THE DETERMINATION OF VALUE BY LABOUR-TIME AND THE MONETARY EXPRESSION
OF LABOR (MEL) IN A PASSAGE OF "NOTES ON WAGNER"
I. In "Notes on Wagner" there is a passage which I find very
important to understand Marx concept of determination of value by
labor-time. It also seems relevant to me that, in this passage, the
MEL (the monetary expression of labor: amount of money in which is
represented one unit of labor-time) is not determined "exogenously"
as is usual in Capital, Grundrisse or Theories.
I have an interpretation of this passage and would want to know the
opinion of listmembers about this.
(I am grateful with Jerry L., Paul Z. and Alfredo S-F, who helped me
to locate the English version of this text.)
II. The passage is:
Second, if the price of grain rises after a bad harvest,
then its *value* rises, for one thing, because a given amount
of labour is *contained in a smaller product*; for another
thing, its *selling price* rises by much more still.
What has this to do with my theory of value? The more the
grain is *sold over its value*, the more other commodities,
whether in their natural form or in money form, will be sold
*under their value* by exactly the same amount, even if their
own money price does *not* fall. The *total value* remains
the same, even if the expression of this *total value* in its
entirety were to increase in money, in other words, if the
sum total of "exchange value" acording to Mr. Wagner were to
rise.
This is the case if we assume that the *drop in price* of the
total of the other commodities does not cover the *over-value
price* (excess price) of the grain. But in this case, the
exchange value of money has fallen *pro tanto* beneath its
value; the total value of all commodities does not only
remain the *same*, but even remains the same *expressed in
money*, if money is included among the commodities.
Further: the rise in price of grain beyond the increase in
its value determined by the bad harvest will in any case be
smaller in the "social state" than it is with present-day
profiteering in grain.
Notes on Wagner: CW, 24, p. 537
III. My intepretation
I will develop a numerical example which, I think, helps us to
interpret the text.
Notation:
$: dollars, symbol-money
gold: reserve-money (in ounces)
Q: physical output
L: social labor-time (hours)
og: ounces of gold
MEL: relation symbol-money/labor-time ($/h)
1/MEL: social labor-time represented by one unit of symbol-money (h/$)
g: parity labor-time/ounce of gold (h/og)
G: parity symbol-money/reserve-money ($/og)
Table 1: Period t
Initial situation
----------------------------------------------------------------------
L Q L/Q Price Price Total Total Approp.
(h) (gold) ($) (og) ($) Labor(*)
----------------------------------------------------------------------
Grain 100 100 1h 1og 1 100 100 100
Other 100 100 1h 1og 1 100 100 100
----------------------------------------------------------------------
Total 200h 200og $200 200h
----------------------------------------------------------------------
(*) Appropriated social labor-time: Total($)/MEL
MEL = $200/200h = $1/h
1/MEL = 1h/$
g = 1h/og
G = $200/200og = $1/og
This is an assumed initial situation in period t. Two commodities
("grain" and "other") are produced. Labor-time (L) is equal for
both commodities (100 hours). Physical output (Q) is 100 TM of
grain and 100 units of "other". Unit labor-time (L/Q) is 1h for each
commodity. There is no constant capital.
Labor-time is expressed in two kinds or aspects of money: reserve-
money (gold) and symbol-money ($). These two aspects of money
constitute the form of value. Symbol-money is usually employed in the
circulation; gold is a store of value.
Production can be calculated in terms of social labor-time, ounces of
gold and $.
The MEL is the relation between total production measured in $ and
total social labor-time.
The relation g is the parity between reserve-money (gold) and
social labor-time. This relation is assumed CONSTANT thorough the
whole example.
A key relationship in the monetary system is G, the ratio symbol-
money/gold.
Table 2: Period t+1
Bad harvest; speculation; compensating fall in the price of "other"
commodity
----------------------------------------------------------------------
L Q L/Q Price Price Total Total Approp.
(h) (gold) ($) (og) ($) Labor(*)
----------------------------------------------------------------------
Grain 100 50 2h 2og 3.0 100 150 150
Other 100 100 1h 1og 0.5 100 50 50
----------------------------------------------------------------------
Total 200h 200og $200 200h
----------------------------------------------------------------------
(*) Appropriated social labor-time: Total($)/MEL
MEL = $200/200h = $1/h
1/MEL = 1h/$
g = 1h/og
G = $200/200og = $1/og
As Marx suggests in the text, there is a "bad harvest": Only 50 TM
of grain are harvested. This has two effects: Firstly, unit labor-
time of grain rises from 1h/TM to 2h/TM. Secondly, scarcity induces a
"speculative" increase in the price of grain, **measured in $**.
That is, the price of grain in $ rises more than the increase in its
labor-time. As Marx says, grain is "sold over its value". Therefore,
in Table 2 it is supposed that grain is sold at $3, instead of $2.
Note that a divergence between gold-prices and $-prices arises. Gold
prices are exactly the same that the labor-time contained, but
"externally expressed" in gold.
Now then, according to Marx, the speculative rising in the price of
grain implies that "other" commodity should be sold "under its
value". It is easy to calculate the $-price at which "other"
commodity must be sold in order to exactly compesate the speculative
rising in the price of grain:
L1Q1 + L2Q2 = W
where W is total labor-time spent: 200 hours. As we assumed that the
speculative price of grain is $3 --which represents 3 hours-- we can
write:
3*50 + L2*100 = 200
That is L2 = 0.5h. This --translated into symbol-money by means of MEL
= $1/h-- gives $0.5, which is the price considered in Table 2.
It is important to note that W, total labor-time spent, is a GIVEN
MAGNITUDE which must be REDISTRIBUTED. This is the key idea of the
determination of value by labor-time.
Therefore, if "other" commodity is sold at $0.5, the speculative
rising in the price of grain is exactly compensated. This implies
that total price (measured in symbol-money) is $200 and thus the MEL
does not change in relation to period t: it remains $1/h. This also
means that the parity G between symbol-money and reserve-money is not
altered: there is no a "monetary crisis" provoked by the depreciation
of symbol-money against the store of value.
Last column shows that the speculative rising in the price of grain
permits the appropriation by this branch of 750f the total labor-
time spent. (Appropriated labor-time is calculated as $-price divided
by the prevailing MEL, for each branch.)
Table 3: Period t+1
Bad harvest; speculation; NOT-compensating fall in the price of
"other" commodity
---------------------------------------------------------------------
L Q L/Q Price Price Total Total Approp.
(h) (gold) ($) (og) ($) Labor(*)
---------------------------------------------------------------------
Grain 100 50 2h 2og 3.00 100 150 133.33
Other 100 100 1h 1og 0.75 100 75 66.67
---------------------------------------------------------------------
Total 200h 200og $225 200.00h
---------------------------------------------------------------------
(*) Appropriated social labor-time: Total($)/MEL
MEL = $225/200h = $1.125/h
1/MEL = 8/9h/$
g = 1h/og
G = $225/200og = $1.125/og
Table 3 considers the other possibility suggested by Marx: the
falling in the price of "other" commodity does not exactly offset the
speculative increasing in the price of grain: "This is the case if we
assume that the *drop in price* of the total of the other commodities
does not cover the *over-value price* (excess price) of the grain."
So, in Table 3 it is assumed that the price of "other" falls to $0.75,
not to $0.5. This implies that total production expressed in $ would
be $225, instead of $200.
The direct consequence of this is that, now, symbol-money represents
less labor-time than before: It only representes 8/9 than in period
t.
It can be suggested that the NOT-compensating falling in the price of
"other" is only possible because the monetary authority issues a
greater amount of symbol-money than before ($225 instead of $200). In
this form, the monetary authority allows that the price of "other"
does not fall up to the level considered in Table 2. This compensates
in a certain degree the "speculative" appropriation of the given
labor-time. Last column shows that "grain" only appropriates 66%
of total labor time, while in Table 2 this branch appropriates 75%.
In any case, the final result is that symbol-money is depreciated
against reserve-money, gold. Relation G is now $1.125 per ounce of
gold. The price of gold in terms of $ rises in 12.5%. Symbol-money
"lost value" because now it represents less labor-time. Marx suggests
this but implicitly considering only gold-money, whose "exchange
value falls pro tanto beneath its value".
IV. Do listmembers agree with this reading? How does run the analysis
in the opposite case: a very good harvest provokes a glut in
grain market? I would be very happy to know your opinions. Thanks in
advance.
Alejandro Ramos M.
26.2.97