[OPE-L:3575] Re: Re: money-capital as initial givens

From: Paul Cockshott (clyder@gn.apc.org)
Date: Sun Jul 09 2000 - 04:30:46 EDT

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At 09:49 07/07/00 -0400, ope-l@galaxy.csuchico.edu wrote:
>I understood from your (3547) - in which you said that "there is no doubt
>that Marx formulated the transformation problem in terms of an initial sum
>of money-capital" - that you agreed with me that Marx did NOT "fail to
>transform the inputs of constant capital and variable capital from values
>to prices of production," as is commonly argued. But after reading your
>(3553), I am not so sure. Here you talk about "third-order effects" of
>price-value deviations of the means of production that Marx failed to take
>into account. So could you please clarify for me what you mean by the
>interrelations between different branches of production that Marx failed to
>take into account?

I am in agreement with you that he posed the transformation problem in
terms of given quantities of money capital. Indeed as you go on to say
his analysis in volume 1 is also in terms of given quantities of money
capital. This analysis is in terms of a binary division of the capital
advanced into capital advanced as wages and capital advanced on the
purchase of means of production.

This is also the categorical structure used in his analysis of the
transformation problem.

He has 5 industries in his example and two categories of capital. With this
theoretical structure there is no question of transforming the inputs.

1) We have no reason to suppose that his 5 industrial groups overlap
   in any way with the distinctions in volume 2 between department I,
   IIa and IIb.
2) Whatever the composition of the ouputs of these groups, the significant
   the significant criterion for their aggregation is their organic
   composition of capital rather than the use to which their product is
3) With only 2 categories of inputs, c+v one or both of these inputs must
   be composed of the outputs of more than one industry. Thus the only
   appropriate way of aggregating them into c or v is in price terms. Thus
   he has to define c and v in price terms.
4) A parsimonious assumption would be that c and what v is spent on -
   necessities - were both composed of representative samples of the
   outputs of his 5 industrial categories.
5) If assumption 4 holds, then the prices of c and the prices of the
   necessities on which v is spent would, in aggregate, equal their values.

This conceptual structure is entirely appropriate for carrying out an
initial investigation of the subject. He is focussing solely on the effects
of different capital compsitions as they affect groups of industries. He is
not focussing on the reproduction relations between these industries. This is
because he is investigating the effect of organic composition considered in
isolation from other phenomena.

However, this point about Marx's investigation of the subject does not
in any way invalidate Sraffa's much more thorough treatment of the subject.
One can accept that Marx's problematic did not necessitate the transformation
of input values into prices of production because of his aggregation procedure
and still think that Sraffa's analysis is more thorough.

The argument about how Marx presented things is a debate on the history of
economic thought, it does not itself deal with the substantial theoretical
issues raised by Steadman. These problems follow from the axiomatic structure
of the problem irrespective of by whom or when these implications were
recognised. They have to be be dealt with by either

a) following through the implications of the axioms and seeing if his
   conclusions are justified - for instance the debate on joint production
   and dominated production techniques;
b) investigating whether certain of the axioms are justified in relation
   to the realities of capitalist economies - for instance do the real
   relationships between profit rates and capital compositions follow those
   that Sraffa assumed.

>And let me try to clarify my own interpretation: I have argued in several
>papers (and summarized in a recent post) that constant capital and variable
>capital are TAKEN AS GIVEN as quantities of MONEY-CAPITAL, in both volume 1
>and volume 3, as the two components of the initial money-capital (M)
>invested to purchase means of production and labor-power (i.e. M = C + V).
>Moreover, the SAME QUANTITIES of constant capital and variable capital are
>taken as given in volume 3 as in volume 1. The only difference is that in
>volume 1 the TOTAL amounts of constant capital and variable capital for the
>economy as a whole are taken as given, and in volume 3 the INDIVIDUAL
>amounts of constant capital and variable capital in each industry are also
>taken as given. But the sums of the individual amounts of constant capital
>and variable capital are by assumption equal to the total amounts of
>constant capital and variable capital.
>THIS is the reason why the magnitudes of constant capital and variable
>capital do not change, and do not have to be transformed from values into
>prices of production: because constant capital and variable capital are
>already in money terms and the SAME QUANTITIES of constant capital and
>variable capital are TAKEN AS GIVEN in both stages of the analysis. The
>magnitudes of constant capital and variable capital are not first
>determined as the value of the means of production and means of
>subsistence, and then later transformed into the prices of these same means
>of production and means of subsistence, as in the standard interpretation.

This is fair enough, but the point that Steadman is making is that if one
defines values in the way they are defined in the section on commodities in
vol 1, - labour required to reproduce a commodity, then the value of the
aggregate commodity purchased by the money advanced as constant capital does
not necessarily equal the value of the money so advanced. Similarly the value
of the real wage bundle purchased by the aggregate variable capital does not
necessarily equal the value of the money advanced for that purchase.
Paul Cockshott (clyder@gn.apc.org)

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