[OPE-L:3673] Re: [3602] Cost-Prices and Value

aramos@aramos.b (aramos@aramos.bo)
Fri, 15 Nov 1996 19:46:03 -0800 (PST)

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I would wish to comment a couple of Allin's statements in OPE-L

Allin says:

> It is only on this condition -- p=v for the inputs -- that
> Marxs "k" can do double duty (value = k+s and price = k+p, on
> the output side). Otherwise wed have to write something
> like: value = c+v+s, price = k+s [I think: "price = k+p"],
> allowing that k might not equal c+v.

So, according to Allin, "k" is a common factor of both, values
and production prices ONLY IF "the inputs are not transformed";
this would be the situation of Marx's illustrations, incluiding
the single-table example of Penguin p. 264.

Additionally, he proposes "to transform the inputs" ONLY for
the "system of prices". In the case of the "system of values"
inputs would be eternally "exchanged" at their values and,
consequently, there would be "two systems" without any coherent
connection between them.

First: I think Allins suggestions has no textual basis at all.
When Marx says that:

"it is necessary to bear in mind [the] modified
significance of the cost-price..."

and that

"if the cost-price of a commodity is equated
with the value of the means of production
used up... it is always possible to go wrong."
(Penguin p. 265)

he does not suggest "to split" cost-prices into two magnitudes
belonging to two completely separated systems of calculation,
as was later done by Tugan-Baranowsky and Bortkiewicz.

Second: Allin's proposal to re-establish Tugan and Bortkiewicz
conception of this problem seems weird to me because the MAIN
consequence of this is that Marx would be essentially wrong, as
these authors stressed.

So, if we follow Allin's dualistic proposal we cannot get the
twin equalities, while if we interpret the problem in a non-
dualistic framework both equalities are easily obtained.
I can understand that Tugan and Bortkiewicz attempted to
show that Marx was wrong, but I cannot understand Allin general
proposal in this respect.

Third: I think that part of Allin implicit intentions would
be contained in the second part of his statement:

"Otherwise we'd have to write something like: value = c+v+s,
price = k+s [I think: "price = k+p"], allowing that k might
not equal c+v."

I think Allin is looking for the difference between cost-price
"k" and another magnitude, namely the VALUE CONTAINED IN THE
COMPONENTS OF COST-PRICE, what he calls "c+v". In this sense,
Allin's proposal makes sense to me.

In effect, as I showed in OPE-L 3651, we can work out the
magnitude that, I think, Allin is looking for. To obtain it, we
simply calculate the ratio Value/Price of Production for each
commodity forming cost-prices. Let us call this ratio Ri.
(Production price i)*(Ri) = (value contained in i). We can add
all these "values contained" in the components of cost-price.
This is the magnitude "that might not equal to k".

This magnitude, however, does not belong to a "separate"
system in the sense that Tugan and Bortkiewicz claim. In
particular, VALUE is not formed by a "sum of values", and
therefore is not formed by the sum of these "values contained"
into the components fo the commodities.

Why? Because in capitalist society the labor-time must appear as
money and this "appearance" could be accomplished in a divergent
way. So, the socially necessary labor time corresponding to the
inputs cannot be the labor time they contain, but the labor time
REPRESENTED by the produccion price that the capitalist must
pay. Labor must appear as money and, actually it appears in a
"divergent" or contadictory way.

To conceive "value" as a "sum of values", independent of any
monetary representation of labor, is to neglect one of the key
pieces of Marx's conceptual framework, i.e. that value is a
unity of substance and form, it is labor-time that must appear
as money.

Fourth: Regarding the definition of value, Allin cites:

"Remember, 'the value of a commodity is equal to the value of
the constant capital contained in it, plus the value of the
variable capital reproduced in it, plus the ... surplus
value'" (Moscow, p. 150).

In this quotation, it seems that the value of the commodity is
defined as a "sum of values"; this is why Allin cites it. But,
first of all, it is important to note that this phrase is
preceded by the following lines, that Allin does not quote:

"These statements hold good on the assumption that the
commodities are sold at their values" (p. 148 of my
Moscow edition, Penguin, p. 249)

It is clear that if prices = values, value can be DIRECTLY
defined as a "sum of values", as Allin wants. However, this
Marx's definition does not contradict in any sense the non-
dualistic vision.

Why? Because Marx says "the value of CONSTANT CAPITAL" and the
"value of VARIABLE CAPITAL". So, he does not say "value of the
MEANS OF PRODUCTION" and "value of the WAGE GOODS". There is a
distinction between these magnitudes. Constant capital is the
amount of money that capitalist advance to buy means of
production and variable capital is the amount of money advanced
as wages.

When prices = production prices, this amount of money-value
corresponds to the prices of production, not to the VALUE
CONTAINED into the commodities. So, Allin is not considering
this clear distinction between, e.g. "value of constant capital"
and "value of the means of production".

This distinction has been stressed by Fred in OPE-L 3587.

Fifth: Allin says:

"Briefly, value = total labour-time embodied, contained
in, or required to reproduce, the commodity, while price
of production is that price which yields a uniform rate
of profit on capitals, regardless of their composition."

Regarding this piece I mainly have a question: Does Allin
identify "value" exclusively with labor-time and "production
price" with money?

Let us cite Dickinson [1956] "A Comment on Meek's 'Notes on the
Transformation Problem'", Economic Journal, 66, p. 740:

"Values and prices are quantities of different dimensions,
measured in different units. Values are measured in
quantities of labor-time. Prices are measured in terms of

Does Allin subscribe this statement?

In that case, I would disagree. I think it is quite clear that
Marx quantities (e.g. values and production prices) are two-
dimensional. That is, they are measured in both labor-time AND

The difference between the vector of values and the vector
of production prices does not involve the dimensionality of the
magnitudes, because both vectors are two-dimensional.

Let us first conceive both vectors in terms of labor.
Labor-value is the labor-time objectified in each commodity,
while production price in terms of labor is the labor-time
appropriated through the selling of the commodity.

Both vectors can be expressed also in terms of money.
Money-value is the amount of money representing the labor-time
objectified in the commodity, and production price in terms of
money is the money representing the labor-time effectively
appropriated by the capitalist.

So, assuming that there is no technical change and prices =
production prices (a situation similar to that of the single-
table in Penguin p. 264), it is possible to calculate 4 vectors:

1. labor-value
2. money-value
3. labor production price
4. money production price

In these conditions, the relationship between money and labor-
time is common for all the commodities.

Alejandro Ramos