From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Tue Mar 06 2007 - 09:07:38 EST
I don't think the magnitudes of inputs can be "transformed" into prices of production, because they are given market prices. The theory of production prices is supposed to explain what regulates the market prices of produced output, given that production has occurred and a certain amount of value has been created. Among Marxists there is a lot of confusion however about what the cost-price refers to. The actual cost-price does not apply to any capital inputs at all, but to a new and different product produced. It is the cost-price of the new product produced, and this can be finally established only after sales of the product. Before that time, you only have an estimated cost-price, which is an ideal price. Once you have a sales figure (gross revenues), you can subtract the costs of production from that figure to obtain your profit income, by referring to the purchase prices of inputs used up to make the product. And you can then calculate a unit-cost and unit-profit for the product, if you know the quantity of product-units sold, all in price terms. But point is, those costs of production of the new product are in reality not even necessarily equal to the input costs (the capital advanced), since e.g. you can inadvertently purchase more inputs than you actually use to make the new product (or what is the same, you use less inputs than you purchased), in which case you might hold more inventories. As a corollary, you may also use more or less labour than you actually paid for. But this does not even necessarily show up in a conventional profit-and-loss statement, because all that statement itemises, is that you had X amount of sales, and Y amount of expenses in an accounting period (from which you can calculate the net income available for distribution). What the production price ends up being, is of little or no immediate concern to capitalists, because what they are interested in, is whether a given sum of capital is transformed into a larger sum of capital. At best, it is only of interest to managers, insofar as they know this depends on the amount of value conserved, transferred and added by employees. Marx then tries to theorise the value relations involved, by comparing the compositions of the initial outlays of capital (K=c+v), to the capital compositions of the output (K'=c+v+s). It is K'[c+v] which is the true cost price. Question however is, how do we know that K[c+v] = K'[c+v]? All that the Marxists can really establish abstractly, after sales have occurred, is that K' - K= s enabling us to find K' - s = c+v which seems reasonable enough. But what entitles us to calculate that? In reality, the abstract identity K[c+v] = K'[c+v] already assumes that: (1) K is completely consumed, in producing the new product. (2) all output is sold. (3) prices stay constant. Jurriaan
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