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

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Sun Mar 11 2007 - 09:13:29 EDT

--- Pen-L Fred Moseley <fmoseley@MTHOLYOKE.EDU> wrote:

> I argue, to the contrary, that the initial
> quantities of money constant
> capital and variable capital are TAKEN AS GIVEN, and
> the crucial point
> is that the SAME QUANTITIES of constant capital and
> variable capital
> are taken as given in the determination of BOTH
> values and prices of
> production – the quantities of money capital
> advanced to purchase means
> of production and labor-power at the beginning of
> the circulation of
> capital (the M in M-C …).  These given quantities of
> money capital are
> later explained as equal to the prices of production
> of the means of
> production and means of subsistence, but to begin
> with they are simply
> taken as given.  Therefore, Marx did NOT “fail to
> transform the inputs”
> of constant capital and variable capital, because
> these inputs are not
> supposed to be transformed.
> Leaving aside the issue of interpretation for now,
> why do you think
> this is not a valid logical method?
> Comradely,
> Fred
For a very simple reason. You say, you take "money
constant and variable capital as given". So let's see
what could this mean. Say a capitalist begins with an
amount of money equal to 50 pounds of silver. What
does he do with this 50 pounds of silver? You say he
buys constant capital and variable capital with it.
Let us say this capitalist is engaged in production of
a commodity X. To produce this commodity X, the
capitalist needs to buy commodity Y and Z as constant
capital and Labor-power L. If the technology available
for the production of X is not the usual neoclassical
one but the Leontieff type, then these Y, Z, and L
must be bought in a given proportion. So let us
suppose that to produce 1 unit of X, it takes 2 units
of Y and 3 units of Z with 1 unit of L. Let us suppose
that the price of Y is 4 pounds of silver, the price
of Z is 5 pounds of silver, and the wage per unit of L
is 6 pounds of silver. Thus the capitalist will spend
29 pounds of silver to be able to buy enough constant
and variable capital to produce 1 unit of X. If there
is no chance of divisibility of commodites below 1
unit, then this capitalist is simply unable to
productively invest the rest of his 21 pounds of
silver. Even if you assume perfect divisibility, the
capitalist in no way will be able to invest his full
50 pounds for constant and variable capital. So what
would it mean to say that the capitalist begins with a
capital in terms of money? This was only to highlight
the flimsyness of such statements that capitalist
start with a GIVEN money. Acually what you have to do
is to start with an input output structure with KNOWN
prices and wages, and then calculate your total amount
of money investment, which you then call given money
investment. Any way, this is not my main criticism.
Let's suppose you are lucky, prices of Y, Z and L
happens to be such that your capitalist could invest
your so-called given 50 pounds of silver completely.
So, how much is the constant capital investment? You
say we add the amount of Y and Z bought by the
capitalist multiplied by their respective prices. So
you cannot get a money measure of contant capital
without knowing the prices of the elements of the
constant capital. After which you tell me that you
derive the prices of Y and Z and show me that voilà!
these prices are the same as I had assumed in
calculating my so-called money constant capital and
therefore there is no transformation problem. Then do
I have to still explain that your methodology has some
problem? You see, it is now well known (at least since
1966) that heterogenous capital cannot be aggregated
in terms of K, or labor or money etc. prior to the
knowledge of prices of those capital goods. Why do you
think Foley and Dumenil only took variable capital
given in terms of money and not the constant capital?
Because they knew that it would be fatal to their
whole argument. Cheers, ajit sinha

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