From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Fri Sep 21 2007 - 10:41:45 EDT
Jerry, As I have noted on OPE-L a few times, for Marx the concepts of valorisation of capital and realisation of capital are not the same. Some Marxists e.g. Mohun and Mattick argue that valorisation includes both production and circulation, but this is not Marx's concept. Valorisation refers to the growth in the VALUE of capital WITHIN the production process, AFTER purchases and BEFORE sales (a moment in the whole process during which the elements of capital are WITHDRAWN from the market), through the applications of living labour. Valorised capital and realised capital are at any time or during an interval of time different magnitudes, and there exists no logical reason nor empirical reason to believe that the sum of prices must necessarily equal the sum of values at any stage of aggregation, as a "tidy accounting sum", anymore than total profits from new gross output must equal total surplus values. These identities are assumed by Marx only to model the distribution of newly created surplus value in the context of intercapitalist competition. The reason for the non-identity is simply that at any time the commodities can be bought or sold above or below their value. All this is obvious to anybody familiar with national accounting practice, which is the most conceptually rigorous system for empirical price aggregation that exists (even if in reality the empirical estimates are not very rigorously obtained as the case might be). Marx generally assumed a MELT of some sort in order to be able to talk of goods being traded above or below value, and he argued that the differences between total values and total prices pertaining to the gross output (the "value of production") would not be so great. But most probably, not having access to comprehensive economic data, he conflated idealisations and the empiria. It is not necessary for total prices and total values to be equal for Marx's theory to be valid, the only requirement is that there must be a determinate quantitative relationship between them. But that determinate relationship cannot be empirically proved, only empirically corroborated, in particular if it is not feasible to operationalise a MELT empirically in any accurate way. It remains a theory or hypothesis which if true would explain a lot. If the validity of Marx's theory is staked on the ability to achieve a "nice and tidy accounting sum" in an idealised model, this is a big epistemological error for many reasons which I cannot all go into now, but not the least because the people actually doing the base accounts already have trouble to achieve an exact consolidation. Contrary to the Marxists, I argue that the surplus value contained in the Marxian value product is not "redistributed" among capitalists, within Marx's model (abstracting from state redistribution) because that would mean parts of surplus value are transferred between capitals. In reality it is just that some capitals realise more of the valorised capital value, and some realise less than the valorised capital value. The aim of capitalist production is to buy below value, produce below value and sell above value as much as possible. Marx's principle is that for goods sold above value, other goods are necessarily sold below value, but this is more or less a tautology. This is also what he says in the Wagner quote, i.e. the more a commodity is sold over its value, the more other commodities will be sold under their value "by exactly the same amount, even if their own money price does not fall". But it is not even necessary that they will be sold under their value "by exactly the same amount". Ever since Leontief, partly inspired by Marx, invented input-output economics, the economics profession has buzzed with the notions of inputs and outputs which have also been used in national accounts and increasingly used in management of all kinds. But this focus on inputs and outputs is in many respects confusing, since these things refer to accounting flows computed from expenditures and revenues in line with certain accounting definitions. Marx himself was primarily concerned not with inputs and outputs, but with how a sum of capital is converted into a larger sum of capital through production, and how this capital is distributed. What makes his theory unique is that he argues that the distribution of newly produced capital is fundamentally determined by the conditions of its mode of production, exactly the reverse of the way in which it appears to most investors. If this interpretation is correct it does not mean that only a qualitative value theory is possible - we can measure and quantify a lot of things empirically which can provide useful insight. It means only that we are able to theorise far more, and in far greater complexity, than we are actually able to observe or measure. Jurriaan
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