[OPE-L:7386] Re: Re: interpreting Marx's texts (fwd)

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Fri Jun 14 2002 - 13:49:13 EDT

re Fred's 7384

>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.

I agree of course that in the monetary macro method value analysis 
enters in the determination of surplus value and the rate of profit 
method as you say.

But I see no relation between your givens and value.

After all, you have argued against Allin and me that constant capital 
in terms of the value transferred from the means of production is 
ultimately NOT determined by the value of the input means of 
production.  Moreover, constant capital in terms of the money laid 
out for the purchase of means of production and raw materials is not 
determined in the monetary macro method by the value of those things 
either but ultimately their prices of production.

So I don't see the relation between your givens and value.

You are making a journey which starts from prices of production and 
ends with prices of production without in any way confirming that we 
have the same unit prices of production on the input and output side, 
and since in your interpretation prices of production have to be 
equilibrium ones, the monetary macro method does not yield prices of 
production which can be validated as such.

>>>   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.

You seem to be arguing here that the money capital laid out for 
constant capital as a whole had to have approximated the prices of 
production for means of production as a whole. Deviations cancel out 
in the aggregate.

But this does not seem to me to speak to my criticism:  that we can 
infer equality between constant capital and price of production in 
the aggregate does not prove that the same unit prices of production 
can regulate the market price of both the input and output means of 
production. Yet--as I say above--this would have to be the case given 
your equilibrium price of production theory; the problem is that the 
monetary macro method does not allow us to validate that equilibrium 
unit prices of production have in fact been derived. Which I think 
gives two options: maintain the equilibrium assumption and defend 
Shaikh's iteration or break out of the box of equilibrium with 

>Rakesh, you say that my interpretation of the determination of constant
>capital is different from Carchedi's, but this is not true.

No I say that the equilibrium feature which you attribute to Marxian 
prices of production is rejected by Carchedi. I am going to jump 
ahead of your interpretation of Carchedi--is he interested in 
rejoining OPE-L?

>>>   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

Fred, as I understand it, you have given textual references to 
substantiate your claim that Marx's prices of production have an 
equilibrium property. You have not however shown that the prices of 
production which Marx derives (or are derived by the monetary macro 
method) can be validated as equilibrium prices.

>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

Shaikh does not say that there is a logical mistake. He says that the 
transformation is incomplete.

I however think there is a logical mistake in Marx's transformation 
tables, and underline that Marx himself pointed to it. Of course I 
say the mistake is the exact opposite to which 100 years of criticism 
has had Marx admitting.

>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

And for Shaikh there are not two capitalists' income; it is the same 
in direct price and price of production scheme. For Shaikh, the 
bourgeois appropriation of unpaid alienated labor in the very process 
of production happens both causally and logically prior to the 
distribution of surplus value among capitalists and the consequent 
determination 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.

Neither does total surplus value nor real capitalists' income 
(profit+ revenue) change at any point in Shaikh's iteration.

>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.

Why not? Why couldn't they be derived?

>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?

Well it is acceptable if one thinks Marx begins with inputs in direct 
prices. I don't think this is an unreasonable interpretation. Nor do 
I think your interpretation that Marx begins with the M which would 
have actually been laid out in order to commence the circuit of 
capital is unreasonable. Either one begins with direct prices and 
carries out Shaikh's iteration, or one begins with prices of 
production as you recommend and (i) admits to the inverse 
transformation problem which does no damage to the logic of Marx's 
transformation and (ii) proceeds in Carchedi's sequential manner.

All the best, Rakesh

All the best, Rakesh

>Rakesh, I look forward to your responses to these points and to further

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