[OPE-L:4452] K-M's concept of "revenue"

Fred Mosele (fmoseley@laneta.apc.org)
Wed, 19 Mar 1997 23:35:01 -0800 (PST)

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This is quick (due to lack of time) response to Andrew's latest (4413) on
K-M's concept of "revenue". I think it provides a conclusive demonstration
that K-M's concept of "revenue" is completely different from Marx's concept
of revenue.

For Marx, surplus-value is determined as the intra-period difference between
the price and the cost of the commodities during this period, and revenue is
a part of this intra-period difference (the part that is spend on consumer
goods). For K-M, on the other hand, "revenue" is determined as the
inter-period difference between the price of commodities produced this
period and the capital advanced in the next period. Therefore, "revenue" is
determined completely independently of the amount of surplus-value, and, as
we shall see, "revenue" can be greater than surplus-value.

Andrew has replied that their concept of "revenue" is indeed "a part of
surplus-value", and that this is evidenced by the fact that, in their
numerical example, "revenue" is less than surplus-value. In Andrew's words:

I'm afraid I don't understand the point. I agree that "Revenue is always
determined as a PART OF SURPLUS-VALUE ...

In the illustration in the book, p. 41, in the first period, the costs of
the goods is 512 and 288 in surplus-value is then added. Thus the
aggregate price of the output is 512 + 288 = 800. The surplus-value is
definitely determined BEFORE the revenue, and irrespective of the amount
of revenue. THEN, only part of the surplus-value is consumed, 270. This
is the revenue, a PART of surplus-value. The rest of the surplus-value,
288 - 270 = 18 is additional capital advanced, since in period 2, total
capital advanced is 530 instead of 512, and 530 - 512 = 18.

However, the fact "revenue" is smaller than surplus-value in this example
has nothing to do with how "revenue" is determined; it does not alter the
fact that "revenue" is determined as an intra-period difference,
independently of surplus-value and thus is not "a part of surplus-value".
DEPARTMENTS; and specifically to the fact that the composition of capital in
dept 1 is greater than the composition of capital in dept 2. If these
relative compositions of capital are reversed, then "revenue" is greater
than surplus-value (according to K-M's own method of determination), and it
is clear and beyond dispute that "revenue" is not "a part of surplus-value".
A quick alternative numerical example will illustrate the point. The first
three lines refer to period 1 and the next three lines refer to period 2. I
hope this table comes through clearly.

"rev" c v s value ppd

I. 120 120 120 360 336

II. 240 120 120 480 504

total 360 240 240 840 840

I. 98 112 126 114 352 330.3

II. 154 224 126 114 464 485.7

total 252 336 252 228 816 816

We can see that in this case "REVENUE" IS GREATER THAN SURPLUS-VALUE (in
period 1): 252 > 240. Therefore, "revenue" cannot be "a part of
surplus-value", as in Marx's theory.

I have argued further, and Andrew has not provided any evidence to the
contrary, that there is no concept in Marx's theory that is determined like
K-M's concept of "revenue", i.e. as this inter-period difference.
Therefore, K-M's interpretation of Marx's determination of prices of
production depends crucially on a concept that is nowhere to be found in
Marx's theory. K-M's concept of "revenue" is a pure invention of their own.
There is of course nothing wrong (and much right) with invention, but K-M
have insisted that they are presenting an interpretation of Marx's theory.
But there is nothing in Marx's theory of prices of production (or indeed in
all of his theory) like K-M's concept of "revenue".