Andrew_Kliman (Andrew_Kliman@email.msn.com)
Sun, 31 Oct 1999 01:03:45 -0500
This is a reply to Fred's OPE-L:1510, concerning my recent paper
on the determination of value transferred, posted as OPE-L:
1374-1381.
Fred has basically understood me correctly. What is under
discussion is Marx's theory of the effect of a change (increase)
in the price of a means of production (cotton). According to my
interpretation, pre-existing stocks of cotton will be revalued
upward when the price rise occurs. And yes, pre-existing stocks
of yarn (that "contain" cotton) will also be revalued upward when
the rise in price of cotton occurs. The amount by which the value
of these pre-existing stocks of yarn increases is the amount by
which the value transferred increases, i.e., the amount by which
the price of the cotton "contained" in them increases. This has
been my interpretation as long as I have had one.
Yet I think the terms in which Fred has posed the issue may make
it harder to understand the logic of Marx's view of revaluation,
and my interpretation of it. So I'd like also to clarify some
concepts.
Fred writes: "As a framework for the discussion, I will
distinguish between three phases
of a given circuit of a given capital ... (1) BEFORE production
... (2) DURING production ... ; and (3) AFTER production ...."
Comment: What is under consideration is NOT "phases of a given
circuit of a given capital." It is true that first there's some
cotton, then it enters production, then yarn is produced, and then
it circulates in the market. What is subject to revaluation,
however, are only PRE-EXISTING stocks of cotton and of yarn,
stocks produced in a previous circuit. Yarn produced with more
expensive cotton (Fred's phase (3)) will not be RE-valued upward,
because it is being VALUED -- acquiring its original value -- in
accordance with the higher price of cotton.
The real situation involves *multiple* circuits of capital.
Imagine for simplicity that production of yarn takes 1 day. At
the end of Friday, the price of cotton is 10 and the value of yarn
is 35. Existing stocks of cotton are worth 10; existing stocks of
yarn are worth 35. Now imagine that, first thing Saturday
morning, the price of cotton goes up to 20. All pre-existing
stocks of cotton are now worth 20, including stocks that enter as
inputs into yarn production on Saturday. Hence, cotton that is
used during Saturday to produce yarn transfers a value of 20, not
10. Hence, the yarn that is completed at the end of Saturday is
worth 45, not 35. Hence, all pre-existing stocks of yarn, stocks
in existence before the end of Saturday, are now also worth 45,
not 35. The *pre-existing* cotton and the pre-exisitng yarn have
been RE-valued, but the yarn *produced* on Saturday has not.
Currently produced cotton and yarn play a determing role here.
Current production conditions determine (ceteris paribus) the
prices of the most recently produced cotton and yarn. The prices
of pre-existing stocks of cotton and yarn change when, and insofar
as, the prices of newly produced cotton and yarn change. That is
because commodities' (social) values are determined by current
conditions.
Fred writes: "If I understand this correctly, there is an interval
of time (phase 2) in the circulation of a given batch of cotton
during which a change in the price of cotton does NOT affect the
value transferred from the cotton to the yarn, and then there is a
later interval of time (phase 3) during which a change in the
price of cotton DOES affect the value transferred from the cotton
to the yarn. Is this correct?"
Not really. Again, "phase 3" actually belongs to a different,
*earlier* circuit. The change in the price of cotton causes a
change in the value of newly-produced yarn and, since values are
determined by current production conditions, pre-existing stocks
of yarn are likewise revalued at that time.
Fred writes:
: If I understand this correctly, then it seems to me that: if
there is a
: change in the price of cotton while a given batch of cotton is
in phase 2
: (during production), then, according to Andrew's logic, this
should result
: in a change in the value transferred by this batch of cotton
when it
: reaches phase 3 (after production and before sale), in order to
catch up
: and adjust to the new current price of cotton, which reflects
the change
: of productivity that occurred while this batch of cotton was in
phase 2.
: Therefore, in the final sale of the yarn at its price of
production at the
: end of phase 3, the value transferred by this batch of cotton
DOES change
: as a result of the change in the price of cotton in phase 2, as
in my
: interpretation. The only difference seems to be that the
adjustment of
: the value transferred to the change in the price of cotton is
delayed
: slightly, from phase 2 to phase 3.
Apart from the "phases" terminology, I agree with this. In terms
of my earlier example, the change in the price of cotton now
occurs say, mid-day Saturday, while the yarn is being produced.
The cotton used to produce this yarn entered production with a
price of 10, so the value of this yarn is 35. Assuming no further
change in the price of cotton after mid-day Saturday, cotton that
enters into yarn production on Sunday has a price of 20. So,
assuming also no other change in the conditions of yarn
production, yarn produced on Sunday has a value of 45. Stocks of
yarn produced on Saturday or before are now revalued upward from
35 to 45. But ...
Fred draws an incorrect conclusion:
: Therefore, it seems to me that Andrew's surprising
interpretation of phase
: 3 seems to imply that his interpretation leads to the SAME value
: transferred from the cotton, and hence the SAME price of
production of the
: yarn at the end of phase 3, as in my interpretation. [emphases
added]
They will not be the same, because simultaneous and temporal
valuation yield different figures for the values of newly-produced
commodities, and thus different figures for the values to which
pre-existing stocks change. This is a general point, but the
easiest way to illustrate it is to imagine production of corn by
means of corn. In each of three years, 6 bushels of seed-corn
serve as input, and the value added by living labor is $12.
According to my interpretation (which I'll call "temporalist" for
short, although there's no unanimity on this point), the
post-production unit value of corn will be
6*(input value) + $12
---------------------
output
and, according to the simultaneist interpretations, it will be
$12
----------
output - 6
Assume that, at the start of year 1, the value of corn is $1/bu,
and output is 18 in year 1, 9 in year 2, and 8 in year 3.
Plugging these figures into the formulas, and noting that the
(temporalist) input value of years 2 and 3 are the (temporalist)
output values of years 1 and 2, respectively, we get:
Post-production unit value
--------------------------
Year Temporalist Simultaneist
---- ----------- ------------
1 1 1
2 2 4
3 3 6
Hence, according to the temporalist interpretation, stocks of corn
produced in year 1 or before, but still in existence after the end
of year 2, will have a value of 2. Stocks of corn produced in
year 2 or before, but still in existence after the end of year 3,
will have a value of 3. (This is true both for stocks that become
seed-corn inputs and those that do not.) The corresponding
figures, according to Fred's and all other simultaneist
interpretations, are of course 4 and 6.
According to both interpretations, then, pre-existing stocks of
*inputs*, AND pre-existing stocks of *finished goods*, are
re-valued in accordance with the price or value of currently
produced commodities of that type. Yet they are re-valued
differently, because values of currently produced commodities are
DETERMINED differently.
I hope this has helped to clarify things.
Ciao
Andrew
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