[OPE-L:3169] RE: TSS and value added

andrew kliman (Andrew_Kliman@msn.com)
Sat, 28 Sep 1996 01:43:43 -0700 (PDT)

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A reply to Fred's ope-l 3167.

Fred wrote:
"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
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."

My answer is exactly the same as before. If there is no change in the amount
of living labor, then VA(2) = VA(1). As Fred notes correctly, ap(1) = ap(0).
Therefore p(2) = p(1). Since constant capital is given and the extraction of
living labor is unchanged, there cannot be a technological change that reduces
the cost of material inputs in period 2 (given a constant monetary expression
of value and no relative price changes).

Remember that p(2) = ap(1) + VA(2) is an equation *determining* p(2).
Causation goes strictly from right to left. That's because ap(1) is given
temporally prior to production, *then* new value is added during the process
of production, and *then* p(2) is a result of the process of production. One
cannot simply assume the size of p(2) and then "impute" value added.

Andrew Kliman