What is an explanation of prices?

One of the half-truths one hears of the Marxian economics is that it offers no explanation of prices. Even when the critic grants that the theory of capital accumulation is interesting and perhaps important, he asks hastily the question, “But what of prices?” Typically, the query is rhetorical. He stands ready and eager to cast his own theoretical pearls before the Marxian swine.

This charge against the economics rests upon a number of misconceptions. One of these is that modern pricing theory is the private property of the standard economics. But Marxists, too, have contributed to its creation and have found its theories useful for certain purposes. Marx himself utilized theories of supply and demand whenever he found it necessary to do so, and here and in successive chapters we shall do likewise without hesitation whenever the facts require that we do so. A more important misconception of the critics is that no historical explanation of prices can be scientific. The point here is that, unlike standard theory, the Marxian theory does not seek to explain prices alone but seeks their explanation in relation to exchange values and use values – all within the historical context. It seeks to explain the development of price-value relations in the real world, especially as they unravel with the rise of capitalism out of feudal society and as they subsequently evolve into those relations peculiar of the present state of affairs.