[OPE-L:4638] Re: surplus-value and capitalist consumption

Ajit Sinh (ecas@cc.newcastle.edu.au)
Wed, 2 Apr 1997 01:03:56 -0800 (PST)

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At 09:57 PM 4/1/97 -0800, Fred Mosely wrote:
>A request for clarification of Ajit's criticism of my interpretation (in

>Two questions for Ajit:
>1. How are you defining "my" rate of surplus-value?

"your" rate of surplus value is determined as:

(1) take total prices of the *net output* in a given money commodity terms
(say y) equate it to total live labor-time (say L).

(2) L/y = 'value' of monetary unit in terms of labor-time.

(3) Given money wages (say w)

(4) w x L/y = 'value' of variable capital

(5) L - (w x L/y) = 'surplus value'

(6) [L - (w x L/y)]/[w x L/y] = 'rate of surplus value'

Is that right? Now, by "your" I mean the 'new solution'. If yours differ,
then let's talk about the 'new solution' first.
>2. How do you think "my" rate of surplus-value is affected by capitalist
>consumption? I don't think so. Indeed, one of the advantages of the new
>solution (emphasized by Dumenil) is that, whereas in the standard Sraffian
>interpretation, the rate of surplus-value IS affected by workers' and
>capitalists' consumption patterns, the rate of surplus-value in the new
>solution is NOT afected by these consumption patterns. The same conclusion
>is also true of my interpretation.

Well, then I don't think you have seen through the implications of "your"
own theory. So let me put it in the most simple manner. Let's suppose that
capitalists consume only luxury commodities X and Y; aX of X and bY of Y.
Now, let us suppose that w is spent on necessaries and there is no savings
on the part of workers. Now, let us suppose that capitalists want to consume
X and Y in different proportions, say cX of X and dY of Y. To accomplish
this the economy will have to go through a new allocation of labor. One can
accomplish this by keeping L constant and the total production of
necessaries constant. The only change that happens in the system is that the
composition of luxury production changes. Since the prices of X and Y in
terms of our given money commodity were different, in all likelyhood the
total prices of (cX + dY) would differ from the total prices of (aX + bY).
This would change the total prices of net output (y). Thus, L/y would
change. Meaning the 'value' of money would change. Given the w, it would
mean that 'value' of variable capital will change. Given L, it means the
rate of surplus value will change. Is that okay? This is simply a problem of
arbitrary money commodity.

Now, this problem in some sense is already present in Lipietz' paper. If you
look into his mathematics closely, you will find it. Let me quote from
Lipietz himself:

"What we gain by expressing r directly as function of e, and y*, we lose
through the complete indeterminancy of y*. ... Suppose w(B) is the part of
the value added which is paid to workers, which they hasten to spend on
necessities, and if possible on discretionary items. But, surprisingly, if
the structure of production changes, so that the price system changes, as a
consequence the frontier of the workers' budget set will move. At a single
rate of exploitation, and value of labor power, workers might be able to
afford both necessities and some luxuries, or not even their necessities,
depending upon the structure of production. THIS DOES NOT FIT VERY WELL WITH
MARXIST INTUTION." (Lipietz, 1982, p. 83, emphasis added).

Your comment about the "standard" Sraffian interpretation is simply wrong. I
think there has been too much of nonsensical criticisms written about
"Sraffians" in Marxist literature, which reveals that people have not even
taken five minutes to think through or even try to leafe through Sraffa's
PCMC before writing their criticisms. The Marxist intellectual enviorenment
seem to have encouraged people to do that, and it's a tragedy. First of all,
the Sraffians do not support the simultaneous equation method in case of the
'solution' to the transformation problem. Garegnani distinguished between
two kinds of possible solutions. One he called the simultaneous equation
solution, and the other the aggregative solution, and favours aggregative
solution over simultaneous equation solution. Eatwell followed Garegnani's
lead in his 1974 and 75 papers. In the aggregative solution, it is the money
wages in opposition to real wages that is taken as given. So in that case,
they are quite close to the 'new solution'. However, they propose using the
standard commodity as a neumerier instead of the arbitrary money commodity.
This takes care of my above criticism of the new solution. Thus a more
advanced solution to the new solution was already available to the public in
1974 and 75. Nobody bothered to read it, because we were supposed to be
anti-Sraffians, and so we didn't read Sraffians! In anycase, I do not follow
Garegnani and Eatwell on this. I think given real wages in Marx is very
important. His rate of exploitation is an objective measure and not a
monetary measure. Now, to come to your point, in the simultaneous equation
method, the rate of exploitation would depend on the workers consumption,
given the technology, as it should be. Necessary labor is the amount of
labor-time needed to produce workers consumption. So a change in workers
consumption should change the necessary labor-time. It basically means a
change in real wages. As far as capitalists' consumption is concerned, the
rate of surplus value has nothing to do with it. Where did you get such an
idea from? Given the necessary labor-time, the surplus value is simply the
total live labor-time minus the necessary labor-time. It simply does not
matter what is being produced during the surplus labor-time.

Cheers, ajit sinha
>If surplus-value is defined as the labor-time embodied in surplus goods, as
>in the Sraffian interpretation, then surplus-value will depend on the
>nature of the surplus goods. However, if surplus-value is defined as the
>excess of the money value added over the money wage, as in the new solution
>and in my interpretation, then surplus-value is independent on the specific
>surplus goods. In other words, the opposite of what Ajit argues.
>So, Ajit, please explain your argument in greater detail. Thanks in advance.