Most joyfully disappointed, of course, is the well-known, illustrious Loria. He has at last found the Archimedian fulcrum from which even a gnome of his calibre can lift the solidly built, gigantic Marxian structure into the air and explode it. What! he declaims indignantly. Is that supposed to be a solution? That is pure mystification! When economists speak of value, they mean value that is actually established in exchange.
"No economist with any trace of sense has ever concerned himself or will ever want to concern himself with a value which commodities do not sell for and never can sell for (ne possono vendersi mai).... In asserting that the value for which commodities _never_ sell is proportional to the labor they contain, what does Marx do except repeat in an inverted form the thesis of the orthodox economists, that the value for which commodities sell is _not_ proportional to the labor expended on them? [...]
"Matters are not helped by Marx's saying that despite the divergency of individual prices from individual values, the total price of all commodities always coincides with their total value, or the amount of labor contained in the totality of the commodities. For inasmuch as value is nothing more than the exchange ratio between one commodity and another, the very concept of a total value is an absurdity, nonsense... a contradiction in abjecto...."
At the very beginning of the book he argues, Marx says that exchange can equate two commodities only by virtue of a similar and equally large element contained in them -- namely, the equal amount of labor. And now he most solemnly repudiates himself by asserting that commodities exchange with one another in a totally different ratio than that of the amount of labor contained in them.
"Was there ever such an utter _reductio ad absurdum_, such complete theoretical bankruptcy? Was ever scientific suicide committed with greater pomp and more solemnity!"
(_Nouva Antologia_, Feb.1, 1895, pp.478-79.)
We see: our Loria is more than happy. Wasn't he right in treating Marx as one of his own, as an ordinary charlatan? There you see it -- Marx sneers at his public just like Loria; he lives on mystification just like the most insignificant Italian professor of economics. But, whereas Dulcamara  can afford that because he knows his trade, the clumsy Northerner, Marx, commits nothing but ineptitudes, writes nonsense and absurdities, so that there is nothing left finally for him but solemn suicide.
Let us save for later the statement that commodities have never been sold, nor can ever be sold, at the values determined by labor. Let us deal here merely with Mr. Loria's assurance that "value is nothing more than the exchange ratio between one commodity and another", and that therefore "the very concept of a total value is an absurdity, nonsense... _a contradiction in abjecto_...."
The ratio in which two commodities are exchanged for each other, their value, is therefore something purely accidental, stuck on to the commodities from the outside, which can be one thing today and something else tomorrow. Whether a metric hundredweight of wheat is exchanged for a gramme or a kilogramme of gold does not in the least depend upon conditions inherent in that wheat or gold. For otherwise these conditions would also have to assert themselves in the exchange, dominate the latter on the whole, and also have an independent existence apart from exchange, so that one could speak of a total value of commodities.
That is nonsense, says the illustrious Loria. No matter in what ratio two commodities may be exchanged for each other, that is their value -- and that's all there is to it. Hence, value is identical with price, and every commodity has as many values as the prices it can get. And price is determined by supply and demand; and any one asking any more questions is a fool to expect an answer.
But there is a little hitch to the matter. In the normal state, supply and demand balance. Therefore, let us divide all the commodities in the world into two halves, the supply group and the equally large demand group. Let us assume that each represents a price of 1,000 billion marks, francs, pounds, or what you will. According to elementary arithmetic, that makes a price of 2,000 billions.
Nonsense, absurd, says Mr. Loria. The two groups together may represent a price of 2,000 billions. But it is otherwise with value. If we say price: 1,000 + 1,000 = 2,000. But if we say value: 1,000 + 1,000 = 0. At least in this case, where the totality of commodities is involved. For here the commodities of each of the two groups are worth 1,000 billion only because each of the two can and will give this sum for the commodities of the other. But if we unite the totality of the commodities of the two in the hands of a third person, the first has no value in his hand any longer, nor the second, and the third certainly not -- in the end, no one has anything. And again we marvel at the superiority with which our southern Cagliostro has manhandled the concept of value in such a fashion that not the slightest trace of it has been left. This is the acme of vulgar economics! 
In Braun's _Archiv fur soziale Gesetzgebung_, Vol.VII, No.4, Werner Sombart gives an outline of the Marxian system which, taken all in all, is excellent. It is the first time that a German university professor succeeds on the whole in seeing in Marx's writings what Marx really says, stating that the criticism of the Marxian system cannot consist of a refutation -- "let the political careerist deal with that" -- but merely in a further development.
Sombart, too, deals with our subject, as is to be expected. He investigates the importance of value in the Marxian system, and arrives at the following results:
-- Value is not manifest in the exchange relation of capitalistically produced commodities;
-- it does not live in the consciousness of the agents of capitalist production;
-- it is not an empirical, but a mental, a logical fact;
-- the concept of value in its material definiteness in Marx is nothing but the economic expression for the fact of the social productive power of labor as the basis of economic existence;
-- in the final analysis, the law of value dominates economic processes in a capitalist economic system, and for this economic system quite generally has the following content:
the value of commodities is the specific and historical form in which the productive power of labor, in the last analysis dominating all economic processes, asserts itself as a determining factor.
So, says Sombart, it cannot be said that this conception of the significance of the law of value for the capitalist form of production is wrong. But it does seem to me to be too broad, and susceptible of a narrower, more precise formulation: in my opinion it by no means exhausts the entire significance of the law of value for the economic stages of society's development dominated by this law.
There is a likewise excellent article by Conrad Schmidt on the third volume of _Capital_ in Braun's _Sozialpolitisches Zentralblatt_, February 25, 1895, No.22. Especially to be emphasized here is the proof of how the Marxian derivation of average profit from surplus-value for the first time gives an answer to the question not even posed by economics up to now: how the magnitude of this average rate of profit is determined, and how it comes about that it is, say, 10 or 15 per cent and not 50 or 100 per cent. Since we know that the surplus-value first appropriated by the industrial capitalist is the sole and exclusive source from which profit and rent flow, this question solves itself. This passage of Schmidt's article might be directly written for economists a la Loria, if it were not labor in vain to open the eyes of those who do not want to see.
Schmidt, too, has his formal misgivings regarding the law of value. He calls it a scientific _hypothesis_, set up to explain the actual exchange process, which proves to be the necessary theoretical starting point, illuminating and indispensable, even in respect of the phenomena of competitive prices which seem in absolute contradiction to it. According to him, without the law of value all theoretical insight into the economic machinery of capitalist reality ceases. And in a private letter that he permits me to quote, Schmidt declares the law of value within the capitalist form of production to be a pure, although theoretically necessary, fiction.
This view, however, is quite incorrect in my opinion. The law of value has a far greater and more definite significance for capitalist production than that of a mere hypothesis, not to mention a fiction, even though a necessary one.
Sombart, as well as Schmidt, -- I mention the illustrious Loria merely as an amusing vulgar-economist foil -- does not make sufficient allowance for the fact that we are dealing here not only with a purely logical process, but with a historical process, and its explanatory reflection in thought, the logical pursuance of its inner connections.
The decisive passage is to be found in Marx, Vol.III, p.200:
"The whole difficulty arises from the fact that commodities are not exchanged simply as _commodities_, but as _products of capitals_, which claim participation in the total amount of surplus-value, proportional to their magnitude, or equal if they are of equal magnitude."
To illustrate this difference, it is supposed that the workers are in possession of their means of production, they they work on the average for equally long periods of time and with equal intensity, and exchange their commodities with one another directly. Then, in one day, two workers would have added by their labor an equal amount of new value to their products, but the product of each would have different value, depending on the labor already embodied in the means of production. This latter part of the value would represent the constant capital of capitalist economy, while that part of the newly-added value employed for the worker's means of subsistence would represent the variable capital, and the portion of the new value still remaining would represent the surplus-value, which in this case would belong to the worker.
Thus, after deducting the amount to replace the "constant" part of value only advanced by them, both workers would get equal values; but the ratio of the part representing surplus-value to the value of the means of production -- which correspond to the capitalist rate of profit -- would be different in each case. But since each of them gets the value of the means of production replaced through the exchange, this would be a wholly immaterial circumstance.
"The exchange of commodities at their values, or approximately at their values, thus requires a _much lower stage_ than their exchange at their prices of production, which requires a definite level of capitalist development....
"Apart from the domination of prices and price movement by the law of value, it is quite appropriate to regard the values of commodities as not only _theoretically_ but also _historically_ antecedent (prius) to the prices of production. This applies to conditions _in which the laborer owns his own means of production_, and this is the condition of the land-owning working farmer and the craftsman, in the ancient as well as in the modern world. This agrees also with the view we expressed previously, that the evolution of products into commodities arises through exchange between different communities, not between the members of the same community. It holds not only for this primitive condition, but also for subsequent conditions, based on slavery and serfdom, and for the guild organization of handicrafts, so long as the means of production involved in each branch of production can be transferred from one sphere to another only with difficulty and therefore the various spheres of production are related to one another, within certain limits, as foreign countries or communist communities."
(Marx, Vol.III, I, p.202)
Had Marx an opportunity to go over the third volume once more, he would doubtless have extended this passage considerably. As it stands, it gives only a sketchy outline of what is to be said on the point in question. Let us, therefore, examine it somewhat closer.
We all know that at the beginning of society, products are consumed by the producers themselves, and that these producers are spontaneously organized in more or less communistic communities; that the exchange of the surplus of these products with strangers, which ushers in the conversion of products into commodities, is of a later date; that it takes places at first only between individual communities of different tribes, but later also prevails within the community, and contributes considerably to the latter's dissolution into bigger or smaller family groups.
But even after this dissolution, the exchanging family heads remain working peasants, who produce almost all they require with the aid of their families on their own farmsteads, and get only a slight portion of the required necessities from the outside in exchange for surplus products of their own. The family is engaged not only in agriculture and livestock-raising; it also works their products up into finished articles of consumption; now and then it even does its own milling with the hand-mill; it bakes bread, spins, dyes, weaves flax and wool, tans leather, builds and repairs wooden buildings, makes tools and utensils, and not infrequently does joinery and blacksmithing; so that the family, or family group, is in the main self-sufficient.
The little that such a family had to obtain by barter or buy from outside, even up to the beginning of the 19th century in Germany, consisted principally of the objects of handicraft production -- that is, such things the nature of whose manufacture was by no means unknown to the peasant, and which he did not produce himself only because he lacked the raw material or because the purchased article was much better or very much cheaper.
Hence, the peasant of the Middle Ages knew fairly accurately the labor-time required for the manufacture of the articles obtained by him in barter. The smith and the cartwright of the village worked under his eyes; likewise, the tailor and shoemaker -- who in my youth still paid their visits to our Rhine peasants, one after another, turning home-made materials into shoes and clothing.
The peasants, as well as the people from whom they bought, were themselves workers; the exchanged articles were each one's own products. What had they expended in making these products? Labor and labor alone: to replace tools, to produce raw material, and to process it, they spent nothing but their own labor-power; how then could they exchange these products of theirs for those of other laboring producers otherwise than in the ratio of labor expended on them?