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

From: Ian Wright (wrighti@ACM.ORG)
Date: Sun Jun 18 2006 - 03:27:04 EDT

Hi Allin

> > Why do you think labour-values should be independent of the
> > real wage?
> "The value of a commodity, or the quantity of any other
> commodity for which it will exchange, depends on the relative
> quantity of labour which is necessary for its production, and
> not on the greater or less compensation which is paid for that
> labour."

Is Ricardo talking about the real wage or the money wage?

> You're offering Marx a solution, but it's not at all clear it's
> one he'd take.  In the context of the present argument (simple
> reproduction with a surplus that's consumed by the capitalists),
> you're arguing (I think) that labour-values and prices of
> production are _identical_ (even if organic compositions
> differ).  That obviously preserves Marx's two equalities, but at
> too high a cost: the distinction between labour-values and
> prices of production is effaced.

It would be hard to efface the distinction between a price and a
labour-cost. However,
in the specific conditions of deterministic equilibrium with a
realised uniform rate of profit, real-cost labour values emphatically
depart from Marx on the issue of price-value divergence due to

I am agnostic about the best interpretation of Marx's chapter on the
transformation, and can see merits in both the simultaneous and
temporal interpretations.  But if we interpret the transformation in
static equilibrium terms then I certainly disagree with Marx. But more
interesting than equilibrium is the sequential process of the
formation of a general rate of profit and the concurrent extraction of
new surplus-value from workers. Your empirical results that market
prices are inbetween simple commodity prices and prices of production
is very suggestive in this context.

But let's not forget the costs associated with adopting Sraffian
labour values, such as the loss of Marx's aggregrate conservation

> Labour-values are no longer "quantities of labour necessary for production",
> other than in what I see as a tricksy sense.

I'm fine with tricksy, counter-intuitive, new or different. My main
concern has been to establish, as clearly as possible, what real-cost
labour values count and what Sraffian labour-values do not count. This
is a necessary prerequisite for evaluation, including comparison with
Ricardo and Marx.

> In fact, I see your analysis as back-handedly supporting Smith's
> old argument: that the labour theory of value ceases to apply
> with the emergence of profits on stock.  With this twist: it's
> not that prices cease to correspond to labour-values, but that
> "labour-values" have to be redefined so that they no longer
> correspond to the labour-times required to produce things --
> which latter quantities are left orphaned, without any valid
> theoretical status ("Sraffian values", based on an accounting
> error).  Prices of production are "correct" and labour-values
> have to be redefined to match.

This is all upside down. It is the transformation problem that implies
that the labour theory of value ceases to apply with the emergence of
profits on stock. I understand that you do not accept this conclusion,
and are content with the Ricardian approximation, but the point
remains. My argument in this thread is that the transformation
problem, in the context of static equilibrium, is a non-problem and
Marx's labour theory of value does apply, incuding the aggregrate
conservation claims, in the situation of uniform returns to capital

At no point have I suggested that "Prices of production are 'correct'
and labour-values have to be redefined to match". That's not the way
to proceed.

> I want labour-values to be based on production technology and
> direct labour-time requirements alone, as per the classics, and
> to be independent of distributional variables.  That way they're
> (in principle) capable of explaining the pattern of commodity
> exchange ratios in a particularly strong sense.  A robust
> materialist sense.  Of course, it's an empirical matter whether
> they actually do so.

Why is this collection of independent variables:
(i) production technology, (ii) direct labour time
compared to this collection:
(i) production technology, (ii) direct labour time, (iii) real wage
more "robustly materialist"?

Why is the first collection in principle able to explain "commodity
exchange ratios in a particularly strong sense" but the second
collection in principle cannot? Your own empirical work (e.g.,
"scientific status of the labour theory of value") implies that
real-cost labour values are slightly better empirical predictors of
prices than Sraffian values.

Earlier you stated that "in respect of most of the specifically
economic arguments at issue, I believe Marx was wrong and Ricardo
right", which I must admit surprised me. Perhaps Ricardo did exclude
the real wage from consideration. I'm not so sure Marx did.

"The value of labour power is determined, as in the case of every
other commodity, by the labour-time necessary for the production, and
consequently also the reproduction, of this specific article."
(Capital 1, ch. 6).

What is necessary for the reproduction of labour-power? At the very
least the real wage. Hence, in Marx's theory, at least one value, the
value of labour-power, depends on the real wage. But labour is an
input to every other commodity. In a state of self-replacing
equilibrium -- in which the distinction between the value of
labour-power and the value that labour-power creates is effaced -- the
value of all commodities therefore depends on the real wage. Prima
facie, the real wage is right at the centre of Marx's definition of
labour value.

Notably the Sraffian formula v=l(I-A)^{-1} is independent of the real wage.

How do you square this with your suggestion that v=l(I-A)^{-1} is
*the* mathematical definition of labour values and that any other
suggestion must be a "redefinition"? I plan to keep an open mind on
this issue. I think resolving the question of correspondence to Marx's
theory will require some time and effort, and also sensitivity to the
issues involved. For example, Marx's definition above has an implicit
recursive structure, an aspect that  Phil alluded to in another post,
and which has very interesting consequences. The recursiveness
manifests in the circular flow  in a particularly simple and
satisfying manner. The value of labour-power is always 1 in real-cost
labour-value accounting, regardless of the technique or income
distribution. Here is a measuring rod that is stable. Marx was not
that interested in Ricardo's search for an invariable measure of

Best wishes,

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