[OPE-L:3811] Re: m in Marx's theory

From: Ajit Sinha (ajitsinha@lbsnaa.ernet.in)
Date: Mon Sep 11 2000 - 07:37:32 EDT

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Fred B. Moseley wrote:

> This is the third installment to my reply to Ajit's (3741). It focuses on
> the role of the key variable m in Marx's theory, the "money new-value
> produced per hour of labor". As discussed in my last post, m is the key
> variable in Marx's theory that was completely missing in the standard
> interpretation and that Duncan's work has brought to light.


This is not true Fred. It only shows that you have not understood the
so-called traditional interpretation of the transformation problem. Your "m"
is nothing but the translator that maps labor accounts to money accounts or
vise versa. In the traditional formulations there were many m's. For example
the condition that total gross prices of production equals total value
basically gives you an "m"; similarly, the condition that total profits equal
total surplus value gives you an "m" too. Bortkiewicz has his own "m".
Duncan's "m" is just one in a series of m's. Eatwell uses the standard
commodity to solve the problem of m. However, the problem with you,Carchedi,
etc. are that you don't understand that the determination of m is the problem.
You guys simply assume that one hour of labor is equal to one dollar, and then
claim that you have solved the problem. But all it says to people like us is
that you simply have not understood the problem.

> Fred:
> Ajit argues that m is completely arbitrary in my interpretation; it could
> be anything, which means that new-value and surplus-value also could be
> anything.
> I don't think so. m is not arbitrary. Marx's labor theory of value, as I
> understand it, assumes that, in a given period of time in the real
> capitalist economy, each hour of average social labor produces a certain
> amount (say, m) of money new-value (or money value added). Even though we
> don't know what m is (i.e. we can't observe m), and even though we cannot
> explain what determines m, the theory assumes nonetheless there is an
> actual, unique m in the real capitalist economy. And it is this actual,
> unique m that is taken as given in the determination of the total
> new-value produced in this period. Therefore, m is not arbitrary; m
> cannot be anything; we are not building abstract models here, where we are
> picking numbers from a hat that have no relation to the real capitalist
> economy. Instead, m is taken to be equal to the actual m that is assumed
> to exist in the real capitalist economy. The value of m comes from
> reality, not from a hypothetical model.


So all you are saying is that if you follow the marxian theory, even in
theory, you cannot determine surplus value, rate of profits, and prices of
production etc. because you don't know what the "m" is nor do you know what
determines this "m". However, everything depends on it. But that's what i have
been saying. You don't have a theory of anything.

> Fred:
> As Duncan has argued in (3761) (and elsewhere), the unique value of m in a
> given period must be equal to NV / L, i.e. to the ratio of the money
> new-value produced in this period to the average social labor performed
> during this period. This does not mean that m is determined by NV / L.
> It only means that m has this unique value. We don't know what
> determines m. But whatever determines m, and whatever the value of m, if
> it is assumed that NV = m L, then m must be equal to NV / L, and cannot by
> assumption be equal to anything else.


Fred, you are reasoning in circle--and this is no dialectics. First you say
that prices of production (your total money value of industry output produced)
is *derived* by first making the proposition that m.L = V + (C + V)r, you
claim that in this equation V, C, L, and m are given. From here you derive
your r. Then you go on to determine your prices of production as (C + V) (1 +
r). When you were asked how is your m given. You say m is equal to [(C + V) (1
+ r) - C]/L. So first you take an m to derive your r and then you take your r
to derive your m. In words, up till now you have been claiming that you were
deriving the prices of production. But to explain your m you find that you
have to, in effect, take prices of production as *given*. There is no need to
drag Duncan in it, because he is not doing any of the sort of things you are
doing. And you should also know that up till now you have been rejecting the
NI approach of deriving m and claiming rather that m is given because you know
that once you accept the NI approach, your logic crumbles.

> Fred:
> Now, let's take a quick look at how Marx determined m in Capital.
> Throughout Capital, Marx assumed that m is equal to the inverse
> of the labor-time required to produce a unit of gold, or the amount of
> gold produced per hour of average social labor, which he took as
> given. In Chapter 3 of Volume 1, Marx said: "Henceforth we shall assume
> the value of gold as a GIVEN factor, as in fact we take it at the moment
> when we estimate the price of a commodity." (p. 314) In Chapter 7, Marx
> derived his numerical example of m (0.5 shillings per hour) from gold
> production. On the assumption that it takes two hours of labor to produce
> an amount of gold equal to one shilling, each hour of gold labor produces
> 0.5 shillings worth of gold, so that m in all industries (e.g. cotton
> yarn) is equal to 0.5 shillings per hour. And so on.


So Fred you have destroyed your whole edifice your self. You say Marx
determines "On the assumption that it takes two hours of labor to produce
an amount of gold equal to one shilling, each hour of gold labor produces
0.5 shillings worth of gold, so that m in all industries (e.g. cotton
yarn) is equal to 0.5 shillings per hour." By the way, how did Marx
determined that two hours of labor produces 0.5 shillings worth of gold? It is
not clear to me whether gold is the money commodity here and 0.5 shilling is
simply certain weight of gold or shilling is in silver and there is a certain
exchange relation between gold and silver assumed here. My sense is that the
assumption here is that gold is the money commodity and half shilling is
simply certain amount of gold. So the question is how does Marx know that it
is two hours of labor that produces 0.5 shilling of gold. Gold is not found
scattered on the beach where labor could simply pick it up. Gold is produced
by labor and various raw materials and heavy machineries. So when Marx says
that it takes two hours of labor to produce 0.5 shillings of gold, he must, in
theory, have calculated the direct as well as the indirect labor needed to
produce 0.5 shillings worth of gold. Now to derive the indirect labor content
of the half shillings of gold Marx will not only need to know the technology
in the gold industry but the technological configuration of the whole basic
sector in the system. So, now according to you Marx, of course, did assume the
Sraffian technology given to him to derive his m. How else, otherwise could he
do this? So we have come a full circle. And i'm getting tired of going round
and round.

> Fred:
> So far as I know, Marx never discussed any modification to this
> determination of m at more concrete levels. But gold production is also
> usually capitalist production. Therefore, the rate of profit in the gold
> industry should tend to be equalized with the average rate of profit in
> the rest of the economy. This seems to suggest (I could be wrong) that,
> at this more concrete level of abstraction with prices of production, m
> would no longer be determined solely by the gold produced per labor hour,
> but would also be affected by the equalization of profit rates across
> industries. But Marx apparently did not discuss this possibility at
> all. Nor can I think of Marxists since Marx who have discussed this
> question. If anyone knows of any discussions of this issue, either by
> Marx or others, please send me the references.


The whole literature on the transformation problem, which you seem to reject,
is about this problem. That's why i say you have not understood the literature
that you have rejected.

> Fred:
> Hence, this question - the determination of m with prices of production -
> remains an important unanswered question in Marx's theory.


Exactly! now you have beginning to understand what the good scholars of Marx
have been calling the transformation problem since the time of Bortkiewicz.
Cheers, ajit sinha

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