[OPE-L:3788] Re: Re: Re: Re: Re: Re: Re: Re: Re: surplus value and transferrred value

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Thu Sep 07 2000 - 14:24:25 EDT

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Ajit, once again you have misrepresented my interpretation of Marx's
theory. After so much effort, that is discouraging. I will point out the
main misinterpretations below.

On Thu, 7 Sep 2000, Ajit Sinha wrote:

> 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

Variable capital appears to be missing from these givens. This is the
second time you have left out variable capital in your formulation of my
interpretation. But at least this time you didn't accuse me of leaving
out variable capital.

> Given this, according to Fred
> 20hrs x m = $700 + $700r, where r is the rate of profits.
> --> r = ($20m - $700)/$700

I have no idea where your equation comes from. It has nothing to do with
my interpretation.

This equation seems to say that the new-value produced (the left-hand
side) is equal to the total price (right-hand side) (assuming no variable
capital). But that is obviously wrong. Where is the value transferred
from the constant capital on the left-hand side? Would you please

In any case, this equation is not the way r is determined according to my
interpretation. As I have explained several times now, according to my

        r = S / (C + V)

where S = m (L - Ln)

and C and V are taken as given.

L disappears from your incorrect formulation of my interpretation; it does
not disappear from my own interpretation, as I have explained before.

> 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)

Assuming no variable capital and assuming r is determined as I just
described, then these equations are indeed my equations for prices of
production. But then you say:

> 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.

No, this is wrong. We know prices of production from the above
equations. Nothing more is necessary. No knowledge of the physical
quantities is necessary in order to derive these prices of
production. Prices of production are completely determined by the givens
Ci's and Vi's and the predetermined r, as in the above equations.

Why do you say that a knowledge of the physical quantities is necessary to
determine these prices of production? Because you confuse Marx's prices
of production with Sraffa's unit prices. You say below that prices of
production would be the UNIT PRICES of $y/5 and $z/10. But prices of
production are NOT unit prices, as I have explained before. Marx's prices
of production are what we might call total industry revenue, which is
identically equal to unit price times quantity, but not determined by this
product, as I have explained. Rather, prices of production are
determined by the above equations, which are completely independent of
unit prices and quantities.

Therefore, none of the rest of your argument follows. It is not necessary
to "derive the technology" in Marx's theory. I myself have no interest in
doing so (contrary to your "from here Fred would like to derive the
inputs"). So there is no "derived technology" that might depend on m.

My last post answered your criticism that "Fred's givens depend on the
Sraffian givens." Your hodge-podge of confusion in this post intended to
show that "Fred's derived technology depends on m" does not in any way
demonstrate either point.


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
> The interesting thing about this exercise is that the real technology that is used
> 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.
> >
> > Comradely,
> > Fred

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