# Re: [OPE-L] questions on the interpretation of labour values

From: Diego Guerrero (diego.guerrero@CPS.UCM.ES)
Date: Fri Feb 23 2007 - 08:09:52 EST

```Hi Ajit,

Remember the table I used in a previous message:

A values
B prices

I

Values and prices with profits proportional to variable capital

wH

w

II

Values and prices with profits proportional to total capital

pH

p

III

Values and prices including different rates of profit in each sector

mH

m

This table is a simplified version of the table I put in my paper. But it suffices to better understand the extensive quotation of myself I make now (apologies for this) that, I believe, it is difficult to summarize in other words:

“Now, the relationship between A and B expresses the necessary relation between the inner magnitudes of values and their monetary expression as exchange values. As true values only exist when all products are produced as commodities, and this implies the existence and functioning of a general equivalent of all other commodities, values have to be expressed in certain quantities of the general equivalent, money. Therefore, all variables in the A side of the table are expressed in hours per unit of commodity, and those of the B side are measured in euro per unit of commodity. But as money is and acts as a special commodity because it is the only general equivalent of all other commodities, it is clear that when any singular commodity is actually being related to money in the market it is in fact being related (as values) through the market with all other commodities (as values).

Therefore, converting values from labour into money is thus just to compare each type of commodity (and its content) with the rest of them (and their content). It is just to interpret the value of each commodity in a comparative or relative way, either it is compared with any other specific commodity (as commodities i and j in column B1 of the table) or with the “average” or “social” commodity, only susceptible of being represented by money—either gold money (column B2) or credit money (column B3).

However, linking a specific quantity of labour-value necessary for reproducing one unit of commodity i with the exact specific quantity of money representing the same basic fact—the need to spend a certain quantity or fraction out of the mass of social labour for reproducing one unit of i—requires something more. It requires in addition conceiving of and measuring value as a certain quantity not of one or another type of labour but of “average”, “social” labour (simple human labour). Thus, dividing any price in the right side of the table, any “B-price” as can be called, by the average, social productivity of labour in terms of money—what we call π and is equivalent to the “monetary expression of labour-time”, but preferable to the “inverse of the value of money”—, amounts to measuring the values, or “A-values”, in hours of average, social, simple, abstract labour, which is the only sort of labour that can appear in Table 1.

As a consequence, and this is an important conclusion, all B-prices in the table (i, w, p, m) can be interpreted as the simple result of multiplying the A-values (iH, wH, pH, mH) by π. And likewise, the A-values are just the result of dividing B-prices by π.

It can be seen that our “definition” coincides as a practical result with the “monetary expression of value” (Duménil and Foley, 2006) or the inverse of what Fine, Lapavitsas and Saad-Filho (2004) calls the “labor expression of money”. However, it is preferable to use “the average, social productivity of labour in terms of money” than the inverse of the “value of money” often used in the literature (see for instance Foley, 1982), in order to taking into account what according to Marx is the “contradiction” between the “two values” of money. As Foley himself writes, “the value of money as defined here will not be equal to the labour value of the money commodity” (1982, p. 39). And Rodríguez-Herrera has emphasized the same idea by insisting on Marx’s idea of the “contradictory character of the form of value” and its application to money, what means that any producer selling his product for money appropriates on the one hand the “value embodied in the use value” of a certain quantity of money, and on the other hand “the value represented” in it (1994, p. 20).

In any case, our defence of the average social productivity of labour is at least as much an “unambiguous method of measuring the monetary expression of labour” as that of the NI, and thus cannot be the object of the criticism made by Foley to the TSS definition of the monetary expression of value of not being “single” nor “consistent” (Foley, 2000, pp. 24, 33). Similarly this method avoids other criticisms made against the NI: “This calculation, based on the definition of the value of money simply as the value commanded by money in circulation, detaches both money and its value from the monetary and financial processes that link money to the general movement of capital accumulation” (Fine, Lapavitsas and Saad-Filho, 2004, p. 9).

As for the exact quantification of π, and having into account that total output holds invariable through both transformations (see below):

(9)        wx = px = mx,

we reach the result that π can be defined either in gross terms (what we call π1):

(10)      π1 = mx/lx

= px/lx

= wx/lx

or alternatively in net terms (π2):

(11)      π2 = m·(I-A)x / lx

= p·(I-A)x / lx

= w·(I-A)x / lx

Therefore if we call all the A-values simply α, and all the B-prices β, we can express every horizontal movements going from A to B and vice versa in Table 1 as done in equation (12), whereupon we can conclude that this kind of movements are simply a sort of “translation” from one language to another, which can be checked in the apparent chaotic way of expression of Marx in Capital, that is not but the result of this double correspondence:

(12)             β = α ·π;

(or:    α = β/π)

II. As for your questions “What do these "values" do in your theory? In other

As I think that you are not asking me about the role of labour-values in general but the role of my version of them, my answer is that I would like just to contribute, as I believe all of us want to do, to a better and better definition of a tool like the LTV, that must help to better understand the real world, especially the level and movement of real prices and their connection with real processes of labour. I defend these definitions of values and prices because I think they explain better actual prices and are more concrete and general that the traditional ones. On the other hand they can help to defend the LTV against some of its critics by showing that, once values and prices are (re)defined in this way, many of the criticisms become trifling.

Cheers,

Diego

----- Original Message -----
From: "ajit sinha" <sinha_a99@YAHOO.COM>
To: <OPE-L@SUS.CSUCHICO.EDU>
Sent: Friday, February 23, 2007 12:57 PM
Subject: Re: [OPE-L] questions on the interpretation of labour values

> --- Diego Guerrero <diego.guerrero@CPS.UCM.ES> wrote:
>
>> The formula is the same in both cases: wH = l +
>> mHÂ·A. That is values are the sum of direct labour
>> (l) plus the value of the inputs (measured by the
>> labour-equivalent of market prices).
> _____________________________
> What is the "labour-equivalent of market prices"? And
> what do these "values" do in your theory? In other