Michael Roberts reviews Fred Moseley’s new book, Money and Totality, Brill, 2016
One of the major trends in the world economy in the last two years has been the collapse of the price of oil in world markets. From a peak of over $100 a barrel, the price plummeted to under $30 a barrel and is still only around $40. The explanation for this fall, as provided by mainstream economics, is simple. There has been a change in the supply and demand for oil. Economists then go on to discuss which is the more important factor: supply increasing or demand falling.
But this analysis of the price of a commodity and what is it is worth at the level of supply and demand – as taught in all economics textbooks in colleges – is superficial at best. There is a joke in financial investor circles, when discussing why the stock price of a particular company has suddenly fallen: ‘Well, there were more sellers than buyers’ – true to the point of tautology.
What explains why a barrel of oil is $40 and not $1? Why do 100 paper clips cost $1 and one car costs $20,000? In other words, we need to understand what something is worth in the marketplace beyond just supply and demand; we need a theory of value. From that, we can begin to explain the workings of a capitalist economy, where everything is produced for sale. And if we can measure changes in value we can begin to understand the laws of motion of a capitalist economy – and, Marxist economics would add, its key contradictions, because Marxist economics is not so interested in the changes in the price of one commodity as in the nature and causes of the overall trends and fluctuations in an economy. That is, macroeconomics – with a purpose.
Marxist value theory is based on the view that commodities are priced in the market according to the labour time expended on them. Actually, labour time is basic for all forms of social production by human beings. As Marx wrote,
Every child knows a nation which ceased to work, I will not say for a year, but even for a few weeks, would perish. Every child knows, too, that the masses of products corresponding to the different needs required different and quantitatively determined masses of the total labour of society. That this necessity of the distribution of social labour in definite proportions cannot possibly be done away with by a particular form of social production, but can only change the mode of its appearance, is self-evident. No natural laws can be done away with.1
But Marx goes on:
What can change in historically different circumstances is only the form in which these laws assert themselves. And the form in which this proportional distribution of labour asserts itself, in the state of society where the interconnection of social labour is manifested in the private exchange of the individual products of labour, is precisely the exchange value of these products.
This is why Marxist theory of value applies to capitalism, not previous modes of social organisation.
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