[OPE-L:4347] Re: SV, labour and machines

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Sat Oct 28 2000 - 13:45:08 EDT

Re 4321
Andrew (B), let me skip to this textual support of Marx's adoption of 
the classical long term (unit) prices of production.

I have so far argued against Ajit's and Duncan's reading of capital 
3, chs 9-10 as committed to such long term centers of gravity and 
thus a solving of his transformation problem in terms of equilibrium 
prices which in my reading is completely foreign to Marx's approach 
(and reality). In these chapters Marx is mainly trying to uncover why 
it is that the value determination of economic magnitudes is obscured.

It is often recognized that Marx attempts to show here that the 
average rate of profit does not modify or contradict the law of value 
but rather becomes the form in which it is expressed. However, it 
often missed that Marx explores another way value determination is 

  Exactly because profit is appropriated in terms of the mark up on 
the average cost prices in the industry, those firms which are 
successful in reducing cost prices vis a vis the average can claim 
extra profit. Marx argues that a most effective way to reduce unit 
cost price and thus claim extra profit is by replacing paid labor 
with machines (per unit c and v may fall  but c rises relative to v). 
To the businessman in the thralls of competition, the labor theory of 
value provides no guide to action.  These common sense notions then 
become the basis for bourgeois economics as well.

So I do not read Marx as committing himself to any notion of long 
term centers of gravity in these chapters (again I think he has long 
ago dropped vol 2 assumptions of constant value, annual turnover of 
fixed capital, exchange at value, all assumptions which allowed him 
to radically simplify the realization problem he was analyzing but 
which were never meant to be turned into controlling methodological 
postulates); rather Marx here is attempting an immanent critique of 
classical economics because even this scientific undertaking could do 
no more than systematize the everyday notions of the agents caught up 
in capitalist competition. (this critique of the everyday suggests 
interesting comparisons to Heidegger's conceptualisation of the 
everyday and the first rate philosopher and sociologist Bourdieu's 
analysis of what he calls habitus.)

Marx wants to show why those phenomena that appear to contradict the 
law of value--the principle of the average profit rate and the extra 
profitability from labor replacing technical change--are best 
explained in terms of it. But this scientific endeavor has Marx  use 
concepts (e.g. Fred's macro entity of the mass of surplus value) 
which have no referent in the world of observed behavior. This anti 
positivistic hypothesizing on the basis of unobserved entities--which 
is what I think Marx meant by mediating links--is rankling Gil quite 
a bit, just as Karl Pearson was way upset by the Mendelians.

Now you claim to have found evidence for where Marx positively 
commits himself to the notion of long term centers of gravity for 
unit prices of production (and I am interested in all evidence for 
this since it seems to me to run counter to Marx's dynamic 
understanding of capital accumulation, marked by continuous 
improvement of technique, saving of constant capital, release of 
capital, moral depreciation, etc):

>[btw, there's no doubting that, in Cap1, Marx seemed to envisage
>prices of production as long run centres of gravity rather like Smith
>and Ricardo's 'natural prices' - check out the footnote that occurs
>just before chapter 6...but this is all at a more concrete level than
>the SV argument].

Obviously I do not read the footnote this way

This chapter aims to show that  commodity exchange cannot be a method 
of increasing value (if one does not assume its purity, it can of 
course be a method for the redistribution of value, but then one's 
gain is another's loss; one can follow Gil and argue that there is 
something arbitrary about the way Marx rules out merchant capital and 
interest bearing capital as methods by which value is actually 

That is one can argue that Marx builds artificial assumptions into 
the problem  such that only labor power can be the source of surplus 

Now in the footnote, Marx reads to me as ruling out the possibility 
that a merchant can sell dear in a cornered market for long or a mfg 
can maintain a monopoly over a long period; this would lead to an 
inflation of price over "value" (marx underlines that he is using the 
term loosely) and explain capital formation on this basis.

This route to capital formation however is simply not secure enough 
in the long run. The capitalist cannot count on forming capital on 
the basis of exceptional prices. One turnover's output may enjoy a 
monopoly price, the next a distress price. So surplus value has to be 
explained on the assumption of the output selling at its average 
price, which he loosely calls value here.

Which is a very different point than claiming that there is a single 
center of gravity for unit prices of production over the long term. 
Or that unit values are stationary except in the long run.

In fact remember that marx has not even introduced the production 
process yet. But it is by means of the continous revolutions therein 
that commodity value is depreciated. In a dynamic economy the chance 
of capital formation on the basis of price inflation is even less 
(assuming of course a constant value of money!) The output itself 
simply has to have a greater value than the input. Yet how is this 
possible if, as Marx has argued previously in this chapter, commodity 
exchange allows in its pure form only for the exchage of equivalents 
or more realistically merely for the redistribution of value, not its 

This is the kind of thing this paragraph is about, not price theory 
over the long term. It may have the logical flaws Gil insists on but 
it really can't be read as a defense of the notion of long term 
centers of gravity in the construction of what both Gil and Alan F 
call Walrasian Marxism (in which money is treated as secondary and 
equilibrium prices are assumed). I have also argued that  Walrasian 
Marxism is self consciously developed in the founding text of Marxist 
economics--Sweezy's Theory of Capitalist Development in which money 
is ignored and Bortkiewicz embraced.

All the best, Rakesh

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