[OPE-L:3790] Re: Re: NI and all that

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Fri Sep 08 2000 - 00:27:10 EDT

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This is a response to Duncan's (3761), which I found very interesting and
in strong agreement on most points (as I understand them). The following
is a few responses.


Duncan states:

> 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).

I agree completely! m is a NECESSARY variable in a labor theory of
value. If one accepts the labor theory of value, then there MUST be a
variable that specifies how much new-value is produced in an hour of
average social labor ("has to be"). I think this has been one of Duncan's
main contributions - to emphasize and call attention to this key variable
in Marx's theory. This key variable has been completely missing from the
standard interpretation of Marx's theory of the last century, starting
with Bortkiewicz.

In the standard interpretation, Volume 1 is about labor-values only; it is
not about money and prices at all. Money is completely absent in the
"value" system of equations and therefore so is m, the money value added
per hour. This is in striking contrast to Marx's own text, in which money
is emphasized from beginning to end (the necessity of money is derived in
Part 1, capital defined in terms of money in Part 2, surplus-value
explained as an increment of money in Part 3, and the variable m plays a
key role throughout.

Volume 3 then is supposed to be about money and prices. Prices are
determined by deriving "transformation coefficients" (x, y, and z) that
transform the labor-values determined in Volume 1 into prices of
production. But these "transformation coefficients" are still not the m
in Marx's theory. These transformation coefficients are different for
each industry. Marx's m is the same for the total economy. The variable
m is simply not present at all in the standard interpretation, not even in
Volume 3.

Duncan was the first that I know of to call attention to the necessity of
this variable in Marx's theory, and I think that is a very significant
contribution. (Dumenil did not emphasize this variable; indeed, to the
contrary, Dumenil assumes that, not only is Volume 1 about labor-time
only, but so is Volume 3! Prices of production are even defined in terms
of labor-times; Dumenil is similar in this respect to the
Roberts-Callari-Wolff interpretation.)


Duncan continues:

> 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.

I agree with this too. If it assumed that labor creates new value, then
there MUST be a relation between the quantity of new-value produced and
the quantity of current labor ("has to be"). m must be equal to the ratio
between these two quantities (m = NV / L), if the labor theory of value is


However, the fact that m = NV/L does not mean that m is DETERMINED by this
ratio. Indeed, m CANNOT be determined by this ratio, because that would
result in circular reasoning. If new-value is determined in part by m (NV
= mL), then m cannot be determined by NV. I think Duncan agrees with
this, right Duncan?

Duncan goes on to say that he is not saying anything about what DETERMINES
the value of money (the inverse of m):

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

In other words, the value of money (and hence m) is simply TAKEN AS
GIVEN. We know that m must be equal to NV/L, but we do not know what
determines it. It may be determined by the costs of production of the
money commodity (as in Marx), but it also may not be determined in this
way. But we still can take it as given, even though we cannot explain its
determination, because we assume the labor theory of value, and on this
assumption, m must exist and must be equal to NV/L. And on the basis of
this and other assumptions and givens, we can provide a theory of
new-value, surplus-value, the rate of profit, etc.

Maybe I am more of a "new solutionist" than I thought! (although of
course disagreements remain)

I think I will stop there for now, and comment later on other points in
Duncan's post. I will of course be very interested in Duncan's and
others' comments.


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