[OPE-L:2514] theory of surplus and theory of prices

Fred Moseley (fmoseley@laneta.apc.org)
Thu, 13 Jun 1996 09:22:21 -0700 (PDT)

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Paul C. has asserted in several recent posts that "one cannot have a theory
of surplus-value without a threory of relative prices." This assertion is
simply false.

I have presented an aggregate theory of surplus-value in my 1993 paper on
the transformation problem in Marx's Method (which I summarized in a recent
post (2441)), which does not depend in any way on a theory of relative
prices. This aggregate theory of surplus-value depends primarily on the
assumption that the total money value added in the capitalist economy as a
whole is proportional to the total current labor in the capitalist economy
as a whole. From this assumption, it is easily derived that the total
amount of surplus-value is proportional to the total amount of surplus
labor, where surplus labor is defined NOT as the labor-time embodied in
surplus-goods, but rather as the number of hours that workers produce money
value added over and above the equivalent of their money-wage.
I think that this theory of the total amount of surplus-value is the main
subject of Volume 1 of Capital. This theory of the total surplus-value does
not depend in any way on a theory of relative prices. It depends instead on
a theory of aggregate price and aggregate money value added.

Duncan has also presented (before me) a similar aggregate theory of
surplus-value.

So, Paul: why do you refuse to acknowledge at least the logical possibility
of such an aggregate theory of surplus-value which does not depend on
relative prices?

Indeed, in my view, essentially THE OPPOSITE IS TRUE about Marx's theory.
In Marx's theory, the determination of the total surplus-value is a
necessary prerequisite of the theory of prices of production, which is not a
theory of relative prices, but which is on a similar level of
disaggregation. I presented the key equation in Marx's theory of prices of
production in (1441):

Pi = (Ci + Vi) + r (Mi)

The key relevant point here is that the rate of profit (r) in this equation
is taken as given, as determined by the prior analysis of the total amount
of surplus-value in Volume 1 (i.e. as equal to the ratio of this total
surplus-value to the total capital invested). Marx repeatedly emphasized
this prior determination of the rate of profit in his theory of prices of
production (e.g. in his critique of Ricardo's theory of prices of
production. I will return to this point in a subsequent reply to Allin on
Marx's critique of Ricardo.)

Therefore, in Marx's theory, contrary to Paul's assertion, IT IS IMPOSSIBLE
TO HAVE A THEORY OF PRICES OF PRODUCTION WITHOUT A PRIOR THEORY OF
SURPLUS-VALUE.

Marx also applied the same method in his theory of the other component parts
of surplus-value analyzed in Volume 3: merchant profit, interest and rent.
According to Marx's method, the total amount of surplus-value is determined
by the aggregate analysis in Volume 1 prior to the analysis of the division
of this total surplus-value into its component parts and is taken as given
in this latter analysis. This method is stated repeatedly throughout the
various drafts of Capital. I have written a paper which documents Marx's
many discussions of this methodological principle which I would be happy to
try to send via email to anyone interested. The main point for our present
purposes is that this same methodological principle is assumed in Marx's
theory of prices of production. Prices of production are not analyzed by
Marx for their own sake, but rather as an aspect of the distribution of
surplus-value across branches of production. The distribution of
surplus-value, including the determination of prices of production, is
analyzed in Volume 3 after the production of surplus-value is analyzed in
Volume 1.

Comradely,
Fred