[OPE-L:1380] Determination of Value, 6

From: Andrew_Kliman (Andrew_Kliman@email.msn.com)
Date: Thu Sep 30 1999 - 12:50:30 EDT

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<DIV>6. Marx's Applications<BR><BR>I will now consider another type of textual
evidence, a few<BR>passages in which Marx applies his concepts, utilizing them
to<BR>solve certain quantitative questions concerning the determination<BR>of
value. I find this kind of evidence to be more convincing than<BR>the passages
in which his concept is merely explicated verbally.<BR>Instead of just writing
about how the variables are determined,<BR>Marx, in the passages to be
considered, constructs examples that<BR>display or model the process of
determination in a quantitatively<BR>exact manner. This permits differing
interpretations to be checked<BR>against his quantitative results.<BR><BR>The
passages are contained in some of the later notebooks of the<BR>economic
manuscript of 1861-63. One relates to Ramsay's early<BR>formulation of a
replacement cost conception of the profit rate.<BR>Ramsay maintained that if,
due to rising productivity, a smaller<BR>share of total output is needed to
replace inputs, the profit rate<BR>must rise. Marx challenged this contention by
constructing a few<BR>numerical examples. The one most relevant to the present
paper is<BR>summarized in Table 2. All figures in boldface are his own;
the<BR>others are inferred from the
Table 2</DIV>
Constant Cap.<BR>&nbsp;&nbsp;&nbsp; Input Total -------------
Output Rate of<BR>Yr. Price Cap.&nbsp;&nbsp; Seed&nbsp; Other&nbsp; Cap. Output
Profit&nbsp; Price&nbsp; Profit</DIV>
<DIV>--- ----- -----&nbsp; ----&nbsp;&nbsp;-----&nbsp; ---- ------ ------ ------
-------<BR><STRONG>1&nbsp;&nbsp; </STRONG>2/qr&nbsp; <STRONG>120&nbsp;&nbsp;
</STRONG>40&nbsp;&nbsp;&nbsp; 40&nbsp; 40&nbsp;&nbsp;
<STRONG>200&nbsp;&nbsp;&nbsp; 80&nbsp;&nbsp; 2/qr&nbsp;&nbsp;
<STRONG>60 q&nbsp; 20 q&nbsp;&nbsp; 20 q&nbsp; 20 q&nbsp; 100 q&nbsp;&nbsp; 40
</STRONG>66.7%<BR><BR><STRONG>2&nbsp;&nbsp; 2/qr&nbsp; 120&nbsp;&nbsp;
40&nbsp;&nbsp;&nbsp; 40&nbsp; 40&nbsp;&nbsp; 200&nbsp;&nbsp;&nbsp;
80&nbsp;&nbsp; 1/qr&nbsp;&nbsp;
<STRONG>60 q&nbsp; 20 q&nbsp;&nbsp; 20 q&nbsp; 20 q&nbsp; 200 q&nbsp; 140
q&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </STRONG>233.3%</DIV>
considers a farmer who produces corn by means of seed corn<BR>and other inputs.
All costs are measured in terms of both money<BR>and corn. Marx assumes that,
although "work was carried on in the<BR>same conditions" in both years, using
"the same amount of labour,"<BR>the output of year 2 is double that of year
1.&nbsp; The total value of<BR>this output, however, does not increase. "Since
the 200 qrs<BR>[produced in year 2] are the product of the same amount of
labour<BR>[as in year 1], then once again they are likewise = only
200.<BR>Thus, only 80 profit remains, which is now, however, = 140
qrs"<BR>(Marx 1991:267). Marx thus suggests that, contrary to Ramsay's<BR>claim,
the rise in productivity causes neither profit nor the rate<BR>of profit to rise
in year 2.<BR><BR>These conclusions are incompatible with the interpretation
that<BR>the value transferred is determined by the input's replacement<BR>cost.
Had Marx computed the value transferred from the seed corn<BR>in year 2 at
1/qr, profit would have exceeded 80. Used-up<BR>constant capital would have
constituted a smaller share of the<BR>output's total value of 200, and thus
surplus-value or profit<BR>would have constituted a larger share, even if
variable capital is<BR>assumed not to change. Marx's conclusion that profit
remains 80,<BR>despite the rise in the physical surplus from 40 qrs to 140
qrs,<BR>is valid only if the value transferred from the seed corn
is<BR>determined by its pre-production value of 2/qr.<BR><BR>The other examples
are similar, albeit shorter, and Marx draws<BR>similar conclusions from them.
One is a criticism of Torrens'<BR>argument that, "The farmer expends 100 qrs of
corn and obtains in<BR>return 120 qrs. In this case, 20 qrs constitute the
profit"<BR>(quoted in Marx 1989:268). Marx (1989:269; 2d emphasis
added)<BR>denies that<BR><BR>"the increase in quantity constitutes *profit*,
which is</DIV>
<DIV>applicable solely to exchange value .[...] As far as exchange</DIV>
<DIV>value is concerned, there is no need to explain further that</DIV>
<DIV>[...] *the value of 100 can be greater than that of 120* [...].</DIV>
<DIV>Thus, on the basis of one example which has *nothing* to do with</DIV>
<DIV>profit, with the surplus in the *value* of the product over the</DIV>
<DIV>*value* of the capital outlay, Torrens draws conclusions about</DIV>
<DIV>profit."<BR><BR>Marx contends here that Torrens' example "has *nothing* to
do with<BR>profit" because, although "120 qrs of corn are most certainly
more<BR>than 100 qrs" (Marx 1989:268), the *value* of the 100 qrs of
seed<BR>corn can be greater than the *value* of the 120 qrs of output.<BR>Profit
can therefore be negative. Yet, if he were to have computed<BR>the value of the
capital outlay at the post-production replacement<BR>cost of corn, Marx would
have drawn the opposite conclusion -- the<BR>100 qrs laid out on seed corn could
not have a value greater than<BR>the 120 qrs produced. Each qr, whether input or
output, would have<BR>the same value, so the value of the 100 qrs of input
would<BR>necessarily be 100/120ths of the value of 120 qrs of output.<BR><BR>In
the remaining passage, Marx (1994:219-20) argues that<BR><BR>"not all of the
*surplus product* represents surplus value; this</DIV>
<DIV>is a confusion found in Torrens and others. Assume, for example,</DIV>
<DIV>that the year's harvest is twice as large this year as the</DIV>
<DIV>previous year, although *the same* amount of objectified and</DIV>
<DIV>living labor was employed to produce it. [...] [a] qr of wheat</DIV>
<DIV>will now have half as much value as before. [...] Thus a qr of</DIV>
<DIV>seed would have to be paid for with 2 qrs of wheat, and all the</DIV>
<DIV>elements of capital as also surplus value would remain the same</DIV>
<DIV>(similarly the ratio of the surplus value to the total
capital)."<BR><BR>This passage reveals that, in his discussions of all
three<BR>examples, Marx has been applying a consistent line of
thought<BR>concerning value determination. He explicitly refers back to
his<BR>earlier critique of Torrens, and the present example is
almost<BR>identical to the one employed to criticize Ramsay. So is
his<BR>conclusion that, despite an increase in the physical surplus,
both<BR>absolutely and in relation to the physical input, surplus-value<BR>and
the profit rate are unchanged.<BR><BR>Once again, the same product serves as
both input and output, and<BR>productivity doubles, so that the value of wheat
declines by<BR>one-half. Consequently, 1 qr of input (seed) employed before
the<BR>productivity increase is worth as much as 2 qrs of output (wheat).<BR>One
"qr of seed would have to be paid for with 2 qrs of wheat" in<BR>the sense that
2 qrs of output would have to be sold, at value, to<BR>recover the sum of value
that was advanced for each qr of input.<BR>Thus, "not all of the surplus product
represents surplus value":<BR>some portion of the physical excess of output over
input would<BR>need to be sold, not to realize a profit, but merely to
recover<BR>the full value of the capital advanced.<BR><BR>In comparing this year
with the previous one, Marx again seems<BR>implicitly to assume that the same
amounts of inputs are employed.<BR>By itself, however, this assumption does not
imply that "the<BR>elements of capital ... remain the same" in value terms.
<DIV>remain the same only if, in addition, the value of the capital</DIV>
<DIV>that was advanced at the start of this year is not altered by
the<BR>subsequent decline in the value of wheat. Marx, in other words, is<BR>not
revaluing the seed at replacement cost.<BR><BR>It might be possible to argue
that, although the capital-value<BR>*advanced* remains unchanged, the *value
transferred* from the</DIV>
<DIV>seed to the wheat nonetheless depends on the seed's replacement</DIV>
<DIV>cost. Yet this argument contradicts Marx's conclusion that</DIV>
<DIV>surplus-value (and thus the profit rate) are the same in the two</DIV>
<DIV>years. Because the total value of the product is the same, a change</DIV>
<DIV>in the sum of value transferred would imply that the surplus-value</DIV>
<DIV>also changes.</DIV></BODY></HTML>

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