About the book of S. Frank. - Georgi Plekhanov

Semyon Frank. The theory of value of Marx and its significance. Critical study. St. Petersburg 1900. (Франк. Теория ценности Маркса и ее значение.)

Mr. S. Frank defines the purpose of his "study" like this: "We tried to show in it, in what respect Marx's theory of value should be recognized as wrong and under what meaning it retains scientific worth. We tried further to show that this last, only, true meaning of the labor theory of value can be found through the organic assistance to it with another theory of value, the so-called theory of subjective value or marginal utility and that such combination of two apparently conflicting theories serves the benefit of both of them and opens some new productive points of view in the theory of value and distribution." (Preface, p. V.)

In other words: Mr. Frank set out to show that Marx would be even more sharpened, when from Böhm-Bawerk is learned a little bit! This is, without doubt, a very interesting topic. The question is whether our author has reached his goal. On this question we need to answer with a decisive negation: no, the goal of Mr. Frank remains unattained.

To criticize Marx, – like any other writer, – you need to give yourself the trouble to understand him. The very hardworking Mr. Frank did not give himself this necessary work. It is not surprising therefore, that of his attempts nothing came, except a huge confusion of concepts.

The main tenet of Frank's criticism of Marx's theory of value is that the third volume of "Capital" is contrary to the first, since in the third volume Marx did not solve the difficulties that he had promised to resolve, and in fact abandoned the labor theory of exchange value (p. 263 and 271). This position is closely intertwined with all of Frank's reflections on the economic system of Marx, and we must admit that it would give them considerable weight, if it were true. But, unfortunately, it is absolutely wrong.

The arguments, given by Mr. Frank in defense of this position, are as follows:

The task of the labor theory of exchange value consists also of the determination of that common property of all commodities, which is present also in the same amount in the with each other exchanging individual ones; therefore the fact, that in the exchange at "average" or "normal" prices commodities are exchanged for each other, enclosing in themselves a different amount of labor time, is by itself a refutation of the labor theory of exchange value, and no explanation of this phenomenon can change it. That is why the majority of adherents of the named theory expected that in the third volume of his main work, Marx will prove that in reality the average price does not deviate from the labor value of commodities. "It was expected, says Mr. Frank, – that he will show the hollowness of this deviation of them, so obvious at first glance, and thus by some mysterious trick solve the famous "sphinx's" riddle. But the third volume of "Capital" deceived those expectations. "Howsoever one looked at that solution of the problem, which is proposed by Marx, – continues Mr. Frank, – one thing is certain: it ... directly acknowledged that the exchange of commodities "at average prices" does not coincide with the exchange in proportion to the relative expenditure of labor on the production of commodities. Such answer was, of course, necessary; it was impossible to think that Marx would reject this mismatch, being one of the least contested positions of economic science. On the other hand, however, this answer ... destroyed all meaning of the labor theory of exchange value, and Sombart is right in saying that the solution of Marx has met one 'general shake of the head, – "ein allgemeines Kopf schütteln", – and many perhaps involuntarily" (p. 63-64).

Thus, "it was expected", that Marx will show the "hollowness" of the deviation in average prices from labor values. This is, perhaps, also true. Mr. Frank rightly says that precisely on this expectation was based the work of Conrad Schmidt and (George C.) Stiebeling in the West and Prof. A.I. Skvortsov (1848-1914) – among us (p. 62). But this fact still in no way proves that the specified "expectation" corresponded with Marx's thought. In fact, it strongly and clearly contradicts it. For example, take the trouble to read these lines: "If, therefore, the capitalist were at all interested in disinterested thinking, he would formulate the problem of the formation of capital as follows: How can we account for the origin of capital on the supposition that prices are regulated by the average price, i. e., ultimately by the value of the commodities? I say “ultimately,” because average prices do not directly coincide with the values of commodities, as Adam Smith, Ricardo, and others believe."1

The plain and simple meaning of these words hardly needs comment: Marx denies the direct (in the original German: direkt) match of the average prices of commodities with their values. People, who think, that Marx recognizes it and even prepared to "prove" it in the third volume, simply misunderstood Marx. Mr. Frank should have shown the futility of their expectations. He did not. From the fact that the third volume of "Capital" did not live up to expectations of some readers of his first volume, he concluded, that the third volume contradicts the first, that in the third volume Marx "abandoned" his own theory of value. A strange logic in Mr. Frank!

True, the cited passage tells us, that in the last resort the prices are still regulated by the labor value of commodities. Prior to the release of the third volume it could remain not entirely clear, what Marx understands by that regulation in the last instance. But on this score one could build one or the other guesses. But that this regulation did not mean that direct match, about which Mr. Frank speaks and about which really thought some readers of "Capital" (Messrs. C. Schmidt and A. Skvortsov included), this is obvious and does not need any evidence.

However, you can't have too much of a good thing (butter never spoils the porridge). In our "critical" time it does not hurt to prove even quite obvious truths. We too give some extra arguments in favor of the thought maintained by us.

In the second volume of "Capital" Marx (chapter 11), examining Ricardo's specified evidence of the difference between fixed capital, on the one hand, and circulating on the other, among other things says:

"When the social surplus-value is distributed between the capitals invested in different branches of industry, differences in the various times for which the capital is advanced (for example, varying lifespans in the case of fixed capital) and different organic compositions of capital (thus also the different circulations of constant and variable capital) have similar effects in the equalisation of the general rate of profit and the transformation of values into prices of production"2

From these words quite clearly follows:

1.That value of commodities is converted into the price of production.

2. That the price of production of a given product is not, or at least, not always equal to its value; if it were equal, then the turnover time and the organic composition of capital would have no influence.

3. That social surplus value is allocated among individual companies according to the law (yet unknown to us) of the transformation of value in price of production.

These three conclusions, on the one hand, explain the meaning of the remarks that we have borrowed from the first volume, but on the other – are a summary (though very short and not very full) of that very solution of the "sphinx's riddle", that ends in the third volume, and which, according to Mr. Frank, emphatically contradicts the theory of value, as set out in the first volume.

But that is not all. Also in the second volume of "Capital" Marx (chapter 17) says that with a general rise in wages, "the price of goods produced in branches of industry in which variable capital is predominant rises, whereas prices fall in those branches in which constant or fixed capital predominates."3

Marx could not hold such a view, if he believed that the "average price" of the commodities is equal to its value. With this agrees anyone who is familiar even if only with the alphabet of the by us occupied theory. And with careful attention to the question anyone who understands business people likewise agrees with the fact that also this view of Marx fairly clearly indicated the sense, in which Marx solved his "riddle": knowing this view, we would have every right to be surprised, if the third volume gave us not that solution, which we find in it today. Then we could really talk about "contradiction" between the various volumes of "Capital". Whereas now we do not have even the shadow of such a right.

It is true that many of the "followers of Marx's theory of value" did not notice the by us indicated locations of the second volume and continued to understand this theory exactly as hitherto understood it Mr. Frank, i.e. in the sense that the "average price" of commodities coincides with their values. And this, of course, can not be praised. But Marx here is not at fault, and his "abandonment" of his own theory still remains a fiction of Mr. Frank.

However, Mr. Frank just repeats someone else's fiction. It's obvious that he was mislead by Böhm-Bawerk, who, in his famous work: "Zum Abschluß vom Marxschen System" (Karl Marx and the Close of His System), advanced an imaginary contradiction of the third volume with the first, as a not subject to doubt truth and as one of the most striking proofs of the economic insolvency of Marx's system. Mr. Frank finds this work of the Austrian professor serious, well thought-out and thorough. According to him, the reasons for the neglect which it met in the Russian literature, may lie in anything, but not in the quality of the work (p. 18, note). "To a systematic and thorough criticism, – he adds, – this work still has not been subjected, despite the fact that about it was written a lot" (p. 19, continuation of the same note). We do not know why none of the Russian writers until now did not want to "systematically and in detail" disassemble this work of Böhm-Bawerk. But we can confidently say that the reason for this lies, of course, not in the strength of the occupied by Böhm-Bawerk theoretical position. That this position could not be more weak, can be seen from the mere fact that the key of it is the all the same non-existent "contradiction" between the third and the first volume of "Capital". We sincerely regret that the "critical" thinking of Mr. Frank failed to critically relate to Böhm-Bawerk and did not notice the infinite disutility of that critical campaign against Marx, which was undertaken by this theorist of marginal utility. A critical attitude to Böhm-Bawerk would have protected our critic from many important misconceptions. Of course, with such an attitude to Böhm-Bawerk the book of Mr. Frank, perhaps, would not have been written at all and would not have taken the rather respectable size, which it has now (VI and 370 pp.). But this would not be a huge disaster. Already Kozma Prutkov gave the excellent advice: Better fewer, but better.

Having attributed to Marx (i.e. Marx of the first style, as is said of painters) the idea that the average prices of commodities are equal to their values, Mr. Frank argues quite logically, by attributing to him a "distribution scheme", which boils down to the fact that "the process of distribution of the entire amount of value produced in a society is accomplished in each branch of industry separately and independently from other branches of industry, and that therefore the capitalists of every industrial groups receive the "surplus value", created by the workers of the same industrial group. The whole of society turns out to be divided into a number of social groups, within which takes place the process of distribution of social income, but who among themselves only exchange one kind of product to another, but do not distribute social income (pp. 268-269).

In connection with this "scheme of Marx", Frank sagely observes that it is "incorrect or, at least, one-sidedly depicts the actual process of distribution in capitalist society" (p. 269), and that in the third volume of "Capital", Marx abandoned likewise this scheme (p. 271). "The picture of distribution receives in the third volume the following look." "Not every individual capitalist retrieves surplus value in the exchange of labor for the product, but the entire capitalist class together. A secondary exchange between the individual members of this class signifies not only a change of the use-forms of the surplus value among the capitalists, so that each of them individually derives his income not only from the first exchange, but also from the second. More precisely from the first exchange the entire capitalist class extracts surplus value, and every member of it individually appropriates to himself a share of this value in the second exchange: as this latter exchange is not an exchange of equal value against equal, it also signifies a distribution of surplus value between capitalists" (p. 272).

Mr. Frank finds this "second scheme" of Marx more correct than the "first", but it also unclearly formulates, in his opinion, those conclusions "to be drawn from the assumptions on which it is based." Among these assumptions, Frank primarily refers to "the recognition (emphasis of Mr. Frank) of social labor as measure of subjective value" (pp. 272-273).

As the reader, of course, noted, the purchase and sale of labor-power is called by our critic the exchange of labor for the product. From his point of view, this change of terms is not devoid of expediency. But that it is absolutely groundless in essence and can bring forth nothing but confusion of ideas, this is clear by itself. Therefore we, beyond a mere reference to it, move on to the "recognition" of labor as measure of social subjective value.

What is this social subjective value?

If we have before us a social group as a single economic entity, – says Mr. Frank, – it also implies unity of will and needs, and hence, also the unity of the assessment of the benefits for all its members. In this sense, social can be called a subjective assessment, and the corresponding value – subjective social value (p. 248).

Thus, the social subjective value of a commodity, is – that value which it has in the eyes of society. We note in passing that, according to Mr. Frank, a condition for the emergence of a sense of this value ​​is the benefit (/use, advantage) of well-known commodities for the self-preservation of the whole social economy, all groups combined (p. 246).

By what means then can social labor become a measure of social subjective value?

Mr. Frank distinguishes two types of economies: 1) isolated economy, and 2) exchange economy. Isolated he calls such an economy, "in which the needs of its subject are satisfied by the own activity of this subject" (p. 244). With this it doesn't matter, – who is the subject of the economy: the individual, family, family clan or society at large. With regard to the exchange economy, its character is sufficiently determined in this respect by its name. Mr. Frank takes first the isolated economy and tries to show that in it "labor value is nothing other than the subjective value of income" (p. 244). He then considers the significance of this theorem in application to the exchange economy. In the analysis of his arguments we naturally keep the same order.

Mr. Frank reasons as follows.4 The "value" of every commodity is determined by the intensity of that need, the satisfaction of which is dependent on the possession of given commodity. While with the help of certain means of production there can be created a certain amount of all commodities, the possession of each of them is not at all a condition of satisfaction respective of his needs: if there is an absence of a commodity, it can be created again. With this will have to be sacrificed only a certain amount of that means of production, i.e. in place of the least useful product to him. Thus, this sacrifice is the same when creating all in production related commodities: it is equal to the value of the least useful product of the given means of production. If we put in place now the concept of "means of production" the concept of labor, which also serves thus as a common means of production for all the reproducible commodities, then we come to the conclusion that the subjective value of these commodities is determined by the value of the least useful product of labor. Since the possession of each of these commodities depends for a human on the expenditure of a certain amount of work, then with the loss of each of them he can secure the satisfaction of the respective needs, by spending on the production of the given commodity a required amount of labor, i.e. losing therewith the least useful product of labor. Donation of a certain amount of labor, required to create the commodity, is therefore equivalent for a human to donated marginal utility of the least useful product of this labor ... Labor, as the general condition for creating commodities, becomes the general measure of subjective value. The subjective value of the products of labor coincides, in this way, with their labor values, i.e. appears the result of an evaluation of commodities in proportion to expended labor on their production" (pp. 233-234).

The subjective value of the excerpts made by us is determined for us by the fact that this long commodity5 clearly shows, in what logical contradictions Mr. Frank falls under the influence of his intense needs to correct Marx by means of Böhm-Bawerk. In fact, the measure of the subjective value of the products appears with him not labor, but the subjective value of this "means of production" determines the subjective value of its least useful product. This is called the sending from Pontius to Pilate or, — to put it in less literary language, – treading on one place. If, not satisfied with such a "critical" treading, we ask ourselves if there is any hierarchy of human needs, Mr. Frank would not hesitate to answer us, that there is. "The subjective value of bread, – he writes in italics, – is higher than the value of adornments" (p. 302). Along with "adornments" here obviously one can put all the luxuries: their subjective value is below the value of items of necessity. That is clear, and this will help us get out of the logical impasse into which we got thanks to our "critic".

Let us imagine that the subject of an isolated economy, – let us say Robinson on his island, – spends a certain number of hours for the production of necessities ("bread" of Mr. Frank) and an as precisely defined number on the preparation of luxury commodities ("adornments"). If for the production of a given luxury Robinson need to use as much time as he needs for making a given necessity, the labor value of these items will be the same, despite the fact that one of them is "bread", while the other is "adornment", and that "the subjective value of bread is higher than the value of adornments." This means that the labor value of the products does not coincide with their subjective value, [i]and therefore can not be the measure of them[/i ]. And because of this also all of Mr. Frank's reasoning is built "on sand" and therefore has a completely negligible marginal utility.

If Mr. Frank abandons his – expressed in italics – idea that "the subjective value of bread is higher than the value of adornments", and, like some other pupils of the Austrian School, for example, (William) Smart in his "Introduction to the theory of value", begins to assert to us, that the subjective value of adornments can be much higher as such than the value of bread, then we will remark to our author, firstly, that such an "abandonment" creates a whole "overturn" in his "system", and secondly, that his situation not in the least even improved by the "abandonment": so long as the manufacture of these two items will cost the subject of an isolated economy the same labor expenditure, so long they do not cease to be for him the same labor value, no matter how different among themselves, in their intensity, those needs are, that they satisfy.6

It goes without saying that, if the given item does not satisfy any needs, the labor expended to produce it, would be pointless and therefore creates no value. But this was very well known to Marx, and to justify this position, there is not the slightest need to appeal to Böhm-Bawerk.

And what about the social subjective value in exchange economy? On this score Mr. Frank tells us this:

"In a society where a real unity of the subject of economy is lacking, or where the activity of the subject plays at least a minor role in the totality of social and economic processes, the category of social values ​​takes place, in so far as in society is spread a representation of ​​the social economy, as a unified whole. The condition for the emergence of a representation of social value is, thus, a certain cultural-legal or ethical view of the world, based on the recognition of all (?) people members of society and the creation of public interest, as such... Where a view of the world is absent, there can not take place either an idea of ​​the social value of the product" (p. 255).

Let us leave it at that. He who carefully read these lines, would also himself have seen, that not one of the "distribution schemes" of Marx was not and could not have been based on the recognition of social labor as measure of social subjective value. Such "recognition" is nothing more than the very unfortunate "work" of Mr. Frank.

The goal Mr. Frank set for himself, remained unfulfilled. His "critical study" is an almost continuous confusion of concepts. And yet it has for us some "subjective value": it shows us, that someone from the followers of Marx should make a new presentation of the theory of labor value, – such an exposition, that would rise to the occasion of the blatant confusion, contributed to this the subject by the "critics" like Mr. Struve, Tugan-Baranovsky, Frank et al., and would eliminate this confusion.

Mr. Frank with great praises responds (pp. 140-141, note) to the articles of Mr. Struve devoted to the "criticism" of Marx's theory of value and appearing in "Zhizn." On his part, Mr. P. Struve praised the "study" of Mr. Frank in a very superficial review, published in the August booklet of "Mira bozhego" (Peace of God).

Why was it that, not being afraid to sin,
the Cuckoo praised the Cock?
Simply because the Cock praised the Cuckoo.7

• 1"Capital", St. Petersburg, 1872, p. 109. (p. 269, Marx 1976). Note: In the edition quoted by us the word "Wert" (value) is translated by the word stojmost. Nowadays to indicate this concept among us one uses the word: tsennost. We believe the old term is more fortunate, but in order to avoid terminological confusion, we also relinquish it.
• 2Page. 152 Russian. transl. and 182 of the second edition of the German original. (p. 294, Marx 1978)
• 3Page. 315 of the second edition of the original German and 253 Russian translation (ed. 1885). (pp. 415–16, Marx 1978)
• 4Apologies for the quality of my translation of this paragraph – Noa Rodman.
• 5("длинное благо" – 'Blag' has several meanings in Russian. Plekhanov is making some kind of pun.)
• 6This case shows that the term "stojmost" is a more apt term than "tsennost": the tsennost of the object is determined here precisely by the efforts, that it takes to make it.
• 7(Krilof and His Fables: https://books.google.com/books?id=E0zvAgAAQBAJ&pg=PA80)