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Fred, I really don't know what is the point of these long posts. You have not
said anything new, nor have you answered any of my specific questions or
objections. Let me again put down some of my problems with your arguments:
(1) When you say that the constant capital should be measured by the money price
of the commodity used as constant capital multiplied by the value of money, then
in effect aren't you saying that prices of production are already *given* as
well. Let us suppose seed corn plus labor is used to produce corn. Now, in
dertemining the prices of production of corn you will be converting the value of
seed corn by taking its *given* prices, which makes the whole exercise of
determining the price of production of corn redundant, since the price of the
seed corn as well as the product corn must be the same. And this is not a problem
specific to just a 'corn model' situation. It will be the same for n input-output
basic goods sector. You cannot take prices of inputs as *given* and then go
around determining the prices of outputs, since it is the same commodities that
appear both as inputs and outputs in the system. Thus if we accept your
interpretation then we must conclude that chapters 9 and 10 of *Capital* are a
product of a crazy head.
(2) You say that in your system (which is supposed to be Marx's) the *givens* are
C (in money terms), V (in money terms), m (the value of money), and L. Whereas in
the "Sraffian" system it is the physical means of production and the real wages
are taken as the *givens*. Now, I have just a simple question here. What do you
think L is doing in your *givens*. Are laborers supposed to be counting money for
the time period L or jumping up and down in the air? If you say that L is given,
then by implication technology (i.e. the physical input-output system) is given
whether you see it or not--L is the part of the technology, if it is given then
technology is given too. I simply don't understand how can you say things like
that.
(3) By the way, how do you measure the socially necessary abstract labor L, which
you have taken as *given*?
(4) You had stated earlier that "Marx's theory of surplus-value, presented in
Chapter 7 of Volume 1, is expressed in terms of money, that are determined by
quantities of labor-time." I'm still waiting to hear your explanation of how is
this expression in terms of money is *determined* by the quantity of labor-time.
(5) You say that the purpose of volume one is to determine dM in money terms. But
all your writings only state that this is how it is rather than determining dM in
any sense of determination.
(6) Furthermore, as i had pointed out, this would mean that one must have a
theory of money supply which explains that after every production cycle total
money supply must increase by dM. Now, I don't see any such theory in Marx. How
do you explain this? Moreover, even you haven't tried to come up with any such
theory. Why?
(7) As Paul Zarembka made a very pertinent observation, how do you explain a
total absence of M-C-M' etc. in his 1865 lecture. You think Marx had not
developed his basic understanding of value and surplus value till then?
(8) Where did you get such weird ideas about the Sraffians from? I had given you
the reference to Eatwell's papers, so you must have read them. Do you think
Eatwell is arguing for given real wages interpretation? Is he a Sraffian or not?
In my critique of the 'New Solution' I made the argument that the 'New Solution'
is very close to the Sraffian interpretation. One major difference happens to be
that the new solution takes any commodity as money, whereas Eatwell argues for
the Standard commodity to be taken as money--and to that extent Eatwell's
position is superior. You not only ignore my paper but you also ignore Eatwell
completely. Why?
(9) By the way, you must be aware that all classical economists including Smith
and Ricardo give their example in terms of pound sterling, all their examples are
in money terms, as in Marx. If we use your kind of interpretation, then we will
have to conclude that the whole of classical economics is singing 'money money
money ...'.
(10) By the way, I hope you are aware that the attempt to interpret classical
economics, including Marx, in the framework of the neoclassical economics
crucially depends on the argument that it is the money wages that is given and
not the real wages in the classical system.
Cheers, ajit sinha
Fred B. Moseley wrote:
> I think I will continue with the "bare-bones" approach to summarizing my
> interpretation of Marx's theory. This post will focus on Marx's theory of
> surplus value in Volume 1 and in particular on the definition and
> determination of the concept of "transferred value" in Marx's theory. This
> is in response largely to the criticisms of Ajit and Rakesh, but put in a
> larger context (thanks very much to Ajit and Rakesh for this stimulating
> discussion). The post is long, for which I apologize, but this seems
> necessary to respond to these criticisms. I would be happy to provide
> supporting arguments and textual evidence on specific points. A subsequent
> post will summarize my interpretation of Marx's theory of prices of
> production in Volume 3.
>
> 1. DEFINITION OF SURPLUS VALUE
>
> To begin with, surplus value is defined as the increment of money, dM, that
> emerges at the end of the circulation of capital and that "transforms money
> into capital".
>
> In particular, Marx's theory of surplus value in Volume 1 attempts to
> explain the TOTAL AMOUNT OF dM for the economy as a whole, not the surplus
> value of an individual industry or individual firm; in other words, the
> total surplus value of the TOTAL SOCIAL CAPITAL, not the surplus value of
> an individual capital.
>
> 2. INITIAL GIVENS
>
> C and V: I have argued in previous posts that: (1) constant capital and
> variable capital are the two components of the initial money-capital, M,
> that is invested in the first phase of the circulation of capital to
> purchase means of production and labor-power, respectively; (2) the
> initial money-capital, M, and hence also C and V, are taken as given, as
> the actual money-capital invested (adjusted for capital gains/losses); (3)
> the reason why C and V are taken as given is that their full explanation
> involves the equalization of profit rates, and, according to Marx's
> method, the equalization of profit rates cannot yet be explained at this
> early stage of the analysis. Before the equalization of profit rates can
> be explained, first the total amount of surplus-value and the general rate
> of profit must be determined.
>
> Lc: the quantity of current abstract social labor in the economy as a whole.
>
> m: the new value (in terms of money) produced per hour of current abstract
> social labor (which Marx often assumed in his numerical examples to be 0.5
> shillings per hour).
>
> 3. THEORY OF VALUE
>
> Marx's theory of value in Volume 1 is about the aggregate price of the
> total social product. Marx often illustrated his theory with a single
> capital, but this single capital, as different from other individual
> capitals, is not the real subject of Marx's theory in Volume 1. Rather,
> the real subject of Marx's theory in Volume is the total social capital,
> which is illustrated by a single capital. The single capital is considered
> only as an "aliquot part" of the total social capital.
>
> In Marx's illustrations using individual commodities, the price of the
> individual commodity (e.g. the price of 20 lb. of yarn in Marx's second
> example in Chapter 7 is 30 shillings) is expressed as the "value" of the
> commodity. As I discussed in a recent post, when Marx used the term, the
> "value" of commodities, without further qualification, it usually refers to
> the "form of appearance of value", i.e. money or prices. The "value" of an
> individual commodity, such as the yarn, is the price that would occur if
> prices were equal to their values. However, this equality is true only for
> the total social capital. Therefore, the "value" of commodities really
> refers to the aggregate price of commodities, or to the price of individual
> commodities, considered as a part of the total price of the total commodity
> product.
>
> According to Marx's theory, the "value" (V), or aggregate price (P), of
> commodities consists of two main components: transferred value (TV) and
> new value (NV), which are in turn determined as follows (all these
> variables are in defined terms of money):
>
> V = P = TV + NV
>
> TV = m Lp (where Lp = C / m)
>
> NV = m Lc
>
> The determination of TV is no doubt the most controversial point in my
> interpretation, and the point that Rakesh and Ajit have criticized the
> most. There are two main issues involved in my interpretation of TV: (1)
> that TV is defined as a quantity of MONEY, not a quantity of labor-time;
> and (2) that the "past labor" (Lp) that determines TV is not equal to the
> labor-time embodied in the means of production, but is instead equal to the
>
> The magnitude of surplus value is then determined by the following simple
> and direct logical derivation from the above initial conditions and
> fundamental assumptions:
>
> S = P - K
>
> = (TV + NV) - (C + V)
>
> = NV - V (since TV = m Lp = m (C/m) = C)
>
> = m L - m Ln (where Ln = V / m)
>
> = m (L - Ln)
>
> Finally, defining surplus labor (Ls) as (L - Ln), we have:
>
> S = m Ls
>
> In Marx's numerical example in Chapter 7,
> Ls = 6 hrs.
> m = 0.5 sh./hr.
> and hence S = 3 sh.
>
> The definition of Ln (necessary labor) presented here is another
> controversial point, similar to the definition of Lp, discussed above.
> Just as Lp is derived from the given money constant capital and is not
> equal to the labor-time embodied in the means of production, so also Ln is
> derived from the given money variable capital and is not equal to the
> labor-time embodied in the means of subsistence. Duncan and the other "new
> solutionists" also define Ln in this way.
>
> 5. IMPLICATIONS
>
> As stated above, I will summarize my interpretation of Marx's theory of
> prices of production in a subsequent post. But to anticipate: a
> significant advantage of this macro-monetary interpretation of Marx's
> theory is that NONE OF THE AGGREGATE VARIABLES (P, TV, NV, C, V, and
> especially S) CHANGES with the determination of prices of production in
> Volume 3. In addition, because none of these aggregate variables change,
> the rate of surplus value (S/V) and the rate of profit (S/C + V) also do
> not change. According to this interpretation, Marx's theory is about
> actual quantities of money-capital, in both Volume 1 and Volume 3. The
> main difference between Volume 1 and Volume 3 is that Volume 1 is about
> actual AGGREGATE quantities of money-capital (and especially the total dM,
> or surplus value) and Volume 3 is about actual INDIVIDUAL quantities of
> money-capital (the individual parts of surplus value). But the sum of
> these individual quantities of money-capital is by definition equal to the
> aggregate quantities of money-capital. Therefore, the aggregate quantities
> of money-capital (especially the total dM and the general rate of profit)
> cannot change as a result of the determination of prices of production.
>
> On the other hand, according to the "standard" interpretation of Marx's
> theory, Volume 1 is not about these actual aggregate quantities of
> money-capital. Instead, Volume 1 is interpreted to be about either
> labor-times or hypothetical "direct prices" that are proportional to
> labor-times. In particular, surplus value is not the actual dM, but is
> instead defined as the labor-time embodied in surplus goods, or the
> hypothetical "direct price" of these surplus goods. Therefore, when
> prices of production are determined in Volume 3, it is not possible for all
> the aggregate variables to remain the same, as they do in my
> interpretation. The actual aggregate money variables determined in Volume
> 3 are not the same as the hypothetical aggregate variables determined in
> Volume 1; therefore, the aggregate variables must change from Volume 1 to
> Volume 3. One of the aggregate variables can be held constant, but then
> all the rest will change. As a result, the rate of surplus value and the
> rate of profit will also generally change.
>
> This constancy of the key aggregate variables between Volume 1 and Volume 3
> seems to me to be a significant advantage of the macro-monetary
> interpretation of Marx's theory over the standard interpretation. Volume 1
> is not about hypothetical variables, whose relation to actual variables is
> unclear (and many would argue "redundant"); rather Volume 1 is itself about
> actual aggregate money magnitudes, and especially the aggregate dM. Volume
> 3 is then about the division of this aggregate dM into individual parts
> (average profit, merchant profit, interest, and rent), with the aggregate
> dM taken as given, as determined by the prior analysis of the total social
> capital in Volume 1.
>
> This macro-monetary interpretation of Marx's theory seems to me to be much
> more plausible, both as what Marx was doing and as the better way to
> analyze capitalism.
>
> I look forward very much to your comments and to continued discussion. I am
> still up in Maine for another week, with access to email only Mon, Wed.,
> and Fri mornings for a couple of hours, so my responses might be delayed
> somewhat.
>
> Comradely,
> Fred
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