[OPE-L:4793] Re: Re: modified significance of the cost price

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Thu Jan 25 2001 - 16:32:24 EST

This is a reply to the following point in Rakesh's (4787):

> Fred,
> 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 
> shorthand.

1.  Strictly speaking, Rakesh is correct - the equation of determination
for the value of commodities is not:

(1)	W = K + S

Rather, the equation of determination for the value of commodities (as I
have discussed many times) is:

(2)	W = C + N

where C is constant capital and N is new-value produced ( = m Lc).  

However, equation (1) can easily be derived from equation (2) (as Marx
himself did on pp. 118-19 on Volume 3):

	W = C + N

	    = C + (V + S)

	    = (C + V) + S

	    =    K   +  S

Therefore, even though (1) is not the equation of determination of value,
(1) still remains true. (1) follows from the equation of determination of
value.  Value is still equal to (K + S), even though value is not
determined by adding up K and S.  

2.  In Marx's discussion of the relation between value and price of
production in Part 2 of Volume 3, which I have quoted from extensively, 
he usually expressed this comparison in terms of equation (1), which is
compared with the following equation for price of production:

(3)	P = K + R	(where R stands for average profit)

Even though value is not determined by (1), the comparison between (1) and
(3) makes it clear the magnitudes of C and V, and hence the magnitude of
K, is the same in the determination of both value and price of production,
and hence the ONLY DIFFERENCE between W and P is the difference between S
and R, which is the main point Marx was making in these discussions.  

3.  Rakesh's criticism about the effect of an increase on the price of
wage goods on the value of commodities does not apply to equation (2), the
equation of determination for the value of commodities.  An increase in
the price of wage goods affects neither C nor N.  N depends on the
quantity of labor employed, not on the wages of labor nor on the price of
wage goods.  This is not an "adding-up" theory of value, in the sense that
an increase of wages would result in an increase in the value of

Another reply or two to Rakesh's recent posts to follow soon I hope.  


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