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

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Fri Jun 16 2006 - 15:58:11 EDT

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

> Hi Ajit
> Thank you for your criticisms, and taking the time
> to provide feeback.
> I understand if you feel we've come to a conclusion
> for now. I hope
> you won't mind if I make some closing remarks on
> your summing up.
> > (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.
> Let's apply your reasoning to how Sraffa treats
> means of production.
> In the example, 2 tons of corns is used-up as raw
> material and
> replaced within the production period. Hence, Sraffa
> has 2 tons on the
> LHS and 2 tons on the RHS. The 2 tons on the LHS is
> used-up in the
> period. The 2 tons on the RHS is new corn output,
> which replaces the
> used-up corn.
> Here Sraffa is turning inputs into outputs "in the
> same period".
> Hence, according to your interpretation, Sraffa has
> made a "logical
> error".
> However, neither Sraffa or I are making a logical
> error, and this is a
> mundane issue.  The element that seems strange to
> you is that this is
> a closed, rather than an open, linear production
> model. In a closed
> model, the capitalists consumption is used-up and
> replaced in the
> production period, just like the means of
> production.
Ian, Sraffa is not making any logical error but you
are. The 2t. of corn as raw material is a historical
datum for Sraffa, it will not change whatever you do
with the 10t; of the output. However, if I give less
or more to the workers or the capitalists from the
output, in your case that must show up in the input
otherwise your accounting system breaks down. You are
using the word 'closed model' as some Marxists use the
word 'dialectics'--the word is supposed to have
magical quality that desolves all conceptual
contradictions. What I have been trying to tell you is
that you can either have a 'closed' model, which is
represented by subsistence economy, or have a
'surplus' model but not both. You are trying to have
both, which entails logical contradiction.
> > (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.
> You introduced time-scripts, I did not. The only
> time I have mentioned
> is the length of the production period. I do not
> need to distinguish
> between production at time t-1 and time t because
> this is a state of
> self-replacing equilibrium, and both moments are
> identical.
It is you who had introduced the time-scripts to
counter my point that outputs cannot be inputs to
itself. In your above statement you have again
introduced time-script. Your 2 tons of corn as raw
material is a historical datum--logically, i.e. there
is no logical posibility of changing it after you have
got your 10 tons of output out of it. Can you say the
same for your 4 tons of corn as capitalist
consumption? If you can, then it is also a historical
datum and you cannot logically change it after getting
your 10 tons of corn. Now you cannot say that
logically I cannot give more to the capitalists from
the 10 tons of corn, can you? Since you cannot, then I
am free to give 6 tons of corn to the capitalists and
2 tons to the workers out of the 10 tons. This cannot
be logically denied. But when I do something which is
logically possible, your principle of accounting
breaks down. But a principle of accounting cannot
breakdown within the realm of logical possibilities
unless the principle is simply wrong.
> In any production period the following happens:
> 2 tons of raw materials are used-up
> 4 tons are consumed by capitalists
> 4000 hours of direct labour is applied
> 10 tons of output is produced, of which
>    - 2 tons replaces the raw materials
>    - 4 tons replaces the corn consumed by
> capitalists
>    - 4 tons is consumed by workers to reproduce
> their labour-power
> This is a standard interpretation of a "method of
> production".
How do you get 4000 hours of labor when your both
moments are identical? Your both moments are never
identical--may be this is the source of your
contradiction. The capitalist consumption is not part
of the 'methods of production' neither in the standard
or non-standard interpretation of methods of
production, except yours.
> There is no merit to this particular objection of
> yours. I therefore
> need to explain why you think it  important. My
> guess is that the
> metaphor of an undistributed surplus is so ingrained
> that you think it
> impossible that either workers consumption or
> capitalists consumption
> can be both consumed (as an input) and replaced (as
> an output) in the
> period of production. More on metaphors below.
Of course you cannot replace within the same
production period, unless you do away with the notion
of production period altogether and say that
production is instantaneous (even then I think it will
be illogical to replace input in the same
period--actualy I don't know if word 'same period'
will have any meaning). In that case, what meaning can
one attach to your 4000 hrs. of labor and that 1 ton
of corn having 1000 hrs. of labor-value.
> > (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
> > futute.
> We have been discussing self-replacing equilibrium
> with a distributed
> surplus. No time subscripts, no historical data,
> just a period of
> production that is self-replacing. Implicit in your
> criticism is an
> unstated assumption that Sraffa's accounting does
> not break down in a
> non-equilibrium state. As I mentioned, this is
> begging the question,
> particularly if Sraffa's accounting is erroneous in
> the special case
> of equilibrium.
Sraffa's accounting is not erroneous in any case. And
it is not Sraffa's accounting but it is everybody's
accounting, which includes Ricardo, Marx, and every
decent scholar I have known, except you. What you need
to do is to forget about Sraffa or Marx etc. and try
to see whether your accounting makes any common sense.
If your accounting breaks down when surplus is 6 tons
of corn, then what good is your accounting? and how
could it be used to show that anybody's accounting is
> > (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.
> I don't have much to say on this point. I'd need to
> consult Vol. 2.
> Maybe the circular flow model does not perfectly
> match Marx's Vol. 2
> reproduction schema.
> > (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.
> Your mention of double-counting was based on the
> idea that firms do
> not need money-capital because they have
> commodity-capital. This was
> followed up by some exchanges between Paul and
> myself on the circuit
> of capital in the circular flow, particularly the
> relationships
> between money-capital, working-capital and
> commodity-capital. My view
> is that a model of an economy in which firms can
> pursue production
> with only commodity-capital, and do not require the
> supply of
> money-capital from capitalists, is not a model of a
> capitalist
> economy. I also suggested, that due to the mapping
> between a Sraffian
> system and a circular flow, that the concept of
> money-capital is
> implicit in Sraffa's theoretical framework.
> I'm not sure where you get "v=c+v+2s" from. My guess
> is that you think
> that placing capitalist consumption on both the LHS
> and RHS of a
> method of production implies double counting. I hope
> my comments above
> address that concern. For example, if you were
> correct, then Sraffa is
> double counting means of production, i.e. "v = 2c +
> v + s". But of
> course he is not.

Your corn model:

2t. of corn + 4000 hr. of Labor --> 10 t. of corn
Marx's calculation:
Value of 1 ton of Corn = 500 hrs. of labor
Marx's labor-value equation:
1000 c + 4000 L = 5000 hr. of total value
which implies, given wages = 0.001 tons of corn per
hr. of labor,
1000c + 2000v + 2000s = 5000 total value
But you insist that the accounting should be rather
like this:
1000c + 4000L + 2000cc = 5000 hrs. of labor
But of course this would be ridiculous on the face of
it, so you say that representation of the technology
as 2t. of corn + 4000 hr. of Labor --> 10 t. of corn
is wrong. It should rather be
2t. of corn + 4t. of cc + 4000L --> 10t. of corn
And so per unit of value of corn itself is 1000 hrs.
of labor. But then you don't tell us what this 4t. of
cc does in the production process? If it is needed in
the production process as the 2t. of raw materials
then in economics for centuries we have been calling
it necessity of production. Then your system does not
have any surplus and it is equivalent to subsistence
economy. The property of this system is well known,
you are not bringing anything new here. Your new
element is that you want to call 4 tons of capitalist
consumption both surplus and the necessity in the
system. But you cannot do that--it involves logical
contradition of terms. A necessity by definition is
not a surplus and a surplus by definition not a
necessity. Let me at the cost of repeating myself nth
time, make the point that if the 4cc is the necessity
of production then when I reduce the wages to 2 tons
of corn, we have now a surplus of 2 tons in the system
properly speaking, what happens to your accounting
system now. The necessity now cannot jump to 6 t. of
cc for the previous period, can it?

> > (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.
> I do not understand why you think a 1-commodity
> economy must be in
> equilibrium. But that is not important. Choose any
> real wage rate on
> condition that it holds in a fully specified
> self-replacing state,
> which is the only situation I have been making any
> truth claims about.
I chose the wage rate and I claim that the capitalists
consume 6 tons of corn from the output of 10 tons of
corn. Give me your labor-value accounting. I'm
assuming 0 rate of growth of the economy and full
equilibrium. Now you can see your assumption imply
more than what people understand by simple
repreoduction. The rest of your message has been
turncated so, I better stop here. Cheers, ajit sinha
=== message truncated ===

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