Subject: [OPE-L:1654] Re: Re: determination of value transferred
From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Tue Nov 09 1999 - 20:39:22 EST
Thanks very much to Andrew for his reply to my previous post. I think we
are making progress in mutual understanding. And I am even beginning to
think that maybe there is not that much difference between us, for reasons
explained below.
1. To begin with, I am very glad that Andrew agrees that if there is a
change in the value of the means of production, then this will cause a
change in the constant capital transferred to the value of commodities
that have already been produced but not yet sold (in what I have called
phase 3 of a circuit of capital) (e.g. stocks of yarn). Andrew agrees
that the constant capital transferred will change because it is determined
by CURRENT production conditions, and current production conditions have
changed.
But Andrew continues to argue that a change in the value of the means of
production will not cause a change in the constant capital transferred to
the value of commodities that are in the process of production (my phase
2). I do not understand why the constant capital transferred to
commodities in the process of production should be determined differently
from the constant capital transferred to commodities already produced but
not yet sold. If the latter is determined by current production
conditions, why isn't the former also determined by current production
conditions?
In any case, it seems to me that there is only a slight difference between
these two interpretations: the only difference is that, if there is a
change in the value of the means of production during production (phase
2), then, according to Andrew, the revaluation of constant capital will be
delayed until after production has finished and the output moves out onto
the market (phase 3). But in the end, at the end of phase 3 when the
output is sold, the constant capital transferred in the two
interpretations will be the same.
2. Let me try to explain further this similarity between the two
interpretations, within the framework of my understanding of Marx's
determination of prices of production.
I have argued in several papers and on numerous occasions on OPEL that,
according to my interpretation, prices of production are determined by the
following equation:
Pi = (Ci + Vi) + r (Mi)
where Pi stands for the price of production of each commodity, Ci for the
periodic flow of constant capital consumed in each industry, Vi for the
periodic flow of variable capital expended in each industry, r for the
general rate of profit, and Mi for the total stock of money-capital
advanced in each industry. In this equation, Ci, Vi, and Mi are TAKEN AS
GIVEN SUMS OF MONEY, and r is taken as given as determined in the Volume 1
analysis of capital in general. I have written this last sentence many
times in recent years. It expresses the two main points of my
interpretation: that C and V are taken as given and that the rate of
profit is determined prior to prices of production.
Andrew, leaving aside the precise magnitude of the constant capital that
is taken as given, do you not agree with these two points: that C and V
are taken as given and that the rate of profit is determined prior to
prices of production? This is the way I have understood your articles on
the transformation problem.
If I have understood correctly, then the issue between us is: what is
the precise magnitude of the C that is taken as given?
According to my interpretation, the precise magnitude of the C that is
taken as given is determined by current reproduction costs. Therefore, if
the value of the means of production remains the same between the time the
means of production are purchased and the time the output is sold, then
the C that is taken as given in the determination of prices of production
will be equal to the actual amount of money-capital used to purchase the
means of production in the first phase of the circulation of capital.
However, if the value of the means of production changes ANYTIME between
the purchase of the means of production and the sale of the the output,
then the value of the GIVEN constant capital also changes. It is changed
to the current cost of the means of production, i.e. what it would cost to
purchase the means of production today, not their actual historical cost,
nor their "pre-production" costs. In this case, constant capital
CONTINUES TO BE TAKEN AS GIVEN, but the precise magnitude of constant
capital that is taken as given CHANGES as a result of the change in the
value of the means of production. THE FACT THAT THE MAGNITUDE OF CONSTANT
CAPITAL MAY CHANGE DOES NOT IMPLY THAT THE CONSTANT CAPITAL CANNOT BE
TAKEN AS GIVEN IN THE DETERMINATION OF OUTPUT PRICES.
I used to think that Andrew's interpretation assumes that the constant
capital is determined at the point in time at which the means of
production enter into production. Therefore, according to this
interpretation, if there is a change in the value of the means of
production after purchase of the means of production, but before
production begins (i.e. during what I have called phase 1), then the value
of the constant capital will change. However, if there is a change in the
value of the means of production after production has begun, but before
the output is sold (i.e. during phases 2 or 3), then the value of the
constant capital will NOT change. In other words, constant capital is
determined by the "pre-production current costs". This interpretation is
significantly different from my interpretation.
But now Andrew seems to be saying that, if the value of the means of
production changes after production and before the sale of the commodities
(i.e. during phase 3), then constant capital WILL CHANGE. This also
implies that, if the value of the means of production changes during the
production process (phase 2), then, even though constant capital will not
change during phase 2, it will change during phase 3 (after the output has
been produced, but not yet sold). According to this interpretation, since
constant capital may change in phase 3, constant capital is NOT determined
at the point in time when the means of production enter the production
process; i.e. constant capital is NOT determined by "pre-production
current costs".
This is why it seems to me that there is only a slight difference between
our two interpretations: the only difference is that, if there is a change
in the value of the means of production during production, then the
revaluation of constant capital will be delayed until after production has
finished and the output moves out onto the market. But in the end, at the
end of phase 3 when the output is sold, then the constant capital in the
two interpretations will be the same.
3. Andrew argues in his most recent post that our two interpretations of
constant capital will be different because constant capital is determined
"temporally" in his interpretation, and is detemined "simultaneously" with
output prices in my interpretation. But this is a misunderstanding of
my interpretation of the determination of constant capital and prices of
production. According to my interpretation, prices of production are NOT
determined simultaneously with input prices (in the Sraffian way, with the
physical inputs and outputs as the initial givens), but are instead
determined in the way I have just described, WITH CONSTANT CAPITAL TAKEN
AS GIVEN, and with the precise magnitude of the given constant capital
depending on current reproduction costs.
So I hope this clarifies my interpretation and why I think our two
interpretations are not that far apart. I look forward to further
discussion.
Comradely,
Fred
This archive was generated by hypermail 2a24 : Sun Dec 12 1999 - 17:29:14 EST