This is a reply to Rakesh's (7359). Thanks, Rakesh. >On Thu, 13 Jun 2002, Rakesh Bhandari wrote: > >> Now you are argue that Marx attempted a journey from givens in money, >> not values, yet if the sum of invested money that you take as a given >> was in turn determined more or less by the prices of production of >> the means of production and wage goods which served as inputs, then >> aren't you saying that Marx simply made a journey from prices of >> production to prices of production? The seemingly tautologous nature >> of your theory of price derivation has provoked criticism before. And I have argued before that my interpretation of Marx's theory is still based on the labor theory of value because: (1) the total surplus-value and the general rate of profit are determined by the value analysis in Volume 1, and (2) the inputs of constant capital and variable capital are ultimately determined by values, even though they are taken as given in the beginning. >> Moreover, since you argue that prices of production do have the >> property of long term equilibrium prices, how does your monetary >> macro interpretation allow us to know that the prices of production >> which Marx derives could have been the prices of production for the >> inputs the monetary purchase of which you take as the given? Because the constant capital that is taken as given in Marx's theory of surplus-value and theory of prices of production in Volume 3 is equal to the AVERAGE SOCIAL COST of the means of production for all capitals together, and is NOT equal to the actual individual cost of the means of production for an individual capital. And the average social cost of the means of production is equal to the price of production of the means of production. That is how we know that the constant capital that is taken as given is equal to the price of production of the means of production. Rakesh, you say that my interpretation of the determination of constant capital is different from Carchedi's, but this is not true. My interpretation is the same as Carchedi's. I learned my interpretation of constant capital from Carchedi (especially his 1984 article in Economy and Society, "The Logic of Prices as Values"). You say: >> Now since Carchedi does not assume that the prices of production >> which Marx derives for the outputs are, have to be, or could have >> been the same as the prices of production for the inputs, he does not >> have a similar burden. Carchedi does indeed assume that the price of production of the means of production as output at the end of the current period (t1) may be different from the price of production of the means of production which were purchased as inputs at the beginning of the current period (t0). But, in that case, Carchedi argued that the value transferred from the means of production (i.e. the constant capital) at time at t1 is equal to the price of production of the means of production AT TIME T1, and is NOT equal to the price of production of the means of production at t0, the time at which the means of production were purchased. These two prices of production of the means of production at t0 and t1 may be equal, but not necessarily. For individual capitals, these two prices of production will not be equal if: (1) the individual capital has non-average costs, or (2) the productivity of labor changes in the production of the means of production. But again, in that case, Carchedi argued that the value transferred from the means of production at time at t1 is equal to the price of production of the means of production at time t1, NOT the price of production at t0. A few passages from Carchedi's 1984 article to support my interpertation: "Now a new production period starts and c enters in it as an input. The product, a, realizes its social value at time t + 1. The social value of c, now considered as an input, as an element of a at time t + 1, will be the value given by the socially necessary labot time AT TIME T + 1, will be the value given by the socially necessary labor time AT TIME T + 1 both to re-produce c and to produce a. More specifically, if the average conditions of production of c change between t and t + 1, the value going into the vlaue of a will be the one give AT TIME T + 1; and if a certain producer of the commodity a has employed more (or less) c than it is socially necessary to produce a, then the value toing into that particular a will be that of the average quantity of c AT TIME T + 1." (p. 442; emphasis added) "... the value of c as an input of a is its value AT THE TIME OF A's REALIZATION, i.e. the RE-PRODUCTION VALUE of the average quantity and quality of c needed to produce a." (p. 443; emphasis added) "But whether or not this price of production [of the means of production] concides with its value at the moment of its realization as an output (t), the possibility arises of a deviation of this price of production at time t from its price of production at time t + 1, if the average conditions of produciton of c change between t and t + 1. Thus, the value of c as an input is determined by the price of production of c in the preceding period ... AS MODIFIED by the change in the average conditions of production of c in the present period." (p. 444; emphasis added) "Thus, what goes into the present period's product is the price of production of c as given in the previous period and AS MODIFIED in the present period." (p. 445; emphasis added) Rakesh, do you disagree with this interpretation of Carchedi? If so, would you please present some passages to support your interpretation? >> And this finally brings us to Shaikh who does in fact attempt to show >> how one can proceed from prices proportional to values (simple or >> direct prices) to equilibrium prices of production which can regulate >> the prices of both the inputs and the outputs. Your macro monetary >> theory does not demonstrate that Marx in fact derived equilibrium >> prices of production. So in terms of demonstrating what both you and >> Shaikh think has to be demonstrated--Marx's prices of production can >> be equilibrium prices, and determined by labor value >> magnitudes--Shaikh's approach is simply better, though you are in >> fact correct that Marx does not begin with values or simple prices >> but with the sum of money which actual capitalists had to have laid >> out to commence the circuit of capital and that there is no need to >> transform the inputs (of course an inverse transformation is needed). I have already explained the sense in which prices of production are derived from values in my interpretation of Marx's theory. And I have explained why prices of production are equilibrium prices, according to my interpretation. Rakesh, I argue, to the contrary, that my interpretation in better than Shaikh's for the following reasons: 1. There is no logical mistake in Marx's determination of prices of production. 2. There are not two rates of profit in Marx's theory (the "value rate of profit" and the "price rate of profit"), but only one rate of profit, the price rate of profit, which is determined in the Volume 1 theory of surplus-value and then taken as given in the Volume 3 theory of prices of production. 3. The total surplus-value does not change as a result of the the determination of prices of produciton. The total surplus-value continues to depend solely on surplus labor, thereby more clearly exposing the exploitative nature of capitalism. 4. The theory of value and surplus-value in Volume 1 is not "redundant", but is instead essential to the determination of prices of production in Volume 3. Values and surplus-value in my interpretation of Marx's theory cannot be derived from the physical quantites of inputs and outputs. Rakesh, even you acknowledge that Shaikh's assumption that the inputs in the determination of prices of production are "direct prices" is mistaken. If Shaikh's interpretation is mistaken on this crucial point, how could it be acceptable? Rakesh, I look forward to your responses to these points and to further discussion. Comradely, Fred
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