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

From: Pen-L Fred Moseley (fmoseley@MTHOLYOKE.EDU)
Date: Sun Feb 25 2007 - 20:50:53 EST

Quoting Diego Guerrero <diego.guerrero@CPS.UCM.ES>:

> Quoting Diego Guerrero <diego.guerrero@CPS.UCM.ES>:
>> In my opinion, values and market prices determine each other mutually.
>> Values are created by labour but the value of a commodity includes the
>> MARKET price of the inputs. As Rakesh said in his last message, Marx has
>> been misread also in this point. In
>> <> I
>> argue that the inputs have to be valued at market prices (m), not at
>> values
>> (w) or production prices (p)--I thus disagree with Alejandro Ramos and
>> Fred
>> Moseley too. In Capital I and II, Marx is assuming that m = w, and in
>> Capital III, that m = p, but this is only the first assumption in
>> analysis.
>> As a general theory it should be assumed that m = m, different from both w
>> and p. One can find in Marx's texts a foundation for this. The reason is
>> that
>> he is (and we should be) interested in the process of creation of NEW
>> values, and he says explicitly that for this we can and must abstract from
>> the values that come from other places, like in the case of the chemist:
> Hi Diego,
> This is a very interesting paragraph, which discusses two different
> questions.  These two questions are related, but I think we need to
> distinguish between them more clearly:
> 1.  What was the logic of Marx's theory in the three volumes of Capital?
> 2.  How should we extend Marx's theory to a more general theory, which
> includes market prices?
> With respect to the first question, you seem to agree that Volume 3 of
> Capital is about the determination of prices of production, and that
> this theory assumes that the prices of the inputs are prices of
> production.  That is, when you say that the inputs for the
> determination of prices of production should be the market prices of
> the inputs, you mean that this is your suggested generalization of
> Marx's theory in Capital to include market prices, not your
> interpretation of what Marx did in Volume 3; right?
> Do I understand you correctly?
> __________________________________

> Diego:
> Yes and no. I agree that in Capital III Marx is mainly concerned about
> prices of production (p). Hi is wise in limiting the discussion to ?p?
> (instead of ?m?) in most cases. But I share the important point made by
> Kenneth May in his 1948 paper where he mentions ?the confusion initiated by
> Bortkiewicz, whose mathematical mystifications bore little or no relation to
> the basic problem posed by Marx?, for ?the real problems in this field are
> not to be found in the alleged difficulty of relating value and price of
> production, but in relating these two concepts to actual prices, to the
> actual exchanges? (1948, pp. 596-597).
> I agree also with his following statement: ?[Marx] assumed that value and
> price coincide throughout Vols. I and II of Capital, an assumption
> equivalent to considering only average and aggregate relations. In Vol. III
> Marx argues that price of production and price coincide, or more precisely
> that market-price of production serves as a norm around which market-price
> oscillates.? (pp. 597-598)
> This quotation coincides with your interpretation. But mine, which is close
> to yours but is not exactly the same, can be better understood if you let me
> quote myself in a passage freshly written where I comment on May:
> <<Therefore, in order to capture the full meaning of market prices Marx
> makes two intermediate steps as he thinks that this is the only way to make
> the final, third step in the correct direction:
> First step:          m = w (and p does not exist yet)
> Second step:      m = p ? w
> Third step:         m = m; w ? m ? p.
> Most of Marx?s analysis in Capital concerns the steps 1 and 2 only, which is
> in accord with his general procedure of dealing first with averages and
> aggregates before descending to the details. Even so, many insights on
> different aspects of the third step can be found in his book. Everybody
> knows that Marx?s Capital is incomplete and Marx was perfectly aware of the
> fact that Capital was incomplete. This incompleteness affect especially some
> intermediary connections between his more general categories?which form a
> complete set of interrelated concepts and laws that are valid for the
> abstract (model of) capitalist mode of production?and the ones that would
> contribute to capture some more concrete features of real societies in their
> historical definition (the State, taxes, the world market, etc.). We are not
> saying that the fraction of Marx?s theory of value that relates to what the
> modern literature calls ?the transformation problem? (TP) is strictly
> confined to steps 1 and 2, but some aspects of the third step are lacking
> and still await for a further development.
> However, even if Marx?s analysis is not completely finished in this field
> too, there is a good part in Marx?s treatment of the ?transformation? that
> has passed unnoticed for almost everybody and belongs to this third step.

I would say Marx mentioned market prices a few times in Capital, mostly
to deemphasize their importance, compared to prices of production,
which are long-run equilibrium prices.  Nowhere that I know of did Marx
suggest that the initial inputs in the determination of values and
prices of production should be market prices.  Please correct me if I
am wrong.  The one sentence that you quote from Chapter 10 of Volume 3
does not suggest that that the initial inputs in the determination of
prices of production should be market prices; rather it suggests that
we should also examine the process through which rates of profit are
equalized (i.e. the process of competition and the mobility of capital).

Again, it seems to me that what you are suggesting is your extension of
Marx’s theory to market prices, not Marx’s own theory of prices of
production and treatment of market prices in Capital.

> ________________________________________________
> Fred:
> Is so, then it seems to me (based on our previous private email
> discussions last Spring) that we are in substantial agreement about
> Marx's logic in Capital.
> ________________________________________________
> D:
> I agree. That discussion helped me to understand that you were basically
> right in the criticisms you were making me at the moment.
> ________________________________________________
> Fred:
> The main points of agreement between us would
> seem to be:
> 1.  The circulation of money capital (M - C . P . C' - M') is the basic
> analytical framework of Marx's theory.
> 2.  This analytical framework suggests that the M at the beginning of
> the circulation of money capital is TAKEN AS GIVEN, as the money
> capital advanced to purchase means of production and labor-power.  And
> the crucial point is that the SAME M is taken as given in the
> determination of both value in Volume 1 and prices of production in
> Volume 3.  Thus there can be no question of Marx "failing to transform
> the inputs" of constant capital and variable capital from values to
> prices of production. This initial given M is eventually explained as
> equal to the prices of production of the means of production and means
> of subsistence.
> ________________________________________________
> Diego:
> I agree with both points except as regards the fact that you are using ?p?
> whereas I use ?m?.

Are you using m as an interpretation of Marx's logic in Capital,
or as your extension of Marx's theory?

> ________________________________________________
> Fred:
> 3.  The total surplus-value and the general rate of profit are
> DETERMINED PRIOR to prices of production; in other words, Marx's theory
> is based on a logic of SEQUENTIAL determination, not simultaneous
> determination.
> ________________________________________________

> Diego:
> I discuss this issue largely in the paper. For me, ?prior? must be
> understood not in chronological terms but in logical terms. I criticize
> Alejandro Ramos and the TSS for their ?chronological? interpretation. This
> is why constant capital has to be computed at replacement costs, not
> historical cost, and in this sense it seems that we agree provided you say
> ?sequential? in this sense.

Yes, I agree.  I also mean "logically prior".

> ________________________________________________
>> F:
> 4.  Both of Marx's two aggregate equalities are always true simultaneously.
> 5.  Constant capital is valued at current costs (at the time the
> products are sold), not at historical costs.
> To what extent do you agree with these points about Marx's logic in Capital?
> ________________________________________________
> D:
> I agree with points 4 and 5
> ________________________________________________
> Fred:
> You seem to emphasize much more the second question in your recent
> paper (and I think more generally in your recent work).  I agree that
> this is an important question, and I would be happy to discuss it.  I
> think there will be more disagreement about this second question.
> But I think it is also important to emphasize that, within Marx's
> analytical framework of Capital (essentially excluding market prices
> and stopping in Volume 3 with prices of production), his logic is
> correct, not flawed and inconsistent.  The Bortkiewicz criticism is
> wrong, because it is based on a misunderstanding of Marx's logic in
> Capital.
> D:
> I agree. I hope that my reflections on May above are sufficiently clear
> about this. I would like to know your discrepancies.

My disagreements with you have mainly to do with the role of market
prices in Marx's theory, as explained above.

I would hope that we could agree about Marx's theory of prices of
production in Volume 3 (inputs valued at p, not m; m is your extension
of Marx's theory).


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