Re: [OPE-L] workers' consumption and capitalists' consumption

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Wed Jun 14 2006 - 05:35:14 EDT

Your last message tells me that this conversation most
likely is not going to be productive any longer. But
here is my last try:

(1) You claim that 'Sraffa's' labor-value accounting
is wrong because he does not account for labor-value
of capitalist consumption. And you correct him by
doing so.

(2) So I read 'Sraffa part' of your paper that
develops this argument. I pointed out to you that your
accounting scheme, which you present as the 'correct'
alternative to Sraff's 'wrong' scheme has conceptual

(3) This conceptual error turns out to be a logical
error since your scheme requires outputs to be treated
as its own inputs--this reading of mine is correct
because in your paper you turn whatever is the surplus
produced in the current period into its own input in
the same period.

(4) To this you responded that actually you are not
treating outputs to be its own inputs but rather the
capitalist consumption is a historical datum, i.e. its
the surplus of the last cycle of production.

(5) then I pointed out that if this is how you
interpret your scheme, then you get into another
problem, i.e. your principle of accounting breaks down
if the current period surplus happens to be different
from the surplus of the past period. So your scheme
freezes rate of wages for all conceivable past and

(6) Note that this condition is not a condition of
simple reproduction schema in Marx. Marx's schema
takes current period and assumes that all the surplus
of the current period will be consumed by the
capitalist. Thus it is open to accommodating any wage
rate that prevails today. Your system is not.

(7) Also note that your labor-value accounting is
radically different from Marx's. In Marx v = c+v+s,
where (v+s)= L, direct labor-time. In your scheme:
v = c+L+s = c+v+2s, that's why in my first messege I
pointed out that your scheme involves double counting
of profits or surplus value.

(8) You say that my example of wages being 0.0005 ton
of corn per hr. of labor in the current period implies
recourse to non-equilibrium situation. Now, just a
second of reflection should have told you that in a
one commodity corn economy, talk of non-equilibrium is
pure non-sense. What could be non-equilibrium in a one
commodity corn economy? Why can't the capitalists eat
the surplus 6 tons of corn? All you need to do is to
think through the issue.

(9) Most of your current response sounds like pulling
a Kliman. I remember, when I will show Kliman that his
TSS is pure non-sense, he will resort to herling
abuses at Sraffa (in his case, his knowledge of Sraffa
was rather negative than even zero, so those abuses
sounded quite funny). My answer to your so-called
criticisms of Sraffa for the purpose of the present
debate is simple: Let us assume that Sraffa was an
idiot, and he did not know that in an equation LHS
must balance with RHS, etc., etc. Further on, let us
assume that Ajit Sinha is an idiot too. Even then the
logical problems with your accounting system that I
have pointed out will not go away. You don't become
right by virtue of X or Y being wrong.

(10) I do not think that your work has been in vein
though. I think if you think through the issues you
could come up with a good mathematical paper that will
show correctness of Sraffa's statement that once
surplus emerges in a subsistence system, the system
becomes self-contradictory. You can show that there is
no way one can convert surplus into cost and equate
the sum of column inputs with the corresponding row
outputs. This could also give you some clue to
interpreting Sraffa's note on 'surplus' and
'objectivity', which you have not read completely but
are relying quite a bit on.

(11) If all this has not convienced you that there is
some problem with your accounting system, then good
luck to you. You have at least not been able to
convience one person. Cheers, ajit sinha

--- Ian Wright <wrighti@ACM.ORG> wrote:

> Hi Ajit
> I'm not sure whether my answers to your earlier
> criticisms have
> satisfied you. Do I take it that these new
> criticisms imply that they
> have?
> What is your reaction to the illustration, in the
> very simplest case
> of a corn economy, that Sraffian labour-value
> accounting is not
> conservative? that the labour-cost accounts do not
> balance? that some
> labour actually performed is not counted?
> Whether this labour should or should not be counted
> is a separate
> question. But the very existence of this question is
> new.
> > (1) Let's suppose that workers wages in period t
> is
> > not 0.001 tons per hours of labor but rather
> 0.0005
> > tons of corn per hrs. of labor. This will give you
> a
> > surplus of 6 tons of corn. However, your
> capitalist
> > consumption is a given datum from the past, which
> is 4
> > tons of corn. Now, all of a sudden you have 2 tons
> of
> > corn that your accounting principle is unable to
> deal
> > with. In other words, your accounting principle
> > becomes self-contradictory.
> Your recourse to non-equilibrium counterfactuals
> begs the question:
> how do you know that Sraffa's labour-cost accounting
> can deal with
> non-equilibrium when its ability to deal with
> equilibrium is precisely
> what is being questioned?
> Such counterfactuals are not relevant to our
> discussion, which has
> been carefully limited to a state of self-replacing
> equilibrium,
> precisely the special case in which the
> "transformation problem" is
> thought to arise.
> There is some irony in your recourse to
> non-equilibrium or dynamic
> considerations in your defence of Sraffa's
> labour-cost accounting,
> given your criticisms of the TSS attempts in this
> direction and your
> stated belief that a dynamic theory of value is
> logically impossible.
> For example, you don't allow the TSS school to
> attempt to avoid the
> transformation problem by recourse to
> non-equilibrium; why then should
> you be allowed to attempt to avoid Sraffa's
> labour-cost accounting
> error by recourse to non-equilibrium? The location
> of the debate is
> self-replacing equilibrium.
> I do not have a theory of the dynamics of simple
> reproduction. Let's
> not pretend that Sraffa does. Hence, your objection
> (1) I think is
> irrelevant.
> > (2) How can you deal with this? You may try to put
> a
> > condition on your system that does not allow such
> > possibility. You may say that my example violates
> your
> > assumption of simple reproduction schema. Before
> we
> > get to what this assumption implies, note one
> > immediate conclusion: This situation must arise in
> all
> > expanded reproduction schemas--where your
> accounting
> > principle logically breaks down.
> Your example does violate the major assumption of
> our whole debate,
> which is why I do consider it irrelevant, as you
> predicted.
> I'm surprised that you state that real-cost
> accounting cannot deal
> with expanded reproduction with such confidence. I
> know it can handle
> the situation of balanced growth along the von
> Neumann ray with zero
> capitalist consumption. I also think it will
> generalise to balanced
> growth with non-zero capitalist consumption,
> although I haven't worked
> on it. Yet you appear to be, quite remarkably, ahead
> of me on this
> line of research. Granted, disproportionate growth
> and structural
> change are quite another matter; but this also leads
> to dynamics,
> which leads us far away from the premiss of our
> discussion.
> Hence, your objection (2) I think is irrelevant and
> also partially incorrect.
> > (3) Given your position that capitalists'
> necessary
> > consumption is out of last round of production,
> your
> > assumption of simple reproduction schema implies
> that
> > the given system with its given wages and profits
> must
> > not only remain frozen for all conceivable future
> but
> > also it must have been frozen for all conceivable
> > past. In other words, the corn equation with its
> wages
> > at 0.001 tons of corn per hr. of labor must exist
> from
> > the big bang to eternity! Because, anywhere in the
> > past or the future if the system diverged from
> this
> > frozen state, it can do only by breaking your
> > accounting principle.
> In the modern context of vertical integration,
> labour-values are a
> variable of economic state, not economic history.
> This is reflected in
> the difference between replacement cost and
> historical cost. For
> example, just because a set of weighing scales is in
> balance does not
> imply it has been in balance forever.
> However, if you measure the weights on the LHS arm
> and the weights on
> the RHS arm you would find them to be equal in
> equilibrium (unless you
> count as the neo-Ricardians do).
> In the special case of self-replacing equilibrium
> the distinction
> between historical cost and replacement cost is
> effaced. The
> trajectory taken toward the equilibrium state is
> "forgotten" and the
> history dissipates. A big, unchecked assumption of
> the whole
> neo-Ricardian critique is that a state of
> profit-equalisation is
> stable (this follows from the assumption that
> Sraffian prices are
> actual, rather than counterfactual, prices). In
> consequence, the
> analysis of a self-replacing equilibrium, contrary
> to what you say
> above, does not imply that such a state necessarily
> exists from the
> "big bang to eternity". To make this kind of
> statement you need
> dynamical laws, a feature entirely absent from
> Sraffa's theory.
> So your objection (3) is incorrect.
> > (4) Up till now I have not mentioned Marx in this
> > context, simply to keep the focus on the logic of
> the
> > issue rather than create emotional outbursts and
> > quotation mongering.
> Thank you for that -- and also thanks to Allin for
> holding off on this
> line of discussion.
> I do not want to enter into a debate on objection
> (4) just yet because
> I think it has the potential to quickly degenerate,
> and obscure the
> question regarding Sraffa's labour-cost accounting
> and the modern
> (simultaneous) form of the transformation problem.
> Best wishes,
> -Ian.
=== message truncated ===

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