[OPE-L:4504] Re: Re: What is Volume 1 about?

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Sun Nov 12 2000 - 11:47:00 EST

Andrew, here's a reply to your 4503:

>In OPE-L 4497, Rakesh Bhandari wrote
>: Surplus value does not have to remain invariant in the complete
>: transformation in order for the the theory of exploitation to hold.
>Why then, pray tell, did the author insist that total profit equals total
>surplus-value?  Rakesh's position implies internal contradiction, or
>error, or "incompleteness" on Marx's part.

Andrew, I do argue (and have argued repeatedly) that the sum of 
profits has to be determined by total surplus value. I argue however 
that since surplus value is total value or total price (its monetary 
expression), less cost price, the modification of cost price will 
change the mass of surplus value. That modified mass of surplus value 
then determines the modified sum of branch profits.

Had you once looked at the set of transformation equations which I 
propose before this outburst of desperation?

Here is my argument again.

Following Ricardo's critique of Smith, Marx argues that the value of 
a product is not determined by adding up wages, profit and rent. 
Rather he maintains that the size of a product's value--as determined 
by the quantity of (indirect and direct) labor expended in its 
production--is the *primary*, basic magnitude that then is resolved 
into or breaks down into cost price and surplus value. It is 
therefore obvious that once the entire magnitude (the value of the 
product) is given in advance as a fixed entity (being dependent on 
the quantity of labor needed to produce it), any increase in one of 
its parts (cost price) will invariably lead to a fall in the other 
(surplus value). [see II Rubin, A History of Economic Thought, p. 259)

So if C is the value of a product (which of course has a monetary 
expression based on the constant monetary expression of labor value 
which Marx assumes just as Ricardo did in his Principles):

(1) C => k + s

If not only C but also the monetary expression of labor value remains 
constant--as they do in the transformation exercise--then it is 
impossible  for

(2) (k+a) + s => C + a {a can be positive or negative)

Under both Ricardian and Marxian assumption, this expresses the 
consequence of a modification of cost price (k + a), the whole point 
of the completed transformation

(3) C => (k + a) + (s-a)

The conditions which a successful complete transformation in which 
cost price is modified by the transformation of the inputs must meet 
rather are the following:

A. the modified sum of surplus value (s - a) still determines the sum 
of profits
B. the sum of profits still derives entirely from unpaid newly added value by

This gives the transformation equations which I have proposed.

(5) c1 + v1 +s1 = c1 + c2 + c3 (C)
(6) c2 + v2 +s2 = v1 + v2 + v3 (V)
(7) c3 + v3 +s3 = s1 + s2 + s3 (SVA)
(8) (C + V + SVA) - (C + V) = s1 + s2 + s3

  the set of transformation equations should then be:

(9)  (1+r) c1x + v1y = Cx
(10) (1+r) c2x + v2y = Vy
(11) (1+r) c3x + v3y = r(Cx + Vy) (SVB)
(12) (Cx + Vy + SVB) - (Cx + Vy) = r(c1x + v1y) + r(c2x + v2y) + r(c3x + v3y)

The invariance condition of course is

(13) (C + V + SVA) = (Cx + Vy + SVB),

In my equations, x, y and r can be solved; the equations do not 
overdetermine the system

As the total value remains as constant the monetary expression of 
labor value throughout out the transformation exerise, the sum of 
prices in both schemes have to be set to equal each other, which is 
given in (13).

There is no other invariance condition allowable on Marxian premises.

The mass of surplus value is also set to equal to the sum of branch 
profits. The modified mass of surplus value is given in the left hand 
of equation (12) as the sum of prices of production minus the sum of 
modified cost prices, that is the sum of paid indirect and direct 
labor. This means of course that surplus value originates in unpaid 
labor. That sum of surplus value then determines the right hand of 
the equation: the sum of branch profits.  So your outburst above was 
completely inappropriate: I maintain the so called second equality.

SVA does not and should not equal SVB as cost prices have been 
modified. See (1)-(3). But though surplus value is not invariant, 
appropriated profit in the transformed scheme still originates 
entirely from unpaid labor; the theory of exploitation is thus upheld.

There are two equalities indeed but only the one invariance condition 
which derives from Marxian theory.

>Rakesh claims that deviations of cost-price from the value of the used-up
>means of production and consumption are offset by deviations of aggregate
>profit from aggregate surplus-value.

I am not quite sure what you are getting at; this may be my fault. 
But I argue that upon allowing for the transformation of the inputs, 
Marx recognizes that prices of the input means of production may no 
longer be 'proportional' to the value of those means of production as 
consumed in and transferred to the commodity output. I maintain that 
this is exactly what the textual evidence says Capital 3, p. 309.

>I know of ABSOLUTELY NO textual
>evidence that supports this claim.  It is simply a consequence of his
>adherence to the physicalist dogma that the value of constant capital
>cannot differ from the value of the means of production.

The value of the constant capital can be the value of the money 
needed to purchase the means of production. I do in fact emphasize 
that this value is different from the value of the means of 
production as consumed in and transferred to the commodity output. I 
argue that total value is determined by the value of the means of 
production consumed in the final output plus new value added--that 
commodity value is determined by the direct and indirect labor which 
a commodity embodies.

 From this the capitalists then deduct the actual money which they 
have laid out as constant and variable capital, leaving then surplus 

All the best, Rakesh

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