[OPE-L:444] Gil's unanswered question, references

Alan Freeman (100042.617@compuserve.com)
Tue, 7 Nov 1995 14:27:18 -0800

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Re: Gil Skillman's unanswered question

Also Re: Chaion Lee's short question; marginal and
average value contribution of labour

In the posting with the above headings I argued that Gil
Skillman's [OPE-L:339] question had not been answered.
The present posting provides citations and readings whose
aim is to help newer list members trace the discussion
themselves, through the archives, or others wishing to
join the debate to retrace it. Any reading is selective.
The list given here is not meant to prove a point nor to
be comprehensive and I apologise in advance to anyone who
is inaccurately represented. The main idea is that list
readers can chase down the original argument, themselves.

Note that I have only reached [OPE 404] so everything after
that, I can't refer to.

Duncan Foley: [OPE-L:337] Re: Chaion Lee's Short Question

"Chaion Lee asks whether the value of gold is regulated
by the marginal or average cost of gold production. I
don't really think this is a short question. The problem
is that in order to answer it it is necessary to specify
a model and in the course of doing so establish the level
of abstraction at which you are working. I think now that
the relative price of gold is largely determined by
speculation on future technological change in gold
relative to other commodities. Given the relative price
of gold, the marginal cost of production would in the
intermediate run determine which gold producers would be
active, and which mines would be closed down, as in any

Gil Skillman [OPE-L:339] Re: Chaion Lee's Short Question

"Why not ask the more general question: why isn't the
value of every commodity determined by marginal rather
than average production conditions, as in Marx's

"Note that if there are non-reproducible quality
differentials in inputs (which Marx certainly does not
rule out, whatever he has to say about the tendency
toward homogenization of labor), then if commodities
exchange at their values, determined by *average* SNLT,
then the market will necessarily unravel, with the
marginal ("high-cost") firms being driven out of
business, a new average being determined, the new
marginal firms being driven out of business, another new
average being determined, etc, until there is only one
firm-that with the lowest "cost" of production--in the

"In other words, formulation of the value of a commodity
in terms of *average* SNLT creates an unnecessary
confusion between "natural monopoly" and "pure
competition", to borrow some terms for the sake of
precise comparison."

Steve Keen:[OPE-L:343] Re: Chaion Lee's Short Question

"[re OPE 339-AF]because marginal considerations only
determine the lowest cost producer if the marginal is
rising. If marginal costs are constant or falling, then
they are largely irrelevant to price formulation; in this
case, the firm with the lowest fixed costs may well be
the most competitive, and that relates to average cost.
The more units sold, the lower per-unit fixed costs are,
hence economies of scale may be more important than
issues of marginal cost."

Paul Cockshott [OPE-L:348] Re: Chaion Lee's Short

"Why forced out of business? That would only be true if
the rate of surplus value was zero. Since that is not the
case, differences in costs of production merely mean that
there will be a variety of different apparent rates of
surplus value. Those producers useing excess labour donot
have all of it count as value creating and hence appear
toand I suppose in fact do, get less surplus value. But
less profit is not not the same as bankruptcy."

Paul Cockshott [OPE-L:342] Re: INTERIM PROPOSAL [951021]

"If one has a theory that says competition leads to
capitals in different branches earning the same rate of
return, then one has a theoretical problem. But what if
this theory is wrong. What if competition does not work
that way. What if capitals in fact earn profits
proportional to the number of workers they employ?"

Andrew Kliman [OPE-L:345] Re: INTERIM PROPOSAL [951021]

"My answer is that, if this [OPE 342 cited above -AF] is
a "fact," it still needs to be explained theoretically.
And unless one can adduce some unalterable, necessary
reason why this must be the case, then a theory that
holds to the determination of value by labor-time must
still be able to account theoretically for instances in
which profits received are disproportional to the number
of workers employed."

Paul Cockshott [OPE-L:385] Re: Clarification re
price/value theory

"I am sure that Andrew is right here [OPE 345 cited above
- AF], that in Ch 9 V3, he [Marx-AF] was concerned with
the quantitative discrepancies between prices of
production and prices that would operate were the simple
labour theory of value to operate. To my mind though,
the question at issue is whether systematic discrepancies
of the sort that he attempts to explain there are in fact
significant and abiding features of capitalist economies.

John Ernst [OPE-L:379] Value Digressions & Questions

"Does the worker in one country create the same amount of
value as a worker in another, given differences in
productivity? It seems to me that Marx in the first book
says answers this question in two different ways. In
Part VI, the worker in the more productive country is
seen to produce as if she/he created more value in a
day. In Part VII, the opposite or, rather, both workers
create the same amount of value in a day. Is this a
problem or are we back to individual value and social
value? "

See also:

Gil Skillman[OPE-L:373] Re: Chaion Lee's Short Question
Gil Skillman[OPE-L:375] Re: Chaion Lee's Short Question
Andrew Kliman[OPE-L:385] Re: Clarification re price/value
Jerry Levy [OPE-L:374] Money markets of contemporary
capitalism [digression]
Duncan Foley [OPE-L:380] Re: Money markets of
contemporary capitalism [digression]
Gil Skillman[OPE-L:382] Re: Chaion Lee's Short Question

I think that also relevant is the thread of discussion
started by Mike Perelman [OPE-L:395] abstract labor again:

"How would you calculate the value of a team of software
engineers working in a large industrial enterprise?"

I do not see how it is possible to conceive that this
value is in any sense proportional to the labour time of
these workers, either empirically or practically; 'value
added' (profit plus wages or margin on sales) by workers
in the most productive IT-based industries has been
calculated at around $750,000 per year. Mike has provided
what I think is the most decisive case in which price-
value deviations are empirically significant.

I have not cited the follow-up on this or the separate
but interlinked thread on whether abstract labour exists
outside of capitalism.