[OPE-L] The roots of value theory

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Tue Mar 06 2007 - 09:07:38 EST

I don't think the magnitudes of inputs can be "transformed" into prices of
production, because they are given market prices. The theory of production
prices is supposed to explain what regulates the market prices of produced
output, given that production has occurred and a certain amount of value has
been created. Among Marxists there is a lot of confusion however about what
the cost-price refers to.

The actual cost-price does not apply to any capital inputs at all, but to a
new and different product produced. It is the cost-price of the new product
produced, and this can be finally established only after sales of the
product. Before that time, you only have an estimated cost-price, which is
an ideal price.

Once you have a sales figure (gross revenues), you can subtract the costs of
production from that figure to obtain your profit income, by referring to
the purchase prices of inputs used up to make the product. And you can then
calculate a unit-cost and unit-profit for the product, if you know the
quantity of product-units sold, all in price terms.

But point is, those costs of production of the new product are in reality
not even necessarily equal to the input costs (the capital advanced), since
e.g. you can inadvertently purchase more inputs than you actually use to
make the new product (or what is the same, you use less inputs than you
purchased), in which case you might hold more inventories. As a corollary,
you may also use more or less labour than you actually paid for. But this
does not even necessarily show up in a conventional profit-and-loss
statement, because all that statement itemises, is that you had X amount of
sales, and Y amount of expenses in an accounting period (from which you can
calculate the net income available for distribution).

What the production price ends up being, is of little or no immediate
concern to capitalists, because what they are interested in, is whether a
given sum of capital is transformed into a larger sum of capital. At best,
it is only of interest to managers, insofar as they know this depends on the
amount of value conserved, transferred and added by employees. Marx then
tries to theorise the value relations involved, by comparing the
compositions of the initial outlays of capital (K=c+v), to the capital
compositions of the output (K'=c+v+s).  It is K'[c+v] which is the true cost

Question however is, how do we know that K[c+v] = K'[c+v]? All that the
Marxists can really establish abstractly, after sales have occurred, is that
K' - K= s enabling us to find K' - s = c+v which seems reasonable enough.
But what entitles us to calculate that?  In reality, the abstract identity
K[c+v] = K'[c+v] already assumes that:

(1) K is completely consumed, in producing the new product.
(2) all output is sold.
(3) prices stay constant.


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