Güney Işıkara and Patrick Mokre have published an insightful book that explains how Marx’s theory of value operates to explain the trends and fluctuations in modern capitalist economies. Called Marx’s Theory of Value at the Frontiers – Classical Political Economics, Imperialism and Ecological Breakdown, the title tells the reader that the book is about taking Marx’s law of value towards what they call its ‘frontiers’, namely markets and trade; imperialism and the global environmental crisis.

This is an ambitious project, but the authors succeed with a high degree of clarity in explaining the way that value (as created by human labour power at the highest level of abstraction) is modified and mediated by competition between capitalists into what Marx called ‘prices of production’ (where individual capitals’ profit rates become equalised) and by market prices (where surplus profits drive capitalists into unceasing competition).

The authors, as former students of Anwar Shaikh, adopt his theory of ‘real competition’ as opposed to the mainstream ‘perfect competition’. The latter is based on a view of capitalist production based on harmony and equilibrium, while real competition is unceasing turbulence. That is real competition at work: “antagonistic by nature and turbulent in operation” (Shaikh). The authors argue that this real competition is the central regulating principle of capitalism, but that “any theory of competition, including real competition, must be underpinned by a value theory. Otherwise, the source of revenues accruing to different social classes (among many other things) will remain undetermined.”

Isikara and Mokre set out to show the logical (and historical) connection between value created by labour power and prices in the market place. They make the important distinction of ‘between-industry’ and ‘within industry’ competition. Within industries, firms compete for shares of the same market; so prices tend to equalize within a given market. The firm that dominates that market will tend to set the price; the ‘regulating capital’. Between industries, capitalists shift investments towards those sectors with the higher rates of profit and so there is tendency for profit rates to equalise across sectors. As a result, the value incorporated in individual commodities is modified into ‘prices of production’ based on costs plus a general average rate of profit. Market prices that consumers and businesses pay move around these prices of production; which in turn are ultimately governed by the ‘direct prices’ of commodities ie the labour value contained. So deviations between direct prices and production prices, on the one hand, and between production prices and market prices on the other hand, follow from changes in value.