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

From: Pen-L Fred Moseley (fmoseley@MTHOLYOKE.EDU)
Date: Thu Mar 15 2007 - 10:35:45 EDT

Quoting ajit sinha <sinha_a99@YAHOO.COM>:

> --- 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
>> 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?
>>
>> 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
> 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.

Yes, you can.  You can “get a money measure of constant capital” (and
also variable capital) from EMPIRICAL OBSERVATIONS (as long-period
averages).  Capitalists invest a certain quantity of money capital (M)
in the sphere of circulation, prior to the production of output, to
purcase means of production and labor-power.  This empirical quantity
of money capital ALREADY EXISTS, prior to production, and therefore CAN
BE TAKEN AS GIVEN AS SUCH in the determination of the total price of
the output and the total surplus-value (which is the main goal of the
theory), as explained below:

1.  The given empirical M is divided into C + V.  C is the money
capital advanced to purchase means of production, and V is the money

2.  The given empirical C becomes one component of the total price of
the output (i.e. C is “transferred” to the price of the output).  The
other component of the total price is the new value produced by current
labor (see #3 below), so that:

P  =  C  +  N

The given empirical C becomes the first component of the price of the
output, no matter what determines the magnitude of C.  It is not
necessary to know the determination C in order for C to be the first
component of P. The first component of the total P is the actual
empirical C (as indeed it is in reality), whatever the magnitude of C.
The first component of the total P is not a hypothetical quantity
(equal to the labor-values of the means of production, as in the
standard interpretation), because then the total P determined would be
a hypothetical total P, not the actual total P, which the theory is
intended to explain.

3.  N is determined by the product of SNLT (L) and the MELT (m), both
of which are also taken as given:

N  =  m L

4.  The given empirical V is subtracted from N in order to determine
the total surplus-value produced:

S  =  N  -  V

=  m L  -  m Ln			where Ln = V / m

=  m (L  -  Ln)  =  m Ls

The given empirical V is subtracted from N to determine S, no matter
what determines the magnitude of V.  It is not necessary to know the
determination V in order to subtract the empirical V from N and
determine S. The V that is subtracted from N to determine S is the
actual empirical V (as indeed it is in reality), whatever the magnitude
of V.  V is not a hypothetical quantity (equal to the labor-values of
the means of subsistence, as in the standard interpretation), because
then the total S determined would be a hypothetical total S, not the
actual total S, which the theory is intended to explain.

logically OK to begin a theory with these empirical observations of M
=  C + V, and use these empirical givens to determine N and S, as
explained above.

There is more to the theory of course, including the determination of
the rate of profit and prices of production, and the eventual
explanation of the given empirical C and V as equal to the prices of
production of the means of production and means of subsistence.  But I
think I will stop for now at this Volume 1 macro level.

A few more responses below.

> 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.

No, I am not telling you that.  Rather, I am telling you that the same
M is taken as given in both in the determination of the total price and
total surplus-value in Volume 1 and in the determination of individual
prices of production in Volume 3, and that is why there is not
transformation problem.  And I am telling you that the initial given M
is eventually explained as equal to the prices of production of the
means of production and means of subsistence.

> Then do
> I have to still explain that your methodology has some
> problem?

Yes, I am afraid so.  I don't see a 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.

You are implicitly assuming here the neoclassical definition of capital
as capital GOODS.  But Marx’s definition of capital is very different
from the neoclassical definition.  Marx’s definition is in terms of
money:  M – C … P … C’ – M’.  There is no difficulty in aggregating
Marx’s concept of capital, because money is homogeneous.  All the
different quantities of money advanced to purchase means of production
and labor-power can easily be added up.  There is no “aggregation
problem” with Marx’s concept of capital.

> 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

Are you suggesting that it is OK to take money variable capital as
given, but not OK to take money constant capital as given?  Why should
there be a difference between C and V in this regard?

Thanks for the discussion.