[OPE-L:1051] does price affect value

Paul_Cockshott (wpc@cs.strath.ac.uk)
Tue, 13 Feb 1996 08:52:56 -0800

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In other words, the value of a capitalistically produced commodity has
TWO parts. Not only the new value added, but the old value preserved and
transferred. Both parts are required for the production of the commodity,
and both parts are *labor-time*. p(t) is a vector of labor-times per unit
of the commodities, just as L(t) is.

This is a rather approximate use of the concept of price. A price
in the sort of commodity money economy that Marx deals with is a
weight of gold. One can convert this to an amount of labour time
by multiplying by the number of hours labour per gram of gold,
i.e., by the value of gold, but this presupposes that one has an
independent method of estimating the value of gold. But what is
this independent method?

In the standard way of computing values, where one measures the
constant capital in labour terms not price terms, one has an
unambiguous way of computing the value of gold as of all other

It is not yet clear to me how you obtain the value of gold that you
need in order to convert prices which are weights of gold into hours
of labour.

Hence, if p(t) changes then the labor-time required for the commodity's
production changes (or course, p(t) must itself reflect only socially
necessary labor, and that is assumed in my formula).

When Andrew says that he assumes that p(t) reflects only socially necessary
labour he seems implicitly to assume some definition of socially necessary
labour that is independent of his way of computing value. This is strange
since although value and socially necessary labour time are identical under
the formula
v(t)= v(t-1)A(t-1) + L(t-1)
it is just this independent definition of socially necessary labour time
that he is rejecting in using his method of computing values.

The key issue, of course, is whether c(t) is an amount of labor-time
required for production even if c(t) not = L{(I-A)**-1}A. I say that
Marx says it is. Several references could be brought, and I cited Vol.
III (Vintage), p. 265. Here's the point. Say we have two sectors, one
that produces commodities having a value of 100 and the other producing
commodities having a value of 40. But they will sell maybe at prices of
90 and 50. Given only that total value = total price, then it is clear
that the prices are just fractions of the total labor-time, albeit
different fractions than the values. Hence, the prices are themselves
sums of labor-time, not giraffes, or Augustinian theology, or logarithms
(of any color). This is not tautology--it depends on the conservation
of value in exchange.

The problem I see with introducing prices into ones definition of values,
is not only that it confuses the social cost of producing something with
the private cost of acquiring it on the market, but that the conservation
of value in the exchange process, does not necessarily imply that the
value of the flow of output must equal the price of the flow of output.

As soon as one deals with prices and thus money one has to drop Says law,
since there is the implicit formation of hoards. If, at a particular phase
of the trade cycle, capitalists throw more money into circulation to
acquire raw materials, these can rise in price without any change in the
amount of labour required to produce them. There has been no additional
value created by this process, in that the loss to those buying at prices
above their long term exchange values is ofset by the gains of the sellers.
But it can result in an aggreate rise in the price level, since, there
is no need for any compensating fall in the prices of consumer goods and
other finished products to offset the rise in the price of raw materials.