I finally have a little time to return to the earlier discussion with Rakesh and Allin and Alejandro R. about whether there are "two reasons for divergence" between prices of production and values in Marx's theory or only one reason for this divergence. I will restart the discussion by responding to Allin's (4982) back on Feb. 19. ALLIN STATED: "There's a real problem of inconsistency in Marx's statements here. We have statements, highlighted by Alejandro and Fred, where Marx says (I paraphrase): "value = cost-price plus surplus value; price of production = cost-price plus profit". The Marx manuscript brought forward by Alejandro put this in algebraic notation, giving it added definiteness. But we also have statements where Marx says (again, I paraphrase; the quotations are well known): "There are two reasons for the divergence between values and prices of production: (1) the price of the means of production employed in the production of the given product differs from the value of those means of production, and (2) the profit realized in the sale of the product differs from the surplus-value embodied in that product. "I'll refer to the first sort of quotations as the "cost-price plus" statements, and to the second sort of quotations as the "double divergence" statements. These two sorts of statements sometimes occur in close proximity in the texts of Marx that we have available to us. "The obvious problem is that if "cost-price plus" is a proper statement of Marx's view then "double divergence" is nonsense: there is only and only one source of divergence between price of production and value, namely the discrepancy between surplus value and (equalized) profit. "It's certainly tempting to suppose that one or other of the sets of statements in Marx must be "not really what he meant to say" (otherwise his views were flat-out incoherent). My preferred interpretation is that "cost-price plus" was not really what he meant -- or at least these statements only hold good on the assumption that the means of production (inputs) were purchased at prices equal to their values. I do _not_ claim that it's clear from context that whenever Marx issued a "cost-price plus" statement he was in fact assuming that input prices were equal to input values (rather, I think there is a degree of inconsistency in the text -- although of course it's a text that Marx never prepared for publication. "I prefer this interpretation, despite its problems, because the alternative is worse, namely that Marx was just gibbering when he made his "double divergence" statements. I haven't seen a rationalization of these statements, from the proponents of the "cost-price" plus, that makes any sense to me." MY RESPONSE TO ALLIN: I agree with Allin that there is an inconsistency in Marx's texts on this issue. I also agree that one or the other sets of statements must be "not what Marx really meant (otherwise his views are flat-out incoherent)." But I disagree on the choice he makes between the two sets of statements. Allin argues that, in Marx's "cost plus" statements (i.e. only one reason for divergence), he must have been implicitly assuming that the prices of the means of production are equal to their values. Allin acknowledges that this assumption is not clear from the statements themselves, nor from the context of these statements. But nonetheless Allin argues that Marx must have been implicitly making this assumption; otherwise the statements about "two reasons for divergence" are gibberish. I argue, to the contrary, that it is clear both from Marx's "cost plus" statements themselves and from their context that Marx was ASSUMING THE OPPOSITE of what Allin suggests - i.e. that Marx was assuming that the price of the means of production are NOT equal to their values. If this is true, then Allin's justification for dismissing Marx's "cost plus" statements cannot be correct. Let's reexamine one of the main controversial texts, in which Marx states both that there are "two reasons for divergence" and that the cost price is the same for both the determination of values and prices of production. This text is from Section 2 of Chapter 12 of Volume 3, which is a "supplementary remark" about "the production price of commodities of average composition". This section begins with the sentence emphasized by Allin and Rakesh. "We have already seen that the divergence of price of production from value arises for two reasons: (1) because the average profit is added to the cost price of a commodity, rather than the surplus-value contained in it; and (2) because the price of production of a commodity that diverges in this way from its value enters as an element into the cost price of other commodities, which means that a DIVERGENCE FROM THE VALUE OF THE MEANS OF PRODUCTION CONSUMED MAY ALREADY BE CONTAINED IN THE COST PRICE, quite apart from the divergence that may arise for the commodity itself from the difference between average profit and surplus-value." (emphasis added) So Marx is clearly stating here that the prices of the means of production are NOT equal to their values. And in the next sentence, Marx repeats the same point, with respect to the commodities produced with capital of average composition: "It is quite possible, accordingly, for THE COST PRICE TO DIVERGE FROM THE VALUE OF THE ELEMENTS of which this component of the price of production is composed, even in the case of commodities that are produced by capitals of average composition..." (emphasis added) Marx then went on in the rest of this section to argue that IN SPITE OF THE FACT THAT the price of the means of production are NOT equal to their values, the cost price is still THE SAME for the determination of both the values and the price of production of average commodities, from which it follows that the prices of production of these average commodities are equal to their values. The cost price that is the same for both values and prices of production is equal to the price of the production of the inputs, not the value of the inputs. In Marx words: "Yet this possibility in no way affects the correctness of the principles put forward for commodities of average composition. The quantity of profit that falls to the share of these commodities is equal to the quantity of surplus-value contained in them. For the above capital, with its composition of 80c + 20v, for example, the important thing as far as the determination of surplus-value is concerned is not whether these figures are the expression of actual values, but rather what their mutual relationship is; i.e. that v is one-fifth of the total capital and c is four-fifths. As soon as this is the case, as assumed above, the surplus-value v produced is equal to the average profit. On the other hand, because it [the surplus-value; FM] is equal to the average profit, THE PRICES OF PRODUCTION = COST PRICE + PROFIT = K + P = K + S, which is equal in practice to the commodity's VALUE. In other words, an increase or decrease of wages in this case leaves K + P unaffected, just as it would leave the commodity's value unaffected, and simply brings about a corresponding converse movement, a decrease or increase, on the side of the profit rate." (C.III: 309; emphasis added) Therefore, it seems clear to me that, in this statement that the cost price is the same for the determination of both value and price of production, Marx was explicitly assuming that the cost price is NOT equal to the value of the inputs. Allin's interpretation is incorrect. Furthermore, the main point of this section is that prices of production of commodities produced with capitals of average composition are equal to their values. This point is true ONLY IF THE COST PRICE IS THE SAME in the determination of both the value and the price of production of these commodities, which implies further that there is ONLY ONE REASON FOR PRICES OF PRODUCTION TO DIVERGE FROM THEIR VALUES (P not = S). Marx made this clear in algebraic formulation, in which the same K is a component of both the value and the price of production of these commodities. There is no clarifying algebra in the "double divergence" sentence at the beginning of the section. Therefore, it seems to me that we have two options: 1. Marx misspoke in the first sentence, when he said that there are "two reasons for divergence" between the prices of production and the values of commodities. 2. The main point of the entire section - that even though the cost prices is not equal to the value of the inputs, the prices of production of average commodities are nonetheless equal to the values of these commodities - is nonsense. In other words, either one sentence is gibberish (or misspoken) or the whole section is gibberish. Giving Marx the benefit of the doubt (and because of other supporting textual evidence which I have discussed and will discuss again in subsequent posts), it seems more likely to me that Marx simply misspoke in the first sentence. What he really should have said is that there are two reasons why the prices of production of commodities are not equal to their values AS WE HAVE THOUGHT ABOUT VALUE UP UNTIL NOW. I think that Marx momentarily slipped back in this opening sentence into using "value" in the provisional Volume 1 sense of proportional to labor-time. However, Marx had already made it clear in Chapter 9 (as I have discussed) that, even though the cost price may not be equal to the value of the inputs, the value of commodities is still = K + s, which implies that the value of commodities may not be proportional to the total labor-time required to produce them (although the new value component is still proportional to current labor-time). And in the remainder of this section of Chapter 12, Marx again used value in this more developed sense (= K + s, even though K not = value of the inputs), in which case total value is not proportional to total labor-time. Or Marx should have omitted the first sentence and started with his second paragraph: "It is quite possible ... for the cost price to diverge from the value of the elements of which this component of the price of production is composed, even in the case of commodities that are produced by capitals of average composition... Yet this possibility in no way affects the correctness of the principles put forward for commodities of average composition... I think this is the real point Marx is trying to make in this section: Even though the cost price is not = to the value of the inputs, this does not affect the correctness of the principles put forward for average commodities. And the correctness of these principles requires that the COST PRICE IS THE SAME for the determination of both the value and the price of production of commodities, which implies that there is only ONE REASON FOR THE DIVERGENCE between prices of production and values. Marx's terminological slip in the first sentence should not distract from the correctness of these principles. Allin, what do you think? Do you still think that Marx did not misspeak in the first sentencec of this section, even though this implies that the rest of this section is nonsense? As Alejandro R. has pointed out in (5003), and as Allin has acknowledged in (4982), the "conclusive textual proof" of the standard interpretation - that Marx explicitly acknowledged that he failed to transform the cost prices - is in fact not so conclusive at all. I think this recognition is in itself an advance in Marxian scholarship. Furthermore, in the passage discussed above, the textual evidence would seem to support the opposite interpretation that the cost price is the same for the determination of both values and prices of production. I will discuss other texts in this controversy in subsequent posts. Thanks very much for the discussion. Comradely, Fred
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