From the September 1937 issue of the Socialist Standard
Blogger's Note:
Fred Montague was the Labour MP for Islington West and, as a young man, was an active member of Hyndman's Social Democratic Federation. He was replying to Frank Evans' two-part article on the Labour Theory of Value which appeared in the
July and
August 1937 issues of the
Socialist Standard.
Mr. F. Montague, M.P., Attacks the Labour Theory of Value (First Article)
I thank The Socialist Standard for allowing me to deal at reasonable length with Mr. Evans's articles on “The Labour Theory of Value.” The view that I desire to uphold is (1) that the Marxian doctrine of exchange is not a true theory of value, even an erroneous one, and (2) that it is not Socialist.
Mr. Evans asks what determines value when supply and demand are equal. I take up this point at once because the question throws into sharp relief, as I think, the fallacious reasoning common to the Marxist case.
Unless value and price are independent of each other, and there is in fact a “soul of the commodity” (Mr. Evans’s own phrase), such a question is like asking what determines the weather when the mercurial level in the barometer equals the atmospheric pressure outside. It is meaningless, not merely irrelevant.
But whether there is such an independent standard is the very issue in discussion. The objective and immediate fact in exchange is that prices fluctuate between what the buyer will pay rather than go without, and what the vendor will accept rather than make no sale, the operations of the market going on readily within those limits. No theoretical standard makes any difference to the facts. It is for the Marxist to show, over and beyond, that the alleged "soul of the commodity” is more than a metaphysical
Pepper’s Ghost.
What Marx actually does is to average prices and call the result “value.” The independent standard turns out to be just the mean of price fluctuations, nothing more, except by way of dogmatic assertion. In other words, prices fluctuate “around” a standard set up by the fluctuations. An argument in a circle if ever there was one, and characteristic of the Marxian logical method throughout.
Commodities “embody” labour since they take labour to produce, and, obviously, labour takes time. There is no dispute so far. But the “embodiment” of labour does not, of itself, prove the labour-time theory. Marx relies upon the arithmetical process of addition-plus-division called “striking an average” and the platitude, which no one quarrels with, that exchange does not change things either in quantity or worth. In other words, he postulates labour time value for a start, performs the arithmetical exercise mentioned, and produces the inevitable result as proof of his postulate.
I could do exactly the same with molecular content, weight, or cubic volume. I could add up the eyes in a bushel of potatoes or the cheese-mites in a quantity of ripe “Stiltons," showing that nothing is added in the process of exchange, and, by division into the units in each case, that in average exchange averages are exchanged. There is no intended gibe in this. I contend that Marx does no more than what I have described and that averaging out an admitted content of the commodity no more proves the Marxian doctrine of exchange than it disproves any other.
When Marx tells me that if corn of the value of £2 10s. exchanges with wine of the value of £2 the com and wine together still total in value £4 10s. and that someone has merely been robbed, I agree. If the prices are as stated there is nothing else to be said. Not even the Marxian Aunt Sally, the “vulgar economist," ever claimed that profit was “created" outside the price ultimately fixed. Marx is right. Two-and-two, if it is two-and-two, make four. Two-pounds-ten- shillings and two-pounds make four-pounds-ten- shillings. Indubitably! Value has already set its seal upon even an inequitable transaction. But its inequity does not prove the Marxian Theory of Value.
The question of what is value still remains open. How is it that Marx begins, in this as in every other illustration of the kind, with money’s-worth ? Corn, wine, coats, chairs, all are priced for a start. Is it that the “money form of value" is invoked in order to give verisimilitude to an otherwise bald and illegitimate argument? Value is the thing actually under discussion. Its nature is being probed. Yet Marx calmly calls upon the competitor to hold the stop-watch, the prisoner to occupy the bench, tells us that pounds sterling are pounds sterling as if it were divine truth, and then proceeds to superimpose labour time upon his small change without a shred of logical excuse!
Once detecting this type of fallacy it is easy to understand why any other definition of value, any conception fantastic or otherwise, may be substituted for labour time without it making the slightest difference to the logical structure of any of the supposed cast-iron instances of the boot-and-butter-equation order. They begin with value (by sheer presumption labour time) in a chain of deduction that should only end in that desired, if elusive, quarry.
If this is disputed I challenge anyone to put pounds
avoirdupois in the place of pounds sterling wherever the latter occurs by way of illustration, and see for himself whether a scrap of logical difference is made by the substitution. And if this is true where is the validity of the reasoning, whatever value might be in actual fact?
No assertion in the Marxian theory is held to be of greater importance in the alleged unique proof of exploitation than that profit is made, not in the market, but in the factory. It is imagined that the origin of value itself is involved in the dogma. How is it supported?
We are told that if a capitalist were to make profit on the market he would be compelled to surrender it when he in turn became, not a seller, but a buyer. Capitalists would have to do this upon the average all round anyhow if profit in general were made on the market. If someone sells dear, someone else buys dear; if anyone buys cheap, somebody sells cheap. Profit cannot be created in the mere exchange of commodities. No one ever said that it could, as a matter of fact, for that it has been said is a Marxian fiction.
But, this aside, what is meant by an adventitious profit “made on the market" being “surrendered" ? Surrendered to whom? Not to the consumer, for the “surrendering" is supposed to take place in the subsequent buying. To other capitalists then! Capitalists surrender profit to themselves! Surely an amazing outcome of a Marxian postulate that is inscribed on the very corner-stone of the theory. One might suggest that when the capitalist sells goods at large he takes it out of the public at large, whereas when capitalists “surrender" profit to each other they actually share the swag.
But I make no such statement. I regard the distinction between the factory and the market in the process of profit as entirely false. The act of making and realising profit is not two but one. There is no real distinction between paying wages and exchanging food and clothes for the same wages. If the process were to be completed without a market and the sustenance of the worker paid in kind direct the result would be the same. The worker is robbed of the difference between what he socially produces and what he consumes. That is the reality. Wages are only command of consumable goods. The market is only an extended factory.
Nothing is “made" in the factory but commodities. Nothing is realised in the market but the value of those same commodities. The operation begins in the factory to be completed in the market and Marx draws an entirely false distinction between two parts of the same process in order to bolster a time concept that would otherwise show itself as demonstrably false.
In my next and final article I shall seek to show that this time concept obscures the fundamental basis of Socialism and that its logical conclusion is, not Socialism, but a wage system. I conclude now by pointing out that “buying cheap and selling dear” is not alleged to be the origin of profit by anyone and is no part of any theory of value whatever. It is pure invention and pure fiddle-sticks. There is no meaning in the terms until value has been determined. The most capitalist of economists asserts that commodities exchange at actual values according to their conceptions of value. Marx juggles with “dear” and "cheap” without authority or relevance, and in advance of the very judgment that alone can settle what is dear and what is cheap. He begs the question.
Reply.
As the writer of the article criticised is away at present, the criticism has been passed on to me.
There have been, and still are (for we get the question at our lectures), people who argue that price, and therefore value, is determined by the operations of supply and demand. In order to show that this cannot be so, we point out that at times demand and supply are equal, and therefore neutralise each other. At one time supply is greater than demand, at another time it is less. There must be a time when, like the see-saw, the two sides are level. In order to dispose of this argument, therefore, we put a question that is quite relevant, in spite of Mr. Montague’s barometrical illustration.
The ends of a see-saw rise a certain height and fall a certain depth, but they do so about a certain point. Why? Because the fulcrum keeps the seesaw moving about that point. Whether the whole contraption overturns or is wrecked does not alter the matter. Mr. Montague may de-materialise the fulcrum but it will still be there.
Prices rise and fall about a certain level—the point is higher in a pound of butter than in a pound of potatoes. What is it determines this level? Is it the higgling of the market that determines a higher point in one than in the other, or is it something else? There must be something, and it cannot be the relations between supply and demand as, in general, they only have effect within a limited range—supply and demand of butter, supply and demand of potatoes. It should be obvious that relative usefulness is also ruled out.
Marx does not average prices and call the result value. He shows that the fluctuations are around a given point and that it is the value of the article which, in the ultimate, determines the position of this point. Prices, therefore, do not “ fluctuate ‘around' a standard set up by fluctuations,” a curious reading of Marx, if ever there was one!
The level of the sea rises and falls, but there is still a mean level which is not the result of averaging the fluctuations but of the quantity of water in the sea, though averaging the fluctuations will give the same point. That disposes of Mr. Montague’s barometer.
Marx does not rely upon an arithmetical process of addition plus division, etc., to prove the labour-time theory of value, nor does he “postulate labour-time value for a start.” He examines the exchange relation at length and finds that the proportions in which articles exchange for each other is not accidental but is an expression of something that they all possess in common. He uses a geometrical illustration to make the point clear; the calculation of the areas of rectilinear figures by decomposing them into triangles.
He then sets out to find, by the process of exclusion, what it is that all commodities have in common. In the end he shows that the only measurable thing they all possess in common is human labour. This is the end of a process of analysis, which occupies the first five pages of "Capital,” and not the beginning, as Mr. Montague asserts.
Marx’s case is not, as Mr. Montague suggests, that someone is robbed because corn of the value of £2 10s. 0d. has been exchanged for wine of the value of £2. Such an entire misrepresentation makes us wonder. It seems incredible that anyone could have read Marx’s own version of his theory of value and hold such a view of it. Anyhow, we defy Mr. Montague to produce such a statement of the value theory from Marx’s writings.
Marx, in opposition to capitalist economists, . states most emphatically that equal values are exchanged—i.e., £2 of corn for £2 of wine—and yet someone is robbed. This disposes of Mr. Montague’s ironical remarks, which are quite irrelevant.
Marx does not begin all his Illustrations with money’s worth. In fact he does not mention money’s worth until he has reached page 41 of ‘‘Capital.” His previous illustrations are of the 20 yards of linen equals 1 coat variety. Having analysed the simplest forms of exchange and shown quite clearly that labour is the substance of value, Marx proceeds to examine the price form in the light of what has gone before. When he comes to this point he is dealing with the world of commodities around him, where "corn, wine, coats, chairs, all are priced for a start,” whatever Mr. Montague may think about it. As Marx does not say anything about pounds sterling being pounds sterling, or even arguing to that effect, we simply don’t understand Mr. Montague's attempt at humour in this connection.
According to Mr. Montague, it is a Marxian fiction that anyone-has said that profit is made in the mere exchange of commodities. This is another amazing statement. The view in question has been, and still is, held by numerous people. It was at the basis of one of the leading schools of political economy — the Mercantilists. Put in another form, it meant buying cheap and selling dear.
When the capitalist sells goods at large he does not take it out of the public at large. What he does is to get back in money form what he has taken out of his workers, and he can do this whether he sells to workers or capitalists.
As Mr. Montague does not accept the labour theory of value he naturally can see no reason to distinguish between the factory, where goods are produced, and the market, where their values are realised. Yet he agrees that the worker is robbed of the difference between what he socially produces and what he consumes. How is he robbed ? Mr. Montague does not say, and yet this is the very heart of the matter. It is failure to understand this that has put the worker at the mercy of every kind of tax reformer and money crank who professed to be able to give the worker a greater command over consumable goods.
No, Mr. Montague has made fun of Marx, but so far he has not shown any flaw in the view that the worker is robbed of the difference between the value of what he produces and what he gets. What he gets depends upon how much the employer pays him for the work he does and not upon how much his products realise in the market.
Gilmac.