Re: [OPE-L] A three-steps analyis of labour values

From: Diego Guerrero Jiménez (diego.guerrero@CPS.UCM.ES)
Date: Sun Mar 11 2007 - 17:41:13 EDT

----- Original Message ----- 
From: "Ian Wright" <wrighti@ACM.ORG>
Sent: Friday, March 09, 2007 12:42 AM
Subject: Re: [OPE-L] A three-steps analyis of labour values

Hi Diego

Just some short comments to communicate that I am interested in what
you have to say.




> production amounts to a
> certain quantity of money, x, and requires a certain quantity of direct
> labour, y. Then I say that z = x/y is the monetary expression of labour 
> (or
> the productivity in money of social labour), no matter whether the 
> magnitude
> of z is changing or not.

Is x the total price of the net product (a la Foley/Dumenil?)




> (Others may have another theory—different from the LTV indeed—and relate 
> the
> quantities of money to the quantity of whatever commodity they want. They
> could obtain the _monetary expression of corn_ for example. They are free 
> to
> do so, but I would reply that when I go to the movies or the doctor or to
> cut my hair, etc., or in general observe other production processes I can
> see corn nowhere, whereas I see labour everywhere when I look at a
> production process. This is why I consider the LTV a more realistic theory
> than theirs)

I agree with your conclusion, but not the reasoning. I think the
"value controversy" can in principle only be settled in dynamic models
that include technical change and labour reallocation. I hope that
Marxist economists will develop and eventually agree upon on a
canonical (mathematical or computational, not natural language) model
of capitalist dynamics, much like neoclassical economics organized
itself around the Arrow-Debreu model.  As evidence of the need for
dynamics, static models leave the theory of value under-determined.
For example, in linear production theory, which is the model type used
to critique Marx's theory of value, any real-cost basis (labour, corn
or any commodity) is formally equivalent, and is therefore a candidate
for the referent of price, even when the transformation problem is
solved via nonstandard labour values. There should be a formal theory
of why the different real-cost bases cannot be equivalent, but
quantitative value theory, it seems to me, has yet to get beyond the
transformation problem in static models.



I agree that we need mathematical or computational language as perhaps the 
main way to put forward the LTV and criticize at the same time other 
theories. But we shouldn’t cease using natural language also. I think it 
will always be necessary to complement technical languages with natural 
language since the latter contributes in great extent to understand the 
insufficiencies of other theories. What do you think of a theory that states 
that price is the expression of for example a certain quantity of (direct 
plus indirect) condoms since condoms are what in the last instance is needed 
to produce directly or indirectly all commodities? I know that this is 
“formally” possible, but as somebody once said, if you start from the 
necessary unrealistic assumptions you can prove that the moon is made of 
blue cheese. Now, it is completely unrealistic to state that condoms 
“produce” anything (rather they help not to produce something if I may play 
the joke).


> Now, the main point in my paper
> ( is
> that although values are a definite magnitude at the macroeconomic level,
> they can be quantified in a triple way at the microeconomic level.
> In the three cases, the cost of a given commodity (an average specimen of 
> its
> class) is the same: m·(A+B), where m are market values in the sense
> explained below, and A and B the coefficients for both material and
> _worker-subsistence_ inputs. But the surplus-labour included in the
> commodity's value can be understood and quantified in a triple, equally
> analytically useful, way.

My initial reaction is that there is only one quantity of
surplus-labour, not three, although I note your surplus-value
equalities below.



I think this is a crucial point. I agree that there is only one quantity of 
concrete surplus-labour because there is only one quantity of concrete 
labour. But if you accept that there are direct prices and also production 
prices at the same time, you must admit that this concrete labour is 
expressed as two different quantities of abstract labour that are expressed 
at their turn as two different quantities of money. My view is that both 
constant and variable capital are already expressed in abstract labour, but 
one of the most important Marx’s points is to explain how concrete new 
labour has to express itself in two different quantities of abstract labour, 
due to the fact that competition processes modify the result of production 
processes of value.


> 1. When we think of surplus-value as proportional to the new value 
> included
> in value, we obtain _direct value_. We do so because we are interested in
> dealing here with the process of creation of values as well as with the
> process of exploitation of workers by capital.

I wonder whether standard labour values ("direct value") are only
appropriate for simple commodity production, or production without a
tendency for profits to equalize, or snapshot moments in which new
surplus-value is produced, but has not yet been distributed?



I don’t think “transformation” is a real phenomenon that happens in time. It 
does not consume any time at all. It is a logical question, a change in the 
perspective from which one as a theoretician observes a phenomenon.


> 2. When we assume that surplus-value is proportional to the magnitude of
> value that capitalists have to advance in production, we obtain 
> _production
> value_. We do so because we are interested in the _abstract_ process of
> competition, i.e. competition in a context where only capitalists in the
> productive sector exist.

I wonder whether this case (in which our formulae for labour-value
appear to be formally equivalent, although perhaps we have different
interpretations) such labour values are only appropriate for simple
and expanded reproduction, in which the tendency of profits to
equalize has been realized.



I am sorry, I am not sure of what you are asking. If you ask if my 
“production values” include a quantity of profit that allows every commodity 
to gain a uniform rate of profit, the answer is “yes”.


> 3. When we assume that surplus-value is NOT proportional to the magnitude 
> of
> value that capitalists have to advance in production, but rather an 
> adjusted
> surplus-value (i.e., surplus-value once deducted from it the sum of
> interest, commercial margin, ground-rent and taxes) is proportional to
> adjusted costs (where the value-equivalent of interests, commercial 
> margin,
> ground-rent and taxes is added to the value of material-and-subsistence
> inputs), then we have the _long-run market value_. In this case we are
> interested in the process of competition in more concrete terms, where 
> along
> with productive capitalists there also exist commercial and financial
> capitalists, the landowners and the state.

I think if we had a dynamic model your 3 cases would be special cases
of the general causal relation between prices and labour-values.



I agree that this “general causal relation” is what matters in the last 
instance. But it is important to note that this is one kind of problem (the 
horizontal movements in my table) and the passing from ‘direct’ to 
‘production’ to ‘market’ values (vertical movements) is a different type of 

I now think that I need another name for my “market value”. Alongside with 
other reasons, “market value” is the name Marx gives to both direct values 
and production values when he compares them with market prices, and this 
alone suffices to create additional confusion with my term.


> In case 1, surplus-value included in a (vector of) commodity is m·B·g 
> (where
> g is the rate of surplus-value). In case 2, surplus-value is m·(A+B)·r
> (where r is the general rate of profit). In case 3, surplus-value is
> m·(A+B)·R, where R is the diagonal matrix of actual long-run rates of
> profits of each sector.
> Now, call sw, sp and sm the surplus-value calculated according to the 
> three
> cases. The labour theory of value states that:
> sw·x = sp·x = sm·x (where x is the column vector of output) even if at the
> individual level sw, sp and sm differ.
> costs are always the same at both the individual and the social level 
> (i.e.
> m·(A+B) and m·(A+B)·x respectively)
> surplus-value are the same at the aggregate level [m·B·g·x = 
> m·(A+B)·(1+r)·x
> = m·(A+B)·R·x] even if they differ at the microeconomic level [m·B·g is in
> general neither = m·(A+B)·(1+r) nor = m·(A+B)·R·x]
> the rate of profit is a quotient between two quantities of labour at the
> social level: surplus-labour in a period divided by the value-equivalent 
> of
> constant capital advanced. That is r = [m·B·g·x] / [m·(A+B)·x].

I have not had time to study your paper, but I certainly will. Your
suggestions are interesting, particularly the surplus-value

Best wishes,


Thanks. I’ll do the same with yours.

Best wishes,


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