[OPE-L:5003] Re: Comments on 3 recent debates

From: Alejandro Ramos (aramos@btl.net)
Date: Tue Feb 20 2001 - 17:36:30 EST

Re Allin 4982:

>2. Two sources of discrepancy between values and prices of production.
>Rakesh and Fred were working at this one not so long ago.  There's a
>real problem of inconsistency in Marx's statements here.  We have
>statements, highlighted by Alejandro and Fred, where Marx says (I
>paraphrase): "value = cost-price plus surplus value; price of
>production = cost-price plus profit". The Marx manuscript brought
>forward by Alejandro puts this in algebraic notation, giving it added
>definiteness.  But we also have statements where Marx says (again, I
>paraphrase; the quotations are well known): "There are two reasons for
>divergence between values and prices of production: (1) the price of
>the means of production employed in the production of the given
>product differs from the value of those means of production, and (2)
>the profit realized in the sale of the product differs from the
>surplus value embodied in that product."

The statetment (I think there is only one, although Allin refers to
"statements") is on pp. 308-309, Capital III, Penguin. It's worthwhile for
the interested reader to check it out. I have no time to copy it.

>I'll refer to the first sort of quotations as the "cost-price plus"
>statements, and to the second sort of quotations as the "double
>divergence" statements.  These two sorts of statements sometimes occur
>in close proximity in the texts of Marx that we have available to us.
>The obvious problem is that if "cost-price plus" is a proper statement
>of Marx's view then "double divergence" is nonsense: there is one and
>only one source of divergence between price of production and value,
>namely the discrepancy between surplus value and (equalized) profit.

There is another possible interpretation of this statement which is in my
published article in IJPE. The gist of the matter is that Marx is not
giving, as Allin wishes, a *definition of value* here but indicating simply
that the cost price (K) --which is a common magnitude for both values (W)
and production prices (P)-- differs from the "the value sum of the elements
of which this component of price of production is composed" (p. 309), i.e.
that "value sum" of the inputs differs from the cost price itself.

>From this cannot be inferred, as Allin and the whole dualist tradition do,
that value is defined as the sum of "cost price in value terms" + surplus
value". This formulation is simply not given by Marx nor is the ackward
category "cost price in value terms", which was literally invented by
dualist authors.

>It's certainly tempting to suppose that one or other of the sets of
>statements in Marx must be "not really what he meant to say"
>(otherwise his views were flat-out incoherent).  My preferred
>interpretation is that "cost-price plus" was not really what he meant
>-- or at least, that these statements only hold good on the assumption
>that the means of production (inputs) were purchased at prices equal
>to their values.  I do _not_ claim that it's clear from context that
>whenever Marx issued a "cost-price plus" statement he was in fact
>assuming that input prices were equal to input values (rather, I think
>there is a degree of inconsistency in the text -- although of course
>it's a text that Marx never prepared for publication).

There is "a degree of inconsistency in the text" only if one wants to read
it in the light of Bortkiewicz et al. Once you forget that mirage, the text
is basically consistent despite it's a draft.

>I prefer this interpretation, despite its problems, because the
>alternative is worse, namely that Marx was just gibbering when he made
>his "double divergence" statements.  I haven't seen a rationalization
>of these statements, from the proponents of "cost-price plus", that
>makes any sense to me.

Well, Allin, but the main problem for your interpretation is that you take
the passage in question completely out of context. As anyone can check,
Marx is referring there to the commodities of average composition and it's
in this context that the passage appears. One simply has to read the whole
section in order to see whether your interpretation is correct.

If I'm not mistaken, you read that passage as saying that Marx defines
respectively the value and production price of commodity j in the following

Wj = Kvj + svj
Pj = Kpj + prj

Wj: value
Pj: production price
Kv: "cost price in value terms"
Kp: "cost price in price term"
sv: surplus value
pr: profit

Here you have your "two sources of discrepancy" between W and P, namely,
Kvj differs from Kpj, and svj differs from prj. Here you have your "two
systems" model inherited from Tugan & Bortkiewicz via Sweezy and others.

Now, I also believe that you agree that, for Marx, in the case of
commodities of average composition value = price (a clear statement about
this is on p. 264). Then, this would hold even in the dualist model, so in
the case Marx is dealing with in these pages, we can write (taking "a" for
average composition commodity)

Wa = Pa

which means

Pa = Kva + sva
Pa = Kpa + pra

*Immediatly after* the passage you quote, Marx writes: "It is quite
possibly, accordingly, for the cost price to diverge from the value sum of
the elements of which this component of the price of production is
composed, even in the case of commodities that are produced by capital of
average composition." (p. 309).

I think that this would indicate that, according to your definitions, Kva
and Kpa are indeed different. But, as in this case Wa = Pa, we are forced
to conclude that the commodities produced by capitals of average
composition, surplus value differ from profit. Only by adding some unequal
magnitudes to the unequal Kva and Kpa can we have Wa = Pa. For example, if
Wa = Pa = 24, Kva is 12 and Kpa is 10, then surplus value must be 12 and
profit must be 14.

But some lines after this Marx says: "Yet this possibility [the divergence
between cost price and the value of inputs] in no way affects the
correctness of the principles put forward for commodities of average
composition. The quantity of profit that falls to the share of these
commodities is equal to the quantity of surplus value contained in them"
(p. 309)

In other words, if we interpret the statement you quote as a dualist
definition of value and production price, we cannot make sense of what Marx
writes, not 3 chapters after this, but in the paragraphs which follows
immediatly afterwards! This means for me, that the passage in question does
not give dualist definitions of value and production prices, which is your
position. The passage has another meaning.

Moreover, 30 lines or so after the ending of the passage you quote, Marx

"As soon as this is the case, as assumed above, the surplus value "v"
produces is equal to the average profit. On the other hand, because it is
equal to the average profit, the price of production = cost price + profit
= k+p = k+s, which is equal in practice to the commodity's value" (p. 309)

That is, Marx give AGAIN the same definition of *value* (k + s) that he
gave in the passage omitted by Engels and that you don't favor. Please,
notice that "k" AGAIN, is the same magnitude for both, production price AND
value. Had Marx given a dualist definition of value in the passage we're
discussing, he would have not  written the same "k" for both, value and
produciton price but something like: production price = cost price + profit
= k + p and value = "value of the means of production" + surplus value.

In this context it's also impossible to argue that Marx is thinking in a
situation in which values = prices for the simple reason that, if this
would be the case, *all* prices equal values and not only the prices of
commodities of average composition equal their values. To discuss "average
composition commodities" makes sense only if you have commodities whose
value differ from their price, i.e. if price is not equal to value in
general. That is, he is "assuming" that all values are transformed into
production prices. 

It is my opinion that your idea that the passage on p. 308-309 gives
dualist definitions of value and price can be maintained only taking it out
of context. However, I'm sure you will agree with me that this is not a
proper intrepretative method.

I'd wish to say that I found this section of your post more willing to
accept that the textual evidence that the whole dualist tradition has
presented to us as "conclusive proof" of Marx errors ("Unfortunately, he
forgot/was unable to transform the inputs...") is, after all, not as
conclusive. This is a welcome change.

Alejandro R.

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