[OPE-L:4787] Re: modified significance of the cost price

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Wed Jan 24 2001 - 03:21:29 EST

In a word, I am arguing that the formula for the determination of 
value cannot be cost price + surplus value.

(1) k + s = V

It is simply obvious that there are many cases in which the cost 
price could rise without any change in the value of a commodity. For 
example, wage goods could become more expensive due to rising ground 
rent payments; the cost price of commodities would thus rise but this 
does not ipso facto raise the value of the produced output (we must 
simply remember that Marx's theory of surplus value originates out of 
Ricardo's critique of Smith's adding up theory of price). So your 
formula simply cannot be correct even if Marx himself uses it as 

The formula has to be

(2) Lmp + Lc = V

And this is what is creating the problem for your interpretation. I 
agree that the inputs don't have to be transformed from values to 
prices of production. We can take them as givens. We can accept your 
insightful argument that Marx finally lets on that the cost price has 
not been determined by the value of the inputs per se but their 
prices of production.

But here's the problem: in constructing his transformation tableaux, 
Marx had assumed that prices are proportional to value--in my 
shorthand, P <> V. Now the standard interpretation says that this 
implies the inputs have to be transformed from values or value prices 
to prices of production. I agree that your criticism of the standard 
interpretation is powerful. Marx is indeed not calling for that; he 
is now showing us that "value" was only partial explanation of the 
determinants of the cost prices of commodities.

But in your interpretation this means that Marx had assumed at an 
earlier point that the value of the means of production was 
proportional to their prices or equal thereto (assuming an m of 1). 
This means that Marx has mistakenly assumed that value of those used 
up means and thus the value embodied in the final product was 
proportional to the price paid for them.

I argue that (1)it is to this very error that Marx is pointing on p. 
265 (you earlier called my interpretation an inverse transformation 
problem--which is exactly what I am saying since what needs to be 
modified is not the inputs but the used up constant capital column in 
Marx's transformation tableaux since we can no longer assume after 
Marx's argument is fully developed that the value of the used of 
means of production is the same as the value of the money needed to 
pay for them); and (2) this is why Marx notes later that value and 
price of production diverge for two reason--that is, a commodity's 
value is determined the (a) value of the means objectified therein 
and (b) newly added value while the price of production of a 
commodity is determined by (a*) cost price and (b*) average profit.

So the divergence between commodity value and price of production 
result both from the divergence between a and a* and b and b*.

This is why Marx on p. 263 says commodity value now splits into TWO 
elements: cost price on the input side and average profit on the 
output side.

I shall continue to puzzle over your argument that Marx's treatment 
of a capital of average composition proves that he should not have 
said--as he clearly does on p. 309--that there are two reasons for 
divergence of which your interpretation cannot make sense. 
This--along with your formulation for the determination of value--is 
my main challenge to your interpretation.

All the best, Rakesh

This archive was generated by hypermail 2b30 : Wed Jan 31 2001 - 00:00:03 EST