# [OPE-L:3649] Re: Monetary expression of value

Duncan K. Fole (dkf2@columbia.edu)
Sun, 10 Nov 1996 14:44:07 -0800 (PST)

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Andrew addresses the question I raised of how to define the "monetary
expression of value" within the TSS approach. (Adolfo Rodriguez-Herrera
gives some persuasive arguments for calling this the "monetary expression
of labor" in Freeman and Carchedi, eds, Marx and non-equilibrium economics
(Brookfield, VT:Edward Elgar,1996, ch 4, but I will stick for the moment
with the more familiar terminology.)

Andrew's method, given data on gross output Q(t), market prices, p(t),
intermediate goods inputs A(t), and living labor time N(t) in a series of
periods is based on the equation:

(1/e(t+1))p(t+1)Q(t) = (1/e(t))p(t)A(t) + N(t) (TSS)

This is consistent with his examples, which are constructed by assuming
e(t) = constant over time (usually, for convenience, \$1/hr) and using this
equation and assumptions on Q(t), A(t) and N(t) to solve for the sequence
of market prices p(t). I pointed out that this equation cannot determine
e(t+1) without some assumption about e(t), or, more generally, some
starting point e(0). Andrew agrees with this, and proposes a number of ways
to get a starting e(0), including the "New Interpretation" definition. He
argues that it wouldn't make much difference quantitatively to the
estimated series e(t) on real data. I suspect this is true.

But from a theoretical point of view it is important to be conceptually
precise. The "New Interpretation" version of this equation would equate the
mev to the ratio value of the net product at market prices to the living
labor expended:

e(t+1) = (p(t+1)(Q(t)-A(t)))/N(t) (NI)

It is clear that there is a difference between the two methods, which will
lead to different estimates of the mev series on real data, and, as we have
seen in earlier discussions, leads to different solutions for the price
series in examples under the assumption of a constant mev.

The fact that there is a difference means that the TSS equation will not
generally yield an mev which is the ratio of the value of the net product
(or the value added) to the living labor time expended in each period. I
have two observations:

1) The TSS definition of the mev does not appear to be consistent with the
conservation of living labor time in the value added realized on the
market. As a corollary, it does not seem to be generally consistent with
the quantitative equivalence of surplus value realized on the market with
unpaid labor time.

2) In presentations of the TSS point of view, such as Alan's ch 11 in the
volume cited above p 235, or Andrew's ch 10 p 215, the quantitative
equivalence of money and labor time through the mev is stated as an
explicit assumption. This led me initially to the mistaken belief that the
definition of the mev. What exact content does the TSS interpretation give
to the assumption of a quantitative equivalence between value produced and
labor time?

I think it is a mathematical theorem that any definition of the mev which
conserves living labor time in value added and unpaid labor time in surplus
value will be equivalent to the New Interpretation definition.

Duncan

Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
(212)-854-3790
fax: (212)-854-8947
e-mail: dkf2@columbia.edu