[OPE-L:1059] Re: does price affect value

akliman@acl.nyit.edu (akliman@acl.nyit.edu)
Wed, 14 Feb 1996 16:33:05 -0800

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Andrew here. I thank Paul C. for his very interesting and thoughtful
comments on the TSS interpretation of valuation in Marx's theory (ope-l:

In reply: first, I want to clear up a possible confusion. Paul writes
that the standard way of computing values "measures the constant capital
in labour terms not price terms." The problem here is that the opposite
to price is value, the opposite to labour is money. As I understand
things, when we speak of value not equalling price, we are talking about
a *quantitative* difference, a different distribution of value. Thus,
for an individual firm, we may have a difference between its "value"
(value produced) and "price" (value received) rates of profit. Since this
is purely a quantitative difference, it has nothing to do with how value
is expressed. Thus, BOTH values and prices in this sense can be measured
in labor-time and in money terms.

Hence, in the expression

v(t+1) = p(t)A + L

(I'll omit time subscripts on the phyical quantities, becuase they don't
change during 1 period), if v and L are in labor-time, then so is p.
Below, I will go into why the "primary" equation must be in labor-time,
though v, p, and L can be in money terms *if* the monetary expression
of value is constant.

Anyway, I think this might answer Paul's complaint that letting prices into
the definition of values confuses the social cost of producing commodities
with the private cost of acquiring them. I say this because, although the
meaning of this compliant wasn't entirely clear to me, Paul went on to
illustrate it by talking about things that can change the monetary
expression of value.

Paul also says that the TSS interpretation requires an independent method
of estimating the value of gold (based on the labor-time needed to
produce gold). I don't think so. I'll leave aside here a number of
thorny issues concerning the relationship between the value of gold, the
exchange-value(s) of gold, and the monetary expression of value (MEV),
because I don't think they need to be solved in order to address the
issue Paul has raised. We can work solely with the relationship between
total money value and total labor-time value. I'll use the term "MEV"
in the following way: if we call total money value TMV and total labor-
time value TLV, then

TMV(t) = MEV(t)*TLV(t)

one might use a different term, but the relationship should be clear.

Now, note that Marx's Ch. 9, Vol. III transformation assumes an unchanged
MEV. I don't have the page citation, but at one point, fairly early on,
Marx writes that a change in total price is always to be explained by a
change in total value, but of course we are not referring here to a mere
change in the monetary expression of these values.

Thus the conservation laws hold given a constant MEV. Put differently,
Marx used money values and prices in the transformation, but they
reflected sums of labor-time unambiguously. Thus, what is actually
conserved is the total labor-time and the surplus-labor time. So the
result that total price = total value means that TLV(t) = TLP(t), where
the latter is total labor-time price. Given the above, we then have

TMV(t) = MEV(t)*TLP(t) = TMP(t),

since it is the same total labor-time that is being expressed monetarily,
just distributed differently, in TMP, total money price.

Now, to answer Paul's point about the need for an independent estimate of
the value of gold: it follows from the above that if we know TMP and if
we know either TLV or TLP, then we can compute the MEV. Or if we know
TMP and MEV, then we know TLV and TLP, etc. Now, we might not actually
be able to compute any of this, though some proxies don't seem hard to
come by. No matter: the issue really has nothing to do with our ability
to actually measure any of these terms. Rather, at any ONE moment, there
is always a single and unambiguous way of converting labor-time and money
sums into one another, one that does not require us to know the value of
gold in order to do so.

Now, if the MEV changes over the production period, then the conservation
laws continue to hold in labor-time terms (as should be clear, since they
held when the MEV was constant, and changes in MEV do not affect the total
labor-time), but TMV and TMP change. Note, however, that the change in
TMV and TMP is necessarily the *same*. Hence, it is ALWAYS the case
that total value and total price and total surplus-value and total profit
are equal, both in money terms and in labor-time terms, although the
money and labor time measures can change at different rates over time.
Moreover, the "value" AND "price" rates of profit are ALWAYS the same,
though the labor-time and money measures of the profit rate diverge
whenever the MEV changes.

As an example, assume no fixed capital, and let the vector p$(t) be
unit money prices. Then, using the usual notation,

p$(t+1)X/{p$(t)AX + MEV(t)*LX} = 1 + hange in MEV between t and t+1.

So, in money terms, total price (LHS numerator) will not equal the
money value produced (LHS denominator) in general. But we know the
reason why not--Marx calls it an "inflation of the MEV." (This last
equation follows immediately from the TSS labor-time value and price
equations plus the above definition of the MEV).

Finally, Paul commented on the need for p(t) to be socially necessary
labor-time. He said the problem does not arise if constant capital
is valued using v(t). First, where did this come from? What happened
to simulatenous valuation of input and output values all of a sudden?
Second, all I meant was that a firm might pay more or less for the means
of production than is socially necessary, but if so, that doesn't count.
p(t)*A is the amount of labor-time that is needed to *produce* A, on
average, at time t (when p(t-1)*A(t-1) is understood as one component
of that total).

There are a number of issues, important ones, that remain concerning the
value of money, etc. I don't pretend to be able to answer them all.
But the key point is that exchange can only distribute labor-time
differently, not alter the total. Changes in the MEV may or may not be
independent of how value is distributed, but as far as price and value
are concerned, their equalitiy, in money terms and in labor-time terms,
is not affected.

Andrew Kliman