Duncan K. Foley wrote: > Gil writes: > > > > >My point is just that you don't need > >a labor theory of value, understood as a notion that commodity prices are > >somehow "regulated" by underlying labor values, in order to advance Marx's > >critique, and in some cases reliance on labor value theory is > >counterproductive. Gil > > Doesn't this kind of miss the forest for the trees? I think Marx's > point was that capitalist societies operate on the basis of money > value calculations, particularly profitability calculations, and that > the basic macroeconomic determinants of profitability are the ratio > of the value of output to the value of capital (what Tom Michl and I > call the "productivity" of capital) and the ratio of profit to total > value added (which is a transformation of the rate of exploitation). > I take the essence of Marx's theory of value to be the observation > that you can't change the rate of profit in the macroeconomy without > changing one or the other or both of these variables. > > I don't see why Ajit has such trouble with the idea that money > represents labor time. It seems sort of intuitive to me. > > Duncan _____________________ I don't have such trouble with the idea that money represents labor time. My problem is which money, and how and how much of labor time it represents. I don't think that when Marx said, "And what we call price of production is in fact the same thing that Adam Smith calls 'natural price', Ricardo 'price of production' or 'cost of production' ..." he simply made a huge error. All these are basically price concepts. So Marx's transformation problem is an attempt to develop his theory of prices based on labor-values of commodities, which are determined directly by the given technologies of production. That's why I think taking prices as empirically given in this context is like putting the cart before the horse--it simply negates the theoretical problem posed. So what is the problem of "m" in this context? Now we know that by using either Seton's or Sraffa's formulations we could derive Marx's prices in terms of any commodity as money commodity. In Seton's formulation taking any commodity as 'money commodity' directly implies the assumption that we are assuming no value-price deviation for that particular commodity. This gives us an "m" but this "m" will be completely arbitrary as well as logically not very sound. It is arbitrary because we could have chosen any commodity out of the n commodities as the money commodity, and so we could legitimately have n different values of "m". It is logically also not coherent to claim, on the one hand, that in general all commodity prices must deviate from their values, and then claim, on the other hand, that for one arbitrary commodity this does not happen by decree. It is like Marshall's claim that marginal utility of everything declines except money's. Thus this problem of "m" logically leads to finding out a theoretical commodity for which the value-price deviation will be zero. Marx's attempt to toy with the idea of a commodity produced with the average organic composition of capital was a search in this direction. But his investigation showed him that this was not completely satisfactory. If we leave out your empirical derivation of "m", and just deal with the claim that labor theory of value implies that the prices of net output (and in this case the prices will have to be prices of production and not the empirical market prices) must equal total live labor time. Then this gives us another "m". But then this is again a decree similar to saying that value-price deviation is zero for the money commodity. Moreover, given this "m" when we analyze the property of Marx's system, we find that many conclusion derived from taking this "m" do not sit well with Marx's analysis of his system. Same happens with other such candidates such as taking total prices of gross output equal to total gross value on the ground that prices must be bound by the total value substance. It seems to me that Sraffa's standard commodity comes closest to what Marx was looking for, but still is not completely satisfactory in my opinion. Thus i think the problem as posed by Marx is still unresolved, and probably insolvable. Now in your above statement, "...the basic macroeconomic determinants of profitability are the ratio of the value of output to the value of capital (what Tom Michl and I call the "productivity" of capital) and the ratio of profit to total value added (which is a transformation of the rate of exploitation). I take the essence of Marx's theory of value to be the observation that you can't change the rate of profit in the macroeconomy without changing one or the other or both of these variables." I'm not sure what you are trying to get at. In monetary terms your ratio of "value of output [gross] to value of capital" minus one will give you the rate of profit, i presume. Now this rate of profit is determined and will not change unless something changes either the value of output or the value of capital. What is the significance of the second ratio here? In anycase, I do not have any quibble over these macro level definitional identities. My problem is, how these macro level definitional identities help us in solving Marx's transformation problem? Cheers, ajit sinha > > > -- > Duncan K. Foley > Leo Model Professor > Department of Economics > Graduate Faculty > New School University > 65 Fifth Avenue > New York, NY 10003 > (212)-229-5906 > messages: (212)-229-5717 > fax: (212)-229-5724 > e-mail: foleyd@cepa.newschool.edu > alternate: foleyd@newschool.edu > webpage: http://cepa.newschool.edu/~foleyd
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