[OPE-L:4534] Re: Re: Re: Re: Re: "Don't go like that" (Was "What isVolume Iabout?")

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Wed Nov 15 2000 - 23:43:28 EST

Let me cut out Andrew's counter case and begin there:

>Moreover, "surplus-value" in Rakesh's interpretation can be positive when
>Marx's is negative.  Marx's is negative when the price of labor-power
>exceeds the value added by living labor.  If this is the case, Rakesh's
>"surplus-value" will still be positive if the difference between the
>value and the price of used-up means of production is greater than the
>difference between the price of labor-power and the value added by living

>Second, the case reiterated above -- POSITIVE "surplus-value" despite
>workers receiving more than a equivalent of the labor-time they work --
>occurs when the price of the means of production sell BELOW value.

In the aggregate there would be no new positive surplus value. Take 
Marx's example of yarn production about which you did not explicitly 
comment.  Marx determines the value of the produced yarn by supposing 
that the labor needed for the cotton, the spindle making and yarn 
weaving all happen under one roof. That is, commodity value is 
determined by the past and present labor time taken up in making it.

Now allow the dispersion of activity: it is possible that the spindle 
is "sold" below value to the final spinner who pays for the entire 
working day of the proletariat which he hires.  This spinner would 
not be extracting new positive surplus value; the total value of his 
product would be value of consumed means of production + newly 
produced value.

Since direct labor is fully or more than fully paid, the excess value 
results from having paid for indirect labor below value.  That is, 
the spinner has only transferred to himself the surplus value 
produced in an antecedent stage of production; I would not have it, 
as you suggest, that the spinner has produced new positive surplus 
value (i also thing positive surplus is a redundant expression). He 
has not exploited labor, that is he has not extracted unpaid labor 
from the work force which he commands.

Can the world economy be understood then as cotton producers, spindle 
makers and yarn spinners? Is the yarn proletariat a labor aristocracy?

If anything, I think it works the other way: the spindler makers 
(producers of advanced capital goods) sell above value, forcing the 
yarn capitalists to depress wages below the value of labor power to 
extract surplus value...the spinner 'nations' try to force transfer 
of spindle technology in order to break the monopoly over technical 
knowledge as a condition of market access. At any rate, the 
superprofits from spindle sales are almost entirely pocketed by the 
imperialist bourgeoisie...but there are spoils to share. I am 
certainly being half serious; it is this sort of vision of how things 
work in part that leaves me quite skeptical of analyses of value 
production in national terms.

James Galbraith provides evidence of monopoly power derived from 
technical knowledge in the production of advanced capital goods 
(speciality and design intensive chips, supercomputers, automated 
guidance systems, software, etc). I do think he is on to something 

>In reply to OPE-L 4522.
>In OPE-L 4515, I demonstrated that, according to Rakesh's interpretation
>of Marx, surplus-labor is not the sole source of profit (or
>"surplus-value").  To avoid other problems of interpretation, assume that
>the price and the value of labor-power are equal.  Marx's aggregate
>surplus-value is the value added by living labor minus the price of
>labor-power.  But Rakesh's aggregate "surplus-value" is Marx's
>surplus-value PLUS the difference between the value and the price of
>used-up means of production.
>I regard this as sufficient to reject Rakesh's interpretation.

This is fair. I am saying that on the assumption of constant capital 
at zero, which is how Marx handles the problem in vol 1, surplus 
value is newly produced value minus the money wage as determined by 
the price of wage goods (m is the monetary expression of labor value 
which Marx has fixed, just as Ricardo does in his analysis).

s= (mNV) - v

I think that you agree with me that a rise in the wage has no effect 
on value added so

(mNV) - (v + a)= s-a

This after all is implied by Ricardo's critique of Smith's adding up 
theory of price. Or as Ricardo puts it at the very beginning:

"The value of a commodity, or the quantity of any other commodity for 
which it will exchange, depends on the relative quantity of labour 
which is necessary for its production, and not on the greater or less 
compensation which is paid for that labour." (I, I, 5)

My argument is simply that a change in the compensation which is paid 
for direct *and* indirect labour does not in itself change the value 
of the commodity output or its price (its monetary expression) but 
rather the surplus value which it represents. I read Marx say exactly 
this in TSV II, p 417-18.

To me that means C remains fixed throughout the transformation as the 
inputs are transformed and thus the money paid for direct and 
indirect labor modified. C again is the prior and fundamental 
magnitude which is resolved into cost price and surplus value. Marx 
of course uses this exact language (see bottom of p. 258 Capital 3 

C => (c + v) + s

It does follow for me as you suggest that

C => [(c + a) + v] + (s - a)

As you rightly suggest, surplus value here does depend on (a), which 
is how much the price of the means of production deviate from their 

Such a distributional variable does then determine the magnitude of 
surplus value. The more paid for the indirect labor, the less unpaid 
labor and vice versa.

However, the reason that there is surplus value at all is answered by 
Marx's discovery of the duality of labor power (assuming the 
incorrectness of Steven K's critique). The essence of surplus value 
is unpaid labor extracted in production; the magnitude of surplus 
value depends on how much has to be paid for direct and indirect 
labor. And that depends on the way in which the prices of the inputs 
deviate from their values which is indeed determined in the realm of 

The completion of Marx's transformation would have failed if after 
the modification of the cost price on the basis of the transformation 
of the inputs, total value or price (its monetary expression) had to 
be resolved entirely into cost price, leaving nothing for surplus 
value. This would have indicated that it is not possible for there to 
be unpaid labor in the system once the inputs are transformed.

But no such results follows if one solves for the equations which I 
propose or goes about the iteration in the way which I propose.

>Third, there is no issue of bankruptcy in this case.  Total price equals
>total value, and the means of production can be replaced more cheaply
>than if they had to be replaced at value since, again, they sell BELOW

Again this only means that Dept I is transferring surplus value to 
Dept II, not that Dept II is producing surplus value.

>Fourth, the "so above" point is not well taken; the price-value
>difference of means of production may be extremely small.  E.g., the
>aggregate price of labor-power minus the aggregate value added by living
>labor may be 1 cent

I don't understand the case. We assume that total wages are greater 
than newly produced value by 1 cent?

>and the aggregate value of used-up means of
>production may exceed their price by 2 cents.  Marx's surplus-value will
>be -1 cent; Rakesh's will be +1 cent.

Again I think you are mixing up the transfer of value through unequal 
exchange relations on the market with the actual production of new 
surplus value.

>So again, since it hurts when you go like this, Rakesh, I recommend that
>you don't go like that.  If you give up the attempt to identify the
>constant capital-value transferred with the value of used-up means of
>production, everything will work out just fine.

But you have to show me evidence and logic where Marx does this.

>On another matter.  If the temporal single-system interpretation of the
>quantitative dimension of Marx's value theory is an "adding up"
>interpretation, then so is Rakesh's interpretation.  In BOTH
>interpretations, the value of the product is equal to AND determined by
>the sum of value transferred from used-up means of production plus the
>value added by living labor.  In BOTH, two sums of value are added.  (But
>this is not what is meant by an "adding up" theory of value.)

No, you have an adding up theory of *price*. Higher compensation for 
paid direct and indirect labor should not in itself add up to greater 
value or price. But all the complete transformation exercise does is 
change the compensation for the inputs, the paid direct and indirect 
labor, the cost price; it cannot by the nature of the case change the 
value of the output and thus its price (assuming a constant monetary 
expression of value). The sum of prices in the unmodified scheme must 
equal the sum of the prices of production.

You would have it that a simple change in the money compensation for 
paid direct and indirect labor can issue in rising prices which 
implies a higher output value on the assumption of a constant 
monetary expression of labor value.

So you allow higher input prices to add up to higher output prices, 
instead of diminished surplus value. This is antithetical to Marx who 
learned here from Ricardo on whom he spared no praise on this point.

>The only difference between the interpretations is that Rakesh adheres to
>the dual-system notion that the sum of value transferred is determined by
>the value of the means of production rather than the sum of value
>currently needed to acquire them.  That is all.

This is what Julian inquired about, and frankly I am confused. I am 
saying that the value transferred from the means of production is 
determined by the labor time contained in the means of production. 
But Marx also says that this labor time itself is socially 
determined. I follow him here too.

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