# [OPE-L:4540] Re: What is Volume 1 about?

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Mon Nov 20 2000 - 00:19:50 EST

```This is a general response to Rakesh's recent posts.  I hope to address
the main issues between us.

1.  To begin with, my interpretation is NOT that price is determined by
the sum of cost-price and surplus-value (and I don't think this is
Andrew's interpretation either).

I have explained in several papers (including my recent RRPE paper on the
"new solution" we discussed last summer) and numerous OPEL posts
(including two long ones back in August, #3697 and #3698) that, according
to my interpretation of Marx's theory, price (P) is determined by the sum
of transferred value (TV) and new-value (NV); i.e.

(1) 	P   =   TV + NV

I have argued further that TV is equal to the given money constant capital
(i.e. equal to the actual sums of money-capital invested in the purchase
of means of production), and that NV is determined by the product of m
(money-value produced per hour) and Lc (the number of hours of current
abstract labor); that is,

(2)	P   =   C + mLc

And I have argued still further that surplus-value (S) is determined by
surplus labor, or by the difference between the total current labor
(Lc) and the necessary labor (Ln) (or the hours necessary to produce
new-value equal to the variable capital = V / m):

(3)	S   =   NV  - V

=   m (Lc  -   Ln)

2.  Rakesh, as I understand your interpretation, you determine P and S in
a different way (in what seems to me to be the same as the
"standard" interpretation of Marx):

(4)	P   =   m L   =   m (Lp + Lc)    =   m Lp + m Lc

(5)	S   =   m ( Lc - Lms)

where Lp is the labor-value of the means of production and Lms is the
labor-value of the means of subsistence.

Do I understand you correctly?

3.  If so, then the basic disagreement between us is how constant capital
and variable capital are determined, right?  We have the following
different interpretations of this crucial question:

RAKESH:  C and V are determined as HYPOTHETICAL magnitudes, as the "direct
prices" of the means of production (m Lp) and the means of subsistence (m
Lms), respectively.

FRED:  C and V are taken as given, as the ACTUAL magnitudes of
money-capital invested in the real capitalist economy to purchase means of
production c and labor-power (V), respectively.

4.  I recognize that some of Marx's texts can be interpreted as you (and
Riccardo and many others) do.  However, I think these texts can also be
interpreted in a different way, and I think there is also more textual
evidence to support my interpretation.  Again, I have presented this
textual evidence in several articles and numerous OPEL posts (including
the two in August just mentioned).  I would by happy to review again the
textual evidence on both sides on this crucial question of the
determination of constant capital and variable capital.

I will discuss below the passage you emphasize on pp. 264-65 of Volume 3.

5.  Beyond the textual evidence, I think the methodological reason Marx
took constant capital and variable capital as given is the following:

According to Marx's logical method, it is not possible at the beginning of
the theory to provide a full explanation of the magnitudes of constant
capital and variable capital.  C and V (understood as the actual
magnitudes of money-capital invested in the real capitalist economy to
purchase means of production and labor-power) are identically equal to the
price of production of the means of production and means of subsistence,
respectively.  Therefore, an explanation of C and V requires an
explanation of prices of production.  However, prices of production
involve the equalization of profit rates across industries.  According to
Marx's method, it is not possible at this early stage of the theory to
explain the equalization of profit rates, which is an aspect of the
distribution of surplus-value.  Before Marx analyzed the distribution of
surplus-value in Volume 3, he first determined the total amount of
surplus-value to be distributed in Volume 1.  For that purpose, Marx took
the actual magnitudes of C and V as given.  The actual magnitude of C is
transferred to the price of the output (equation 2 above), and the actual
magnitude of V is subtracted from the new-value produced to determine the
actual surplus-value (equation 3 above).

According to this interpretation, in Volume 1 Marx provided a partial
explanation of the determination of the given magnitudes of C and V.  Marx
provisionally assumed in Volume 1 (and 2) that the given magnitudes of C
and V are proportional to the labor-times required to produce the means of
production and means of subsistence, respectively.  In other words, he
assumed that these given magnitudes of C and V are determined solely by
these labor-time quantities.  In reality, the determination of C and V is
more complicated than that.  The prices of the means of production and the
means of subsistence are affected by other factors besides labor-times
(although labor-times remain the main determinants of C and V).

However, this partial explanation of C and V DOES NOT CHANGE THE
MAGNITUDES OF C AND V.  The magnitudes of C and V continue to be taken as
given, as the actual quantities of money-capital invested in the real
capitalist economy.  The difference is that, with this provisional
assumption, these given magnitudes are partially explained (but only
partially).

In Volume 3, after the determination of prices of production, the given
magnitudes of C and V are more fully explained as equal to the prices of
production of the means of production and means of subsistence.

However, once again, this more complete explanation of the given
magnitudes of C and V in Volume 3 does not alter these given
magnitudes.  C and V continue be taken as given, as the actual amounts of
money-capital invested in the real capitalist economy.  The same actual
magnitudes of constant capital and variable capital that are taken as
given in the determination of surplus-value in Volume 1 are also taken as
given in the determination of prices of production in Volume 3.  That is
why C and V DO NOT HAVE TO BE "TRANSFORMED" from "direct prices" to prices
of production.

As I have said before, I think that Marx's logical method with respect to
the determination of C and V, as described above, can be characterized as
"positing the presuppositions."  The initial quantities of C and V are
first "presupposed" (and used to explain S), and then they are
"posited" (explained or determined, in stages).

6.  In your interpretation (as I understand it), C and V are derived from
given physical quantities of the means of production and the means of
subsistence, as the "direct prices" of these given means of production and
means of subsistence.  In this case, C and V are not equal to the actual
magnitudes of money-capital invested to purchase means of production and
labor-power in the real capitalist economy, but are  rather HYPOTHETICAL
magnitudes derived from the given physical quantities.

In my view, the disadvantages of this interpretation are:

(1) C and V do not correspond to the actual quantities of money-capital
invested in the real capitalist economy to purchase means of production
and labor-power.

(2) Consequently, the surplus-value determined in Volume 1 is not the
actual dM in the real capitalist economy.

(3)  Therefore, when the analysis moves on to Volume 3 and to actual
quantities of money and prices, constant capital and variable capital from
Volume 1 will not be equal to these actual quantities of money and prices
in Volume 3.  It is for this reason that, according to your
interpretation, that C and V "MUST BE TRANSFORMED" from "direct prices" to
prices of production.  And as a result, the total surplus-value determined
in Volume 1 will not be equal to the total profit determined in Volume 3.

I don't think this was Marx's logical method.  I don't think Marx first
determined hypothetical magnitudes in Volume 1, which would then have to
be transformed into actual quantities in Volume 3.  Rather, I think Marx
first determined the actual total surplus-value (or dM) in Volume 1, and
for that purpose he took as given the actual quantities of C and V
invested.  He then determined in Volume 3 the division of this total
amount of actual dM into actual individual parts.

7.  The third consequence of your interpretation listed above (that the
total surplus-value is not equal to the total profit) is very serious.  It
contradicts the basic quantitative premise of all of Volume 3: that the
total amount of surplus-value is determined prior to its division into
individual parts and is not affected by the subsequent division into
parts.  I have documented in two papers many of Marx's discussions of this
key quantitative premise throughout his various drafts of Volume 3 ("The
Development of Marx's Theory of the Distribution of Surplus-Value" and
"Hostile Brothers: Marx's Theory of the Distribution of Surplus-Value in
Volume 3 of Capital"; these papers are available on my website:
www.mtholyoke.edu/~fmoseley)

Rakesh, I thought you have said in other posts that you agreed with me on
this key quantitative premise.  But your interpretation of the
determination of prices of production contradicts this general
premise.  Does not this make you wonder about the conclusion of your
interpretation, that the total amount of surplus-value does indeed change
as a result of the distribution of surplus-value?

8. You have emphasized the following passage from Chapter 9 of Volume 3 to
support your interpretation that the magnitudes of C and V (or the "cost
price", the sum of C and V) change as a result of the determination of
prices of production:

"The development given above also involves a modification in the
determination of a commodity's cost price.  It was originally assumed that
the cost price of a commodity equaled the value of the commodities
consumed in production.  But for the buyer of a commodity, it is the price
of production that constitutes its cost price and can thus enter into
forming the price of another commodity.  As the price of production of a
commodity can diverge from its value, so the cost price of a commodity, in
which the price of production of other commodities is involved, can also
stand above or below the portion of its total value that is formed by the
value of the means of production going into it.  It is necessary therefore
to bear in mind this modified significance of the cost price, and
therefore to bear in mind too that if the cost price of a commodity is
equated with the value of the means of production used up inn producing
it, it is always possible to go wrong.  Our present investigation does not
require us to go into further detail on this point.  It still remains
correct that the cost price of commodities is always smaller than their
value.  For even if a commodity's cost price may diverge from the value of
the means of production consumed in it, this error is the past is a matter
of indifference to the capitalist.  The cost price is a given
precondition, independent of his, the capitalist's, production, while the
result of his production is a commodity that contains surplus-value, and
therefore an excess value over and above its cost price."  (C.III: 264-65)

I have a different interpretation of this passage, which I have discussed
in several papers, most recently in my "new solution" paper (RRPE, 32:2,
pp 300-01).  I don't think Marx is saying that the magnitude of the
cost-price changes as a result of the determination of prices of
production.  Rather, I think that Marx is saying that the cost price
remains the same because it is a "given precondition", both before and
after the determination of prices of production.  The "given
precondition" does not change.  What changes is the EXPLANATION of this
"given precondition". After the determination of prices of production, we
have a more complete explanation of this "given precondition" than we did
before.  Before we assumed that the given cost price was proportional to
the labor-values of the means of production and the means of
subsistence.  But now we can see that the cost price is also affected by
the equalization of profit rates across industries.  Therefore, if one
assumed that the cost price is proportional to these labor-values, that
would be "wrong".  But the magnitude of the given cost price remains the
same.  And the magnitude of the surplus-value also remains the same, as
the excess of the value of commodities over this given cost price.

Additional textual evidence:  if Marx were saying in this passage that the
cost price changes as a result of the determination of prices of
production, this would flatly contradict a number of other passages in
which Marx explicitly stated the opposite (including in crystal-clear
algebraic expressions) that the cost price DOES NOT CHANGE as a result of
the determination of prices of production. Instead, the cost price remains
the same ("k remains the same").  Alejandro and Andrew have also
emphasized these passages.  These passages include the important "missing
paragraph" in Chapter 9 discovered by Alejandro.  I have discussed these
passages in the recent RRPE paper just mentioned (pp. 299-303).  I think
these passages provide strong textual evidence to support my
(our) interpretation.

Rakesh, how do you interpret these passages?  (Please forgive me if you
have already explained in previous posts that I have missed.)

Rakesh, perhaps this is a lot to digest.  I know it is different from the
standard interpretation.  And I gather from you that it is also different
from Grossman (I wish I could read Grossman).  But I think there is
substantial textual evidence to support this monetary interpretation of
the initial givens in Marx's theory, and also strong methodological
arguments for this interpretation (especially that the objective of Volume
1 is to explain the actual dM, not the hypothetical "direct price" of
surplus goods which is not equal to the actual dM).  So I hope you (and
others) will be willing to give it careful consideration.

Thanks very much for this stimulating discussion.  I look forward to more
of the same.

Comradely,
Fred
```

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