[OPE-L] Fred's argument about the deduction (retro)

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Wed Jan 16 2008 - 12:42:03 EST

The question is really whether surplus value is a religious concept, or whether it refers to an objective reality. If it is a religious concept, we can only study it sociologically or psychologically by observing Marxists muttering about "C V and S". If it refers to an objective reality, the question is how we can know about it, what we can observe about it, and in what ways we could measure it. 

If U is a "deduction" from S, total S can never equal total P, and indeed P will quantitatively differ greatly from S. In that case, the equality of total surplus value and total profts can never hold by definition. The implicit assumption is that U is funded from the value product created by the productive workers in the same accounting period, but what evidence is there for that assumption?

Paul C.'s solution is that the magnitude of S is relevant only in the estimation of the value of the net product, obtained basically by subtracting V from value added like Fred does. To calculate R, you strike a ratio between P and the capital stock (fixed capital and inventories). But clearly Marx himself thought that R = S/(C+V). The ratio is supposed to be the ratio between the total stock of productive capital tied up during the year and the total surplus value which it yields during the year (the sum of profit, interest and rent; presumably it would also include taxes and certain fees paid in respect of production).

As far as Marx was concerned, rent payable from the gross income of producing enterprises constitutes a component of surplus value, and rent receipts from producing enterprises constitutes an appropriation of surplus value. Since enterprises often have both rent receipts and rent payments, then a least in aggregate the net rent (payments less receipts) constitutes a component of surplus value that is part of the value product. You can exclude rent from the calculation as Paul C. does (and in fact national accounts do this, by either excluding rents altogether, or by including them in intermediate consumption, as with leases of productive equipment), but then you don't follow Marx's concept, that is all.  

According to Michael Perelman, Marx's economics is only a qualitative theory, and in that case we cannot empirically measure any of the variables he mentions, and any quantitative model faces insuperable contradictions. I find that difficult to believe, because there may well be an intermediate position between exact measurement and no measurement at all - we may be able to develop empirical indicators which approximate the economic relationships Marx specifies sufficient to test the validity of his theories. 

Marxists usually assume that the value product is equal to net value added, give or take a few bits. But in so doing, they have already accepted the accounting definitions of production, gross output, intermediate consumption, gross profit, compensation of employees, taxes on production, economic depreciation, and subsidies. However, once we deconstruct the meaning of these definitions, it is clear that the value product and net value added necessarily diverge by a considerable margin. I cannot go into detail here because it is a long story, but anyway it suggests, that for a better measurement we have to ask very foundational questions about the estimation of gross product and capital, rather than simply take the accounting concepts for granted.

Thus, a research statistician would adopt a strategy involving several levels of inquiry:

- What is the objective of measurement?
- What are the pure concepts for which we seek measures, and what do they presuppose?
- What are the operational definitions for these concepts, and how do they differ from the pure concepts?
- What measures are feasible for these operational concepts, and to what extent can the measures approximate the operational concepts?
- How accurately can the measures approximate the operational concepts?

One thing we could conclude is that Marx's model of the essential relationships involved diverges considerably from the observable relationships we can measure. We would go wrong if we reasoned by analogy that Marx's characterization of the essence of capital corresponds directly with observable realities. This is not an insuperable scientific problem per se, insofar as some things may really exist without us being able to measure them with any exactitude. But it is an insuperable problem if the essential relationships do not manifest themselves in observables in any way whatever, because in that case, there is no observable  evidence possible at all to test the essential relationships. In that case, these concepts are strictly metaphysical, i.e. not amenable to any scientific proof at all, an unverifiable interpretation. 


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