# [OPE-L:3167] TSS and value added

Fred Moseley (fmoseley@laneta.apc.org)
Fri, 27 Sep 1996 22:26:40 -0700 (PDT)

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This is a response to Andrew's (3146) about the Duncan's criticism that the
TSS interpretation implies that a change in the price of material inputs
will change the amount of value added, independent of the amount of living
labor, contrary to Marx's theory.

In (3144), I presented the following price equation:

P = C + VA

and argued that:

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.

Andrew responded in (3148) that these results are not possible:

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.

I will try to reformulate my argument in terms of equations more similar to
Andrew's own. (I am working mainly from Duncan's (3074). I cannot locate
Andrew's post to which Duncan was responding because it was sent while I was
"on the road". Andrew, could you please send me another copy of this post?)

1. It seems that Andrew's "historical cost" price equation could be written as:

p(t) = ap(t-1) + VA(t)

where VA is the "value added" component of the price of commodities, which
according to Marx's theory is due solely to living labor.

2. Now assume three periods of production: p(0), p(1), and p(2). Then the
price equations for periods (1) and (2) could be written as:

p(1) = ap(0) + VA(1)

p(2) = ap(1) + VA(2)

3. Assume that there is no technological change in period (1), so that
p(1) = p(0).

4. Finally, assume that there is technological change in period (2) that
reduces the cost of material inputs, so that p(2) < p(1). However,
assuming "historical cost' valuation, the constant capital component of p(2)
and p(1) are equal, because p(1) = p(0). Therefore, it must follow that
VA(2) < VA(1). In other words, VA has declined solely as a result of the
change
of the price of material inputs, without a change in the amount of living
labor, contrary to Marx's theory.

This has been Duncan's main point in recent posts, and I do not think it has
yet been answered by Andrew or other TSSer.