1. The Importance of the Problem of Value.
The problem of value has constituted a fundamental question of political economy since the earliest days of the science. All other questions, such as wage-labour, capital, rent, accumulation of capital, the struggle between large-scale and petty operation, crises, etc., are directly or indirectly involved in this fundamental question.
“The theory of value stands, as it were, in the centre of the entire doctrine of political economy,” Böhm-Bawerk rightly observes. (Grundzüge der Theorie des wirtschaftlichen Güterwerts, p.8.) This is not hard to understand; price, and therefore the standard determining price — which is value — is the fundamental all-embracing category in the production of commodities in general and in the capitalist production of commodities in particular, whose child is political economy. The prices of commodities regulate the distribution of the production forces of capitalist society; the form of exchange, whose presupposition is the category of price, is the form of distribution of the social product among the various classes.
The movement of prices leads to an adaptation of the supply of goods to demand, since the rise and fall of the rate of profit causes capital to flow from one branch of production to another. Low prices are the weapon by which capitalism cuts its path and finally conquers the world: it is low prices that enable capital to eliminate artisan production, to supplant petty operation with large-scale operation.
The contract between the capitalist and the worker — the first condition for the enrichment of the capitalist — assumes the form of a purchase of labour power, i.e., the form of a price relation. Profit the expression in terms of money-value, but not the natural expression of surplus product, is the driving motive of modern society: on this precisely rests the entire process, of the accumulation of capital, which destroys the old forms of economy and is distinguished sharply from them in its evolution as an entirely specific historical phase of the economic evolution. etc. Therefore the problem of value has again and again attracted the attention of economic theorists in far higher measure than any other problem of political economy. Adam Smith, David Ricardo. Karl Marx — all took the analysis of value as the basis of their investigations. The Austrian school also made the theory of value the corner-stone of its system, having undertaken to oppose the classics and Marx and to create their own theoretical system, they necessarily concerned themselves chiefly with the problem of value.
It follows that the theory of value in reality still occupies the central position in present day theoretical discussions, although John Stuart Mill already considered this question disposed of. (John Stuart Mill, ibid., p.209.) As opposed to Mill, Böhm-Bawerk believes that the theory of value has still remained “one of the most unclear, most confused, and most disputed sections of our science”; (Böhm-Bawerk, Grundzüge, etc., p.8), yet he hopes that the studies of the Austrian School will put an end to this confused state. “It seems to me that certain labours performed in recent and very recent days,” he says, “have introduced the creative thought into this confused ferment, from a fruitful development of which we may expect complete clearness.” (Ibid., p.8.)
We shall attempt below to subject this “creative thought” to the necessary examination; but let us state at the outset that the critics of the Austrian School often point out that the latter has confused value with use-value; however, that its theory belongs rather to the domain of psychology than to that of political economy, etc. No doubt this objection is fundamentally correct. Yet we do not think our judgment should end here. We must rather proceed from the point of view of the representatives of the Austrian School, we must grasp the whole system in its internal relations, and only then reveal its contradictions and insufficiencies, the products of its fundamental fallacies. For instance, value has been variously defined. Böhm-Bawerk’s definition will necessarily differ from that of Karl Marx. But it is not sufficient to declare simply that Böhm-Bawerk does not touch the essence of the matter, i.e., that he does not treat that which should be treated; rather, we must show why his treatment is wrong. Furthermore, it must be shown that the presuppositions from which the theory in question proceeds lead either to contradictory constructions or fail both to include and explain a number of important economic phenomena.
But where is there any point of departure for criticism in this case? If the conception of value is completely different even in the most varied tendencies, i.e., if, according to Marx, it has no points of contact at all with that of Böhm-Bawerk, how will it be possible to formulate a criticism at all? In this situation, however, we are aided by the following circumstance: great as are the differences between the definitions of value, though they may even contradict each other in places, they nevertheless have something in common, namely, in conceiving value as a standard of exchange, in that the conception of value serves to explain price. Of course, the explanation of prices alone is not sufficient, or, more properly, we have no right to limit ourselves to an explanation of prices; yet the theory of value is the direct basis for the theory of price. If the corresponding theory of value solves the question of price without internal contradictions, it is a correct theory; if not, it must be rejected.
These are the considerations from which we shall proceed in our criticism of Böhm-Bawerk’s theory.
We have seen in the preceding section that price is considered by Böhm-Bawerk to be the resultant of individual evaluations. His “theory” therefore is divided into two parts: the first part investigates the laws of the formation of individual evaluations — “the theory of subjective value” — the second part investigates the laws of the origin of their resultant — “the theory of objective value.”
Such a strong introduction to his Chapter, The Theory of Value. Liking this a lot.
from Economic Theory of the Leisure Class. Nikolai Bukharin 1927