[OPE-L:5325] Re: Re: Re: double divergence

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Wed Apr 04 2001 - 02:06:49 EDT

>I finally have a little time to return to the earlier discussion with
>Rakesh and Allin and Alejandro R. about whether there are "two reasons for
>divergence" between prices of production and values in Marx's theory or
>only one reason for this divergence.  I will restart the discussion by
>responding to Allin's (4982) back on Feb. 19. 
>"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
>put 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 the 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.
>"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 only and only
>one source of divergence between price of production and value, namely the
>discrepancy between surplus value and (equalized) profit.
>"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 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
>"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 the "cost-price" plus, that makes any
>sense to me."

There is obviously no nonsense here, and it is unfortunate that Fred 
agrees that there is a problem.

Total value is determined as the sum of Lmp + Lc (labor value of the 
means of production plus current labor); total value, thus 
determined, can be represented as or resolved into k + s or k + p.

The difference between total value, as monetarily expressed, and cost 
price is the mass of surplus value which then determines the sum of 
profits; in other words, s and p are equal in the aggregate.

Now if there is a wage led redistribution, this will change neither 
total value (k + s) nor total price of production (k + p)--given 
Marx's assumptions about money.

  If we could construct a perfect average commodity which serves as a 
synedoche or perfect aliquot of total capital, a change in the wage 
level would not change its price of production either.

But of course for all real commodities, a change in the wage level 
will change its price of production. This is the point of chapter 11. 
Marx is only reiterating the argument here.

All Marx is saying that for total capital or the average commodity, a 
change in the wage level cannot in itself change total value and 
total price of production--though Marx's argument here does indeed 
depend on some assumptions about money which he has not justified.

But in making this point, Marx does not contradict his thesis of 
double divergence.

Marx has NOT argued that total value is determined as k + s--yes, 
total value can be represented that way for all practical purposes, 
but value is not so determined.

Nowhere in this paragraph does Marx write k + s => value. Moreover, 
the equality between k + s and value does not hold for individual 
commodities but only total capital or the imagined average commodity.

  Of course if Marx had said value is so determined--as Fred, 
Alejandro and Alan F all claim-- then the only difference between 
value (k + s => V) and price of production (k + p => Pp) would be in 
the second term-- that is, the difference between s and p.

There would be only one reason for divergence.

And then Allin says the thesis of double divergence would make no 
sense, and Fred then says Allin is right and that Marx blundered by 
advancing it.

Though Marx seems to have blundered twice since he advanced the 
thesis of double divergence in TSV III, right before Fred and Alan F 
cut him off.

But it should be obvious that the thesis of double divergence does 
not contradict the thesis of the non effect of of wage led changes on 
total value and total price of production for capital as a whole (or 
for the perfect average commodity).

For any individual commodity its value is determined by Lmp + Lc 
while its price of production is determined as k + p. It is obvious 
that each of the two respective terms differ from one another.

The first reason for divergence: while value is determined by the 
*value of the consumed means of production*, price of production is 
calculated on the cost price into which *the price of production of 
the means of production* enters

The second reason for divergence: while the value of any commodity 
depends on current labor or *the value newly added* over and above 
the value of the means of production preserved by labor gratis, the 
price of production of a commodity depends on *profit* which of 
course tends to represent an equal claim on this sum of surplus value 
produced by current labor as a whole.

There is of course no divergence between value and total price of 
production for capital as a whole or the imagined average commodity. 
This is why Marx writes for the average commodity k + p = k + s. This 
identity holds for total capital and the average commodity which Marx 
is imagining.

.So, Allin and Fred, why can't Marx advance both theses without 
talking gibberish or making a mistake or lapsing into incoherence?

And one more point on Marx's error, confessed to on p. 265. Duncan 
repeats the common charge that in Marx's transformation table the 
inputs are left in values or simple or direct prices. Meaning that 
Marx wrote up his transformation tables in the form of the circuit of 
C - C' and then transformed it to C-M'

With the monetary aspect of his interpretation, Fred has made a 
persuasive critique of this construal of the error to which Marx is 
confessing, though Fred denies that Marx admits to any real error in 
his transformation tables.

This has obviously been Fred's greatest stumbling block in winning 
people over to his interpretation.

For Marx's error is indeed real, and philosophical in nature: Marx is 
admitting that he treated a non-observable, though detectable, 
variable (the value flow from the machine) as an observable (by 
equating it with the price flow of the machine). But I have said 
enough about the inverse transformation problem.

Do note that though for Marx value is in principle not measurable and 
directly observable, value is indeed DETECTABLE.

As long as Fred and Alejandro insist that value is in part the 
visible price flow of the machine, then we can't get to the debate 
about the status of theory in which the explanatory fundamental 
variable is unobservable, though detectable.

Yours, Rakesh

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