[OPE-L:4784] capitalism consumption and the rate of surplus-value

fred moseley (fmoseley@laneta.apc.org)
Mon, 14 Apr 1997 22:40:16 -0700 (PDT)

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I am finally getting around to responding to Ajit's (4638) on whether the
rate of surplus-value according to my interpretation, or the new solution,
depends on capitalist consumption. Ajit, thanks for your response to my

1. First of all, we may have to distinguish between Foley's and Dunemil's
version of the new solution. In looking back quickly at Dumenil's works on
the new solution, I could not find anywhere where the rate of surplus-value
was explicitly defined. So let's leave Dumenil aside for now.

The main point is that the definition of the rate of surplus-value that
Ajit gives for Foley and me is wrong. Ajit defines "our" rate of
surplus-value as a ratio of LABOR-TIME quantities as follows:

"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.

But Foley and I do not define the rate of surplus-value in this way, but
rather as a ratio of MONEY quantities, more specifically as the ratio of
surplus-value to variable capital, where variable capital is defined as the
money wage and surplus-value is defined as the difference between money
value added and money variable capital (see p. 36 of Foley's book or any of
my papers on the transformation problem).

In terms of these (our) definitions, the rate of surplus-value is not
affected by capitalist consumption. Variable capital is taken as given as
the money capital expended to purchase labor-power and money value added is
determined by the quantity of living labor. Neither of these variables is
affected by capitalist consumption. If capitalist consumption changes,
neither variable capital or surplus-value changes. It simply means that
the given amount of surplus-value now purchases a different bundle of
goods. Ajit's argument as to why our rate of surplus-value is affected by
capitalist consumption is wrong because it is based on a different
definition of the rate of surplus-value.

2. Ajit goes on to say that Lipietz (one of the proponents of the new
solution) was aware of this "problem" in the new solution, as evidenced by
the following passage:

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, first emphasis mine, second emphasis

But Lipietz' point is not the same point Ajit is trying to make. Lipietz
is saying that, WITH A SINGLE RATE OF SURPLUS-VALUE, the quantity of
consumer goods workers are able to afford will be different according to
the price of these consumer goods, which in turn depends on the structure
of production. The rate of surplus-value does not change; instead the
quantity of means of subsistence may change even though the rate of
surplus-value does not.

I am still thinking about Ajit's further comments about whether, according
to the Sraffian interpretation of Marx's theory, the rate of surplus-value
is affected by a change in capitalist consumption, so I will save this
issue for a later post.