraction of capital in one or another industry.

The solution to the problem of socially-necessary labour, which is given in Essays, reveals to us market value, as "intermediate link" of the process of the formation of the average rate of profit. The scheme of this process can be expressed in such basic links: processes of change of the technical composition of capital – the tendency of different organic compositions of equal-sized capitals toward a "socially-average" structure – a reflection of the change in the organic composition of capital per the largest market value – processes of the redistribution of the mass of produced surplus value through the movement flows of commodity values – as a result of these processes, rearrangement of capital from one industry of production into another – the price of production in the sphere of the market.

The market value in each industry plays the role here of a peculiar "transmission apparatus." Through the change in the market value, changes in the organic composition of capital affect the redistribution of mass of labour, and consequently, also the total mass of surplus value. The changes of the organic composition of capitals under an everywhere equal rate of exploitation, cause changes of the magnitude of the market value ​​in each industry.

For each industry the magnitude of "actually, socially payed needs" is changed. Is not all this reflected in the magnitudes ​​of the redistributed mass of labour, does not the magnitude of the price of production itself change as a derivative of the new level of the value rate of profit? A different correlation must be established between the organic composition of different industries, that affects the regrouping of capitals.

The price of production in circulation, reflecting the laws of the redistribution of the mass of labour, thereby reflects the processes bringing closer the organic composition of capitals toward the socially-average level. Price of production should coincide with market value in industries of socially-average organic composition of equal-sized capitals, inasmuch as the tendency in technical progress under free competition constantly operates for a convergence of the individual composition of capital with the socially-average level.

Here the sphere of the market and direct production do not match, but "mutually-penetrate" into each other, their unity acts as a "unity of differences." ...

Marx attached great significance to the problem of the links between the distribution of capital and the distribution of labour. Without a proper understanding of this problem one can not study the internal laws of the curve of capitalist development.

The relation of free competition between capitalists, for Rubin, is incompatible with different value rates of profit in different spheres of production. The presence of competition, obviously, mechanically should ordain a permanent equality of individual value rates of profit to its social average rate.

Thus seems to us the logical chain of reasoning of Rubin. Its final link is a consequence of a mistakenly developed "starting position": if the average level of profit is derived from value rates, then the latter must be realised in selling prices. Drop the initial link and the whole chain is smashed!

For Marx – directly in the sphere of the market the individual value rates of profit, are not realised, the market price can not be identified with the price of production. The average level of profit in the sphere of the market corresponds with individual value rates only as the result of a complex process. The law of production price consists of nothing else than in the display of the patterns of the dialectics of this process.

The numerical patterns of the table of the third volume of Capital express determined economic patterns. The conditions of the numerical example of the tables of the ninth chapter reflect all the distinctness of "the forming principle" of the capitalist structure. The tables reflect the dialectics of the process of the formation of the average rate of profit, the process of converting value in a "newly determined form," in production price. The tables do not only not exclude, but presuppose the relation of free competition. The price of production displays the direction of the process of the moves of the mass of social labour, market value operates (as) "regulatory magnitude" of that amount of labour, that comes to the given sphere, an amount, which in capitalist society by no one is established.' These categories – are different moments of the internal-contradictory process of the redistribution of social labour. Rubin mechanically separates different columns of the tables, ignoring the "linking of their movement."
Marx did not assume the realisation in commodity prices of the value rates of profit. The last column represents only a "starting point" of the process in the phase of direct production.

Insofar as between all industries there is proportionality, the value rate of profit for each industry according to Ricardo coincides with the average general rate of profit. 'Ricardo identifies production price with value from the very outset, – Marx writes, – and does not see that this assumption is a prima facie contradiction of the law of value. Instead of solution he starts to forcibly derive the law from the contradictory phenomena of reality.

Scientific intuition tells Ricardo that the technical composition in different industries is different. But then also the value rate of profit in different industries is different. The metaphysical formulation of the question drives all study in a false, vicious, hopeless circle. Over which questions does Ricardo grievously rack his brain?

How to solve the great antinomy:

1) different individual value rates of profit constantly are realised in the selling prices;
2) in the selling prices is realised a constantly equal-for-all-capitals rate of profit?

By what ways can these individual value rates of profit coincide with the constantly realised in prices average profit? For metaphysics commodities are sold either at production prices, or at market values; commodities of equal-sized capitals are not exchanged at labour values, since the technical compositions of them differs, – in this form of an unresolved antinomy Ricardo left stand the labour theory of value.

Marx condemns Ricardo not for the attempt to derive the average rate of profit from individual value rates, but for the identification of these categories. He pounds on Ricardo because the great metaphysician does not understand that the unity of average profit in circulation is carried out by value rates, as a process, in which the latter operate only as necessary "intermediate links" of the process.

What is the logical consequential conclusion of the original position: the value rates of profit do "not serve as intermediate links" of the process of the formation of the average level? Study need not be interested about the organic composition of equal-sized capitals.

However Rubin, following Marx, gives decisively important significance in analysis to differentiation in the composition of capitals c and v, which reveals the secrets of the origin of surplus value. In this way, 'the distribution of capital, through the organic composition of capital,. – correctly notes Rubin, –​ bridges to the distribution of social labor.' In this way, 'by a visible process of emigration of capital is revealed the invisible process of the redistribution of the mass of social labour.'

But Rubin, obviously, is aware of his logical inconsistency. How can one "enter" in analysis of the organic composition of capitals and ignore therewith the by them caused value rates of profit? 'It is obvious – Rubin notes, – that different rates of profit in individual spheres are used by Marx only as numerical expressions, indicators of the organic composition of capital.'

The artificiality of the argument strikes the eye! Why can it not be also the reverse situation? Indeed only because then it is necessary to reject the initially presupposed commentary of the problem! Why under an everywhere equal rate of exploitation and other conditions being equal, can not the different organic compositions of capitals, on the contrary, serve as indicators of the rate of profit, produced in the given industry?

'The average rate of profit, – Rubin notes in one place, – is the result of the "redistributed between capitalists erstwhile total mass of surplus value.' But then, obviously, individual value rates of profit – are a "link" of the process.

Dave B
Joined: 3-08-08
Aug 22 2017 19:33

for pennoid

A scientific law is not a theory.

It is just a mathematical formulation or expression of the connection between two observable data sets.

Often under certain prescribed, defined and narrow circumstances.

Thus with the gas laws;

The mathematical expression of the laws can be incidentally different.

Thus if the temperature of a gas is “doubled” and it pressure is allowed to remain the same its volume doubles,

Or if the pressure doubles the volume halves etc.

Actually it only works or is observed as such over a relatively narrow set of circumstances.

And from those narrow set of ‘ideal’ circumstances it was or is derived.

Eg relatively low pressures and with certain ideal or noble gases.

One might ask what is the point of creating a law or gas laws by cherry picking data from narrow sets of circumstances that are more unusual than applicably normal?

And that would apply equally to taking a law derived from simple commodity production when your interest is capitalism.

But by cherry picking gas law data led to, by extrapolating back, a concept of an absolute zero temperature and much more importantly the kinetic theory of gases.

Which actually led to chemistry and the development of the periodic table amongst other things.

But more importantly although you developed a theory from a ‘law’ derived from a highly selective and limited set of data.

That selective and limited set of data was real enough.

The fascination, interest and ‘bias’ for scientists is when the connection between two sets of data can be expressed in a neat mathematical formula.

Anyway you develop a theory and take it with you and plug it back in to normal situations to see if it can also explain how and why and when it doesn’t work.
Thus choosing another example before we return to Karl.

You could observe like maybe Galileo did that;

……….. stated that Galileo had dropped balls of the same material, but different masses, from the Leaning Tower of Pisa to demonstrate that their time of descent was independent of their mass. This was contrary to what Aristotle had taught: that heavy objects fall faster than lighter ones, in direct proportion to weight……

And move on from that to some interesting ideas?

But who is going to say that a falcon feather falls to the ground at the same speed as a hammer ?

Although it wasn’t our case as things happened somewhat in reverse; one could ask why does the falcon feather fall as fast as the hammer on the moon but not on earth.

Like why does stuff exchange at its value in simple commodity production but not in capitalism?

Or in other words do you use the simple situation on the moon or the orbits of the planets etc to explain what goes on on earth with its interfering and modifying atmosphere and air resistance etc.

Or use capitalism with its interfering affects of rate of profit to make sense of the law of value in simple commodity production that has no such interference?

Karl did take forward ‘a’ theory or set of logical concepts derived from simple commodity production and applied them to capitalism.

Developing theories from laws derived from selective empirically observed data and applying them back to general situations can often go belly up; and it does more often than not.

And in fact scientist love it when it does.

Thus the orbit of mercury was doing anti Newtonian stuff but the Einstien theory of gravity fixed that.

Not that everyone dropped Newton’s ‘laws’ as it was still good enough for practical purposes just as you could argue the Law of value still has a general validity, albeit flawed in theoretical detail.

Going back to Karl and his C-M-C in simple commodity production.

Actually it is better doing.

C(1) –M – C(2)

So C(1) is a thing or use value like some linen that the owner and producer doesn’t want or have a use for.

What the owner and maker of C(1) wants is C(2) not M which is just a means to and end or the ownership and use of C(2) which he is going to consume and destroy or wear out in the process.

And they theoretically exchange at their value.

As far as it goes it is a closed circuit.

Actually in capitalism as far as the worker is concerned the same thing happens as in simple commodity production and nothing changes and the theory holds.

Except for the worker in capitalism C(1) isn’t an object or a piece of stuff that he has made it is his ability to work or labour power or a use value to someone.

Linen or labour power?

What’s the difference if they are both commodities?

He exchanges it, his labour power C(1) for M at its value, so still no problem and the theory abstracted from simple commodity production still works .

Then he buys C(2) which might be a coat with his M at its value.

The worker just like the simple commodity producer is only interested in a coat to wear and consume.

And again it is a closed cycle.

And the law of value still operates?

But for the capitalist it is somewhat different.

He takes his M and buys a special commodity labour power C(1) at its value.

But then the capitalist uses and consumes the C(1), labour power, which has a value and for which he has paid a full law of value price for, to create something with more value in it.

Which he sells at a higher value.

So he has 5 hours of money with which he buys 5hours of labour power.

Then he uses the 5 hours of labour power to produce something with 10 hours of value.

Or ;

M(5hours) – C(5hours of labour power)

But the 5hours of labour power works for 10 hours and produces a commodity with 10 hours of value in it.


M(5hours) – C(5hours of labour power)….C(10hours)

The C(10hours) belongs to the capitalist and all he needs to do sell it for more than M(5hours) to make a profit.

If C(10hours) sold at its value and according to the law of value then.

M(5hours) – C(5hours of labour power)….C(10hours) –M(10hours)

Then if he wanted to he could start again and double up.

But actually as the objective is to end up with more money than he started with the law of value doesn’t need to operate in the last transaction or;

C(10hours) –M(10hours).

As long as in the more general formula and objective for capitalism;

M –C ….C`– M`

M` > M


Thus a capitalist enterprise can still work even if the ‘last’ transaction breaks the law of value.

Or if the capitalist produced commodity does not exchange at its value or say;

C(10hours) –M(8hours).

The regulation of the last transaction can or is invariably modified by the rate of profit.

Actually all the transactions in capitalism eg

M –C

Purchase of labour power or its ‘price’.

C ….C`

Which I suppose is like the rate of exploitation.

As well as;

C`– M`

Can change or break their own ‘models’ or whatever according to circumstances.

There are theories why commodities exchange at their value in simple commodity production and why labour power exchanges at it value.

But there is no doubt that they shouldn’t be scrutinised either.

Dave B
Joined: 3-08-08
Aug 24 2017 21:59


“that went well”

As Neville Longbottom said in deathly hallows part one.

My hero!

I have got an 8 outcome ‘dialectical’ tree script here in front of me here scribbled on a side of A4, is that it?

Noa Rodman's picture
Noa Rodman
Joined: 4-11-09
Jan 30 2018 18:21
Noa Rodman wrote:
Like I said, I think from Rubin's other articles whose translation will soon be published, it is more clear that he did believe SCP was real and that the law of value applied in it.

Now that this (Responses to Marx's Capital: From Rudolf Hilferding to Isaak Illich Rubin) has been published, let me just select some passages (from Rubin):

...It would seem that, with the complete prevalence of simple commodity economy, the sole purpose of production is already exchange-value, not consumption, yet Marx declares that the final goal of the circuit C– M–C is use-value. The seeming contradiction vanishes if we recall that a long process of historical development is involved, which begins with purely natural economy and ends with developed capitalism. This protracted process of historical development is characterised by exchange-value gradually squeezing out use-value as the motive and purpose of production. It is completely understandable, therefore, that any given stage, by comparison with the previous one, reveals the increasing prevalence of exchange-value while at the same time, when compared to the subsequent stage of development, it reveals an insufficient ascendancy of exchange-value. That is particularly the case with the intermediate place occupied by simple commodity economy. In the latter, the goal of production is immediately exchange-value alone, although ultimately, or in the final analysis, the goal of production is to satisfy the personal needs of the producer himself.


We know that a simple commodity economy previously existed, although it was not yet adequately developed, and that it represented a unity of productive forces and their social forms. In particular, there existed in the simple commodity economy, although not yet adequately developed, the social form of value. We know that, precisely due to pressure from development of material productive forces, the production relations between simple commodity producers grew over into production relations of the capitalist type. We know that this growing over was not merely quantitative but was also qualitative; it was an entire historical upheaval, a leap.


The unity and opposition of the two formulae of circulation, C–M–C and M–C–M, simply reflects the fact that the capitalist economy is simultaneously a further development and a negation of the simple commodity economy. It is a further development of the simple commodity economy because it arose historically from the simple commodity economy and at the same time operates on the basis of commodity and money circulation. On the other hand, however, the laws of commodity circulation, in the conditions of capitalist economy, acquire a form that is antithetical to the forms that distinguish them in a simple commodity economy. If simple commodity economy was based upon the exchange of equivalents, in capitalist economy we are dealing with the capitalist’s appropriation of the workers’ unpaid labour.

Noa Rodman's picture
Noa Rodman
Joined: 4-11-09
Feb 1 2018 20:06

^ quotes taken from p. 485 ('Marx’s Teaching on Production and Consumption', 1930),
p. 744, pp. 789–90 ('The Dialectical Development of Categories in Marx’s Economic System', 1929).

Noa Rodman's picture
Noa Rodman
Joined: 4-11-09
Feb 7 2018 10:46

Just another passage from Marx on SCP:

Peasant Proprietorship Of Land Parcels (bäuerliche Parzelleneigentum, Fernbach's translation: Small-scale peasant ownership)

The peasant here is simultaneously the free owner of his land, which appears as his principal instrument of production, the indispensable field of employment for his labour and his capital. No lease money is paid under this form.
This form of landed property presupposes ... that the rural population greatly predominates numerically over the town population, so that, even if the capitalist mode of production otherwise prevails, it is but relatively little developed, and thus also in the other lines of production the concentration of capital is restricted to narrow limits and a fragmentation of capital predominates. In the nature of things, the greater portion of agricultural produce must be consumed as direct means of subsistence by the producers themselves, the peasants, and only the excess above that will find its way as commodities into urban commerce. No matter how the average market-price of agricultural products may here be regulated, differential rent, an excess portion of commodity-prices from superior or more favourably located land, must evidently exist here much as under the capitalist mode of production. This differential rent exists, even where this form appears under social conditions, under which no general market-price has as yet been developed; it appears then in the excess surplus-product.
The assumption here is generally to be made that no absolute rent exists,
absolute rent presupposes either realised excess in product value above its price of production, or a monopoly price exceeding the value of the product. But since agriculture here is carried on largely as cultivation for direct subsistence, and the land exists as an indispensable field of employment for the labour and capital of the majority of the population, the regulating market-price of the product will reach its value only under extraordinary circumstances. But this value will, generally, be higher than its price of production owing to the preponderant element of living labour, although this excess of value over price of production will in turn be limited by the low composition even of non-agricultural capital in countries with an economy composed predominantly of land parcels.

This form of free self-managing peasant proprietorship of land parcels as the prevailing, normal form constitutes, on the one hand, the economic foundation of society during the best periods of classical antiquity, and on the other hand, it is found among modern nations as one of the forms arising from the dissolution of feudal land ownership. Thus, the yeomanry in England, the peasantry in Sweden, the French and West German peasants. We do not include colonies here, since the independent peasant there develops under different conditions.

The free ownership of the self-managing peasant is evidently the most normal form of landed property for small-scale operation, i.e., for a mode of production, in which possession of the land is a prerequisite for the labourer’s ownership of the product of his own labour, and in which the cultivator, be he free owner or vassal, always must produce his own means of subsistence independently, as an isolated labourer with his family. Ownership of the land is as necessary for full development of this mode of production as ownership of tools is for free development of handicraft production.