From: Andrew Brown (Andrew@lubs.leeds.ac.uk)
Date: Mon Dec 09 2002 - 14:11:43 EST
Dear Paul C and all, Though I have not the time to study the argument in great detail I very much appreciated Paul's theoretical explanation of why prices and labour times are closely correlated . This explanation seems potentialy to be an important contribution to the debate on the transformation problem despite Paul's boredom with that literature. It is well known that in Vol 3, ch.9 Marx's initial discussion does not transform the inputs. In my view, Alfredo has demonstrated this is a valid procedure given Marx's OCC / VCC distinction. Whatever one's view of that distinction, I think Paul C's argument might just turn out to further back up the validity of Marx's procedure and also explain Marx's comments when Marx does (briefly) come to consider the transformation of the inputs. Marx first recognises this key issue with the following paragraph in ch.9, Vol.3: --------------- But the difference is this: Aside from the fact that the price of a particular product, let us say that of capital B, differs from its value because the surplus-value realised in B may be greater or smaller than the profit added to the price of the products of B, the same circumstance applies also to those commodities which form the constant part of capital B, and indirectly also its variable part, as the labourers’ necessities of life. So far as the constant portion is concerned, it is itself equal to the cost-price plus the surplus-value, here therefore equal to cost-price plus profit, and this profit may again be greater or smaller than the surplus value for which it stands. As for the variable capital, the average daily wage is indeed always equal to the value produced in the number of hours the labourer must work to produce the necessities of life. But this number of hours is in its turn obscured by the deviation of the prices of production of the necessities of life from their values. However, this always resolves itself to one commodity receiving too little of the surplus value while another receives too much, so that the deviations from the value which are embodied in the prices of production compensate one another. Under capitalist production, the general law acts as the prevailing tendency only in a very complicated and approximate manner, as a never ascertainable average of ceaseless fluctuations. --------------------------- I wonder if Marx's argument here is expressing Paul's point that, given the law of large numbers, the transformation of the inputs is likely to leave both total wages and total constant capital costs, hence total costs, very close to labour times? If so this would only reinforce the point that abstracting from the transformation of the inputs is inessential to Marx's procedure. However, I presume I am barking up the wrong tree totally since the literature is so vast and I know very little of it -- if so apologies. Andy > The necessary labour time is given by the labour content of > the commodities consumed by workers - the labour content > of the wage bundle as the neo-ricardians put it. Now if workers > just lived on a single commodity corn, as occurs in some > neo-ricardian models then expected the standard deviation of wages > relative to necessary labour content would also be S, but in fact the > wage bundle contains thousands of different commodities. Each of these > commodities has a selling price that is either above or below value, > but by the law of large numbers the standard deviation of the wage W > times M from the actual labour content of the wage bundle will be much > smaller than S. > > Thus in a real economy with a big wage bundle we can assume > that the wage bill multiplied by the labour equivalent of money > will be very close to the actual necessary labour time. > > Now consider all industries. Each of these has a selling > price in labour hours made up of a wages commonent which > is almost exactly equal to the V in labour time used by Marx > in volume I of capital, plus a component C for constant capital, > plus some random profit - determined by market conditions. > For most industries C will again be made up of a large > bundle of commodities and as such will, by the same argument > as applied to wages tend to be purchased for a price very > close to its value. The exception will be a few industries that > process a single raw material - these will have a C which in > money terms will deviate more from value than is normal. > > Empirically it is a fact that for most industries labour is the > major cost. We know that the cost of labour WM is very close > to Marx's v or necessary labour time, and also that for > most industries CM will also be close to Marx's c. > That leaves only profit as a random element causing > prices to deviate from values.
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