# [OPE-L:3775] Re: Re: Re: Re: Re: Re: Re: Re: surplus value and transferrred value

From: Ajit Sinha (ajitsinha@lbsnaa.ernet.in)
Date: Thu Sep 07 2000 - 03:54:57 EDT

Let's cut through this merry go around, and put Fred's arguments in equation form to
show its absurdity. Let me accept Fred's assumption that Ci's and Vi's are "given".

Let us suppose we are in two good economy say iron and wheat. According to Fred's
theory, for iron sector we "observe":

\$300 (iron) + \$100 (wheat) + 10 hrs of labor, and for wheat sector
\$200 (iron) + \$100 (wheat) + 10 hrs of labor

Given this, according to Fred

20hrs x m = \$700 + \$700r, where r is the rate of profits.

--> r = (\$20m - \$700)/\$700

Now Fred's equations for the prices of production would be

\$400 + \$400r = \$y, say (for iron sector) and

\$300 + \$300r = \$z, say (for wheat sector)

Still we don't know the prices of production until we know how many units of iron
and how many units of wheat was produced. Now Fred will say, okay! let us suppose
now that the right hand side of the Sraffian equations are given to us too! So let
us suppose that 5 units of iron and 10 units of wheat were produced. Now, Fred's
prices of production of iron would be \$y/5, and for wheat \$z/10. Now, from here Fred
would like to derive the inputs. So the technology is now derived as:

1500/y units of iron + 10 hrs of labor --> 5 units of iron
1000/y units of iron + 10 hrs of labor --> 10 units of wheat

in producing iron and wheat may not have anything to do with this derived technology
because it crucially depends upon the value of "m". You change the valume of "m"
arbitrarily, and your technology will keep changing accordingly. This is the
absurdity of Fred's theory, which he keeps attributing to Marx.
Cheers, ajit sinha

Fred B. Moseley wrote:

> This is reply to Ajit's latest (#3765). Ajit, thanks again.
>
> On Wed, 6 Sep 2000, Ajit Sinha wrote:
>
> > The problem I'm trying to bring home to you
> > is that your so-called givens presuppose the Sraffian givens. That is, the
> > Sraffian givens are prior to your givens, and so your givens have no
> > legitimate theoretical status.
>
> ...
>
> > When you say that "We know that in a certain period of
> > time a certain amount of money-capital is invested to purchase means of
> > production and labor-power. This amount of
> > money-capital is in principle observable; it is an empirical given", you
> > must accept that this *observation* cannot take place independently of
> > what was "purchased" and how much at what price. Your empirical givens
> > are *derived* by taking the amounts of inputs and labor and their
> > prices. By claiming that my theory closes its eyes to it does not change
> > the objective situation that the theoretical givens in your theory are
> > Sraffian givens plus the prices of all inputs.
>
> Ajit, I have already answered this criticism in a recent post (I lost
> track of the number; it is between 3734 and 3741). Marx's givens do not
> depend in any way on the Sraffian givens. Sraffian theory is not the only
> way to determine the magnitude of constant capital (as the unit price
> times the quantity of the means of production). As I have explained, Marx
> determined the magnitude of constant capital in a different way. He first
> took the magnitude of constant capital as a given and then later explained
> this magnitude as equal to the price of production of the means of
> production. Marx's prices of production are not the same as Sraffian unit
> prices. Furthermore, contrary to Ajit, Marx's determination of prices of
> production does not depend in any way on either physical quantities or
> unit prices. Marx's prices of production are indeed identically equal to
> the product of quantities times unit prices. But Marx's prices of
> production are not determined by this product, but rather by the
> redistribution of the aggregate surplus-value in such a way to equalize
> the rate of profit across industries.
>
> > When a theory takes something as given, it
> > claims that those givens are determined in a space outside of its particular
> > theoretical space. For example, utility function in the neoclassical economics
> > is taken as given. By this the theory is claiming that the utility function is
> > determined by the psychology and the socio-psychological determinants that are
> > outside the scope of the economic theory. In your theory you do not claim that
> > those money variables are determined by the variables that are outside of the
> > scope of your theory.
>
> Ajit, I don't understand this. It seems to me that it would be BETTER to
> be able to eventually explain a theory's initial givens (i.e. to "posit
> the presuppositions"), rather than taking a theory's initial givens as
> determined outside the given theory. Why is this a problem?
>
> > Furthermore, when you go about determining your prices of production
> > by taking the disaggregated Ci's and Vi's, you never explain how do you get
> > these disaggregated figures without the knowledge of the Sraffian inputs.
>
> This is easy. Marx "gets" the disaggregated Ci's the same way he
> "got" the aggregate C - by taking them as empirically given. Just like
> the aggregate C is in principle observable and can serve as an initial
> given, so also are the disaggregated Ci's in principle observable and can
> serve as initial givens. Marx said this explicitly in the Theories of
> Surplus-Value:
>
> "If we take society at any one moment, there exists simultaneously in all
> spheres of production, even though in very different proportions, a
> definite constant capital - presupposed as a condition to
> production." (TSV. I: 109)
>
> A knowledge of the physical inputs is in no way necessary to determine
> these disaggregated Ci's. Indeed, I don't see how a knowledge of the
> physical inputs could help one disaggregate the total C into individual
> Ci's. Just dividing by the physical inputs won't do it, because the
> different means of production have different unit prices. Ajit, would you
> please explain? Why is it better to explain a theory's givens outside the
> theory, rather than inside it?
>
> > Just saying that I take everything as given given given don't make a
> > theory.
>
> Ajit, one more time: Marx did not take "everything as given given
> given". Rather Marx assumed that:
>
> NV = m L
>
> and that
>
> P = C + m L
>
> and from these two key fundamental assumptions, together with a small
> number of initial givens, Marx's theory is able to explain surplus-value
> (dM = mL - mLn), the rate of profit, prices of production, and much, much
> else.
>
> Fred

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