The Forum: Concerning Value and Price

12, Elizabeth-street, Salford. 12.5.09.
Dear Sir,—Being desirous of a sound knowledge of Marx’s “Capital,” would you enlighten me on a few points? It is regarding Value, Price, and Profit. I can follow the theory as explained, but am unable to fit it to existing cases. Marx says : The Value of a commodity is the respective quantity of Labour embodied in it. Price is the monetary expression of its Value, which, when realised, should be due to the Labourer. He, however, only receives a portion of this price for the whole of his labour-power, the other portion is confiscated by the exploiter as surplus-value. Now is this theory actually carried out ? Take a case in point; a pair of boots are sold by the manufacturer to the wholesaler at a certain price, by the wholesaler to the retailer at another price, and by the latter to the consumer at still another price. How do the various dealers arrive at the prices ? I have asked several business men their method of fixing the prices, and all say cover cost of labour, etc., then add percentages for wholesale, retail, etc. A friend of mine produced a patent article. I asked him how he was arranging the retail price of this commodity. He informed me that it would be manufactured at 8d. and retailed at 3s. 6d., the difference between cost and retail prices being distributed between manufacturer, wholesale dealer, retailer, and royalty for himself. This is a sample of modern methods as I know them. According to Marx 3s. 6d. is its real value, or cost of production. Again, how do you account for a certain brand of article being retailed at different establishments within a quarter of a mile of each other at 10s. 6d. and 8s. 11d. respectively ? Again, an article is sold within a mile of the factory at 10½d., and at a minor establishment 20 miles away for 8d., and no gap of time intervening to allow for a slump.


Our correspondent’s difficulty seems to be, is Price the monetary expression of the Value of commodities in fact, as well as in theory. The real significance of this, of course, is that the enquirer challenges the correctness of the theory, for a theory is merely a scientific explanation of facts, and, though to be able to apply it to facts does not necessarily prove it right, if it is incapable of such application (as distinct from our ability to apply it), then the theory must be wrong.

Now the term “expression” must be taken in its algebraic sense, as meaning a sign or symbol of quantity. This being so, the Price of a commodity is a sign in money of its value—a sign, that is, of the amount of Labour embodied in it. The argument, of course, so far, is unsound ; for, as Mr. Harrison points out, equal values are sold at very unequal prices, and, as he might have pointed out, the price of a pair of boots at Northampton does not tell us if there is embodied in them the Labour of bringing them from America, or merely from the next street.

But Marx deserves closer attention, friend Harrison, and that would reveal that he safeguards his theory with several conditions. The labour is to be socially necessary human labour, such labour, that is, as is generally necessary to produce and present to the purchaser the kind and quality of commodity in question, under the prevailing conditions of production. Price, also, is to be taken over an extended period, so that fluctuations may cancel one another. A further condition is to presuppose the general environment of commodities—a free, competitive market.

The statement now runs “The Price of a commodity, taken over an extended period, and presuming the unrestricted play of competition, is the sign or symbol of the quantity of socially necessary human labour embodied in it.” This is another way of saying that commodities exchange at their value, and as this is evidently the theory our correspondent is trying to reconcile with every-day experienee, we may, having get our house in order, turn to his examples.

“How do the various dealers arrive at the prices ?” By the very simple process of getting each as much as he can. It takes two to make a bargain, you know, and the question is not so much arriving at a price as getting it. Ask your business men why they don’t double their “percentages for wholesale, retail, etc.” Ask them why they draw any line at all. They will be forced to admit that competition compels them to fix their prices with both eyes on the other fellow. If they work upon the system of “covering cost of labour and adding percentages,” that is only because they must have a system, and that system is as good as another. But how if one of them secures some exceptional advantage—exclusive access to some labour-saving machine ? He at once abandons the system, and lowers his prices only sufficiently to capture the market. That the exchange is effected on the basis of value is not due to human calculation, but to the nature of things. Think ! every sale is an exchange of two commodities. The holder of the boots and the holder of the gold face each other on an exactly equal footing. X of boots is just as much the expression of value of Y of gold as Y of gold is of X of boots. The holder of the gold “arrives” at a price just as much as the holder of boots, and departs as reluctantly from it when he finds the market against him. Thus each facing the other with like determination to get the most possible for his commodity, and with like desire to become possessed of his opponents commodity, who or what is to hold the balance between them ? Clearly the condition of the market. A scarcity of boots is in favour of the seller of boots; a plenitude of boots is in favour of the buyer of same.

So traders do not arrive at prices by “covering cost of labour, etc., and adding percentages,” (though they may think they do,) but by putting on all they think the market will bear.

Regarding the varying prices of wholesalers, retailers, etc., our correspondent is enjoined to remember that there are wholesale and retail markets, and that the passage through these of the average commodity is socially necessary under existing conditions. This is not accomplished without the consumption of further labour-power, which, purchased at its cost of production (in labour time), in its expenditure creates more than it cost to produce, and so continues to yield surplus-value every step of the necessary journey from the factory to the consumer.

Directly we come into contact with patented articles, of course, we leave behind the condition of unrestricted competition, for the very essence of a patent is protection from competition. Nevertheless, in the instance given, there does not appear to be any startling discrepancy in the proportionate distribution and that which Socialists claim obtains throughout the industrial world, especially considering that after leaving the factory the article has to be the subject of the expenditure of further labour-power before it rests its weary head in peace upon the bosom of the consumer. It is possible that, in spite of the protection of “patent rights,” “3s. 6d. is its real value, or cost of production,” measured in units of averagely efficient, socially necessary labour time, as our correspondent should not have neglected to state.

The instances of discrepancies in prices given by our friend show nothing more than that he is trying to make the broad law of exchange cover exceptional cases. In the struggle for trade many examples may be found of instances which utterly confound one who attempts to fit them to any theory. These, however, by no means show that the theory that Price is the monetary expression of value, under the given conditions, is not true in every-day life.


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