[OPE-L:2319] Re: determination of constant capital and variabe capital

S.Mohun (S.Mohun@qmw.ac.uk)
Wed, 22 May 1996 05:26:56 -0700

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Fred,
Thanks for your reply. I've got too many exams to mark at present, so it
will be some time before I can concentrate on what you say (hopefully after
about 3 weeks of the current misery!)
Simon

>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
>
>
>
Simon Mohun,
Dept of Economics,
Queen Mary and Westfield College,
Mile End Road,
London E1 4NS,
UK
Telephone: 0171-975-5089
Fax: 0181-983-3580