Thanks very much to Duncan, Simon, Riccardo, Andrew, Paul C., and Alan for
very interesting and stimulating replies to my (2193) and to each other. I
would like to start with a reply to Simon, picking up on an important point
of disagreement between between Simon and Andrew. I apologize to Simon for
overlooking his earlier post on these matters.
1. I agree with Andrew that the the VALUE OF LABOR-POWER IS NOT THE SAME
THING AS VARIABLE CAPITAL. I think that Simon shifted the focus of the
discussion from the determination of variable capital and constant capital
to the determination of the value of labor-power and the value of the means
of production (especially the former). These two sets of questions are
related, but they are not the same, as I will try to show. Constant capital
and variable capital are the "inputs" in Marx's theory of surplus-value in
Volume 1 and his theory of prices of production in Volume 3. The
controversy over the "transformation problem" ever since Bortkiewitz has
centered on the precise nature of the determination of these inputs: did
Marx fail to transform these inputs? I will first explain my
interpretation of the determination of variable capital and constant
capital, which I will then contrast with Simon's interpretation of the
determination of the value of labor-power and the value of the means of
production.
2. Constant capital and variable capital are the two components of the
initial capital invested in the first phase of the circulation of capital.
This initial capital in defined in Chapter 4 of Volume 1 in terms of money,
the M in M-C-M'. Since the total capital is defined in terms of money, so
also the two components of this total capital - constant capital and
variable capital - are also defined in terms of money, as the quantities of
money invested in the first phase of the circulation of capital to purchase
means of production and labor-power. These definitions are clear from the
passages from Chapter 8 of Volume 1 quoted by Simon in (2222).
The next question then is: how are these quantities of the initial
money-capital - constant capital and variable capital - DETERMINED, both in
Marx's theory of surplus-value in Volume 1 and his theory of prices of
production in Volume 3?
I argue that these quantities of the initial money-capital are TAKEN AS
GIVEN, i.e taken as the initial data which which Marx's theory of
surplus-value and prices of production begins. The standard interpretation
is that the INITIAL GIVENS of Marx's theory are not these quantities of
money-capital, but are instead the PHYSICAL QUANTITIES of the technical
conditions of production and the real wage; constant capital and variable
capital are then derived from these given physical quantities, as the values
of these means of production and means of subsistence, i.e. as the
labor-time embodied in these means of production and means of subsistence.
3. My arguments to support my interpetation of the determination of
constant capital and variable capital have to do with the nature of Marx's
logical method, and especially with the logical relation between Parts 1, 2,
and 3 of Volume 1 of Capital. In Part 1, value is derived from an analysis
of commodities and money is derived as the necessary form of appearance of
the value of commodities. In Part 2, capital is defined in terms of this
previously derived concept of money: as money that becomes more money.
Part 3 then analyzes the origin of the increment of money that is
characteristic of capital, WITH THE INITIAL MONEY-CAPITAL (constant capital
and variable capital) TAKEN AS GIVEN. Marx did not suddenly in Part 3
ignore the prior logical development of money and capital in Parts 1 and 2
and introduce out of nowhere the technical conditions of production and the
real wage as the initial givens in his theory. Instead, Parts 1 and 2
provide the logical presuppositions for Marx's theory of surplus-value in
Part 3 and beyond. The standard interpretation, on the other hand, has no
explanation for Marx's analysis in Parts 1 and 2 or for the logical relation
between these two parts and the theory of surplus-value in Part 3. The
standard interpretation simply ignores these beginning parts of Capital as
if they did not exist, and assumes without discussion or justifiation that
the initial givens in Marx's theory are the technical conditions of
production and the real wage.
Marx's theory of prices of production in Part 2 of Volume 3 takes the same
magnitudes of constant capital and variable capital as given as in the
Volume 1 theory of surplus-value. The only difference is that in Volume 3,
not only are the aggregate quantities of constant capital and variable
capital are taken as given, but also the disaggregate quantities of these
two components of monney-capital for each industry. THIS is the reason why
constant capital and variable capital do not change, or do not have to be
transformed, in the transition from the aggregate analysis of surplus-value
to the disaggregate analysis of prices of production - because the SAME
quantities of constant capital and variable capital are taken as given in
both of these stages of the analysis. The magnitudes are not first
determined as the values of the means of production and the means of
subsistence, and then later transformed into the prices of these same means
of production and means of subsistence.
That the initial constant capital and variable capital are taken as given in
terms of quantities of money is further indicated by the general analytical
framework for Marx's theory, which is expressed (in abbreviated form) as the
general formula for capital, or M - C - M'. The starting-point of this
formula is M, a sum of money invested as capital to purchase means of
production and labor-power, which suggests that this starting point provides
the initial givens in Marx's theory. The purpose of Marx's theory of
surplus-value is to explain how this given sum of money is increased in
magnitude through the purchase, production, and sale of commodities.
Therefore, the structure of Marx's general formula for capital suggests that
Marx's theory begins with a GIVEN sum of money.
My interpretation of the determination of constant capital and variable
capital is also supported by Marx's general methodological principle of
"historical specificity", according to which the explanatory concepts of a
theory of capitalism should NOT refer to the general features which
capitalist production shares with all form of social production, but should
instead refer to those features which are specific to capitalism (see
Korsch, 'Karl Marx', Chapter 2). The technical conditions of production and
the real wage are general features of social production, and thus are not
the fundamental explanatory concepts of Marx's theory. On the other hand,
the concept of money-capital refers to specific features of capitalism and
is a fundamental explanatory concept in Marx's theory. The initial
money-capital invested in the first phase of the circulation of capital
forms the starting point of how this given sum of money-capital increases in
magnitude.
Finally, my interpretation is also supported by the numerous passages
throughout the various drafts of Capital in which Marx referred to the
money-capital which initiates the circulation of capital as the "PRESUPPOSED
capital" or the "POSTULATED capital" or the "STARTING POINT" or the "POINT
OF DEPARTURE" for his analysis of the circulation of capital. (see, for
example, Chapter 4 of Volume 1 of Capital, and the earlier drafts of this
chapter in G. 250-64, MECW.29. 501-07, MECW.30. 9-20). Nowhere did Marx
refer to the "presupposed means of production" or the "postulated means of
production." Either Marx, who it should be remembered had a Doctorate
degree in Philosophy and paid a great deal of attention throughout the
various drafts of Capital to questions of logical method, was extremely
sloppy in these numerous passages or Marx intended the usual methodological
meanings to the terms "given", "postulated", "presupposed", etc.: that they
are the fundamental data with which a theory begins. An especially clear
passage is the following from the manuscript entitled "Results of the
Immediate Process of Production":
Here, where we are concerned with money only as the *point of departure*
for the *immediate process of production*, we can confine ourselves to the
observation: capital exists here as yet only as a given quantum of value =
M (money), in which all use-value is extinguished, so that nothing but the
monetary form remains... Thus in the original simple expression of
capital (or capital to be) as money or value, every link with use-value has
been broken and entirely destroyed... If the original capital is a
quantum of value = X, it becomes capital and fulfills its purpose by
changing into X + dX, i.e. into a quantum of money or value = the original
sum + a balance over the original sum. In other words, it is transformed
into the given amount of money + additional money, into the *given value +
surplus-value*. (C.I. 976-77; emphasis in the original)
This passage suggests that Marx's methodological procedure is to take an
initial sum of money as given, and to explain how this given sum of money is
increased in magnitude. Notice that in this analysis, "all use-value is
extinguished, so that nothing but the monetary form remains ... every link
with use-value has been broken and entirely destroyed."
In sum, I argue that both constant capital and variable capital in Marx's
theory are determined in the same way - they are both taken as given, as
quantities of money invested to purchase the means of production and
labor-power in the first phase of the circulation of capital. Constant
capital and variable capital are not derived from given technical conditions
and real wages (as in the standard interpretation). Nor are constant
capital and variable capital determined in different ways: variable capital
taken as given in terms of money and constant capital derived from given
technical conditions (as in the "new" interpretation presented by Simon and
others).
4. In my initial comment about the "new solution" in (2193), I said that
the "new solution" was inconsistent because it adopted an interpretation
similar to mine with respect of variable capital, but adopted the standard
interpretatioin with respect to constant capital.
Simon's reply hardly mentions variable capital and constant capital.
Rather, the focus is on the value of labor-power, and, to a lesser extent,
the value of the means of production. The circuit of CAPITAL, M - C - M',
is not mentioned at all. Instead the circuit of LABOR-POWER, C - M - C is
analyzed, with emphasis on the two acts of the circulation of labor-power:
(1) C-M, the sale of labor-power by workers and (2): M-C, the subsequent
purchase of consumer goods by workers. The main question addressed is
whether, in the case of prices of production not equal to values, the value
of labor-power is equal to the value of the means of subsistence (the
standard interpretation) or derived from the money-wage (the "new"
interpretation). The latter "new" interpretation implies that the money
wage is taken as given, i.e. that variable capital is taken as given, as in
my interpretation (although this implication is not explicitly mentioned in
Simon's post, which emphasizes instead the value of labor-power).
The reasons given by Simon as to why the value of labor-power is derived
from the given money-wage are: (1) labor-power is not a produced commodity
with an "intrinsic" value; and (2) labor-power is not produced by capitalist
firms, and therefore is not subject to the equalization of profit rates,
which means that labor-power exchanges at its value, rather than at its
price of production. Under these conditions, the value of labor-power will
be determined by the money-wage.
Simon argues further that these reasons do not apply to the means of
production, which are produced commodities with an intrinsic value and which
are produced within capitalist firms and therefore tend to sell at prices of
production. Therefore, the value of the means of production is equal to the
labor-time embodied in the means of production, and cannot be derived from
the money constant capital used to purchase these means of production.
It can be seen that Simon's reasons why constant capital and variable
capital are determined differently are instead reasons why the value of
labor-power and the value of the means of production are determined
differently, and that these reasons have to do with the nature of
labor-power and the means of production. These reasons have nothing to do
with the circulation of capital which begins with money. They have nothing
to do with constant capital and variable capital as the two components of
the initial money-capital invested in the first phase of the circulation of
capital. They have nothing to do with Marx's logical method or with the
logical relation between Parts 1, 2, and 3 of Volume 1.
Therefore, I conclude that my interpretation of the determination of
constant capital and variable capital is a more accurate interpretation of
Marx's theory than Simon's interpretation. In Marx's theory, constant
capital and variable capital are both determined in the same way - they are
both taken as given as sums of money-capital - because they are both
components of the initial money-capital that begins the circulation of
capital.
5. Simon could argue in reply (as he seems to hint in his CJE article) that
he is not primarily interested in the more accurate interpretation of Marx's
theory, but rather in the best theory of contemporary capitalism (similar
sentiments have been expressed in a number of recent ope-l posts). This
reply is of course completely legitimate (although much of the discussion of
the "new solution" has been presented as an interpretation of Marx's
theory). In this case, we should be as clear as possible about the
differences between Marx's theory and the "new" theory.
And the question of the logical coherence of Marx's theory would still
remain - which is the question I have been addressing in my work on the
transformation problem (at least at this stage). Is Marx's theory a viable
candidate for a theory of contemporary capitalism, or is Marx's theory ruled
out as a viable candidate by logical incoherence? It is almost universally
held that Marx's theory in 'Capital' is logically incoherent and that
various revisions must be made in order to make it logically coherent. I
(and Andrew and Alan and others) have been arguing that this almost
universal negative evaluation of the logical coherence of Marx's theory is
in fact based on a misunderstanding of Marx's logical method. If Marx's own
logical method is correctly understood, then Marx's theory of prices of
production is logically coherent. Marx's theory cannot legitimately be
rejected on these logical grounds.
In any case, a fair and appropriate evaluation of the logical coherence of
Marx's theory surely should be based on the best possible understanding of
Marx's own logical method, especially his method of the determination of
constant capital and variable capital, the "inputs" into Marx's theory of
surplus-value and his theory of prices of production. I think I have shown
that, according to Marx's own logical method, constant capital and variable
capital are determined in the same way - taken as given as the two
components of the money-capital that initiates the circulation of capital.
What do Simon and others think?
In solidarity,
Fred