[OPE-L:3815] Re: Re: m in Marx's theory

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Thu Sep 14 2000 - 00:21:38 EDT

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Responses below to Ajit's 3811:

On Mon, 11 Sep 2000, Ajit Sinha wrote:

> 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.

Ajit, you continue to misunderstand Marx's theory. In Marx's theory,
there is ONLY ONE m for the whole economy. m in Marx's theory is the
quantity of money new-value produced per hour of ABSTRACT labor. An hour
of abstract labor (i.e average social labor) in any industry is assumed to
produce the SAME AMOUNT of money new-value as an hour of abstract labor in
any other industry. THAT IS THE NATURE OF ABSTRACT LABOR. The fact that
there are "many m's" in the standard interpretation is itself unmistakable
proof that this is a misinterpretation of Marx's theory. In Marx's
theory, abstract labor in different industries does not produce different
amounts of money new-value, but rather the same amount. In the standard
interpretation of Marx's theory, on the other hand, there is no abstract
labor; there are only different concrete labors, with different mi's.

Contrary to your claim, I do understand the standard interpretation (with
its "transformation coefficients"), and I also understand that the logic
of the standard interpretation is fundamentally different from the logic
of Marx's theory. That is what you don't understand. If you did
understand Marx's theory, you could not argue that the "transformation
coefficients" in the standard interpretation is the same concept as money
value added per hour (or the inverse of the value of money) in Marx's

> 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.

Ajit, what do you mean there is no theory of surplus-value (no theory of
anything!)? Here is the theory of surplus-value (Marx's theory of
surplus-value, I submit):

1. Whatever the given values of m and V, surplus-value is produced IF AND
ONLY IF the total length of the average working day is greater than V / m,
i.e. greater than the time necessary for the average worker to produce
money new-value equal to the variable capital, i.e. greater than the
"necessary labor-time" (Ln). In Marx's numerical examples in Chapter 7 of
Volume 1, V = 3 shillings and m = 0.5 shillings per hour (both are taken
as given). Therefore, Ln = 6 hours, so that surplus-value is produced if
and only if the average working day is longer than 6 hours, as Marx
dramatized with his two examples. In Marx's first numerical example, the
working day is 6 hours, so surplus-value is = 0. In the second example,
the working day is 12 hours, so surplus-value = 3 shillings.

2. The MAGNITUDE OF SURPLUS-VALUE is equal to m ( L - Ln). If m is
changed, this does not affect the essentials of the theory. Marx assumed
that the magnitudes of all the monetary variables (prices, components of
capital, etc.) would change proportionally. So the ratios between the
monetary variables would remain the same. L and Ln would also remain

3. From this theory of surplus-value, the following important phenomena
of capitalist economies are derived (thereby attesting to its empirical
explanatory power): conflict over the length of the working day, conflict
over the intensity of labor, inherent technological change, periodic
crises, etc., etc. None of the explanations of these important phenomena
requires a full explanation of the determination of m. For example, the
conflict over the length of the working day. Whatever m is, and whatever
determines m, a longer working day will produce more money new-value, and
hence more money surplus-value, than a shorter working day. Hence it is
in the interests of capitalists to lengthen the working day (or at least
resist attempts by workers to reduce the working day), which leads to the
inherent conflict over the working day.

Ajit, why isn't this a theory of surplus-value? It is perhaps incomplete
in some respects (as indeed all theories are), but it still has impressive
explanatory power, despite its incompleteness.

Ajit criticizes "my theory" (which I insist is an interpretation of Marx's
theory) because it does not fully explain the determination of
m. However, if Marx's theory is weak, COMPARED TO WHAT? Sraffian theory
cannot even explain money, period; i.e. it can not explain the necessity
of money, why money must exist in a commodity-producing economy. At least
Marx's theory can explain, as a logical deduction from the fundamental
assumption of the theory (the "labor theory of value"), that money has to
exist, in order to function as the special commodity in which all other
commodities express their labor-value. This is not an ad-hoc explanation
of the necessity of money, based on the "difficulties of barter", but a
deduction from the fundamental assumption of the theory. In other words,
the necessity of money is explained in an integrated way, along with the
explanation of lots of other phenomena (e.g. conflict over the length of
the working day), all derived from this fundamental assumption. I think
this is a very significant theoretical achievement that no other economic
theory has been able to achieve (as is well known, neoclassical economics
has also not been able to explain the necessity of money from its
fundamental "utility theory of value"). In other words, Marx's theory has
achieved a unity of its theory of value and its theory of money that no
other theory has been able to achieve. Compared
to this significant achievement, Marx's "failure" to fully explain the
determination of m is very minor indeed.

> 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.

No, I am not arguing in circles. I am NOT arguing that m is DETERMINED by
NV/L. I am arguing that Marx assumed that m is determined INDEPENDENTLY
of NV. Then is it assumed that NV is determined by the equation NV =
mL. From this it follows, as a matter of simple logic that, whatever
determines m, if NV = mL, then m must be equal to NV / L. Not that m is
determined by NV/L, but that m is equal to NV/L. This is just a more
precise way of saying that, at a given point in time, m must have a unique
value; it is not "arbitrary", as you have claimed.

I am NOT saying that r is used to derive m. Where do you get this?

Let's let Duncan speak for himself.

> 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.

Marx did not calculate m (or the value of gold) from given physical
inputs. Marx simply took the value of gold as GIVEN, as I quoted in my
last post from C.I: 314. You are going round and round only because you
refuse to admit that Marx had a fundamentally different logical method
from Sraffa.

> 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.

As explained above, the "whole literature on the transformation
problem" is about an entirely different problem from the determination of
Marx's m. By the nature of abstract labor, m cannot have multiple
values. I would say that I have understood the transformation literature,
but you, like this literature, have not understood Marx's theory. One of
the main points that you apparently don't understand is this: due to the
nature of abstract labor, there is one and only one m for the economy as a

I would like to hear what others think about Ajit's criticisms and my


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