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I think John and I have reached understanding, if not complete agreement on
most of the issues in mentioned in the last couple of posts. At the end of
his post he raises once more the question of what happens to the value
invested by the capitalist when prices change during the process of
production, in the following terms:
>First, I'd agree that the capitalist is not a hoarder -- he
>doesn't want M for its own sake. Indeed, he will not allow money
>in whatever form to merely accumulate. But then you go on to
>say that the capitalists seek "expanding value." But how are we
>to measure this expanding value? It seems to me that Marxists
>have done so in one or more of 3 ways.
>1. In simple models, the degree to which outputs exceed inputs
>is seen as an expansion of value. The rate of expansion can be
>computed in terms of the use values of the commodities themselves.
>[C(1)'-C(1)]/C(1) where C(1)' > C(1).
>One needs no concept of value at all to proceed in this fashion.
>2. In somewhat more complex models, all commodities can be seen as
>embodied abstract labor and a rate of expansion calculated. Here,
>folks differ about simultaneous valuation. Using it, in the simpler
>models one gets the same rate of expansion that we have in 1.
>3. The same difference concerning simultaneous valuation occurs if we
>compute a MELT in order to measure the degree to which value
>expands. Why? For all of us, the different MELTs are a result of
>adding up different amounts of abstract labor time. The argument
>simply moves to another level. Matters change if we adopt
>Marx's way of proceeding by starting and ending with money whose
>value is given and constant. If a $10 investment produces a profit
>of $1, we could not argue that the rate of profit is anything other
>than 10%. Even with falling input prices which may occur as this
>profit is produced, there is no way to argue that $10 was not
>advanced. Or is there?
In real life the capitalist is after money, and measures profit in money
terms. The simple one-commodity models can be seen either as abstracting
from money altogether, or just presenting the simplest framework in which
we can think about the expansion of value. I don't think one-commodity
models in themselves are incapable of expressing real social relations in
an abstract form, as long we remain alert to their limitations (for
example, those raised by the Cambridge capital critique about the
conception of capital).
I agree with John that capitalists care about their realized profit, and if
they lose money on the stocks of commodities tied up in production due to
changes in the prices of the commodities, they have really lost money, and
their realized profit rate on their historical investment is really lower.
The question is whether it makes sense to separate two different factors
here: one is the addition of value through the expenditure of labor in the
production process, which is the basis of the exploitation of living labor,
and the other is the revaluation of stocks of commodities due to price
changes. I read Marx as insisting that this distinction is important, and
focusing primary attention on the appropriation of surplus value from
living labor in the process of production. The point is that the
revaluation of commodities is not the result of the expenditure of living
labor, but of other economic processes. This doesn't seem to me to deny the
reality of the revaluation of stocks of commodities (which Marx viewed as a
key element, for example, in the working out of capitalist crisis), but to
insist that the two sources of profit have their origin in different social
It makes all kinds of sense to analyze the revaluation of commodities
through price changes, too. Where I question the TSS methods is that it
seems to me that in calculating the MELT TSS implicitly attributes the
revaluation of stocks of commodities to living labor, which seems to me
incompatible with Marx's theory of exploitation.
So, sure, the $10 was advanced, but if the capitalist lost $.50 in the
devaluation of the stocks of commodities through price changes, then I
would argue that the surplus value appropriated from the workers was $1 and
the loss on price changes was $.50, so the realized profit was $.50, which
is not the same in this case as the surplus value. The $10 was really
advanced, but two different things happened to it: the expansion of the
variable capital, whatever proportion it was, in production through the
appropriation of surplus value, and the shrinkage of the value in the
commodity stock through price changes.
Duncan K. Foley
Department of Economics
New School University
65 Fifth Avenue
New York, NY 10003
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