[OPE-L:1023] Reply to Fred (961: Valuation of Inputs)

akliman@acl.nyit.edu (akliman@acl.nyit.edu)
Fri, 9 Feb 1996 10:57:50 -0800

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I dislike long posts myself, but this will be one. I need the space to
respond to Fred. I have great respect for his work on the FRP and his
desire to get at what Marx's own value theory was, and I think that his
"logical method" defense of simultaneous valuation is the strongest by
far. So he deserves a proper response, and it'll take some space, though
this isn't a mega-post.

Fred is right that, emprically, the difference between pre- and post-
production reproduction costs is usually much smaller than the difference
of both from historical costs. But, conceptually, there's a huge difference
between pre- and post-, because the latter abolishes historical time. And
in doing so, as I've shown in my posts, or pres :-), on Torrens vs. Marx, it
contradicts the determination of value by labor-time. I was alluding to
this when I said that the simultaneist interpretation cannot make sense of
the whole of Marx's value theory, not to the specifics of Alan's conception,
which I do not fully share.

Fred has responded with much the same quotes and interpretations that I
already questioned. I suspect my response might start the cycle again.
As I've noted, I doubt that this procedure will result in agreement, which
is 1 reason why the relative adequacy of different interpretations must be
judged by how well they can make sense of the whole (unless the whole is
*demonstrated* to be self-contradictory). Despite my misgivings, however,
I'm willing to reanalyze the quotes once more. But batting interpretations
back and forth like a tennis ball across the net :-) is not the best way,
I think. So I want to begin with something that may seem far removed from
input valuation--Marx's philosophy--to get to the ground of the difference
between Fred's interpretation and mine.

Fred repeatedly says the meaning of the passages he quotes is clear. But I
interpret them radically differently. Is he obtuse? Am I? I think not
(therefore I am not :-) ). We understand Marx's use of philosophic terms

Fred quotes MECW 30:79-80. The beginning of the passage states that the
value of means and materials of labor "only re-appear ... to the extent
that they were *preposited* to the latter [production] as values, i.e.,
were values *before* they entered into the process." [I'm using stars for
*my* emphases; I'll use caps for MARX'S.] In Vol. III, Vintage, p. 265,
Marx writes that although "a commodity's cost price may diverge from the
value of the means of production consumed in it, this error *in the past*
is a matter of indifference to the capitalist. The cost price of the
commodity is a *given precondition* ...."

their synonyms--'presupposed', 'postulated', etc.) REFER TO TEMPORAL

Fred thinks Marx's references pertain to his logical procedures. I suspect
that this interpretation stems from the fact that terms such as "preposited"
and "postulated" are categories of logic. But as we have just seen,
Marx has used them *interchangeably* with temporal categories. Why?

Whereas Western philosophy had separated thought and reality, Hegel re-united
them. Thus, the categoies of his logic are not categories of thought alone;
they are categories of *all* reality, thought included. Put differently,
logic is not "applied" to reality as if the content of the latter were
external to logic. The logic is the logic of the real world. (This of
course does not imply any Engelsian "dialectics of nature.) The same is
true of Marx: in these passages, he's referring to a real process of
value determination in capitalism.

Lenin seems to have been the first Marxist after Marx to recognize the
unseparatedness of thought and reality in Marx's work. In the winter of
1914-15 (the middle of WWI!), Lenin studied Hegel's _Science of Logic_.
At the end of his study of the section on Subjectivity in the Doctrine
of the Notion, which takes up Notion, Judgment, Syllogism, Lenin wrote:
"Very profound and wise! The laws of logic are the reflection in the
[sorry: OF the] objective in the subjective consciousness of man."

After reading the section on the Theorem, which Hegel shows to be transcended
by the practical Idea, Lenin writes: "the practice of man, repeated billions
of times, fastens itself in the consciousness of man by the figures of logic.
The figures have the solidity of a prejudice, an axiomatic character[,]
precisely (and only) because of this billion times repetition."

And, drawing conclusions immediately after completing the _Science of Logic_,
Lenin writes: "If Marx did not leave a Logic (with a capital letter), he
left the _logic_ of _Capital_, and this should be especially utilized on
the given question." [quotes from Raya Dunayevskaya's translation, in the
1958 ed. of her _Marxism and Freedom_, p. 340, p. 348, p. 353]

The phrase about logic of _Capital_ is well known, but the context isn't.
The context indicates that Lenin is suggesting that the logic of _Capital_
is not external to capitalism, not a method "applied" to analyze capitalism,
rather that the logic is that of capital itself.

I suggest that, when the passages Fred cites are re-read in light of these
remarks, the obviousness of his interpretation of most of them immediately
falls to the ground.

IV. RE-READING MECW 30, pp. 79-80
Take just a bit of this passage for instance: "in the labour process into
which they enter as material and means they are always *preposited* as
*given* values .... For in this process they only emerge as values in so
far as they entered as values." Doesn't this now suggest that entry and
emergence are real processes in real time? Doesn't it suggest that what
goes in earlier is what comes out later?

"... changes in their value ... have nothing to do with the labour processes
into which they enter as finished products with a *given* value. If this
value changes before the new product ... is finished, they nevertheless
relate to it as *independent, given* values *preposited* to it." Doesn't
this now suggest that, although the value of means of production (mp) can
change during the production period, the magnitude of constant capital (cc)
is nevertheless given before and independently of the change?

In TSV I (1969 ed) p. 109 (MECW 30:413 is translated identically), Marx
writes that: "it is true that the VALUE of this constant part [of capital]
can fall or rise .... This CHANGE IN VALUE, however, never alters the fact
that in the process of production, into which it enters as a condition of
production, it is a postulated value which must reappear in the value of
the product. ... In all circumstances it is a definite quantity of PAST,
MATERIALIZED LABOUR, which passes into the value of the product as a
*determining factor.*

Fred couldn't find the phrase "determining factor," but he says it means
essentially the same thing as "postulated value" or "given precondition."
But Fred say that although cc is a given precondition or determining
factor of the product's value, "IT IS NONETHELESS DETERMINED AT THE TIME OF
THE SALE OF THE OUTPUT." Hmm. How can "PAST" labor be determined in the
future? How can cc be a determining factor of the product's value if it,
itself, is determined simultaenously with the value of the product? How
can something "reappear" in and "pass into" the value of the product if it
doesn't exist until the product's value is determined (or, according to
Fred, even *later*, when the product is *sold*!)

If the value of products and the values of cc are determined simultaneously,
then neither is a determinant of the other. Both are determined by
something else--physical input/output relations (Dmitriev-Sraffa) or demand
(of the neoclassical "derived" type or the underconsumptionist "effective"

What Marx is saying in this passage is that changes in the value of cc do not
alter the magnitude of the cc-value that enters production. It is the latter
that reappears in the value of the product and which therefore is a
*determining factor* of the product's value.

Fred has objected to Alan's corn model as a representation of Marx's value
theory because, according to Fred, Marx's theory requires the assumption
that none of the products use themselves as inputs. He repeats this in his
interpret Marx as a simultaneist, as Fred recognizes here, one must
stipulate that Marx's value theory is applicable to NON-BASICS only!

As I mentioned in another post, Marx didn't object to Torrens' corn model,
but took Torrens' input/output data and came up with quite different
conclusions regarding value and profit (Fred is looking this stuff over--
I'll give him time to respond).

Marx *does* say the value of cc is determined in a different process from
the one in which it is used as an input. There's one way of understanding
this concept that does not limit Marx's value theory to non-basics: the
value of seed-corn used in year 2's production of corn is determined in
year 1's corn production process.

Fred evidently couldn't find the relevant passage. He cites one on p. 318
of Vol. I (Vintage), but I was referring to p. 314: the "value [of a mp]
is determined not by the labour process into which it enters as a mp, but by
that out of which is has issued as a product. In the labour process it
serves only as a use-value, a thing with useful properties, and cannot
therefore transfer any value to the product unless it possessed value
*before* its entry into the process."

This passage is wholly inconsistent with simultaneism, for which it doesn't
matter whether the mp had value before the process or not. A mp that had
zero value will still "preserve" and "transfer" a value it didn't have if
replicas of it do have value later, when the products it produces emerge
(or are sold, in Fred's view).

I had tried to explain how the value of cc can be understood as constant,
despite a change in the value of its elements, by referring to the difference
between value of cc and value of mp. Fred understood me as having said that
this difference *entails* that a change in the value of mp leaves the value
of cc unchanged. He says I made a "false inference." I would have, had I
said this, but I didn't.

I'm surprised that anyone thinks the passage on pp. 317-18 of Vol. I (Vintage)
supports the "replacement cost" position. Marx's example is: Day 1, price
of cotton = sixpence; Day 2, price of cotton = 1 shilling. "Each pound of
the cotton bought at sixpence and worked up *after* the rise in value,
transfers to the product a value of one shilling." Sure. The cotton is
worked up--becomes an input into production--AFTER the rise in value, and so
it transfers a value of one shilling, THE COST OF REPRODUCING IT WHEN IT
ENTERS PRODUCTION AS AN INPUT. Frec and others who quote this passage would
have a point if Marx had said the cotton worked up BEFORE the rise in value
or in process AT THE TIME OF the rise transferred a value of 1 shilling,
but he didn't.

Notice exactly how, in this very example, Marx calculates the value trans-
ferred. He doesn't use the price of cotton when the yarn (the product of
the cotton) is finished, which might not be 1 shilling anymore. Much less
does he use the price of cotton when the yarn is *sold*, which is likely to
be Day 3, or Day 8, or Day 47, or Day never. He doesn't even *mention*
these figures, because he doesn't need them. He calculates the value
transferrred by using the INPUT price of the cotton, at the moment when it
becomes an input.

{Those who think that values and prices are independent of one another in
Marx's theory (Fred isn't one of you) should note well that the input PRICE,
not the input VALUE, is what is transferred.}

Everything I've said also applies to Marx's subsequent examples on p. 318
(depreciation is an aliqout share of the current, pre-production price of
machinery). Also to the supposedly conclusive passage in Ch. 6 of Vol. III
that Fred didn't cite, but other simultaneists do.

What, then, is Marx's point on pp. 317-18? Simply that although things that
get used as cc transfer a value that cannot change once they enter
production, this doesn't mean that the value they transfer is fixed for all
time, i.e., the value transferred is not their historical cost.

In Ch. 8 of Vol. I, in conncetion with the concept of cc, Marx refers to
"transfer" of value 30 times, "preservation" of value 24 times, the
"re-appearance" of the value of mp 6 times, and the cc as "original" value
and "old" value 4 and 3 times, respectively. He says 3 times that the
value of mp "enters into the valorization process," and twice that the mp
"parts with" its value. Also that the cc is "pre-existing" value, a sum
of value "advanced," which "contribute[s]" its value to and "presents
[itself] afresh" in the value of the product, by means of a

Can anyone tell me of any other case in which transfer occurs instantaneously?
In which preservation is not of something pre-existing? And if the cc
transferred isn't pre-existing, old, original, value, then why does Marx
say that it is? Etc., etc.

Note also Marx's definition (p. 317) of cc: it is "the part of *capital* ...
which is *turned into* mp ... [and which] does not undergo any quantitative
alteration of value in the process of production." In the paragraph above
that (p. 317), he had written: "The excess of the total value of the product
over the sum of values of its constituent elements is the excess of the
capital which has been valorized over the value of the capital *originally
advanced* [the cotton, etc. examples clarify that "originally advanced" means
the pre-production reproduction cost, not the historical cost]. The mp on the
one hand, labour-power on the other, are merely different forms of existence
which the value of the *original capital* assumed when it lost its
monetary form."

These passages explain why cc transfers a given value despite changes in the
values of its elements during production. The cc is *not* the value of the
mp; it is the sum of value advanced to acquire items that *become* mp and
thus become the *form* cc assumes in production. The sum of value advanced
for this purpose--the cc--cannot change retroactively (unless we're talking
about the logic of time travel rather than the logic of capital). It is a
"sunk cost."

Now, it is true that if a firm buys something at a value of 19, and its value
falls to 16 before it gets used in production, then only 16 is transferred,
even though the 19 is also a "sunk cost." But this is a different case,
because the firm advanced more than it had to, and the only labor-time
that counts as value is that which is socially necessary.

If I've convinced anyone, good. If not, I'm not going to--I've already given
it my best shot. And unless decisive new textual evidence comes along,
I won't be convinced my interpretation is wrong. The more I look at the
existing evidence, the more convinced of the above interpretation I become.
So I suggest that the only way we're going to resolve anything is by
evaluating the relative adequacy of different interpretations in replicating
Marx's theoretical results.

Fred's post also raised the issue of the compatibility of stock and flow
measures. I hope to deal with this in a later post. It requires a
separate treatment, and the above was mega enough, in my view.

Andrew Kliman