[OPE-L:4568] Re: Re: Re: Re: reply to Fred (1)

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Thu Nov 23 2000 - 14:24:23 EST

re Fred's 4567

>1.  Because I think Marx was trying to explain the ACTUAL surplus-value
>produced, not a HYPOTHETICAL "surplus-value" (equal to the "direct
>price" of surplus-goods).

As I said, I don't think Marx is interested in the actual magnitudes 
but in the relations between the variables. So the actual sum of 
surplus value or profit rate is not important; what is important is 
how they are determined

dM/M= (s/v)/ (c/v) + 1, ignoring turnover time.

So even if c and v (cost price) have to be modified once Marx drops 
the controlling assumption that the inputs sell at simple prices 
(commodity value x m), the variables are still related in the same 
way. Since it is these relationships which are important--along with 
the time paths for the variables--it hardly matters if Marx holds to 
assumption of exchange at simple prices.

Price-value deviations and relative prices have little importance to 
the laws of motion of the system as a whole.

>2.  Because Marx's analytical framework is the circulation of capital:
>	M - C ... P ... C' - M'
>and the circulation of capital begins with M, the money-capital invested
>to purchase MP and LP.  These quantities of money that initiate the
>circulation of capital are the initial givens in Marx's theory of the
>circulation of capital (and especially of how M turns into M').  These
>quantities of money-capital that initiate the circulation of capital are
>identically equal to the prices of the MP and MS, but these quantities of
>money-capital are not derived from these prices.  Rather they are taken as
>given directly, as the "first form of appearance" of capital in the
>circulation of capital.

Fred, this misses how much Marx controls what goes on in his thought 
experiment which is the 3 volumes of Capital.  He isolates a closed 
capitalist economy, allows no foreign trade, no credit, keeps the 
value of money constant, lets in only two classes...and conceives of 
all goods as if they were perfect aliquots of total value.

That is, Marx stipulates that all commodities have been (in general) 
produced by a capital of average organic composition. This means that 
all commodities exchange at prices proportional to their labor values.

This assumption, along with the constant value of money, is crucial 
to Marx's explanation of surplus value which thus cannot be explained 
by the purchase of raw materials or means of production below value 
(that's how he rules out that the surplus value embodied in boots 
could be due to the self valorization of the leather contained 
therein) or the depreciation of money.

So I do not think Marx takes the sale of inputs as givens; he fixes 
that sale at value or prices proportional to value in order to 
isolate surplus value in what he calls the pure case (this of course 
being the methodological step to which Gil has objected).

This means that when the assumption of exchange at value or simple 
prices proportional to value is dropped, it has to be dropped for 
both the inputs and the outputs. And Marx himself recognizes that his 
transformation procedure only relaxes the assumption for the outputs. 
I continue to think however it is grossly antithetical however to put 
Marx in simultaneous equations such that both the inputs and outputs 
are transformed in terms of a vector of equilibrium prices, but 
that's another question.

I'll leave it at that.

Yours, Rakesh

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