# Re: [OPE-L] price of production/supply price/value

From: Fred Moseley (fmoseley@MTHOLYOKE.EDU)
Date: Sun Jan 29 2006 - 10:33:17 EST

```On Fri, 27 Jan 2006, Rakesh Bhandari wrote:

> There is confusion
> in our understanding of value. By value of a commodity do we mean
> the amount of abstract labor time it represents or do we mean the amount
> of abstract labor time it requires to produce a commodity. I argue
> that value means the former, and that for most commodities its value
> is given by the price of production multiplied by the value of money. This
> does
> not discount the importance of labor time required for production but it makes
> its influence mediated in a complex way.

Hi again Rakesh,

Here is how I see this issue:  The simple price of commodities is the sum
of two components the TRANSFERRED VALUE from the means of production and
the NEW VALUE produced by current labor:

P   =   TV   +   NV

=    C   +   (MELT) L

C, L, and the MELT are taken as given, and jointly determine the simple
price of commodities.

(I would also add that this theory of the simple price in Volume 1 applies
mainly to the economy as a whole.  Its main purpose is to explain the
total surplus-value produced in the economy as a whole.  The simple price
of individual commodities is a theoretical price which is not directly
observable as such.)

The total labor-time contained in commodities consists of two
corresponding components - the PAST labor transferred from the mean of
production and the CURRENT labor:

TL   =   PL   +   L

The past labor component of the total labor is derived from the given
constant capital (which is equal to the price of production of the means
of production), by dividing the given constant capital by the MELT (or, as
Rakesh puts it, by multiplying the given constant capital by the value of
money):

PL   =   C / MELT

In general, the past labor derived in this way will not be equal to the
labor-time required to produce the means of production, because the prices
of production of the means of production are in general not equal to the
simple prices of the means of production.

The labor-time required to produce the means of production has already
been objectively expressed by the price of production of the means of
production (which is equal to the constant capital advanced to purchase
the means of production, prior to production).  Even though this is not a
perfect representation of the labor-time required to produce the means of
production, this is how this labor-time has already been represented, and
it is this already-existing imperfect representation of past labor that
becomes the first component of the total labor contained in commodities.

However, the situation is different with the other component of the total
labor - the current labor.  The quantity of current labor is not derived
from the given variable capital, because current labor produces new-value,
which did not previously exist before current production.  And the
quantity of new-value produced is determined by the product of the
quantity of current labor and the MELT; i.e.

NV  =  (MELT) L

And the new-value produced by current labor is in general greater than the
given variable capital (which is of course the secret of surplus-value).

So the relation between labor-time and prices is different for the two
components.  For the transferred value component, past labor-time is
derived from price, because the price of the means of production already
exists and this already existing price is taken as given and becomes the
first component of the simple price of commodities.  On the other hand,
for the new value component, price is determined by labor-time, because
new-value did not previously exist, but is instead the result of the
current period of production.  In this case, the quantity of current L is
taken as given and determines (along with the MELT) the quantity of
new-value produced.

This point is discussed more fully in my "sympathetic critique of the new
interpretation" paper which was attached to my last message.