From: Diego Guerrero (diego.guerrero@CPS.UCM.ES)
Date: Sun Feb 25 2007 - 14:31:48 EST
Quoting Diego Guerrero <diego.guerrero@CPS.UCM.ES>:
> In my opinion, values and market prices determine each other mutually.
> Values are created by labour but the value of a commodity includes the
> MARKET price of the inputs. As Rakesh said in his last message, Marx has
> been misread also in this point. In
> <http://www.countdownnet.info/archivio/teoria/521.doc> I
> argue that the inputs have to be valued at market prices (m), not at
> values
> (w) or production prices (p)--I thus disagree with Alejandro Ramos and
> Fred
> Moseley too. In Capital I and II, Marx is assuming that m = w, and in
> Capital III, that m = p, but this is only the first assumption in
> analysis.
> As a general theory it should be assumed that m = m, different from both w
> and p. One can find in Marx's texts a foundation for this. The reason is
> that
> he is (and we should be) interested in the process of creation of NEW
> values, and he says explicitly that for this we can and must abstract from
> the values that come from other places, like in the case of the chemist:
Hi Diego,
This is a very interesting paragraph, which discusses two different
questions. These two questions are related, but I think we need to
distinguish between them more clearly:
1. What was the logic of Marx's theory in the three volumes of Capital?
2. How should we extend Marx's theory to a more general theory, which
includes market prices?
With respect to the first question, you seem to agree that Volume 3 of
Capital is about the determination of prices of production, and that
this theory assumes that the prices of the inputs are prices of
production. That is, when you say that the inputs for the
determination of prices of production should be the market prices of
the inputs, you mean that this is your suggested generalization of
Marx's theory in Capital to include market prices, not your
interpretation of what Marx did in Volume 3; right?
Do I understand you correctly?
__________________________________
Diego:
Yes and no. I agree that in Capital III Marx is mainly concerned about
prices of production (p). Hi is wise in limiting the discussion to “p”
(instead of “m”) in most cases. But I share the important point made by
Kenneth May in his 1948 paper where he mentions “the confusion initiated by
Bortkiewicz, whose mathematical mystifications bore little or no relation to
the basic problem posed by Marx”, for “the real problems in this field are
not to be found in the alleged difficulty of relating value and price of
production, but in relating these two concepts to actual prices, to the
actual exchanges” (1948, pp. 596-597).
I agree also with his following statement: “[Marx] assumed that value and
price coincide throughout Vols. I and II of Capital, an assumption
equivalent to considering only average and aggregate relations. In Vol. III
Marx argues that price of production and price coincide, or more precisely
that market-price of production serves as a norm around which market-price
oscillates.” (pp. 597-598)
This quotation coincides with your interpretation. But mine, which is close
to yours but is not exactly the same, can be better understood if you let me
quote myself in a passage freshly written where I comment on May:
<<Therefore, in order to capture the full meaning of market prices Marx
makes two intermediate steps as he thinks that this is the only way to make
the final, third step in the correct direction:
First step: m = w (and p does not exist yet)
Second step: m = p w
Third step: m = m; w m p.
Most of Marx’s analysis in Capital concerns the steps 1 and 2 only, which is
in accord with his general procedure of dealing first with averages and
aggregates before descending to the details. Even so, many insights on
different aspects of the third step can be found in his book. Everybody
knows that Marx’s Capital is incomplete and Marx was perfectly aware of the
fact that Capital was incomplete. This incompleteness affect especially some
intermediary connections between his more general categories—which form a
complete set of interrelated concepts and laws that are valid for the
abstract (model of) capitalist mode of production—and the ones that would
contribute to capture some more concrete features of real societies in their
historical definition (the State, taxes, the world market, etc.). We are not
saying that the fraction of Marx’s theory of value that relates to what the
modern literature calls “the transformation problem” (TP) is strictly
confined to steps 1 and 2, but some aspects of the third step are lacking
and still await for a further development.
However, even if Marx’s analysis is not completely finished in this field
too, there is a good part in Marx’s treatment of the “transformation” that
has passed unnoticed for almost everybody and belongs to this third step.
This is why we must repeat once and again that May’s observations, perhaps
the first author who did realize this, are so important. May writes:
“It is these statements about relationships between the value concepts
(value, market-value, price of production, etc.) and actual prices (price,
market-price, etc.) which pose the significant economic problem. The
relationship between value and price of production is hardly more than a
formal preliminary.” (p. 598; emphasis added)>>
At this point I write in a footnote something related to this and at the
same time to the general “dynamics problem” that, as you know, is very
important for me:
<<This is why he adds: “Winternitz’ derivation is limited strictly to the
relation between values and prices of production at an instant, actual
prices and economic processes in time not being directly involved”, and then
quotes Marx [K, vol. III, p. 205] again: The real difficulty lies in this
question: How is this equalization of profits into an average rate of profit
brought about, seeing that it is evidently a result, not a point of
departure” (1948, p. 598).>>
________________________________________________
Fred:
Is so, then it seems to me (based on our previous private email
discussions last Spring) that we are in substantial agreement about
Marx's logic in Capital.
________________________________________________
D:
I agree. That discussion helped me to understand that you were basically
right in the criticisms you were making me at the moment.
________________________________________________
Fred:
The main points of agreement between us would
seem to be:
1. The circulation of money capital (M - C . P . C' - M') is the basic
analytical framework of Marx's theory.
2. This analytical framework suggests that the M at the beginning of
the circulation of money capital is TAKEN AS GIVEN, as the money
capital advanced to purchase means of production and labor-power. And
the crucial point is that the SAME M is taken as given in the
determination of both value in Volume 1 and prices of production in
Volume 3. Thus there can be no question of Marx "failing to transform
the inputs" of constant capital and variable capital from values to
prices of production. This initial given M is eventually explained as
equal to the prices of production of the means of production and means
of subsistence.
________________________________________________
Diego:
I agree with both points except as regards the fact that you are using “p”
whereas I use “m”.
________________________________________________
Fred:
3. The total surplus-value and the general rate of profit are
DETERMINED PRIOR to prices of production; in other words, Marx's theory
is based on a logic of SEQUENTIAL determination, not simultaneous
determination.
________________________________________________
Diego:
I discuss this issue largely in the paper. For me, “prior” must be
understood not in chronological terms but in logical terms. I criticize
Alejandro Ramos and the TSS for their “chronological” interpretation. This
is why constant capital has to be computed at replacement costs, not
historical cost, and in this sense it seems that we agree provided you say
“sequential” in this sense.
________________________________________________
F:
4. Both of Marx's two aggregate equalities are always true simultaneously.
5. Constant capital is valued at current costs (at the time the
products are sold), not at historical costs.
To what extent do you agree with these points about Marx's logic in Capital?
________________________________________________
D:
I agree with points 4 and 5
________________________________________________
Fred:
You seem to emphasize much more the second question in your recent
paper (and I think more generally in your recent work). I agree that
this is an important question, and I would be happy to discuss it. I
think there will be more disagreement about this second question.
But I think it is also important to emphasize that, within Marx's
analytical framework of Capital (essentially excluding market prices
and stopping in Volume 3 with prices of production), his logic is
correct, not flawed and inconsistent. The Bortkiewicz criticism is
wrong, because it is based on a misunderstanding of Marx's logic in
Capital.
________________________________________________
D:
I agree. I hope that my reflections on May above are sufficiently clear
about this. I would like to know your discrepancies.
________________________________________________
So I think we need to distinguish more clearly between these two
questions. I realize this more clearly now than I did in our previous
discussions.
Comradely,
Fred
________________________________________________
Cheers,
Diego
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