[OPE-L:2216] Re: New Solution

akliman@acl.nyit.edu (akliman@acl.nyit.edu)
Tue, 14 May 1996 15:34:25 -0700

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This is a reply to Riccardo's ope-l 2211, and it will also in the process
address Simon's point about differential treatment of C & V.

I owe a serious post to Riccardo on many thoughtful points and questions
he has raised. He's in the same boat as a lot of others to whom I owe
posts. I apologize again to one and all, including Riccardo, because
this one will touch only on his latest points.

Yes, I did not answer Riccardo's question in Boston. I had too little
time, too many questions to answer (this was during a panel) and I
answered the questions I understood best (including 1 or 2 of Riccardo's).
I'm still not sure I understand the issue, but I'll take a stab at it.

I do not agree that there is no advance of capital for means of production
by capitalists as a whole. What advance means to Marx is that money
is not spent, but laid out for the purpose of getting it (and more)
back. I think this may be in Ch. 4 or 5. Thus, all of C is advanced, as
is all of V. It is true that proceeds from sales of last period's products
are (generally) enough (more than enough) to purchase the C; this is,
however, also true for V. ... Intermediate goods is a Keynesian
concept, not a Marxian one. Also, I think the category is a misrepresen-
tation of the real situation. It presumes that all means of production
"eventually" get used in the production of consumer (final) goods. This
is not the case, as Marx's schema of expanded reproduction show. If
we have steel which produces more steel to produce even more steel, etc.,
then how is it an intermediate good. (Not so incidentally, for Marx,
capitalism is first and foremost, production for production's sake.)

As to the circuit and the timing of purchases, examples I use assume,
for simplicity, that circulation is instantaneous, so that the end
of one period of production *is* the beginning of the next. Hence,
LP and MP are purchased at the same time, after last period's production
and before this period's. C and V are determined by the quantities
purchased and by the prices reigning during that "moment" (between the
two periods of production) when they are purchased (or would need to be
purchased--raw materials might have been actually purchased 5 years ago,
e.g., but the value they transfer to their product is determined by
their price when they enter production. This however, does not affect
*total* C, which is given historically; it only affects the value
transferred.) And both LP and MP are purchased before they enter

If we relax this assumption, nothing really changes. Capital advanced is
still given historically, and the value transferred is determined by the
quantity used up and the price of the MP when they enter production.

I think this answers Riccardo's question, but I'm not sure. Please tell
me if I'm wrong, Riccardo.

As for the rest of Riccardo's points in ope-l 2211: I have no "model" of
what determines the value of labor-power. (In general, as Alan rightly
stresses, there is no TSS model of capitalists' behavior. The TSS
interpretation trys to theorize the consequences of capitalists'
behavior, whatever the behavior might be.) However, personally I
don't think that if prices are going to be higher by the end of the
week, and workers are hired at the beginning, that the money wage is
raised so as to keep workers' consumption constant. No, they have to
pay the higher prices until they get a wage increase; it isn't
automatic. But maybe I've misunderstood Riccardo here.

More important, however, I think, is this: THE VALUE OF LABOR-POWER, OR
IS NOT THE SAME AS VARIABLE CAPITAL. Variable capital is the sum of value
laid out to acquire workers. It is not determined theoretically, but
practically--7 workers are hired for 1 week each at $300 per worker.
Variable capital is $2100. (The TSS interpretation does not predict
why it is 7 instead of 6 or 8, or $300 instead of $250 or $350.)

By the same token, constant capital is not the value of means of production.
It is the sum of value laid out that is used to acquire means of production.
Marx is extremely clear about this in Ch. 8 (Vol. I), 2-1/2 pages from
the end, but almost no one has paid attention to what he says here.
He writes that MP and LP are just different forms of existence assumed
by the capital, which was originally advanced (in his simplified discussion)
in the form of an independent money. Credit must go to David Yaffe, who
did notice this more than 2 decades ago.

This is why I think Fred is right to say that C and V need to be treated
the same way. Discussions about how the value of labor power is
determined are fine, but beside the point WHEN we are dealing with Marx's
Ch. 9, Vol. III transformation, because the starting-point of that
transformation is not value of MP and value of MP, but constant and
variable capital. RTFM!

Had this been understood, there would have been no "transformation
problem." One reason the confusion arises is that economists, though
probably not real people, have thought that the transformation deals with
the move from a system of commodity exchanges at values to a system of
commodity exchanges at production prices. And the root of this is partly
a reading of Marx through Ricardianism. Marx's standpoint, however, is not
the production of commodities by means of commodities, but the production
of commodities by means of capitals.

One important implication of this is that those who go around saying that
TSS values are not "labor embodied" values simply misunderstand very,
very basic things about volume I of _Capital_. They are disagreeing
with Marx, not us, and what they disagree with is the formula
value of the product = (used-up) C + V + S. Even in vol. I, exchange
at values is just an assumption, not a postulate used to derive anything
, so in principle, even in vol. I, there can be a discrepancy between
used-up C and value of used-up MP. That's in _Capital_, and that's
what they disagree with.

Andrew Kliman