It seems this is really my poor English. In Russian the phrase “abstracted from” has the only meaning “separated from”, whereas in English it has, I think, another meaning like “extracted from”. If it’s so, then the case is closed.

Very interesting autobiography – and a very interesting man.

Mises has written in his Memoirs: ,,I believe that in the end even Bauer himself had to admit to the unsustainability of the Marxian labor theory of value. He abandoned his intention to write a reply to Böhm’s critique of Marx.” No, it is not true. Marxian labor theory of value has its scientific status. Bauer, sadly, had no intellectual capacity to write a reply to Böhm’s critique of Marx. The economists W. Paul Cockshott and Allin Cottrell have proved its scientific status in their article ,,The scientific status of the labour theory of value” in 1997. You can read the article here: http://www.wfu.edu/~cottrell/eea97.pdf

Mr. Berman,

I would point out that actually Marx and Engels have attempted refutation of the subjective theory of valuation in their economic writings. Marx in his Das Kapital has opposed the labor theory of value to subjective theory of value. Engels has proved that ,,the origin of all value is” NOT ,,a subjective matter, an “assignment” to one or another position” and already many years before Mises’s Human action has responded to his ,,magnum opus”. So, let hear Engels what he says against ,,the subjective theory of valuation”:

,,The form of circulation by which money becomes capital contradicts all previous laws bearing on the nature of commodities, of value, of money and of circulation itself. Can the purely formal differences of inverted order of succession cause this?

What is more, this inversion exists only for one of the three transacting persons. As a capitalist, I buy commodities from A and sell them to B. A and B appear merely as simple buyers and sellers of commodities. In both cases, I confront them merely as a simple owner of money or owner of commodities, confronting one as buyer or money, the other as seller or commodity, but neither of them as a capitalist or a representative of something that is more than money or commodity. For A, the transaction began with a sale; for B, it ended with a purchase, hence, just as in commodity circulation. Moreover, if I base the right to surplus-value upon the simple sequence, A could sell to B directly and the chance of surplus-value would be eliminated.

Assume that A and B buy commodities from each other directly. As far as use-value is concerned, both may profit; A may even produce more of his commodity than B could produce in the same time, and vice versa, whereby both would profit again. But otherwise with exchange-value. Here, equal values are exchanged for each other, even if money, as the medium of circulation, intervenes. (P.119 [156-58])

Abstractly considered, only a change in form of the commodity takes places in simple commodity circulation, if we except the substitution of one use-value for another. So far, as it involves only a change in form of its exchange-value, it involves the exchange of equivalents, if the phenomenon proceeds in a pure form. Commodities can, indeed, be sold at prices differing from their values, but this would mean a violation of the law of commodity exchange. In its pure form, it is an exchange of equivalents, hence no medium for enriching oneself. (P.120 [158-59])

Hence, the error of all endeavors to derive surplus-value from commodity circulation. Condillac (P.121 [159]), Newman (P.122 [160]).

But let us assume that the exchange does not take place in a pure form, that non-equivalents are exchanged. Let us assume that each seller sells his commodity at 10 per cent above its value. everything remains the same; what each one gains as a seller, he loses in turn as a buyer. Just as if the value of money had changed by 10 per cent. Likewise, if the buyers bought everything at 10 per cent below value. (P.123 [160-61], Torrens.)

The assumption that surplus-value arises from a rise in prices presupposes that a class exists which buys and does not sell — i.e., consumers and does not produce, which constantly receives money gratis. To sell commodities above their value to this class means merely to get back, by cheating, part of the money given away gratis. (Asia Minor and Rome.) Yet, the seller always remains the cheated one and cannot grow richer, cannot form surplus-value thereby.

Let us take the case of cheating. A sells to B wine worth 40 pounds sterling in exchange for grain worth 50. A has gained 10. But A and B together have only 90. A has 50 and B only 40; value has been transferred but not created. The capitalist class, as a whole, in any country, cannot cheat itself. (P.126 [162-63])

Hence: if equivalents are exchanged, no surplus-value results; and if non-equivalents are exchanged, still no surplus-value results. Commodity circulation creates no new value.

That is why the oldest and most popular forms of capital — merchant capital and usurers’ capital — are not considered here. If the expansion of merchant capital is not to be explained by mere cheating, many intermediate factors, lacking here as yet, are required. Even more so for usurers’, and interest-bearing, capital. It will later be seen that both are derived forms, and why they occur historically before modern capital.

Hence, surplus-value cannot originate in circulation. But outside it? Outside it, the commodity owner is the simple producer of his commodity, the value of which depends upon the quantity of his own labour, contained in it, measured according to a definite social law; this value is expressed in money of account — e.g., in a price of 10 pounds. BUt this value is not at the same time a value of 11 pounds; his labour creates values, but not self-expanding values. It can add more value to existing value, but this occurs only through the addition of more labour. Thus, the commodity producer cannot produce surplus-value outside the sphere of circulation, without coming in contact with other commodity owners.

Hence, capital must originate in commodity, yet not in it. (P.128 [165-66])

Thus:

the transformation of money into capital has to be explained on the basis of the laws inherent to the exchange of commodities, the exchange of equivalents forming the starting point. Our owners of money, as yet the mere chrysalis of a capitalist, has to buy his commodities at their value, to sell them at their value, and yet at the end of this process, to extract more value than he put into it. His development into a butterfly must take in the sphere of circulation and yet not in it. These are the conditions of the problem. Hic Rhodus, hic salta! (P.129 [166])”

Mr. Berman, you have asked me the following questions:
1. Do you agree (with Marx) that the coming of socialism is an historical inevitability?
2. If so, then what matter to which economic theory (or theories) some of us subscribe?

My answers are: 1. yes. and 2. It doesn’t matter, I would like to ask dead Mises, if the socialism was publicly welcomed by the workers and peasants in Russia, why in 1920-th Mises joined the rescue capitalism from the ,,Red Terror” and armed with ideas of orthodox liberalism, under the guise of scientific objectivity of bourgeois political economy, embarked in proving that socialism is economically impossible? You should ask dead Mises, if he appeared in your dream, what matter to which economic theory (or theories) some of us subscribe?

,,Certainly, what will be–will be” as you said Mr. Berman. Cockshott and Cottrell have only contributed their own thoughts to the ,,socialist calculation debate” which actually was started by Mises himself.

A comment for the editors:

The title of Rothbard’s article suggests some sort of “Instant Intimacy”. I had not read this article till now because I assumed that if “we never knew” something about Mises, it is perhaps about what brands of cars he liked, and what were his favourite dishes.

But it is actually “an intellectual autobiography, explaining his ideological struggles and how he arrived at his ideas.” That makes me drop everything I’m doing and read it!

“The Mises We Never Knew” may be ok as a title in the Libertarian Review because the readers expect it to contain only “serious stuff”, and besides, you just have to turn the page to see what the article talks about. On a website, on the other hand, you have click and open it to read it (which is best compared to following a footnote).