[OPE-L:4152] Re: RE: Part Two of Volume III of Capital

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Wed Oct 18 2000 - 15:04:02 EDT

Re Julian's 4150

>  > I find it very difficult to reconcile this kind of language with the
>>  idea that Marx made no distinction between the labor embodied in the
>>  constant capital and the money value of the constant capital at
>>  prices of production.
>	Marx's comment here seems to say no more than "be careful about
>which -- of cost price and value of means of production used up -- you
>identify as being the value of the inputs" (and by implication "choose the
>cost price", according to Fred and TSSers).

Julian, what is the value of the inputs? To what is this referring?

As I understand Marx, the cost price is what determines the 
denominator for the rate of profit: s/c+v

The (labor) value of the means of production used up, along with the 
surplus value produced by live labor,  is formative of the new value 
added at the completion of production. (Of course the labor value of 
the used up means of production is socially determined.)  Marx had to 
have assumed that the input means of production and wage goods  sold 
at value in the construction of the tableaux since he had not yet 
derived the category price of production until the completion of the 
the second tableaux.

Unlike what Fred and TSS is saying, this does indeed imply that the 
cost prices themselves for each of the five branches would have to 
modified to reflect means of prod and wage goods selling at prices of 
production. This is where my agreement with Ajit, Allin and others 
ends, for  there  is no textual evidence and no good reason to 
interpret Marx as saying that the unit inputs have to be transformed 
into the same unit prices of production as the outputs. There has 
been no citing of evidence to answer my challenge.

To arrive at such "a vector of equilibrium prices" is simply a 
distortion of Marx's thinking.

First, Marx was not a long periodist such that an analysis in terms 
of equilibrium UNIT prices (unit input prices=unit output prices) 
makes any sense. Duncan has not responded to my textual evidence and 
argument. Marx only said the changes in prices of production due to 
changes in the general rate of profit would only be manifest in a 
longer period, not that prices of production and in particular unit 
prices of production would not change over the shorter terms.

Second, as I have said, Bortkiewicz's attempt to put the 
transformation back into the Vol II reproduction schema is based on 
incomprehension of the totally unrealistic nature of the latter; that 
is, grand, completely unrealistic simplfying assumptions such as 
constant value, exchange at value, annual turnover of fixed capital, 
etc. were built into the repro schemes *only* in order to make the 
study of the possibility of the realization of surplus value 
tractable. It was Marx's belief that the dropping of the assumptions 
would not affect the study of the specific problem he was analyzing, 
and Marx may have been wrong: it may not be possible to demonstrate 
realization of surplus value while still respecting the *technical* 
differences b/t the two deparments unless one allows for exchange at 
prices of production, instead of value--see Paul Z's accumulation 
essay and Mattick's criticism of Bauer in his Lenin and Luxemburg 
essay in Mattick's Anti Bolshevik Communism.

  At any rate, these vol 2 assumptions, in particular constant value 
(or input prices=output prices), are not to be carried over for 
economic analysis at any approximation to reality. Sweezy's 
declaration (note that he makes no real argument) that the 
transformation has to be solved in conditions of simple reproduction 
is based on the same total misunderstanding of the schema. Has anyone 
yet responded to this point of mine?

Now there is a real problem in terms of how we are to understand 
replacement costs.

The replacement costs of c or the means of production is what is 
substracted, along with the replacement costs of v or the wage goods, 
from the total value added to arrive at s.

It is possible to define replacement costs as either the money cost 
already borne by the capitalist; then the time subscripts in the 
determination of the rate of profit would be the same r=NV-c+v at 
t/c+v at t.

Or it is also possible to determine replacement costs as current 
costs to replace the *material* already used up. It seems to me that 
Marx uses both definitions. Then r=NV-c+v at t+1/c+v at t. In his 
analysis of the release of capital, Marx seems to use this latter 
formula, no?

I think the latter formula is consistent with a temporal, sequential 
(and thus realistic) approach. I am however in agreement with TSS 
(Andrew in particular) that Marx never says the denominator should be 
in current costs.

Note that if we use the latter formula, then it would not be possible 
to determine the net (value) product through the use of simultaneous 

All the best, Rakesh

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