This is a reply to Geert's 5577. Geert, thanks for your post.
> I dont think that Marx in "Capital" presents a price theory (say "micro",
> as in micro-economics). Even not in the LET-interpretation. Although it
> might perhaps be developed from it. For VFT (at least my version of it)
> there is no transformation *problem*, at say, the level of abstraction of
> V-3. The big transformation ("the transsubstantiation") happens at the
> level of abstraction akin to early in V-1. (Marx's problem was that he had
> to set out his theory in terms of the language of his day, i.e. the
> Ricardian problematic).
Geert, would you please explain what you mean by "there is no
transformation *problem*, at say, the level of abstraction of V-3"? It
seems to me that there is the need to explain how the general rate of
profit and prices of production are determined, is there not? At least,
that is what Marx did in Part 2 of Volume 3, right?
According to your interpretation, how did Marx determine the general rate
of profit and prices of production in Part 2?
> However, when LET and VFT arrive, so to speak, at the beginning of V-3,
> Part Three (i.e. after "the" transformation), they have equal weapons in
> this respect. (I am NOT saying that LET makes a detour, the two tours are
> different.)
Geert, why start with Part 3 of Volume 3? Why not with Part 1? And
especially why skip over the key and controversial Part 2?
What do you mean that these two interpretations "have equal weapons in
what respect"? That they both present theories of the general rate of
profit and prices of production? Or something else?
Also, what do you mean that "the two tours are different"? That two
different interpretations of Marx's theory of the general rate of profit
and prices of production are presented? If so, then this should not be
simply ignored and go on from there. One of the issues under dispute is
how Marx determined these key variables. Again, I would appreciate an
explanation of your interpretation.
> Even within, broadly, a LET problematic, it is not obvious -- as Fred seems
> to suggest -- that surplus-value is a predetermined *given* from a V-1
> analysis. Fred and I have discussed this before -- outside OPEL -- and some
> of the same arguments were recently made by Rakesh. The *given* view
> polishes away all the interesting dynamics of V-2 and V-3 (and even those
> are still at a quite high level of abstraction) -- thus (in Fred's view
> apparently) we seem to make no progress. All there is to say to it has been
> said in V-1. (The other Fred, BTW, Engels was of the same opinion -- this
> is to say it is a respectable position, I happen not to agree.)
It may not be obvious that surplus-value is a predetermined given at the
beginning of Volume 3, but I think the textual evidence to support this
interpretation (that I have presented in two papers) is very strong (some
of which will be presented below).
I have modified my views somewhat with respect to Volume 2, in response to
Rakesh's recent comments (Rakesh, thank you for this clarification). I
argue that what is determined in Volume 1 is the surplus-value produced by
any given capital WITHIN A GIVEN PERIOD of production. Since the same
theory applies to each and every capital, it also applies to the total
surplus-value produced by the total social capital. What is determined in
Volume 2 is the surplus-value produced by any given capital (and hence the
total social capital) DURING ONE YEAR. The surplus-value annually
produced is equal to the product of the surplus-value produced within each
period (Volume 1) times the number of turnover periods in a year (Volume
2).
But my main point with respect to Volume 3 remains the same. When Marx
comes to Volume 3, all the above have already been determined and then are
taken as given in the Volume 3 analysis of the distribution of
surplus-value, i.e. of the division of the total surplus-value into
individual component parts. The division of a predetermined total amount
obviously does not affect the total amount itself. This is the basic
premise of Marx's theory of the distribution of surplus-value in Volume
3. Volume 3 is not about the determination of the magnitude of
surplus-value; the magnitude of surplus-value has already been
determined. Rather, Volume 3 is about the division of this total amount
into individual parts, the "necessary forms of appearance" of this
predetermined total amount.
With respect to "progress", I would say that theoretical progress is made
in V3, but it is a different kind of progress that you are talking
about. There is no further determination of the total surplus-value
produced (that has already been determined), but there is the
determination of the individual component parts of the total surplus-value
(equal rates of profit, merchant profit, interest, and rent). That is
progress of a different kind. It is the explanation of the
individual "forms of appearance" of surplus-value, rather than the
determination of the total surplus-value.
There is more to be said in V3 (much more), but it is about the
distribution of surplus-value, not about the production of surplus-value,
or the determination of the total amount of surplus-value.
> I think this is the main point and before this issue has been cleared there
> is, it seems to me, not much use to go into details about other matters.
I agree that this is a crucial point, and I welcome further discussion of
this all-important issue.
Let me begin this further discussion by going straight to one of the main
issues: the determination of the general rate of profit in Part 2 of
Volume 3 (which in turns determines prices of production). I argue that
Marx determined the general rate of profit as the ratio of the total
surplus-value annually produced in the capitalist economy as a whole to
the total social capital, i.e. RP = S / C; and that the total
surplus-value in this ratio is taken as given, as already determined in
Volumes 1 and 2. This method of determination of the general rate of
profit is consistent with the general premise of Volume 3 that the total
surplus-value is a predetermined given.
Textual support for this interpretation includes the following passages:
"The general rate of profit is formed through the TOTAL SURPLUS-VALUE
produced being calculated on the TOTAL CAPITAL of society (of the class of
capitalists). Each capital, therefore, in each particular branch,
represents a *portion* of a total capital of the same organic composition
... As such a portion, it draws its dividends from the surplus-value
created by the aggregate capital, in accordance with its size. The
surplus-value thus distributed, the amount of surplus-value which falls to
the share of a block of capital of given size, for example 100,
... constitutes the *average profit* or the *general rate of profit*
..." (TSV.II: 433; capitalized emphasis added)
"The empirical, or average, profit can therefore be nothing other than the
distribution of that total profit (and the total surplus-value represented
by it or the representation of the total surplus labor) among the
individual capitals in each particular sphere of production, in equal
proportions ... It therefore represents the result of the particular mode
of calculation in which the different capitals divide among themselves
aliquot parts of the total profit. WHAT IS AVAILABLE FOR THEM TO DIVIDE
AMONG THEMSELVES IN ONLY DETERMINED BY THE ABSOLUTE QUANTITY OF THE TOTAL
PROFIT OR THE TOTAL SURPLUS-VALUE." (MECW.33: 99; emphasis added)
"Empirical or average profit ... relates the TOTAL AMOUNT OF
SURPLUS-VALUE, hence the surplus-value realized by the whole capitalist
class, to the TOTAL CAPITAL, or the capital employed by the whole
capitalist class, in exactly this way - it relates the total surplus-value
as profit to that total capital of society, without regard to the organic
relation in which the individual components of that total capital have
participated directly in the production of that total surplus-value
..." (MECW.33: 100; emphasis added)
"But it was also shown that considering the sum total of the capitals
which are employed in the various particular spheres of production, the
total amount of the social capital, or, and this is the same thing, the
total capital of the capitalist class, the average rate of profit is
nothing other than the TOTAL SURPLUS-VALUE related to and calculated on
this TOTAL CAPITAL." (MECW.33: 104; emphasis added)
"The TOTAL SUM OF CAPITALS applied in the five spheres is 500; the TOTAL
SUM OF SURPLUS-VALUE they produce 110; the total value of commodities they
produce 610. If we treat 500 as one single capital, with I-V simply
forming portions of it, ... then the average composition of the capital of
500 is 78c + 22c. Treating the capitals of 100 as each simply a fifth of
the total capital, its composition would be this average one of 78C +
22v; in the same way the average surplus-value of 22 would accrue to each
of these capitals of 100, the average rate of profit would thus be 22 per
cent ..." (C.III: 254-55; emphasis added)
"... the value level of the TOTAL CAPITAL advanced (both constant and
variable), ... [together] with a GIVEN SIZE OF SURPLUS-VALUE OR PROFIT FOR
THE ENTIRE CAPITALIST CLASS, determines the rate of profit
..." (C.III: 299-300; emphasis added)
"This rate of profit, expressed absolutely, can be nothing but the
*surplus value* produced (annually) by the *capitalist class* in relation
to the total of *social* capital advanced. For instance, if the social
capital = 400c + 100v and the surplus value annually produced by it =
100s, then ... the rate of profit is 20 per cent. This is the *general
rate of profit*. ... The price thus equalized, which divides up the social
surplus-value equally among the various masses of capital in proportion to
their sizes, is the *price of production* of commodities, the center
around which the oscillation of the market prices
moves. (SC: 193; emphasis in the original)
Parts 4 through 7 of Volume 3 - the rest of Marx's theory of the
distribution of surplus-value in Volume 3 - are similarly based on the
premise that the total amount of surplus-value is taken as a predetermined
given. Part 4 redetermines the general rate of profit, this time to
include commercial capital in the total social capital, i.e. in the
denominator of the rate of profit. The total amount of surplus-value, the
numerator in the rate of profit, remains the same, as determined in
Volumes 1 and 2. Part 5 analyzes the division of the predetermined total
amount of surplus-value into profit and interest, and Part 6 analyzes the
division of the same predetermined total amount of surplus-value into
profit and rent. Part 7 is a kind of summary of Marx's theory of the
distribution of surplus-value in Volume 3. The "surface
appearances" of surplus-value that are the variables of vulgar economics
are now explained as the "necessary forms of appearance" of the same
unifying substance: surplus labor.
One especially clear and important passage from Part 7 is the following
summary of Marx's theory of the distribution of surplus-value and the
determination of the general rate of profit.
"We have thus an ABSOLUTE LIMIT for the value component that forms
surplus-value and can be broken down into profit and ground-rent; this is
determined by the excess of the unpaid portion of the working day over its
paid portion, i.e. by the value component of the total product in which
this surplus labor is realized. If we call THIS SURPLUS-VALUE WHOSE LIMITS
ARE THUS DETERMINED profit, when it is calculated on the total capital
advanced, as we have already done, then this profit, considered in its
absolute amount, is equal to the surplus-value, i.e. it is just as
regularly determined in its limits as this is. It is the RATIO BETWEEN THE
TOTAL SURPLUS-VALUE AND THE TOTAL SOCIAL CAPITAL ADVANCED IN
PRODUCTION. If this capital is 500 ... and the surplus-value is 100, the
absolute limit to the rate of profit is 20 percent. The division of the
social profit as measured by this rate among the capitals applied in the
various different spheres of production produces prices of production
which diverge from commodity values and which are the actual averages
governing market prices. BUT THIS DIVERGENCE FROM VALUES ABOLISHES NEITHER
THE DETERMINATION OF PRICES BY VALUES NOR THE LIMITS IMPOSED ON PROFIT BY
OUR LAWS... THIS SURCHARGE OF 20 PER CENT ... IS ITSELF DETERMINED BY THE
SURPLUS-VALUE CREATED BY THE TOTAL SOCIAL CAPITAL, and its proportion to
the value of this capital; and this is why it is 20 percent and not 10
percent or 100 percent. The TRANSFORMATION OF VALUES INTO PRICES OF
PRODUCTION DOES NOT ABOLISH THE LIMITS TO PROFIT, BUT SIMPLY AFFECTS ITS
DISTRIBUTION AMONG THE VARIOUS PARTICULAR CAPITALS OF WHICH THE SOCIAL
CAPITAL IS COMPOSED ..." (C.III: 998-1000; emphasis added)
We can see from this passage: (1) that the total amount of surplus-value
is determined by the unpaid portion of the working day; (2) that this
total amount of surplus-value is the given "limit" of the sum of the
individual parts into which it is divided; (3) that this total amount of
surplus-value related to the total capital invested is the rate of
profit; and (4) that the equalization of profit rates does not affect the
magnitude of the total surplus-value, but only its distribution across
industries.
Geert (and others), do you disagree with my interpretation of Marx's
determination of the general rate of profit in these passages (that in the
determination of the rate of profit, the total amount of surplus-value is
taken as given, as determined in Volumes 1 and 2)? If you disagree, then
would you please explain your interpretation of these passages, and more
generally your interpretation of Marx's determination of the general rate
of profit and prices of production?
Thanks very much in advance. I look forward to further discussion.
Comradely,
Fred
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