From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Mon Feb 06 2006 - 14:56:47 EST
Jerry, If you think I am not being sufficiently clear, do say so! >How exactly from your perspective would this _in the aggregate_ lead to S-P inequalities? (NB: this is a question, not a rejection of the possibility). The concept of competition, dialectically considered, contains within itself "the negation of competition as a means of competition", through blocking competitors or disadvantaging them. Economic competition is not simply a sport between equals on a level playing field, but a war between unequals in which you try to tilt the playing field in your favour as much as possible. If you have close to a monopoly over a resource, a market or an output, you can raise prices well above value on a more or less permanent basis. Inversely, a strong market position may enable you to force sales below value, on a more or less permanent basis. In that case, profit can exceed surplus value for a seller, or surplus value can exceed profit for a buyer. >Well, if there is wasted labour or destroyed output this could affect the magnitude of S. Is there reason to think that the magnitude of profits would change to a greater or lesser degree than the change in S? It could also affect the magnitude of profit. BTW I didn't talk about "product dumping" (dumping prices) or criminal activity yet (cross-border "dirty money" is said to be a trillion dollars a year globally; this may involve a transfer of resource without exchanging for anything). You might contract to produce something, but it is destroyed or not produced for some reason, yet you still have a financial obligation. In the insurance world, you strike this all the time. Someone makes a profit, although nothing is produced, or although what was produced is destroyed, because of a contractual obligation. >Accounting tricks can't change the _actual_ amount of profit; they can only change the accounting for profit. Ditto tax rules -- and the accounting that firms do to minimize their tax liability. I disagree - accounting tricks and tax rules rarely alter the amount of surplus value produced, but they can alter the magnitude of profit income realised. Think of depreciation and inventory accounting for example, or, what items you can and cannot capitalise on. Profit is basically revenues less costs, but there are numerous techniques for overstating or understating costs and revenues, depending on what is most advantageous at the time, and this has real effects for the incomes realised. It may be a work of science to extract and define the real economic relation, that exists behind all the clever ways in which it is represented in accounts. >The concept of a redistribution of surplus value is key to Marx's understanding of the relation between landowners and capitalists and the theory of rent, isn't that so? Well, Marx's idea is that part of the gross revenues of industries is captured by landowners as rent, and by banks as interest. A product has a certain value, but how much of that value is realised in the exchanges occurring between the point of production and the point of consumption can vary. In modern times, the situation is more complex, both because of the increased intermediation between producer and consumer, and because corporations engage in trade internal to their own organisations. In estimating the Marxian new value added, land rents and subsoil rents paid out of current revenues of producing enterprises should be included, but in official national accounts they are excluded from gross product. >Right. I'm not sure where conservation "laws" entered Marxian political economy (Sraffa?), but Marx didn't really have a theory of the conservation of value. Instead, he highlighted (especially in _TSV_) the destruction of capital values. Marx does argue explicitly that human labour conserves asset values - but he argues this is often a service which the business gets "gratis" as "a free gift", since repairs, conservation & maintenance is just part of the ongoing labour-activities of employees. Human labour has, according to Marx, the capacity to compare value, consume value, conserve value, transfer value and create new value. I remember that when I lived in New Zealand, there was a strike where pulp and paper workers forced a total closure of a mill for several weeks. We got one of the union reps out to talk about the issue in a public meeting and on radio. The mill owners complained that, because the mill was shut down, its capital value deteriorated, quite apart from the loss of production, orders, etc. If you think of the example of a "ghost town", you can see what happens when all human labour is completely withdrawn. >But Marx didn't claim that in reality total value equals total prices. He assumed it in VI but he claimed in V3 that total value equals total *prices of production*. There is a huge difference since there are entire sectors (e.g. where there are natural monopolies) that are excluded from the transformation. Indeed, one could claim that if total value = total PoP then total value can _not_ = total prices! Well I agree with that, but whether the identity concerns "market prices" or "production prices" does not alter my argument one iota. The problem is to understand, what it means to say that an aggregate product value is "equal" or "identical" to an aggregate money-price (whether a real or an ideal price), a question which our clever mathematicians rarely ask, because they just assign a "number" to total value and a "number" to total price. Once the numbers have been assigned, you can go ahead with constructing equations. Obviously, if I assigned letters or hieroglyphs (or whatever) to values, and numbers to prices (or vice versa), I couldn't construct any meaningful equation between values and prices, both have to have a numerical magnitude so that they are both quantities that can be compared. Presumably what the equation value=price means, is that the aggregate money-price accurately expresses the "real" aggregate product value, i.e. this amount of money would exchange for, or buy, the "real" aggregate product value, consistently valued. But exactly what valuation criteria, equivalence principle, or terms of exchange, is being applied here? In social accounting, you strike this problem all the time. Whatever else you might say about it, the assumption in the value-price identity is one of AN EXCHANGE OF EQUIVALENTS. In Cap. Vol. 1, Marx aimed to show that in production, i.e. the "moment" between between M-C and C'-M', an increase in value can occur, even if the exchanges M-C and C'-M' are strictly equal exchanges, i.e. exchanges of equivalents. The problem is, that the moment of production itself occurs external to the marketplace, and does not constitute a transaction itself (it occurs after M-C and before C'-M'), and the only observable economic evidence available that value-accretion has occurred is that C' has a higher value (or price) than C. As Frederick Engels states in "Herr Duehring's Revolution in Science", the theoretical problem is to explain "how is it possible constantly to sell dearer than one has bought, even on the hypothesis that equal values are always exchanged for equal values?". http://www.marxists.org/archive/marx/works/1877/anti-duhring/ch19.htm Engels also elaborates, that the added value "cannot come either from the buyer buying the commodities under their value, or from the seller selling them above their value. For in both cases the gains and the losses of each individual cancel each other, as each individual is in turn buyer and seller. Nor can it come from cheating, for though cheating can enrich one person at the expense of another, it cannot increase the total sum possessed by both, and therefore cannot augment the sum of the values in circulation." In reality, however, equal exchange is the exception, and unequal exchange to some degree or other is the norm, in a business environment that is constantly changing and prone to market fluctuations - business indeed scours the globe to buy as cheaply as possible (below value, if possible) and sell as dear as possible (above value, if possible), even regardless of what happens in production itself, yet also under the constraint that everybody tries to do the same thing. It therefore appears as though new value arises in exchange (value is added, through trading or through market expansion), whereas in reality it is created in production. Given the constraint that everybody tries to do the same thing, what then regulates supply-prices in an overall sense? It cannot generally be anything other than the ruling cost-prices and the mass of surplus value newly created, and the formed production-prices are just the synthesis of these two factors, the phenomenal form of a combination of a mass of necessary labour and a mass of surplus labour. Prof. Steedman complains that "Marx acts as though the same good has a different price depending on whether it is being bought or being sold", but that is not the case, because Marx argues inputs are bought (M-C) to produce new, different outputs with them for sale (C'-M'). So we're not talking about the same good, but different goods. Prof. Steedman would be correct, if value-adding production of new products did not exist. But isn't the input of one enterprise the output of another? Certainly, but all that means is that value-price divergences can occur at the point of acquisition of inputs as well, something which the astute businessman tries to turn to his advantage. And, that aside, you have an historic cost-price, a cost-price at the point of pricing an unsold new output, and a cost-price after sales; you have also enterprise cost-prices and average or ruling cost-prices in the market. I use the term "generic profit" because profit income in the macro-economic sense can be realised in the broad categories of ordinary profit, or interest, rent, tax, royalties, capital gains and fees. Profit from production is, as Marx says, only one of the modes of accumulation of capital, but it is ultimately the only mode of accumulation that can increase the total volume of profit, except for (1) privatisation (or, to put it differently, "the integration of more resources and labour as private property in markets") and (2) the extension of credit which allows us to capitalise on the future today or shift the obligation to pay to someone else. To cut a long story short, (1) Marx is only talking about "pure cases" and "ideal averages", (2) aggregate financial data involves "stylised facts", (3) mathematicians are likely to say "gimme some data, so I can do some computations" whereas what is being counted also merits inquiry. Jurriaan
This archive was generated by hypermail 2.1.5 : Tue Feb 07 2006 - 00:00:02 EST