[OPE-L:3675] Value and production price in Vol III, Part 1 and 2

aramos@aramos.b (aramos@aramos.bo)
Sun, 17 Nov 1996 18:50:05 -0800 (PST)

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Marx's definition of cost-price and value in Vol. III, Part 2
has been discussed in diverse recent posts by Andrew, Fred,
Allin and myself. In particular, in OPE-L 3590 I show that --in
a passage omitted by Engels-- Marx defines value and production
price as:

Werth = KostenpreiB + Mehrwerth
ProductionspreiB = KostenpreiB + Profit

It seems important to me to trace the use of these formulas in
RELEVANT passages of Vol III, Part 1 & 2. (This is not an
exhaustive list of the passages where these formulas are used.)


[A] Definition of cost-price

Marx starts to use the controversial formulas at the
beginning of Vol III. In Ch. 1, he says:

If we call cost price k, the formula C = c+v+s is
transformed into the formula C = k+s, or commodity
value = cost-price + surplus value. (Penguin, p. 118)

[B] Tranformation of surplus-value into profit

After this, in the same chapter:

If we call profit p, the formula C = c+v+s = k+s
is converted into the formula C = k+p, or commodity
value = cost-price + profit. (Penguin, p. 127)


* In Part 1 of Vol. III, Marx does not consider the quantitative
divergence between value and production price arising from
the formation of a general rate of profit. Marx only introduces
the categories of "cost-price" and "profit" as "mystified
forms". So, "profit" is a "mystified form" of surplus-value and,
"cost-price" is also a "mystified form" insofar as the
distinction between the money advanced in constant and variable
capital vanishes.

* In Part 1, cost-price and profit are considered abstracting
the differences in the compostion of capitals (which are only
introduced in Part 2, Ch. 8), so that we can think that, there,
prices are considered as equal to values.

* However, it is important to stress that in the second
quotation [I.B], Marx defines Value = Cost-Price + Profit. So,
there is a "qualitative transformation" in the definition of
value which no longer corresponds to cost-price + surplus-value,
but to cost-price + PROFIT.

(Incidentally, this would be another "anomaly" for the dualistic
approach because, according to their supporters "profit" is a
category that belongs to the "system of prices" which cannot be
"mixed" with the "system of values".)


[A] Paragraph omitted by Engels

In the "main manuscript" of Vol. III, Marx writes:

Werth = KostenpreiB + Mehrwerth W = K + m.
oder Profit, als identisch oder = K + p.
mit m.p.

KostenpreiB = Werth - Mehrwerth oder K = W - m.

ProductionspreiB = KostenpreiB + Profit P = K + p*.
berechnet nach der allgemeinen Profitrate = p*.

(MEGA, Section 2, Vol. 4.2, p. 240, lines 15-20)


* In my citation of this paragraph in OPE-L 3590, production
price is defined as P = K + p, and not, as in Marx's original,
as P = K+p*. Actually, Marx uses an apostrophe that is "omitted"
in these electronic messages; in the present case I use a "star"
(*) instead of the apostrophe to show the distinction.

* Note that value is actually presented as it was defined in the
piece of Penguin p. 127: Value = cost-price + profit. This is
the "produced profit", an already "mystified form" of surplus-
value. So, strictly speaking, in Vol. III, Parts 1 & 2, value
is no longer = cost-price + surplus-value, but:

Value = Cost-Price + [produced] profit

* On the other hand, production price is defined as cost-price +
p*, where p* is a portion of the total profit "calculated
according to the general rate of profit". In this case Marx,
seems to use the same notation (p*) to designate the general
rate of profit and the mass of profit appropriated, on average,
by each capital. This could be in connection with the following
"algebraical" example, in which he presents a capital whose cost-
price K = 100. In that case rate and mass of profit are equal.
(See points [II.B] and [II.C] below.)

* So, in the "missing paragraph", production price is defined as:

Production price = Cost-Price + [appropriated] profit

Therefore, the only difference between production price and
value is quantitative: the difference between appropriated and
produced PROFIT. There is no *qualitative* difference between the
"mystified forms" of "cost-price" and "profit", regarding the
definitions of value and production price.

Production price is, in this sense, only a QUANTITATIVE "modified
form" of value, and the "modification" involves the re-allocation
of profit in accordance with the amount of capital invested:

a) In the case of value, PROFIT (no longer "surplus-value")
is PRODUCED in accordance with living labor exploited.

b) In the case of production price, PROFIT is DISTRIBUTED in
accordance with capital advanced.

[B] The hidden-table

* Immediatly after the passage omitted by Engels, we have the
description of an "algebraical" table. I described this "hidden
table" in OPE-L 3590. In the "main manuscript" and in the
Engels version (See Penguin, p. 263), Marx --using the
definitions of the omitted passage-- assumes that K=100, that
the rate of surplus-value is 100% and that the "average capital"
is composed by 80c + 20v, so that the rate of profit is 20%. So,
in this example, both the rate and the mass of profit correspond
to 20 and, thus, p* = 20.

* After this, Marx develops the example in "algebraical terms"
for 3 capitals: low, high and average composition. The
difference in composition is designated by "x". So, for the 3
capitals considered, production price and value are:

Low composition

Production price = K + 20
Value = K + 20 + x

High composition

Production price = K + 20
Value = K + 20 - x

Average composition

Production price = K + 20
Value = K + 20

* Then, in the version published by Engels, it is inserted a
single-table example, containing the 3 capitals (average, high
and low composition) where x = 10.

[C] Distinction between mass and rate or profit

After this, there is a passage where the definition of cost
price is re-discussed:

The formula that the price of production of a
commodity = k + p, cost price plus profit, can now
be stated more exactly; since p = kp* (where p*
is the general rate of profit), the price of
production = k + kp*. If k = 300 and p* = 15 per
cent, the price of production k + kp* = 300 + 300
X 15/100 = 345. (Penguin, p. 265)

* This passage does not appear in the "main manuscript". I do
not know if it was inserted either by Engels or by Marx.

* In relation to the "missing paragraph", the rate and the mass
of profit have been now distinguished: p* is exclusively the
rate of profit, and the capital considered amounts to 300, not
to 100. Although 300 is the sum of the total capital invested in
the single-table example of Penguin p. 264, now the assumed rate
of profit amounts to 15%, not to 20%.


[A] Value and production price of "average commodity"

On the other hand, because it is equal [the surplus-
value] to the average profit, the price of production
= cost-price + profit = k + p = k + s, which is equal
in practice to the commodity's value. (Penguin, p. 309)


* This quotation has been discussed by Fred in OPE-L 3587. It is
possible that this is a complementary passage to the discussion
contained just after the "hidden table", concerning "dynamic"
problems such as changes in the production prices of commodities
of a particular sphere of production, given changes either in
the "general profit rate" or in "value" (Penguin, p. 265-6).

In effect, in the case of the passage of Penguin, p. 309, Marx
is concerned with the effect of "an increase or decrease in
wages" on the "average commodity".

* I think it is also important to note that, when the "dynamic
problems" are suggested (Penguin p. 266) Marx also says that:

We are not referring here, of course, to a mere
change in the monetary expression of these values.

(Then comes a reference to Corbet, "An Inquiry..." p. 174.
Perhaps someone living in a developed country --where there
are Libraries-- could tell me what is the meaning of this

I want to stress this, because it is in line with that I
suggested in OPE-L 3618: The dynamic problems must be set in a
framework in which the "monetary expression of value" is
explicitly considered. That would be, of course, the case of
changes in wages.

Alejandro Ramos M