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Fred B. Moseley wrote:
> 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.
Fred, it is disappointing indeed that you are simply not putting any effort to understand
what I'm saying. My sense is that i have understood your argument better than you have,
that's why i'm able to put it in clearer and mathematical terms. There is nothing wrong
with my interpretation of your theory except a minor typo, which however makes no
difference to my argument, and which you should have caught had you paid any attention.
> 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.
The two $100 are your variable capitals. Wheat is put their to show that workers spend the
money on wheat for consumption. It is for the realism of the system. The typo error there
is that instead of just "for iron sector we" it should have said "for iron and wheat
sectors we". By the way, you should go and check your post where i had suggested that you
had missed your variable capital. I was right.
> > 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.
There is a minor typo error above, which however does not make any difference to the
argument. Instead of "20hrs x m = $700 + $700r, where r is the rate of profits." it should
20hrs x m = $200 + $700r
Now the interpretation. Left hand side of the equation is your L.m and the right hand side
is the Value of the net output, that is V+S. So the above equation is nothing but a
faithful representation of your interpretation that L.m = V + S. And from this equation
you will get,
r = (20m - 200)/700; this is how you have been claiming that Marx derives his rate of
> 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
Now it should be clear to you. The right hand side is the money value of the net output
and not the gross output. Sorry about the typo.
> 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.
L, of course, does not disappear from my equation of your interpretation. 20 hrs. in my
equation is your L. Of course, when you multiply L with m, then labor units cancel out and
you are left with a product in terms of dollars. As my equation above shows, r = (Lm - V)/
(C+V), exactly faithful to your interpretation.
> > 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
Now you should know that the variable capital is in there and that the r is determined
exactly as you want it to be determined. So now you should agree that the above two
equations are faithful representation of your interpretation.
> 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.
By the way, you have been claiming that your theory explains what it posits. But what do
you explain when you stop where you want to stop. Explanation of your initial money
capital on Ci's and Vi's is what i have done. Whether you are interested in it or not, the
logical consequences of your interpretation, as i have explained, leads to the conclusion
that technology depends on m, and will change accordingly as we arbitrarily change m. I
have only brought out the fact that the logical conclusion of your reasoning leads to
absurdity. You, of course, don't want to go that far but that does not mean that stopping
in the middle will be okay. You will have to show that there is a logical flaw in the way
I have derived the conclusion, which you haven't been able to do. Furthermore, it has been
a long time we have been waiting to hear how your m is also "given". And as long as your m
is arbitrary, your surplus value is arbitrary and everything else that flow from it.
Cheers, ajit sinha
> 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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