From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Apr 08 2007 - 23:45:51 EDT
Thought I would write something substantive in reply to the wikipedia entry seemingly submitted by Kliman. The Wikipedia wrote: >Second, according to the standard interpretation of Marx's value >theory, values and prices constitute two distinct and independent >"systems." With respect to relative magnitudes, prices do not depend >on values, and values do not depend on prices. Prices of outputs >depend on the prices of the inputs used to produce them, while >values of outputs depend on the values of the inputs used to produce >them. In contrast, the TSSI is a "single-system" interpretation >since it holds that, in Marx's theory, (a) prices of outputs depend >in the aggregate on the so-called "value rate of profit" (the ratio >of surplus-value to capital invested), while (b) businesses' >investments of capital value, and thus the values of the outputs >produced, depend partly on the prices of the inputs acquired by >means of theses investments. Value and price are therefore >determined interdependently, though they remain distinct. What this means is that the TSS school insists that the value transferred from the used up means of production to the produced commodities is not determined by the value of those used up means of production themselves but by the value of money required to purchase those means of production at current prices. Yet Marx clearly argued the value of a commodity is determined by the value added by living labor and value incorporated in the used up means of production. Indeed for this reason Marx reasoned the price of production of a commodity differs from its value for two reasons: first, the surplus value appropriated through the production of commodities is not proportional to the profits made, given the tendency towards the equalization of the profit rate; second since price of production is calculated on the basis of the cost price of a commodity and the cost price contains a deviation from the value of the used up means of production, this deviation can only result in a further divergence between the value of a commodity and its price of production. But the TSS school holds that the deviation between the prices of production of the used up means of production and their respective values cannot be a reason for the divergence between the value and prices of production of the produced commodities since it holds that the value of the produced commodities incorporates not the value of the used up means of production but the value of the money required to buy those means of production at their current prices of production. Yet on at least two occasions Marx spoke of two reasons why the value of a commodity would diverge from its price of production. The TSS school denies the very possibility of the second reason for divergence, given above. This challenge was put to the TSS school by two participants at the OPE-L list serve, but no response has yet been made. However, the TSS school could argue did at times confuse whether the value transferred from the used up means of production to the produced commodities was given by (1) their own value or (2) the value of the money required to purchase them at current prices. TSS could also argue that its acceptance of the second approach is well grounded in and indeed demanded by Marx's own theory in spite of disjecta membra otherwise. Other theorists who accept the second approach include important members of a robust Althusserian school (Richard Wolff, Stephen Resnick, Antonio Callari and Bruce Roberts) and Fred Moseley author of an innovative reconstruction which justly emphasizes the monetary and macro economic character of Marx's value theory. Yet the second approach is not well grounded in Marx's own writings about value theory, but these theorists argue that the defense of Marx's value theory against the charge of mistakes in his value-price calculations depend on it (see here von Bortkiewicz and Samuelson on Marx's putative transformation problem). It is not clear that this is in fact true (for example Anwar Shaikh calculates value in terms of the first method in his fixed point iterative solution to the relationship between value and price), but it also seems that nothing substantive in terms of Marx's value theoretic analysis of capitalism (the theory of exploitation and the law of motion of Capital) is lost if one accepts this second approach. Some members of the TSS school rightly do not concede that Marx left his theorization of the relationship between values and prices incomplete as traditionally charged. It has been argued that even after Marx transforms the values of the produced commodities into prices of production, he left the means of production and wage goods in values or prices which are proportional to values, recognizing the need for but failing to transform them into prices of production as well. Yet Marx takes the cost prices of commodities and the invested sum of money capital as a precondition--given, unchangeable. He could not have been arguing for the transformation of cost prices or an already invested sum of money capital. It is true that in the course of the ninth chapter of Capital, Volume III Marx has changed our understanding of what had determined the cost prices--Marx had allowed his readers to assume they had been determined by the value of goods but now we see that they had to have been determined (directly and indirectly) roughly by the prices of production of goods. Because Marx assumed that the constant capital outlay portion of the cost price had been determined by the value of the used up means of production he also assumed in his transformation tables that the value transferred could be identified with the cost price of the goods. This assumption he says is wrong. That is, Marx never admitted that he had left the means of production and wage goods in the form of values or prices proportional to values in his transformation tables in the ninth chapter of Capital, volume III. As Rakesh Bhandari has clarified, Marx only admitted that he had wrongly assumed that he could determine the actual value transferred from the means of production to the produced commodities from the flow price of the used up means of production. But that Marx made this faulty assumption is irrelevant as no matter the actual value transferred from the means of production--and it simply cannot be precisely known as we know that it was not proportional to the flow price of the used up means of production--the value of any commodity is greater than its cost price, the value of the produced commodities of any branch is greater than the cost price of those goods, and the total value of goods is greater than the total cost price. Which means that new value has been added, and it will tend to be distributed according to an equal profit rate rule on the basis of the given precondition of the cost prices. And for this reason, among others, the value basis of economic magnitudes is concealed. This is what Marx set out to and did in fact establish. Marx never conceded that he should have go back and transform the inputs from values to prices of production. The cost prices cannot be changed after all; they are a given precondition. This has been particularly well argued by Alejandro Ramos Martinez of the TSS school. Marx also never admits to a need for an equilibrium theory of price in which inputs and outputs are transformed simultaneously into the same prices of production. The TSS rejection of a simultaneous theory of price is consistent both with Marx's dynamic understanding of capitalism and the dynamics of accumulation as well. It is after allmost unlikely that the prices of the production of means of production and wage goods would be identical to the prices of production of the produced commodities given the ceaseless attempts to raise productivity, so why should we build on a method which requires for mathematical completeness that values and prices of production do not change in the course of production? The basic TSS challenge is powerful indeed.
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