This is the SECOND part of my answer to Allin's OPE-L
3606, Point 2. The FIRST part is in 3697. I also briefly
comment on Paul's (3678).
I) TEXTUAL EVIDENCE DISCUSSED
Allin, Fred and myself have been discussing the following
paragraph of Vol. III, Chapter 12 ("Supplementary
Remarks"):
I will quote Allin's "Moscow version":
"We have seen how a deviation in prices of production
from values arises from:
1) adding the average profit instead of the
surplus-value contained in a commodity to its
cost-price;
2) the price of production, which so deviates
from the value of a commodity, entering into the
cost-price of other commodities as one of its
elements, so that the cost-price of a commodity may
already contain a deviation from value in those
means of production consumed by it..."
(Allin's Moscow, pp. 206-7; my Moscow, pp. 202-3; Penguin,
pp. 308-9; the latter has slight but important differences
with Moscow's)
II) ISSUES
First of all, I will quote main Allin's statements
regarding this paragraph, as well as Fred's comments on
Allin's vision.
a) "On [the single-system view], Marxs point 2 is
*not*, as he states, a cause of "a deviation in prices
of production from values", since (on the single-system
view) the *value* of the output commodity, just as much
as the price of production of that commodity, is
altered by price-value deviation in the means of
production consumed.
If the consequences of the single-system view are
pursued rigorously, Marxs point 2 has to be seen as
causing not a deviation of prices of production from
values, but a *deviation of values from the labour-
times required actually to produce commodities* --
a deviation which, I claim, is nonsensical within
Marxs theory." (Allin, 3606)
b) "...a key statement of Marxs on this whole matter,
namely that a price/value deviation among the non-
labour inputs to a given commodity is a cause from
which arises "a deviation in prices of production from
values" on the output side...
How can they make sense of this? On their reading --
where, *in the general case*, value = cost-price plus
surplus value, and price of production = cost-price
plus profit, with only one "cost-price" in the picture
-- there should be only *one* source of such deviation,
namely a divergence between profit and surplus value,
not two as Marx states. (Allin, 3676)
c) "I think that Allin is correct that, in this passage,
Marx was using value in a different sense than in the
very next paragraph and in the other passages we have
discussed above. Here Marx was using value in the
abstract sense of Volume 1, assuming that prices are
equal to their values, rather than in the more
concrete sense of the value of commodities in Volume 3."
(Fred, 3680)
d) "My view is that the value of the output commodity
equals the sum of the values of the non-labour inputs,
plus the value created by the current labour input.
This is consistent with Marxs statements to the effect
that there are *two* sources of deviation between
price of production and value on the output side
(inequality between surplus-value and profit,
inequality between value of inputs and price of
inputs)." (Allin, 3693)
I would summarize the discussion in the following points:
1. In the single-system view is not possible to make sense
of this Marx's piece.
2. There are "two causes/sources" of deviation between
production prices and value, instead of only one. The
"second cause" would be the "deviation contained" into the
components of the cost-price. Marx's point "2)" would
present this "second cause/source".
3. In this paragraph, Marx is using the term "value" as it
is calculated when prices = values. So, in this case the
calculation of "values" should be performed as is usual in
the traditional Tugan-Bortkiewicz-Allin vision of the
transformation.
(In this vision --it is important to remember this-- Marx
work AS A WHOLE is COMPLETELY INCONSISTENT as Tugan,
Bortkiewicz or... Steedman have pointed out in many
places. The main reason of this is that in Tugan-
Bortkiewicz-Allin interpretation IS NOT POSSIBLE TO OBTAIN
MARX'S TWO EQUALITIES. Consequently, profit cannot be
explained as the result of the surplus-labor exploited. I
am not clear about if Allin also thinks that Marx work IS
INCOHERENT.)
4. If we can calculate "value" as a magnitude completely
separated of prices, we can worked out a "cost-price in
value terms" and a "cost price in price terms", so that we
have two completetly SEPARATED AND INCOHERENT "systems of
calculation". Instead of a magnitude common to both values
and prices of production, we have "two cost-prices", one
corresponding to the "system of values" and another to the
"system of prices".
III) NUMERICAL EXAMPLE
1. In (3696) I discuss the fact that Allin's reading takes
for grant that points "1)" and "2)" in Marx's paragraph are
"causes/sources" of deviation. In that post, I show that it
is possible to read these points, not strictly speaking as
"causes of deviation", but as "ways of manifestation" of
the divergence. It is obvious that, to address Allin's
important issues, the interpretation of the verb "to arise"
is not enough. So, in order to present my reading, I need
to work out a numerical example showing that these issues
can be discussed in the single-system view.
2. As I did in (3651), I will use Marx-Engels (?) single-
table example of the transformation (Penguin, p. 264).
The single-table is converted into a simple reproduction
schema, assuming that spheres I+II produce means of
production ("iron", Dep. 1) and sphere III produce means of
consumption ("wheat", Dep. 2). Wheat is both wage-good and
surplus-product, so that, in the last instance, capitalist
appropriate their profit under the physical form of wheat.
Differing from my presentation in (3651), now I include
two "capitals" in Dep. 1. These capitals ("a" and "b")
correspond to Marx's "spheres" I and II. Capital "a" is
Marx's "average capital" presented in Vol.III, Ch. 9 and Ch.
12: 80c+20v.
Table A: Single-table transformation procedure
------------------------------------------------------
C V k SV PR PP VA De
------------------------------------------------------
1. 170 30 200 30 40 240 230 +10
a 80 20 100 20 20 120 120 0
b 90 10 100 10 20 120 110 +10
2. 70 30 100 30 20 120 130 -10
------------------------------------------------------
Tot 240 60 300 60 60 360 360 0
------------------------------------------------------
3. In Table A, we have a version of Marx's last example
of the transformation. It is a single-table where:
a) All magnitudes are expressed in monetary terms; of
course, they could also be expressed in terms of labor-time.
b) Cost-price is a common magnitude for both values and
production prices. Cost-price corresponds to the PRICE OF
PRODUCTION of the commodities, so that "the inputs have
been transformed" for both values and production prices.
Marx indicates this in the know paragraph: "It is necessary
to bear in mind..." (Penguin, p. 265).
c) The difference between values and production prices
"arises" (is caused by) only one factor: the difference
between surplus-value (or produced profit) and appropriated
profit.
Values = cost-price + a proportion of the total profit
produced, given by the share of each capital into the
living labor exploited. This proportion is the surplus
value or "produced profit", as surplus-value is designated
from Vol III, Ch. 1 on.
Production prices = cost-price + a proportion of the total
profit, given by the share of the cost-price of each
capital into the total cost-price advanced. This proportion
is the appropriated profit.
d) In this table, the "twin equalities" are easily
obtained. Total value = 360 = total production price, and
total surplus-value = 60 = total profit. The sum of the
divergences is zero. In the context of the dualistic
reading, this result "had been refuted" by many authors in
order to show that the whole Marx theoretical construction
is a complete failure.
4. In order to discuss Allin's arguments we have to re-
present Table B in another way. This "re-presentation" or
"re-calculation" makes use of a Marx's suggestion in Vol.
I, Ch. 9, part 2 (Penguin, p. 329) and Vol. III, Ch. 9
(Penguin, p. 260) concerning a "method of reckoning" which
permits one to "decompose the product in proportional
parts". In Vol. I, Marx says that "the decomposition of the
product is a simple task as it is important; this will be
seen later when we apply to complex and hitherto unsolved
problems" (Penguin, p. 331). [More references to this
"method of reckoning" in my (3681)].
5. To be discussed, Allin's issues require the
"decomposition into proportional parts" of the magnitudes
forming the VALUE of the commodities in Table A, in such a
way that they are expressed as a sum of [the value
contained into the commodities] + [the deviation between
value and production price]. For instance, constant capital
used by Dep. 1 is 170. This corresponds to the production
price paid by capitalists to buy "iron". But this INPUT
(iron) contains a sum of money-value, representing the
labor-time socially necessary to produce iron. What is the
sum of money-value "contained" in the iron consumed as
input? What is the amount of "deviation" between this money-
value and production price actually paid for this input?
According to Allin, to calculate these magnitudes requires a
completely separated system in which values are worked out
under the premises of Vol. I and II (prices = values).
However, the "decomposition into proportional parts" shows
that these magnitudes can be calculated in the framework of
the single-system view, making sense of Marx paragraph.
6. In order to decompose all the components of
commodities's value in Table A into a part representing
[value contained] and another representing [deviation
contained], we obviously need the ratios Value/Production
Price for both departments:
In Department 1 the ratio Value/PP = 230/240 = 0.9583 = R1
In Department 2 the ratio Value/PP = 130/120 = 1.0833 = R2
Using these ratios the following Table B can be worked out:
Table B:
Decomposition of Value into [Value contained] and
[Deviation contained]
-----------------------------------------------------------
Cv d Vv d Kv d SVv d VAv d
1 2 3 4 5 6 7 8 9 10
-----------------------------------------------------------
1. 163 7 32.5 -2.5 195 5 32.5 -2.5 227.9 2.1
a 77 3 21.7 -1.7 98 2 21.7 -1.7 120.0 0.0
b 86 4 10.8 -0.8 97 3 10.8 -0.8 107.9 2.1
2. 67 3 32.5 -2.5 100 0 32.5 -2.5 132.1 -2.1
------------------------------------------------------------
Tot 230 10 65.0 -5.0 295 5 65.0 -5.0 360.0 0.0
------------------------------------------------------------
**There are rounded-off errors.
"Cv" stands for "value contained" in iron
"Vv" stands for "value contained" in wheat used as wage-
good.
"Kv" stands for "value contained" in the components of
cost-price: Sum of Cc+Vc.
"SVv" stands for "value contained" in wheat used as surplus-
product.
"VAv" stands for "value contained" in the components
of value: Sum of Kv+SVv.
"d" stands for "deviation contained"; note that the same
letter is used for the different "deviations".
The procedure is very easy. It consists in distributing
"vertically" both, the "value contained" and the
"deviation" of both iron and wheat, according to they are
used as "inputs", or consumed as "surplus-product" (in the
case of a fraction of wheat).
Let us take the production of "iron" in Table A. Its
production price is 240, its value is 230, and its
"deviation" is +10. These magnitudes arise when we consider
iron as an OUTPUT. But, we can also consider "iron" as
an INPUT, and therefore break down its production price
into two "proportional parts": one corresponding to the
"value contained" and another to the "deviation".
This "decomposition" is presented in the two first columns
of Table B. The first column (the "value contained" in
iron considered as INPUT) is given by the multiplication of
R1 by the production price paid by each capitalist to
purchase the amount needed of iron. So, Dep. 1 pays 170 for
its iron, but the "value contained" in this INPUT is R1*170
= 162.9; the "deviation" is 170-162.9 = 7.1.
The vertical sum of the "value contained" gives 230 which
--according to Table A-- is the total value objectified
in Dep. 1. Similarly, the vertical sum of the "deviations"
gives +10, which is the deviation between production price
and value in Dep. 1.
So, concerning the "deviation", the only difference between
Table A and B is that, in Table A, the deviation is
calculated taking into account the commodity as OUTPUT,
while in Table B it is calculated considering the commodity
as INPUT.
The procedure is also performed for the variable capital
and surplus-value in Table A, using R2 (ratio Value /
Production Price of wheat).
The column of "surplus-value" requires some clarification.
In Table A, this column is the amount of profit that
capitalists would appropriate if the commodities were sold
at their values. It is clear that to these amounts of
"produced profit" correspond some amounts of the physical
surplus-product generated, namely wheat. Actually,
capitalists do not appropriate these amounts of wheat, but
those corresponding to the "average profit". However, the
amounts of wheat that "ideally" correspond to the surplus-
values produced can be also decomposed into "value
contained" and "deviation". This is presented in Table B,
columns 7 and 8.
In Table B, the sum of the "value contained" in wage-goods
(65, column 3) and surplus product (65, column 7) gives the
total value of wheat (Dep. 2), calculated in Table A (130).
The sum of "deviations contained" in wage-good (-5, column
4) and surplus-product (-5, column 8) gives the total
deviation of Dep. 2, calculated in Table A (-5-5 = -10).
As said, Table B is only a re-calculation of Table A,
"exploring", for instance, how the deviation between value
and production price is contained into the commodities WHEN
THEY ARE CONSIDERED NOT AS OUTPUTS, BUT AS INPUTS (OR
SURPLUS-PRODUCT). Thus, on the basis of Table B, it is easy
to reconstruct the columns of the components of value in
Table A: The sum of each two columns in Table B (taken as
pairs) gives the respective column of Table A: C = Cv+d; V
= Vv+d; K = Kv+d; SV = SVv+d and VA = VAv+d.
If Table B is only another ("input/surplus product"
considering) version of Table A, it is obvious that the
total "value contained" (column 9) is equal to the "total
value" and to total production price, as calculated in
Table A (=360). Similarly, the sum the divergences in Table
B (column 10) is zero.
7. This does not mean, however, that the VALUE of each
commodity (Table A) is equal to the sum of "values
contained" (Table B). In general terms, this result comes
from the fact that IN CAPITALIST SOCIETY labor cannot be
directly represented. It requires a MONETARY MEDIATION.
Marx discussion is about a CAPITALIST SOCIETY, neither
on a "central planned economy" nor on the Inca State
(where the labor-time needed to produce use-values was
directly known and calculated).
In CAPITALIST SOCIETY there is a monetary mediation of the
labor-time which is also accomplished through a
contradictory process. In this contradictory process arise
QUANTITATIVE DIVERGENCES which are annulated for the
totality (a result that cannot be reproduced under the
dualistic vision). Allin (and Paul) tend to see "monetary
magnitudes" as a complete different "ontological entity"
with respect to "labor-time" magnitudes. This neglects one
of (in my opinion) greatest Marx's discoveries: that "money
magnitudes" are only an "objective form" of LABOR TIME:
"Money IS labor-time in the form of a general object."
(Grundrisse, p. 168), an statement that cannot be explained
if we think (as Allin) in "values" and "prices" as two
"ontologicaly" different "spheres" that cannot be "mixed"
or "contaminated" between them: Marx says that money IS
labor-time, a clear "contamination" between the "two
worlds".
So that, to produce "iron", a capitalist pays (in money
terms) the production price for the input "iron". This
amount of money is only the representation of an amount of
labor-time which, in this case, is what is SOCIALLY needed
(on account of input "iron") to produce iron. It is
important to not that the word "SOCIALLY" involves not only
a "TECHNICAL" but, indeed, a SOCIAL, determination.
So, referring to Paul (3678, second point) I would wish to
say that IN CAPITALIST SOCIETY what is socially needed to
produce iron (on account of the inputs) is what the
INDIVIDUAL CAPITALIST must advance in money terms to
produce iron. The model representing such society cannot
neglect the INDIVIDUAL mediation given by the CENTRAL fact
that capitalism is a system of private, individual property
and, in particular, a money-organized economy.
The amount of money corresponding to production price is
certainly the representation of an amount of labor time.
Frankly, regarding Paul's point, I find very difficult to
conceive the category of "production price" depicted as a
"noisy channel". (This reminds me a Microeconomics texbook
and does not suggest me a reading of Marx.) Production price
is not a "noisy channel" but a necessary form of value.
Production price does not presents "misleading information",
but the only information available under the constraints of
capitalist system (e.g. individual private property, money,
general rate of profit). In any case, Marx shows how what
Paul considers "misleading information" (the "distorsions"
(?) between value and price) is annulated for social
capital.
So, to produce iron, the "society" cannot DIRECTLY
"advance" (on account of the inputs) an amount of labor-
time. First of all, because it is not "the society"
which "advance" this inputs, but an individual
capitalist. Secondly, because this individual capitalist
MUST pay a money production price for her/his inputs. Now
then, although this money does not represent the socially
necessary labor-time to produce the inputs, it represents a
fraction of the labor-time spent by the society, which
becomes what is "socially necessary" to produce iron on
accounts of the inputs, in this particular case of society.
In Table A, this UNAVOIDABLE "monetary mediation" in the
determination of VALUE is taken into account. So according
to Table A, the value objectified in iron is 230, an amount
of money which result from the (complicated, but NECESSARY
under capitalism) "monetary mediations" carried out to
produce iron. Due to these "monetary mediations" (which, in
this case, involve only the divergence value/production
price), this sum (230) is not equal to the sum of the
"value contained" into the components of iron's value: 228
(Table B). On the other hand, according to Table A, the
"deviation" in iron industry is +10, but the sum of the
"deviations contained" into the components of iron's value
is +2.1.
However, it is important to note 2 things:
a) As said, for the totality, the amount of value
objectified (Table A) = value contained (Table B) =
production price (Table A) = 360. So that, the sum of
"deviations" (directly or indirectly contained in
commodities) is zero.
b) In the case of a high composition capital (iron) the
"sum of deviations" in Table B is > 0, and in the case of
low composition (wheat) this sum is < 0. Only in the case
of the "average commodity" (1.a) the sum of the "values
contained" (Table B) is equal to its value = 120 =
production price (Table A). Similarly, the sum of the
"deviations contained" in the average commodity (Table B) is
equal to its deviation value/production price = 0 (Table
A).
This happens because the (positive) "deviation contained"
in the elements of cost-price of average commodity (Table
B: 2; actually 1.7) is offset by the deviation contained
into the corresponding surplus product (which, in this
case, is also equal to the amount of wheat that the
"average capitalist" appropriates).
IV) DISCUSSION
Coming back to the textual evidence in Vol. III, Ch. 12 and
the issues posed by Allin.
1. As I show by means of Tables A and B, the paragraph
commented by Allin can be read in the framework of the
single-system.
2. There ARE NOT two "causes/sources" of divergence between
production price and value, as alleged by Allin. There is
only ONE source of deviation, namely the divergence between
surplus-value and profit.
In the paragraph commented by Allin, Marx is referring to
the ways by which we can "observe", "perceive" the only
existing divergence.
In point "1)" Marx is referring to the way the divergences
appear/arise when we consider the commodities AS OUTPUTS
(Table A). In this case, it is clear that the only source
of divergence is the fact that capitalist "add" the profit
corresponding to the general profit rate, instead of the
"produced profit", corresponding to the rate of surplus-
value.
In point "2)" the "deviations contained" mentioned by Marx
are those depicted in Table B; specifically those of column
5, Kv. These are not a "second cause" of divergence but the
same divergences calculated in Table A, "vertically
allocated" in the commodities. That is, they are the same
divergence calculated in Table A, but considering that the
commodities are being used as inputs.
The "deviations contained" in the cost-prices do not
"explain" the divergence of a commodity considered as
output, because when capitalist pays the cost-price, this
is an "given precondition" (Penguin, p. 265). Above this
"given precondition" the capitalists "add" a profit which
differs from the surplus-value actually exploited. This
difference is the only one existing between production
price and value.
3. I reject Fred's statement that in this paragraph, Marx
is using the term "value" as it is calculated in Vol I and
II, where prices = values. The "value" Marx refers in point
"2)" is the "value contained" in the commodities when we
consider them as INPUTS. Specifically, it corresponds to
columns 1, 3 and 5 in Table B.
4. Table B shows that the "value contained" in cost-price
can be calculated in terms of the single-system view. This
means that to calculate a "cost-price in value terms" using
the premises of Vol. I and II is absurd. Cost-price is the
same magnitude for both values and production prices. The
"value contained" in the cost-price is calculated when we
consider the commodities as inputs, and it is derived from
the magnitude of value calculated in the single-table. So,
it is unnecessary to "split" the calculation of cost-price
into two incoherent "systems", as Tugan and Bortkiewicz
proposed in order to show that Marx's theory is a failure.
5. It is important to take into account the CONTEXT of the
piece raised by Allin. Marx is discussing on the "average-
commodity". His concerning is the following: In the single-
table example (Table A), it seems that the "average
commodity" is not involved in the "transformation process"
because, apparently, the ONLY SOURCE OF DIVERGENCE
(difference between surplus-value and profit) is not
presented (does not "arise") in it, so that, its value =
its production prices = 120.
Notwithstanding this, the transformation does involve the
"average commodity" because its inputs "contain a
deviation". So, point "2)" is devoted to take into account
this other way by which the "transformation" arises
(appears); a way that is clear insofar as we consider the
commodities as inputs and not only as outputs. This is why
in the following paragraph Marx says:
"It is quite possible, accordingly, for the cost-
price to diverge from the value sum of the elements
of which this component of the price of production
is composed, EVEN IN THE CASE OF COMMODITIES THAT
ARE PRODUCED BY CAPITALS OF AVERAGE COMPOSITION.
Let us assume that the average composition is 80c+
20v. It is possible now that... the 80c may be
greater or less than the value of c [in my example,
this "value of c" is the "value contained" = 77,
lesser than 80c], the constant capital, since this
c is composed of commodities whose prices of
production are different from their values.
The 20v can similarly diverge from its value, if
the spending of wages on consumption involves
commodities whose prices of production are
different from their values [in my example, the
"value contained" in the wage goods of average
capital is 21.7, so greater than 20v] (Penguin,
p. 309; emphasis added.)
Alejandro Ramos M.
25.11.96