[OPE-L:3153] RE: TSS and value added

andrew kliman (Andrew_Kliman@msn.com)
Thu, 26 Sep 1996 15:35:16 -0700 (PDT)

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In ope-l 3146, Fred wrote, in part:

"It seems to me that Andrew's (3097) does not respond to Duncan's main point
(main criticism of TSS) in his (3074). As I understand it, Duncan's main
point was that the TSS interpretation implies that the value added component
of the price of commodities is affected by a mere change in the price of
material inputs, independent of the amount of living labor, which contradicts
Marx's labor theory of value. ....

"Duncan assumes along with Andrew a constant value of money - or a constant
monetary expression of labor. The "purely financial effect" in Duncan's logic
is not
an inflationary effect in either of Andrew's two senses, but is instead the
effect of a change in the price of material inputs on value added, independent
of changes in living labor."

I've tried to address this again in a post that "crossed" with Fred's. The
only other thing I have to say is that if the monetary expression of value is
constant, and there are no relative price changes, then Marx's theory implies
that all changes in the prices of materials are *dependent* on changes in
living labor. The TSS equation reflects this. In other words, I deny the
following (also from Fred's post) is possible, if he is referring, as I think
he is, to *aggregates*:

"According to the TSS interpretation, technological change during a given
production period which reduces the price of material inputs (along with a
constant amount of living labor) will reduce P (which is determined by current
costs), but does not affect C (which is determined by historical costs).
Hence, VA (and consequently profits) must decline; i.e. VA is affected by the
change in the price of
material inputs without a change in the amount of living labor."

If P = C + VA, and VA is constant because the monetary expression of value and
living labor are constant, and C is given, then P can't fall.

Andrew Kliman