[OPE-L:3692] cost price and value

Fred Moseley (fmoseley@laneta.apc.org)
Thu, 21 Nov 1996 08:27:34 -0800 (PST)

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This is a response to Allin's (3676) which crossed in cyberspace several
days ago with my last post (2680). I will follow Allin's numbers.

1. Allin writes:

Alejandro [3675] cites the following passage from Capital III, ch. 1:

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)

I think this passage supports my reading. The point is this: I don't
think that any party to the current debate would hold that "value = cost
price + profit" is a proper expression for the value of a commodity *in
the general case*. In the single-system approach, value = cost-price +
surplus value, where surplus value can diverge from profit. So, either
Marx is 'talking loosely' here, or, if you prefer, he is assuming in
context that profit = surplus value. But my claim is that "value =
cost-price + surplus value" has the same sort of status. Marx may say it
(or imply it) in some places, but it is not correct *in the general case*
either -- again, it is either a loose formulation, or it is based on the
assumption that cost-price equals the sum of the values of the inputs.

Alejandro has already answered this argument in his (3678). This passage is
from Part 1 of Volume 3 where there is no quantitative difference between
profit and surplus-value. The only difference is that surplus-value is
related specifically to its source, variable capital, and profit is a
mystified form in which the same surplus-value is related to the total
capital. Marx is not "speaking loosely" here; rather he is speaking
abstractly, in the sense that prices of production and profit differing from
surplus-value have not yet been derived.

Nor is the equation:
value = cost price + surplus-value
"based on the assumption that cost price equals the sum of the values of the
inputs." In recent posts, we have discussed various passages from Part 2 of
Volume 3, after prices of production have been determined, and therefore
after the cost price of commodities no longer equals the values of the
inputs, and yet in which Marx still states that "value = cost price +
surplus-value". In other words, this equation is true in the general case,
whether or not the cost price is equal to the values of the inputs.

Also, I have argued in (3680) that all the terms of this equation are in
terms of money. The fact that in Part 1 of Volume 3 it is stated over and
over again that profit and surplus-value "are the same magnitude", or just
"another name" for the same magnitude, only related to different components
of capital, provides further support for this interpretation. There is no
discussion in Part 1 of a transformation of units from labor-time units to
money units in the transition from surplus-value to profit. Both are
clearly expressed in units of money. In Marx's frequently used example in
Chapter 1, both surplus-value and profit are equal to $100 (pounds). The
only difference is that surplus-value is this sum of money related to its
origin (variable capital) and profit is a form that obscures the origin of
this same sum of money by relating it to the total capital. For example:

Profit, as we are originally faced with it, is thus THE SAME THING as
surplus-value, save in a mystified form, though one that necessarily
arises from the capitalist mode of production. Because no distinction
between constant capital and variable capital can be recognized in the
apparent formation of the cost price, the origin of the change in value
that occurs in the course of the production process is shifted from the
variable capital to the capital as a whole. (C.III. 127; emphasis added)

Many similar statements are found, again without any hint of a change of
units, in the earlier draft of Part 1 of Volume 3 in the 1861-63 manuscript,
in a very interesting and important part of this manuscript only recently
published in English for the first time (MECW, vol. 33, pp. 69-103).

2. Allin argues:

Fred [3644] cites the concluding paragraph to ch. XI of vol. III (in which
chapter Marx analyses the impact on prices of production of a change in
the wage). ...

Fred wants to use the fact that the transformation is taken by Marx as
"given" to argue against my point that -- in certain aspects of his
argument -- Marx is assuming that input prices are equal to values (which
makes it possible to explain, without giving up 'dualism', why Marx
sometimes says, or implies, that value = cost-price plus surplus value.)
But it seems clear to me that in the above quotation, all that Marx is
saying is that the transformation of *outputs* is taken as already
accomplished in ch. XI.

Allin's argument seems to suggest that in Chapter 11 the prices of the
OUTPUTS have already been determined, but not the price of the INPUTS, i.e.
as Allin has argued before, Marx has only taken the first step in an
iterative transformation of values into prices of production. But there is
no indication whatsoever in the text that this is Marx's meaning. Prices of
production have already been fully determined in Chapter 9, where Marx noted
several times that the prices of the inputs are also transformed.

Allin argues further:

This interpretation squares with section II of the following chapter (XII)
where Marx introduces -- N.B. *as a new consideration* -- the possibility
that "the cost-price of commodities produced by capitals of average
composition may differ from the sum of the values of the elements which
make up this component of their price of production."

My translation says nothing about a "new consideration". Rather it
discusses the "possibility" that the cost price of "average" commodities is
not equal to their value. This possibility is not new; it has already been
discussed in Chapter 9.

3. Allin's third argument has to do with the third paragraph of Section 2
of Chapter 12 of Volume 3. Allin argues that Marx's conclusion in this
paragraph that a change of wages does not affect the price of production of
an "average" commodities is true whether the cost price of this "average"
commodity is equal to the value or the price of production of the inputs.
In other words, Marx could be assuming here that the cost price is equal to
the value of the inputs.

However, in the paragraph immediately preceding, Marx discussed the
possibility that the cost price of "average commodities" is not equal to the
value of the inputs. The third paragraph then begins: "NONETHELESS THIS
POSSIBILITY (i.e. the possibility that cost prices are not equal to the
values of the inputs) in no way affects the correctness of the principles
put forward for commodities of average composition." Then Marx continued in
THE VALUE OF INPUTS, the value of the average commodities in nonetheless
equal to the cost price plus the surplus-value and neither the value nor the
cost price of the average commodities is affected by a change of wages.
Therefore, Allin's argument is beside the point. Even though Marx's
conclusion concerning the effect of a change of wages would also be true if
cost prices were equal to the values of inputs, Marx is explicitly
considering here the more general case in which cost prices are equal to the
prices of production of inputs which are not equal to their values, and this
passage provides further support for the interpretation that even in this
general case, the value of commodities is equal to the cost price plus the

4. Allin's final argument is concerned with "a key statement of Marx's on
this whole matter, namely that a price/value deviation among the non-labor
inputs to a given commodity is a cause from which arises "a deviation in
prices of production from values" on the output side."

I have answered this argument in (3680), the last couple of pages, and I ask
those interested to please refer back to this post. But I would like to
point out that the premise of this fourth argument is the opposite of the
premise of Allin's second and third arguments. There two earlier arguments
presume that the cost price is THE SAME for both the determination of the
value and the determination of the price of production of commodities,
thereby acknowledging the considerable textual evidence to support this
interpretation. However, his fourth argument presumes that the cost price
is NOT THE SAME for the determination of the value and the price of
production of commodities. Therefore, if the premise of the earlier
arguments are true (as suggested by all the other textual evidence we have
discussed), then his fourth argument cannot be true.