Hi Andrew, the discussion of demand and realization on p.4ff of Hans Ehrbar's essay on the LTV is very illuminating, I think. Your further thoughts would be appreciated of course. http://www.econ.utah.edu/ehrbar/ltvtoday.pdf yours, rb >Surely the macr'o money invested is the given, and prices of production >follow from this. If we are talking about the amount of money invested then >this is part of M' in the M-M' money circuit. M is constant and variable >capital, M' is constant and variable capital plus dV+dC, new constant and >variable capital (assume zero capitalist consumption for simplicity). From a >supply point of view capitalists advance M which results in M'; from a >demand point of view they advance investment (dC+dV). Now the amount of >profit, from which we would calculate prices of production, is condidtional >on M and M'. Surplus value must be positive for there to be a positive >difference, but this difference and its magnitude arguably do not depend on >prices of production. > >This is a bit clipped, but thought I'd try it out off the cuff. > >Andrew. > >> -----Original Message----- >> From: Fred B. Moseley [SMTP:fmoseley@mtholyoke.edu] >> Sent: 14 June 2002 03:29 >> To: ope-l@galaxy.csuchico.edu >> Subject: [OPE-L:7384] Re: interpreting Marx's texts (fwd) >> >> >> 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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