[OPE-L:3324] Re: TSS and Value Added 2/2

Duncan K. Fole (dkf2@columbia.edu)
Tue, 8 Oct 1996 14:37:35 -0700 (PDT)

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More comments on Andrew's [OPE-L:3307]:

>Hence, the real issue is whether (1/m[t-1])p(t-1)aX(t) + l(t)X(t) is indeed
>the labor-time value of output, i.e., whether the first term is Marx's C and
>the second is his V+S, in labor-time terms. Simultaneist interpretations deny
>that the first term is C; the TSS interpretation affirms this.

Duncan (now):
We have no disagreement that l(t)X(t) is the labor-time measure of Marx's
v+s. Without getting into doctrinal discussions, it seems clear that there
are two meaningful, but different, ways of answering the question: what is
the labor time embodied in the means of production used up in a given
period? The first answers this question historically by keeping track of
the actual labor time of various vintages contained in the productively
consumed means of production, and adding labor of these different vintages
together. The second answers this question by imputing to the means of
production used up the labor time required to reproduce them with
contemporary methods of production.

For what it's worth I think Marx quite explicitly makes the point that the
market revalues stocks according to reproduction cost in the first chapter
of Volume I of Capital. But in any case, this ambiguity seems to me a
powerful argument for sticking with the idea that the monetary expression
of value is the ratio of the money value of net output to the living labor
expended, because you'll come out with the same answer this way, whichever
method of valuation of inputs you use.

Let me emphasize here that this method does not prejudge how you might
measure c when calculating the rate of profit. If you are interested in the
money rate of profit on historical cost, fine. If you are interested in the
rate of profit on reproduction cost, fine as well, as long as we are
careful to be specific about what we're talking about.

>Second, I deny that my actual procedure, as I have just outlined it, imputes
>price changes in stocks to the value added by living labor.

Perhaps at this point we might make more headway if you would explain how
you think we ought to go about measuring the monetary expression of value
from real data on prices, inputs, output, and labor time. Perhaps this way
of approaching the LTV will allow us to reach a firmer shared ground of
discussion (even if we eventually agree to disagree!)


>Incidentally, my GVP equation differs from what Duncan thinks my equation is.
>Using *my* concept of "money value added" -- an expression I don't like, but
>will accept for the moment --- and *Duncan's* formula relating the MEV and
>money value added (that he thought we both accept), one would get the
>following gross value of the product in labor-time terms:
>GVP(t) = (1/m[t])p(t)X(t) = (1/m[t])p(t-1)aX(t) + l(t)X(t)
>which differs from mine in that the first RHS term is being deflated by m[t]
>instead of m[t-1]. I think this is clearly wrong, since m[t] corresponds to
>p(t), but m[t-1] corresponds to p(t-1).

Duncan (now):

This won't make any difference in the examples where m(t) is given and
constant over time.

>Duncan: "When I solve the equation using the NIA definition of Money Value
>p(t)X(t) - p(t)aX(t) = ml(t)X(t)
>with the same rate of increase in labor productivity, I (I think correctly)
>get a price path that declines at the same rate as social labor productivity,
>and leads to a constant money rate of profit."
>This implies that Duncan's GVP in labor-time terms is:
>GVP(t) = (1/m[t])p(t)X(t) = (1/m[t])p(t)aX(t) + l(t)X(t).
>Value added is being attributed solely to living labor, as in my equation, but
>the first RHS term counts C differently, not due to any monetary factor, but
>in labor-time terms. *This* is where we differ. Duncan's formula uses the
>post-production labor-time value of means of production, instead of the sum of
>labor-time laid out as constant capital at the start of the production period.
> But I'm still not sure that Duncan *wants* to deny that the constant capital
>laid out at the start of the period is transferred to the value of the
>product, as all simultaneist interpretations do.

Duncan (now):
The advantage of defining the monetary expression of value as the ratio of
the value of net product (NIA value added) to the living labor time is that
the result does not depend on how you value the constant capital, since it
is netted out. Do you want to define the monetary expression of value as
the ratio of the value of gross product to some labor input? If so, which
labor input, since the gross product has in it the means of production
produced by a whole historical range of vintages of labor?

I'd like to thank Andrew for his patience and work in pursuing my
questions. I feel that I've learned a lot from this exchange, even if we
haven't resolved our differences completely.


Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947
e-mail: dkf2@columbia.edu