# [OPE-L:3258] RE: TSS and value added

andrew kliman (Andrew_Kliman@msn.com)
Thu, 3 Oct 1996 13:18:59 -0700 (PDT)

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A response to Duncan's ope-l 3249.

I'm going to begin purely purely in labor-time terms, since I remain convinced
that money magnitudes and discrepancies between them and labor-time
magnitudes, are irrelevant to the value added/ revaluation/IVA discussion.

If 5 bushels of corn are purchased at their value, 500 labor-hours, at time 1,
just before being used as means of production, and if they then "count" as
anything other than 500 at time 2, then I would say that they are being
revalued. I base this on my understanding of the word "revalued," and not on
any concept of value added. Thus, when you point out again that the BEA does
not count the 5 bushels as 500 in value in its value added/IVA calculations,
being true, but I'll say that the BEA revalues the corn.

If you want to say that valuing the corn as 500 labor-hours at time 2 *is*
revaluing it, and that the BEA does not revalue it, I'm willing to accept that
usage in this discussion (but I can't promise I can remember to use the terms
this way). It is just a matter of terminology.

What is not a matter of terminology is this. I'm still not sure whether you
agree that a change in the *aggregate* value of this corn between times 1 and
2 (say a change of -20 labor-hours, from 500 to 480) should not be counted as
part of the *aggregate* value added by the extraction of living labor in
capitalist production. Clearly the change in the *unit* value of the corn is
affected by how much living labor is extracted *per unit of output*, but the
question is this: if the workers work 100 hours between times 1 and 2, have
they added a value of 100 labor-hours or a value of 100 - (-20) = 120
labor-hours? I say the former, and add this 100 to the 500 to get 600
labor-hours as the value of output at time 2.

Now, in arguing that I compute value added incorrectly, you *in essence* took
my value of output at time 2, 600 labor-hours, together with the input of 5
bu. of corn at time 1 and the output of 6.25 bu. of corn at time 2, and
calculated as follows: take the 600 labor-hours, subtract (5/6.25)*600 = 480
labor-hours, and arrive at a value added of 120 labor-hours. You then imputed
this 120 labor-hours to living labor expended. I disagree with this. I
think that if the workers worked 100 hours, Marx's theory says they add a
value of 100 labor-hours.

That you and I both began with money figures originally disguised the
underlying labor-time calculations, which is why I find it more helpful to
work directly with labor-hours. So what are my money prices? They could be
anything, in principle. Let's assume that 1 labor-hour is equivalent to \$1 at
time 1 and \$2 at time 2. Then I'd say that the money-value of the corn
invested is \$500 and the money-value of the output is \$1200. The monetary
"value added" is \$700, but I find the term misleading here, because the \$700
calculation in money terms would then be: take \$1200, subtract (5/6.25)*\$1200
= \$960, and arrive at a monetary value added of \$240, which would again give
you a labor-time value added of 120 hours if you reckoned according to 1
labor-hour = \$2. Or, as I've noted, if you use your own value added
calculation, and take the 100 hours worked as the labor-time value added,
you'd get 1 labor-hour = \$2.40, which contradicts the original assumption.
Something seems wrong with this.

There is one way and only one way your equation works --- you cannot accept
any labor-time value of output as given, or, equivalently, you cannot accept
any money-value of output *and* labor-time/money relation at time 2 as given.
You *must* hold that if workers work 100 hours, and 5 bu. and 6.25 bu. of corn
are invested and produced, respectively, the value of the output is 500
labor-hours, no more, no less. This is, of course, the traditional

The point is this: you cannot take *my* labor-time value figures, or,
equivalently, you cannot take *my* money-value of output and the
money/labor-time relation I assumed in order to get the money figures (the
an internal inconsistency in my interpretation of value determination in
Marx's work. Rather, it is your formula that is inconsistent with my
interpretation and with any interpretation other than the simultaneist one.
Your formula implicitly assumes that the latter is correct. If my value of
output is correct, or any value of output other than l/(1-a) is correct, then
your formula either gives the wrong labor-time/money relation or gives a value
added that diverges from the living labor extracted, and it therefore can't be
used to show internal inconsistency in my interpretation.

Now, you may accept that the unit value of output must be l/(1-a) --- I'm
still not sure. If so, we have a difference in interpreting Marx, and you and
I will get different results for almost everything, the rate of profit, total
value, the money/labor-time relation, constant capital, etc., everything
*except* value added in labor-time terms (and perhaps variable capital and the
rate of surplus-value, since I think we agree that variable capital isn't
revalued [in my terms, i.e., doesn't change] over the course of the production
period).

But as both Fred and Bruce recognize, in different ways (Fred's way is mine),
whether I'm getting the wrong value added is not the issue. We both get the
same value added in labor-time terms. The real issues are first, whether
constant capital and therefore the value of output are what simultaneism says
(400 labor-hours and 500 labor-hours in period 1 of my example) or what
temporalism says (500 labor-hours and 600 labor-hours). Second, whether
simultaneous determination can make any sense intertemporally, which I
addressed in an earlier post today. And third, which interpretation is
consistent with Marx's results.

Andrew Kliman