[OPE-L:3761] Re: NI and all that

From: Duncan K. Foley (foleyd@cepa.newschool.edu)
Date: Tue Sep 05 2000 - 23:45:01 EDT

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Since there's been some further discussion of the "New
Interpretation" on the list, I'd just like to clarify a couple of

The NI consists of the following observations. If you think that
money represents labor time quantitatively, there has to be a
coefficient relating money to labor time in any commodity-producing
society at any particular time (the Monetary Expression of Labor
Time, or its inverse, the Value of Money). If you believe that value
is created by the expenditure of living labor, this ratio has to be
the ratio of value added to labor expended. If you further want to
regard money profits as representing unpaid labor time, then
mathematically you must regard the value of labor power as the money
wage multiplied by the value of money: the two ideas are logically

None of this constitutes a discussion of what determines the value of
money or the value of labor-power. The value of money might be
determined by the cost of production of a money-commodity, and the
value of labor-power might be determined by the price of a socially
and historically determined subsistence standard of living
consistently with the NI, but in and of itself it doesn't imply or
require those theories to hold.

My interest in this line of argument was to link Marxian categories
more closely to directly observable economic statistics, so that
Marx's ideas could be developed as a framework for analyzing
contemporary political economic problems. At the time I wrote my
original RRPE piece, most Marxist empirical work started by trying to
re-value everything in terms of embodied labor coefficients derived
from input-output matrices. This was terribly cumbersome, and slowed
down and limited Marxian empirical work. Furthermore, it raised the
very good question of why anyone should care about the flows of
"value" in this alternative accounting scheme, when it seems as
though political economy is mostly about flows of money. Finally,
Shaikh, Ochoa, Cockshott and Cottrell, and others showed that the
quantitative difference between the key ratios in embodied labor
coefficient accounts and price accounts was pretty small anyway.

One doesn't have to buy the quantitative relation between value added
and living labor time, of course. Many traditional Marxists are quite
content with the "dual" interpretation that envisions labor flows and
money flows coexisting, but not in a strict quantitative
correspondence. (I think David Laibman, for example, adopts this
position.) "Value-form" theorists argue for an interpretation of
abstract labor that makes the determination go the other way (value
added in price terms determines abstract labor), which I must say
seems to be close to some passages of Marx.

I think it is very difficult indeed to establish from purely
theoretical principles what the "correct" approach to the
transformation problem and the treatment of constant capital is, and
almost as difficult to figure out "what Marx really meant", in the
sense of which contemporary formulations of these issues he might
endorse. I get more interested in these debates when they lead to a
discussion of what difference the interpretations make to the
understanding of the fundamental problems of contemporary political


Duncan K. Foley
Leo Model Professor
Department of Economics
Graduate Faculty
New School University
65 Fifth Avenue
New York, NY 10003
messages: (212)-229-5717
fax: (212)-229-5724
e-mail: foleyd@cepa.newschool.edu
alternate: foleyd@newschool.edu
webpage: http://cepa.newschool.edu/~foleyd

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