[OPE-L:2995] Re: Re: Need 3 corection to my last

From: C. J. Arthur (cjarthur@pavilion.co.uk)
Date: Wed May 03 2000 - 08:22:13 EDT

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Oops. In my 2985 I made a mistake. I repeat it with CORRECTIONS and
Chris A

>Since neither fred nor anyone else has replied to Andrew's 'Need 3' I take
>the liberty of doing so even tho' I am sorry to say I have not closely
>followed their debate.
>>Table 1
>> Constant Cap.
>> Input Total ============= Vbl. Output Rate of
>>Yr Price Cap. Seed Other Cap. Output Profit Price Profit
>>1 2/q 60 q 20 q 20 q 20 q 100 q 40 q 2/qr 66.7%
>> 120 40 40 40 200 80 66.7%
>>2 2/q 60 q 20 q 20 q 20 q 200 q 140 q 1/qr 233.3%
>> 120 40 40 40 200 80 66.7%
>>Marx considers a farmer who produces corn by means of seed corn and other
>>inputs. All costs are measured in terms of both money and corn. Marx
>>assumes that, although "work was carried on in the same conditions" in
>>both years, using "the same amount of labour," the output of year 2 is
>>double that of year 1. The total value of this output, however, does not
>>increase. "Since the 200 qrs [produced in year 2] are the product of the
>>same amount of labour [as in year 1], then once again they are likewise =
>>only 200. Thus, only 80 profit remains, which is now, however, = 140
>>qrs" (Marx 1991:267). Marx thus suggests that, contrary to Ramsay's
>>claim, the rise in productivity causes neither profit nor the rate of
>>profit to rise in year 2.
>>These conclusions are incompatible with the interpretation that the value
>>transferred is determined by the input's replacement cost. Had Marx
>>computed the value transferred from the seed corn in year 2 at 1/qr,
>>profit would have exceeded 80. Used-up constant capital would have
>>constituted a smaller share of the output's total value of 200, and thus
>>surplus-value or profit would have constituted a larger share, even if
>>variable capital is assumed not to change. Marx's conclusion that profit
>>remains 80, despite the rise in the physical surplus from 40 qrs to 140
>>qrs, is valid only if the value transferred from the seed corn is
>>determined by its pre-production value of 2/qr.
>In answer to the above gloss on Marx on Ramsay:
>a) I do not agree that the reproduction value at the beginning of year 2 is
>1/qr. It is unchanged at 2. This is because the new technique has not yet
>been applied. It is just a glint in the farmers' eye. Only at the end of
>year 2 is the new snlt *socially validated*. Thus only at the start of year
>3 is unit reproduction value 1 and the seed corn remaining from the end of
>year 1 suffers moral depreciation accordingly.
>b) An interesting contingency is this: suppose the new technique is applied
>first in the Southern hemisphere and transport costs are negligible. In the
>Northern Hemi corn arrives half way through year 2 at the new value. Then
>even if the Northern seed corn has already been productively consumed it is
>retrospectively devalued accordingly.
>c) I do not understand Andrew's numbers in his second para. I would say
>that in the case under (b) the output price for year 2 would be 180 (not
>200) because less value is transferred from the seed corn; and the
>*realised* profit would be 60 over 120 i.e. 50%.
>d) In year three the investment would only be 100 if seed corn was
>purchased at 1/qr and the profit rate would go up to 80 0f the output
>price remained 180.
>*However* the input value per quarter would now be *below* 1 because 200 q
>at the end of year 2 would be valued at 180. And the output price would
>also decline below that.
>We would be into a real time iteration of input/output price discrepencies.
>e) The iteration might be considered not as a real time one but as
>telescoped back to the start of year 3 on the grounds that the new
>technique has been validated by then i.e. continual moral depreciation of
>seed corn is applied all at once; the hit is taken straight away.
>f) Just as in the transformation problem there is a choice of 'temporal' or
>'simultaneist' iteration. In the one case value would decline to its
>asymptotic limit. In the other case the excess price would decline
>gradually to meet the new value.
>It all depends what you want to mean by value.
>(Naturally to isolate this issue theoretically we must apply cet par, e.g.
>the price of labour power stays the same notwithstanding the cheaper corn.)
>Chris A

Introducing the South was a red herring. It merely signals that *in future*
replacement cost is cheaper. The argument in (a) still holds and the value
of the input remains 2 per unit. There is no reason why the output shuld
not be sold for 200 at the end of year 2 (matching the South's price
As a result of this mistake I conflated year 2 and year 3. It is in year
three that the actual input price of 1 would result in the 200 units of
output being valued at 180. (note that if improved corn from the South
arrived in year 1 then the Northerners could gloomily anticipate
devalorisation of their 100 units of OUTPUT.)

I turn Ajit's complaint (2988) about the table over to Andrew.

Consider the following sequence.

Year 1 20 units of seed at 2 = 40 + other c 40 + v 40 + s 80 yeilding
100 units of corn valued at 200, unit output price 2.
Year 2 20 units of seed at 2 = 40 + other c 40 + v 40 + s 80 yeilding
200 units of corn valued at 200, unit output price 1.
Year 3 20 units of seed at 1 = 20 + other c 40 + v 40 + s 80 yeilding
200 units of corn valued at 180, unit output price 0.9.
Year 4 20 units of seed at 0.9 = 18 + other c 40 + v 40 + s 80
yeilding 200 units of corn valued at 178, unit output price 0.89.
year 5 the difference between input and output price is negligible.

At the beginning of year 2 the seed is genetically modified for free and
hence the output doubles; this is inheritable so the output remains at 200
in subsequent years. All the prices are actual prices (not necessarily
values I shall argue). The money wage remains constant as does the rate of
exploitation and other cet. pars.
If you accept these prices are intuitively acceptable, my question is this.
*How do they relate to value?*
The simplest solution is to say the values are identical with the prices.
But this suffers a grave defect if you hold a theory of value which relates
it exclusively to determinants in production and not circulation. For the
only year in which there was a change in the conditions of production was
year 2. Hence only in that year could a discrepency between the input value
and the output value be possible. The price changes in subsequent years
could not reflect value changes since in years 3, 4, 5, etc the conditions
of production are stable.
It might be concluded then that the only change in value occurred in year 2
and this then exercised a gravitational pull on prices which were out of
line with value for years 2 onwards but spiralled into it after 4 years or
Probably this issue has already been addressed in the literature but I do
not know it.
Chris A.

P. S. Please note that I have a new Email address,
but the old one will also run until the summer. (To be doubly sure load both!)

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