[OPE-L:7688] Re: Re: Re: Re: Re: Re: Moving on...

From: Gil Skillman (gskillman@mail.wesleyan.edu)
Date: Thu Sep 19 2002 - 18:49:21 EDT

Thanks for the reply, Fred.  I'll start with this post, because some 
answers below may help clear up some persistent issues in our other ongoing 

Where I wrote

> > Granted. But isn't it also true that "the constant capital that Marx took
> > as given in his theory of surplus-value in Volume I" must necessarily be
> > the sum of inputs of means of production times their respective prices,
> > *whatever* these prices are (in particular, whether or not they are
> > understood as "prices of production" in the sense you use below), and
> > whether or not these prices have yet been "explained"?  Could constant
> > capital represent *anything else* but such a product?  If so, what?
>Marxs theory of the circulation of capital begins with a quantity of
>money, M.  Capital "appears first" as a quantity of money.  Marx took this
>first appearance of capital as the initial given in this theory of
>capital, i.e. his theory of how this given quantity of money becomes
>bigger, through the purchase and sale of commodities.
>This quantity of money is invested to purchase means of production and
>labor-power.  It is certainly true that the quantity of money constant
>capital is be definition identically equal to the quantity of means of
>production purchased times their "purchase price", whatever that is.

It's the price at which capitalists purchase constant capital goods in a 
given scenario, as e.g. in the two examples Marx examines in Chapter 9 of 
Volume I.

>   And
>the quantity of money variable capital is identically equal to the
>quantity of labor-power purchased times the "purchase price" of
>If this is what you asked, then the answer is yes.

OK.  Then it's the case that *whether or not* Marx chose in a given 
instance to elaborate the point, it *must be* that the monetary magnitude 
Marx calls "constant capital" corresponds to the vector product of means of 
production and the respective prices at which they're purchased, and the 
magnitude Marx calls "variable capital" corresponds to labor inputs times 
wage rate.  Significance of this observation discussed below.

>But I dont see the significance of this.  The identity of constant capital
>and Q*P of the means of production, and the identity of variable capital
>and w*L, play no role in Marxs theory of surplus-value and prices of

As a descriptive matter, it is true that in Volume I Marx does not 
generally explicitly invoke the relationships C = Q*P and V=w*L in his 
analysis (although he clearly understands them to obtain).  However, since 
the phenomena he *is* explicitly discussing arise in the context of an 
economy in which these relationships necessarily hold, his analysis of 
these phenomena must, at minimum, be *consistent* with these relationships 
obtaining.  If not, then the theory is simply logically incoherent on its 
own terms.  And potential  inconsistencies cannot legitimately be avoided 
simply by ignoring them, that is, by simply refusing to consider whether 
one's analysis is in fact consistent with relationships that must 
necessarily hold in the system under study.

>  In Marxs theory of surplus-value, the "value
>transferred" from the means of production to the value of the output is
>equal to the constant capital invested in these means of production (which
>is taken as given).  And surplus-value is equal to the difference between
>the new-value produced by current labor ( = m L) and the variable capital
>invested in the purchase of labor-power (which is also taken as

The appropriate question to ask here is whether you understand this 
relationship S = mL - V to be a matter of *definition* or an *inference* 
from more basic definitions and conditions. Insofar as Marx does not define 
surplus value in this way, I assume that you understand this relationship 
to be logically inferred from Marx's definition under given conditions, 
e.g. that all commodities exchange at their respective values.  But then 
this claim must be shown to be consistent with what Marx actually says 
surplus value *is*:  you advance an amount of money M to purchase 
commodities (with accompanying money prices), and then you sell commodities 
(with accompanying money prices) to achieve M'.  Applied to the context of 
the circuit of industrial capital, this inference must be shown to emerge 
from a process in which capitalists purchase constant capital goods at 
their respective prices and wage labor at its price.    None of these 
things are equal by definition to aggregate labor expenditure times m 
(whatever that is; the only *specific* representation of what this 
represents in your summary and articles appears to presuppose commodity 
money. More on that point below.)  Anyway, insofar as the claimed 
relationship is an inference, it must be shown to be consistent with Marx's 
more general definition of surplus value based on first buying and then 
selling commodities within the circuit of capital.

>   In Marxs theory of prices of production, the same quantities of
>money constant capital and money variable capital are taken as given as
>"inputs" in the determination of prices of production.

I agree with this as a descriptive matter, but it remains the case that 
this procedure must be shown, at minimum, to be consistent with the 
relationships C = Q*P and V = w*L before it can be accepted as 
theoretically coherent.

Finally, where I say

> > Again, you're answering a different question than the one I asked.  I'm 
> not
> > asking yet about the "derivation" of prices of production under either
> > account; I'm asking if it's not necessarily the case that the monetary
> > magnitudes of constant capital that Marx takes as given in Volume I. are
> > equal to the vector products defined above.  One reason I'm asking this
> > more basic question is hinted at by your answer, which *assumes* a
> > theoretical conclusion that is in dispute, namely that the "average 
> profit"
> > can in fact be determined *prior* to prices of production, such that it is
> > possible to *arrive* at prices of production by *augmenting* constant and
> > variable capital magnitudes according to a *predetermined* "general 
> rate of
> > profit".  Marx, and thus you, are *asserting* that the general rate of
> > profit can be determined analytically prior to prices of production, and
> > thus at minimum that it is *logically possible* to make this prior
> > determination.  Thus you have the burden to prove this assertion rather
> > than simply asserting it.

you write

>I have already explained how it is logically possible to determine the
>rate of profit prior to prices of production in the summary of my
>interpretation ( 7652).

Rather, you've indicated a *possible* story according to which the rate of 
profit is understood to be determined prior to prices of production, but it 
can't be that you've explained how it is "logically possible" to do so, 
because you haven't demonstrated the conditions, if any, under which this 
representation is logically consistent with the *unavoidable* fact that C = 
Q*P and V=w*L.  Since these relationships *necessarily* obtain whether or 
not they are explicitly represented, the logical coherence of your or 
Marx's account cannot possibly be established until that account is shown 
to be consistent with these relationships obtaining.

One problem I can foresee in making any such demonstration lies in your 
definition of the parameter m.  In both of your articles you first define 
this entity as " 'the monetary expression of value,' or the rate at which 
current abstract labor produces new value per hour"--which doesn't mean 
anything in particular of itself, or rather has a number of possible 
meanings.  In your RRPE article, you further specify that this corresponds 
to "the inverse of the value of money."  If the latter is in fact the 
definition of m, two observations follow:  first, m has a coherent 
definition *only* in a commodity money economy, because in an economy in 
which, for example, checking account deposits count as money, the value of 
money is 0, and thus m is undefined.  The question then arises as to what, 
if anything, determines m in the case of a fiat money economy.

Second, even granting the operation of a commodity money economy, it must 
be shown, not simply asserted, that it is logically coherent to represent 
surplus value as m*Ls even in the more complex case that prices are given 
as prices of production rather than assumed to be proportional to labor 
values.  For example the first step in your demonstration for the simpler 
economy is S = P - K, but it isn't demonstrated that P is the same in the 
more general economic scenario--e.g, it's not at all clear why MVA = mL in 
this more general scenario, since if the latter holds, it is necessarily as 
an inference for the simpler economic scenario.



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