A Marxian “Reply” to B¨ohm-Bawerk

G. A Marxian “Reply” to B¨ohm-Bawerk

The theory of surplus value is also applied in the Grundrisse to analyze “the com- pensation for the longer fallow period of the capital” (MECW 28 : 445). When first mentioned this issue is set aside because it “presupposes the secondary and derived forms of surplus value, i.e. interest”; again: “we are here completely abstracting from the difference in the time during which capital must remain in the phase of production – in the process of productive valorization” (443). But, subsequently, Marx devotes a lengthy passage to the problem of “capital lying fallow, or labour [being] at a standstill,” illustrated inter alia by the case of maturing wine – which is the example later used by B¨ohm-Bawerk to criticize Marx’s value analysis (B¨ohm-

Bawerk 1890: 390). 32 As in the Transformation Marx defends the labor theory from an aggregative perspective. As for its substance, Marx takes for granted the validity of the surplus value- doctrine whereby labor is the source of surplus, and proceeds accordingly:

The difference in the return [of different capitals], so far as it is dependent upon the phase of the circulation process which coincides with the immediate production pro- cess, depends not only on the longer or shorter labour time which is necessary for the completion of the object (e.g. canal construction, etc.), but in certain branches of indus- try – agriculture – also on the interruptions in labour which are inherent in the nature of the work itself, when either capital lies fallow, or labour is at a standstill. . . . Here the constancy of the production process does not coincide with the continuity of the labour process. This is one moment of the difference [in the return]. Secondly : [In some branches] the product altogether requires a longer time to be completed, to be put into its finished state [than in others]. This is the total duration of the process of production, quite apart from whether or not there are interruptions in the operations of labour; the different duration of the phase of production in general. Thirdly : After the product is finished, it may have to lie fallow for quite a long time, during which it requires relatively little labour, in order to let natural processes work upon it, e.g. wine. (Conceptually, this is approximately the same case as I.) Fourthly : It may take a longer time to bring the product to market, because it is destined for a more distant market. (This coincides conceptually with case II.) Fifthly : The shorter or longer time involved in the total return of capital (its total reproduction), so far as it is determined by the ratio of fixed to circulating capital, evidently does not relate to the duration of the immediate process of production, but is determined by circulation. The time for the reproduction of the total capital is determined by the total process, including circulation (521–2).

32 See also Sowell: “The classic ‘refutation’ of Capital was made by a leading figure in the new economics, Eugen von B¨ohm-Bawerk. His refutation repeatedly misunderstood what it was

refuting, and unknowingly repeated criticisms that Marx had already made of Ricardo’s labor theory of value in manuscripts still unpublished at that time” (2006: 183).

G. A Marxian “Reply” to B¨ohm-Bawerk 257 Now Marx did not perceive “fallow” capital, illustrated by the test case of maturing

wine – the third case above, to be an exception to the general rule of “exchange value.” Differences in the return on capital would indeed compensate for differential time periods from product to product – relative prices would adjust appropriately to accommodate the differential – but interest is a “secondary” or “derived” form of surplus value, and – taking an aggregative view – surplus value itself is solely generated by labor.

This perspective is confirmed by a criticism of Ramsay (1836: 55) for suggesting that capital “can constitute an original source of value creation apart from labour, from its exploitation” (MECW 28 : 470). The point is that though a particular capital “remain[ing] longer in devalued form” would indeed be compensated by “a higher exchange value for its products than the other capitals,” thus assuring profit-rate uniformity across sectors, there is no such escape considering capital in the aggregate; as in the more “formal” Transformation discussion, Marx recognizes explicitly price deviations from labor values and the circumstance that “the individ- ual capital can . . . be credited with more value creation than is directly explicable by its particular exploitation of labour power”:

For the distribution of surplus labour among the individual capitals takes place not in proportion to the surplus labour time achieved by the individual capital, but in proportion to the total surplus labour achieved by the totality of capitals. The individual capital can therefore be credited with more value creation than is directly explicable by its particular exploitation of labour power. But this “more” on the one side must be compensated for by a “less” on the other. Otherwise, average means nothing at all. The question how the relation of capital to alien capital, i.e. the competition of capitals, distributes surplus value among them, obviously has nothing to do with the absolute amount of this surplus value. Nothing therefore more absurd than to conclude that, because a particular capital is compensated for its exceptional circulation time . . . all the capitals taken together, capital, can make something out of nothing, turn a minus into a plus, minus-surplus labour time or minus-surplus value into plus-surplus value; to conclude, in other words, that it has a mystical source of value creation independent of the appropriation of alien labour (470–1).

It was, in brief, Marx’s contention that “[t]he method of calculating the capitals’ respective shares in surplus value – not only on the basis of the surplus labour time which they have achieved, but also in accordance with the length of time during which their capital has been working as such, i.e. has lain fallow, gone through the phase of devaluation – does not of course in the least affect the total amount of surplus value which they have to distribute among themselves” (471). And the presumption throughout that “only labour itself is productive” is central to the conclusion of Marx’s argument, that any extension of individual capital a’s production period (its “lying fallow” for a longer period) must be seen as a “larger advance” of necessary labor in the aggregate and thus a deduction from aggregate surplus value. The central doctrine itself was, from this perspective, unassailable.

1857–1858 I: Surplus Value