Fred, I thank you for getting me so right. I had asked for a clarification of your formula for value determination, but I shall assume that I have understood you. Our difference has remained a simple one for some time: we agree that cost price of the used up means of production is not the same as the value of the used up means of production, but you argue that into the *value* of the commodity enters the *cost price* of the used up means of production, not the value of the means themselves are they are consumed and reappear in the final product. Of course one advantage of my interpretation is that value is determined by labor time all the way through (the value of the used up means of production + newly added value) while your formula for the determination of value mixes the *price* of the means of production + current labor or newly added value. I want to argue here that you cannot reproduce Marx's reasoning that there are two reasons for value price divergence. So let me cut to the chase: I consider almost all your textual evidence irrelevant for two reasons: (a) I have provided you with quotes in which Marx says that the value transferred from the means of production is determined by the value of the consumed means themselves as they reappear in the final product (so I don't think we will resolve this by quotes) but, more importantly (b) I am not disputing that before the crucial point in vol 3 Marx had indeed assumed that the value of the consumed means of production as they reappear in the final product is proportional to their price. So for our purposes what truly matters is Vol 3, p. 264-65 (as well as Capital 3, p. 309); it is in these two places which Marx lays out TWO REASONS why price of production and value diverge in a non proportional manner. So you noted: > >5c. The following paragraph (pp. 264-65) begins with the three sentences >that Rakesh has emphasized in recent posts to support his interpretation: > >"The development given above also involves a modification in the >determination of a commodity's cost price. It was originally assumed that >the cost price of a commodity equaled the value of the commodities >consumed in production. But for the buyer of a commodity, it is the price >of production that constitutes its cost price and can thus enter into >forming the price of another commodity." And Marx continues: "As the cost price of a commodity can diverge from its value, so the cost price of a commodity in which the price of production of other commodities is involved, can also stand above or below the portion of its total value that is formed by the value of the means going into it. It is necessary to bear in mind this modified significance of the cost price, and therefore to bear in mind too that if the cost price of a commodity is equated with the value of the means of production used up in producing it, it is always possible to go wrong." You recognize that the two cannot be equated, but seem to think that nothing of importance follows from Marx noting the difference here. But let's go the beginning What has Marx already done in his transformation tables, p. 256? He has assumed the monetary expression of labor value to be one. This allows him to treat the proportionality assumption of P<>V in which the constant of m has been dropped as a simple equality P=V. Marx thus assumes that the means of production which have been purchased as a result of outlays on constant capital were bought at prices equal to their values. Marx then writes up his tables so that the money cost to the capitalist of the used up means of production is equated with the value of the consumed means as they reappear in the value of the final product. Only upon analysis of the completed tables do we understand why the value of the means of production cannot be equated with price paid for them. You of course are not denying that Marx is pointing to a divergence. I argue that this assumption is built into Marx's transformation tables. The first conclusion to draw from the transformation tables is that due to the divergence between surplus value produced and profit appropriated, commodities cannot exchange at prices determined by or proportional to their values though the law of value still regulates prices in the aggregate. But there is another reason for value and price to diverge. It is alluded to here (p.265), and again noted on p. 309. This is what your interpretation has been unable to account for. But let's get the first reason for divergence straight. A commodity's price of production is c + v + p or k + kr while its value had been assumed to be c + v + s or substituting k for (c + v), k + s. So we have divergence between kr (or p) and s as one reason why price and value diverge. Marx had assumed the value of the commodity to be Lp + Lc (value of means of production + current labor)--of course, you disagree but stick with me. Lc (or new value added) is often expressed as (v + s), that is as the replacement costs of the advanced variable capital plus the residual of the surplus value. So Marx has expressed the determination of value as constant capital + [variable capital + surplus value] (c + [v + s]), though strictly speaking it is Lp + Lc. But kr or p in price determination is not equal to s. So value (c + v + s) does not equal price (c + v + p). And the other reason for divergence is that the price of the means of production, which has determined the money sum laid out as constant capital (c), is not equal to the value of the means of production (Lp) So now we have value expressed as [Lp + (v + s)] or [Lp + Lc] does not equal price, expressed as (c + v + p) or (k + kr) or (k + p). I have presented an interpretation in which commodity value diverges from its price for two reasons, just as Marx says on pp. 309-9: the difference between surplus value and profit [s and kr (or p)] and the difference between the value of the consumed means of production and the price paid for them (or the money laid out as constant capital) [Lp and c]. So, Fred, unless you can reproduce Marx's DOUBLE reasons for price-value divergence, I would say that your interpretation cannot be sustained. Comradely, Rakesh
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