Kevin wrote “It is unequal exchange that is at the root of all of the evils of capitalism.”

But Christian writes: “That’s very wrong, see my article:
Marx’ Theory of Value and Why Exchange Can Be “Equal” and Still Bad.”

Christian’s article says: “The problem with capitalism isn’t that prices are “unfair”—most prices aren’t. There are other problems. First, production only takes place if there is profit.”

What’s the diff between unequal exchange and exchange for profit?

I find it very difficult to parse all the high-concept economic jargon, but I think I agree mostly with Kevin that “It is unequal exchange that is at the root of all of the evils of capitalism,” only I would
add “or any other economic system.”

I think we must hold a laser-like focus on the problem of externalities, which IMO are the dead give-away of any rip-off or con game.

I was feeling in agreement, wanting only to add “or any other economic system.”

And then from Christian: “That’s very wrong, see my article: Marx’ Theory of Value and Why Exchange Can Be “Equal” and Still Bad.”

The linked article says “The problem with capitalism isn’t that prices are “unfair”—most prices aren’t. There are other problems. First, production only takes place if there is profit.”

So whats the diff between unequal exchange and exchange for profit?

It is almost impossible for me to feel I have correctly parsed the premises and logic in all this high-concept, jargon-ladden economic theory.

Just my 2 cents.

Second, the portion of your article that actually does consist of supporting argument involves mainly an argument (that of “winners” and “losers” in market competition leading to a propertyless proletariat selling its labor on disadvantageous terms) that I attempted to answer in the past on the P2P list–an answer which you never addressed.

As I pointed out there, under capitalism artificial scarcity rents on land and capital, through the principle of compounding return, enable “winner” status to build on itself over time. Eliminating the role of the state in enforcing such artificial scarcities (such as entry barriers for the supply of secured credit against member property in mutual banks, enforcement of absentee title to vacant and unimproved land, etc.) will severely restrict the ability of the winners’ wealth to grow on itself over time. At the same time, the elimination of such artificial scarcities of land and capital will reduce the cost threshold for acquiring the minimum amount of capital and land needed for comfortable subsistence, so that the “losers” have a lot less distance to fall.

My point was mainly that, whenever markets are the primary means of organizing exchange so that people cannot survive without buying and selling, the need to sell labor power (and hence capitalism) will necessarily emerge. In response, you sketch a society where people can survive without buying and selling, by reverting to a subsistence-based way of life. Clearly, my argument doesn’t apply to such a society where markets are not needed for survival.

So, in theory such a society might be possible. In practice, I seriously doubt that subsistence could be a viable alternative in modern society. Food and shelter are not enough, there are just too many things which people need for a worthwhile life–health care, mobility, communication technology, culture, education and so on.

For mere survival, subsistence may be sufficient (provided you stay healthy, that is). But to live a good life, we need productive interactions with other people, either through markets or through a better mode (such as commons-based peer production).

I find that Raoul is not saying the things that you say. He says that when you try to artificially suppress money, it comes back, which is something that strengthens our argument.

That’s just what I wrote in my text: “Raoul also explained that money is just the incorporation of symmetric exchange; you cannot abolish money without abolishing exchange, and vice versa. Money emerges spontaneously when it is needed, e.g. cigarettes were used as a substitute money in times of war. When markets are forbidden but there is no other adequate way of organizing production and distribution, black markets appear–markets in their worst form. So money can only be abandoned by getting rid of its root cause: exchange.”

So your task, if we really want to change something, is to get rid of exchange, to make exchange superfluous. If production is common–resources and means of production are commons, and tasks and outputs are shared according to some community-defined rules–than exchange become superfluous (that’s just what I describe in my book).

Since it cannot be abolished artificially, then the alternative to regulate it differently becomes a rational option, and this is the only thing we are proposing. So the choice comes down to this: do you prefer a money which is regulated in the interests of a tiny class of financial predators and destroys the productive economy, or is it better to regulate it in the interest of the majority of the population?

That assumes that “money” is just a name which you can fill with any content you like. My understanding (and also Raoul’s, I assume) is that money has its own logic which you cannot just suppress since it, like money itself, will inevitably come back as long as it is needed. So you cannot artificially suppress interest (etc.), just as you cannot artificially suppress money.

First, your argument as to why “exchange can be ‘equal’ and still bad,” to a large extent, consists of the same assertions that I catalogued in my description of points of disagreement between Marxists and individualist anarchists (I don’t see why the latter term should be put in quotes any more than the former, since it is the legitimate name of a real historical movement).

I stated in my post that Marxists believed exchange as such to contain the seeds of capitalism, and considered exploitation to be inherent in the sale of labor power. But in my post I explained *why* I think the Marxists get it wrong, whereas the article you link consists mainly of the assertion without supporting argument.

Second, the portion of your article that actually does consist of supporting argument involves mainly an argument (that of “winners” and “losers” in market competition leading to a propertyless proletariat selling its labor on disadvantageous terms) that I attempted to answer in the past on the P2P list–an answer which you never addressed.

As I pointed out there, under capitalism artificial scarcity rents on land and capital, through the principle of compounding return, enable “winner” status to build on itself over time. Eliminating the role of the state in enforcing such artificial scarcities (such as entry barriers for the supply of secured credit against member property in mutual banks, enforcement of absentee title to vacant and unimproved land, etc.) will severely restrict the ability of the winners’ wealth to grow on itself over time. At the same time, the elimination of such artificial scarcities of land and capital will reduce the cost threshold for acquiring the minimum amount of capital and land needed for comfortable subsistence, so that the “losers” have a lot less distance to fall. Being a “loser” hurts a lot less when you have access to a cottage and means of subsistence on the village commons–which is exactly why the propertied classes fought so hard to enclose the commons on the eve of the Industrial Revolution.

And as I also pointed out, you conception of “winners” and “losers” seems to reflect a paleotechnic conception of industry, in which enormous capital outlays are the basis for firm boundaries and for the authority relationships within hierarchical firms. But in an economy where the cost of the basic equipment required for physical production are imploding in a growing number of industries, the distinction between “winners” and “losers” becomes increasingly meaningless. When most people own their own living spaces free and clear, and a growing part of subsistence needs can be met through production in household or informal production with almost zero overhead cost because most people already own the basic capital equipment, the very idea of “going out of business” is meaningless.

Even on a larger scale, in networked manufacturing on the Emilia-Romagna model, the small-scale machinery that’s used is so cheap that it’s entirely feasible for a small workers’ co-op to own it. In the flexible manufacturing networks that characterize such industrial districts, it’s quite uncommon for individual shops to “go out of business” in any conventional sense. Rather, individual shops are constantly entering and leaving particular projects, with constantly shifting contractual relationships between themselves.

In both cases, the overhead costs are so low that it’s possible to ride out a slow period indefinitely. And in low-overhead flexible production, in which the basic machinery for production is widely affordable and can be easily reallocated to new products, there’s really no such thing as a “business” to go out of. The lower the capitalization required for entering the market, and the lower the overhead to be borne in periods of slow business, the more the labor market takes on a networked, project-oriented character—like, e.g., peer production of software. In free software, and in any other industry where the average producer owns a full set of tools and production centers mainly on self-managed projects, the situation is likely to be characterized not so much by the entrance and exit of discrete “firms” as by a constantly shifting balance of projects, merging and forking, and with free agents constantly shifting from one to another.

I entirely agree that Marx did not intend the LTV to be normative, but rather descriptive. As Maurice Dobb pointed out in his introduction to The Poverty of Philosophy, Marx wanted to show how it was possible for labor to be exploited even when goods all exchanged at their real labor-value. As Dobb also pointed out, Marx was obliged to take this position and to deny the significance of unequal exchange (just as Engels was obliged to deny Duhring’s “force thesis”) because accepting unequal exchange as the result of privilege would have left him open to the proposals of “petty bourgeois socialists” like Hodgskin to simply remove privilege and unequal exchange and institute a producer-controlled system of market socialism.

I still do not believe you have demonstrated that wage labor itself puts a disadvantage on the worker. It depends on whether artificial barriers are created to self-employment, and whether the working class (through Enclosures and the like) has been deprived of access to the means of subsistence and production. You have yet to demonstrate that the normal state of affairs in a genuine free market, with free access to vacant land and the provision of capital at cost, is for the worker to have to offer to work for a low enough wage to convince the capitalist to hire him (rather than the capitalist having to offer a high enough wage to be more profitable to the worker than living on his own land and exchanging his surplus produce and other forms of home production with those of his equals). The proper state of affairs in a free market, as opposed to a capitalist market, is for wage employment to compete with self-employment.

And I believe that the attractions of self-employment will be such, in a society without privilege constraining access to land and capital, that in most cases wage labor will not be found on terms profitable to the employer. So wage employment will be far less prevalent, and with a far lower rate of profit where it exists–and those who do engage in wage labor will be more likely to take it on a part-time basis to supplement subsistence livelihoods, with prolonged periods of self-employment when they wait for terms of employment more to their liking.

BTW: I do not agree, in fact, that most prices are not unfair. In the monopoly capital sector, superprofits from oligopoly markup, from rents on “intellectual property,” etc., have far surpassed the acquisition of surplus value from the wage labor relationship.

Michel

Unequal exchange is based on artificial scarcity.

Artificial scarcity can only be brought about and maintained by state-mandated and state-upheld monopolies.

Examples of those damaging monopolies are numerous.

Money is one of them. State mandated bank money promotes money scarcity and is at the root of the need to “pay for the use of money”, leading to a very unequal exchange.

Health care is another of those monopolies. State mandated exclusivity of pharmaceutical production and medical licensing have made health care so expensive as to be practically outside the budgetary possibilities of many countries. While pharmaceutical companies and medical insurers are hugely profitable, the price for drugs and services have skyrocketed.

As another example, intellectual property laws are guarantees by State power to monopoly-type interests. Also in this category would be the control (and sale) of the right to use frequency bands for purposes of telecommunications and the insanely high barriers of entry for production of cars for example, where you practically need a production series before you can obtain certification of a car for public sale.

Of course this has been recognized and we have anti-trust laws, but within the logic of capitalism, those laws are just another challenge to overcome. Consequently, corruption has hollowed out those laws to where they have become practically ineffective.

The P2P logic will have to overcome those gatekeepers of artificial scarcity that are the laws and government regulations which – in one way or another – restrict who may do what. For a real P2P economy to take off, all those monopolies will have to gradually be dismantled.