[OPE-L:5113] Re: Production and Circulation

Duncan K. Foley (dkf2@columbia.edu)
Sun, 25 May 1997 15:08:29 -0700 (PDT)

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In reply to Ajit's OPE-L 4982:

>At 10:41 AM 5/9/97 -0700, Duncan Foley wrote:
>>As I read Marx, he thinks value is created in production through the
>>expenditure of living labor, and realized in circulation when commodities
>>are exchanged against money. (The one exception is the money commodity
>>itself, which does not need to be exchanged, since it's already in the
>>general equivalent form.) If we look at an economy over a specific period,
>>we can in principle (subject to a number of problems about measurement of
>>labor, reduction to simple labor, and distinction between productive and
>>unproductive labor) observe how much labor time was expended. We can also
>>observe in principle the money value added realized in the sale of those
>>commodities (taking account of the time lag between production and sale).
>>The stipulation that the "monetary expression of labor time" is equal to
>>the ratio of the money value added realized in the sale of the commodities
>>to the living labor time expended in their production is supposed to
>>correspond to this idea. So I would say that the labor time expended in the
>>mass of commodities sold in a given period is "given prior to sale", but
>>the expression of this labor time in money is not necessarily given prior
>>to sale. The definition of the "monetary expression of labor time" above is
>>inherently ex post. It tells us what happened after the dust has settled.
>>This might not be a completely satisfactory answer for Alan, because I
>>think he wants to know whether I think the "value" of the non-labor means
>>of production is determined before sale. While it's obvious that its
>>historical cost is predetermined, I tend to be convinced by Fred's evidence
>>that Marx thought of these intermediate inputs as being revalued to their
>>reproduction cost.
>My question is, what is the point of translating these monetary values to
>labor units ex-post? What is the analytical significance of this?

I'm not sure what you mean by "analytical" here, but to my mind the point
of measuring these things is to answer questions like, what has happened to
the rate of exploitation in the U.S. economy since 1950? Or, even more
basically, what is the rate of exploitation in the U.S. (or French, or
British) economy this year (a question students, for example, find
extremely interesting.)

>I don't think we can talk about value of a commodity in labor-time units
>either in your case, since we have no idea what to do with the constant
>capital element of the commodity.

I'm not sure what this means. The constant capital element in the
commodity, as Marx says over and over again, is reproduced in the total
price of the commodity. The new labor creates the new value (that is, the
value added.)

>In my opinion, Fred is simply wrong. Marx
>argued that the value of the constant capital must be measured by the
>labor-time it takes to reproduce the constant capital currently, and not how
>much it costs in monetary terms currently.

There are two issues here. One is which accounting system one uses:
embodied labor coefficients or market prices. The other is how one takes
account of value changes in either accounting system. I take Fred's quotes
from Marx as strongly supporting the reading that Marx thought you should
revalue constant capital to its current value in whichever accounting
system you were using.

>If we take Fred's position, then
>we must admit that value is determined by the prices rather than the other
>way round, and that too in a most unsatisfactory manner, as I have argued
>before and Fred is yet to respond to my criticisms of his tansformation
>problem solution.

This is a much more complicated issue, in my opinion, since I'm not sure
Marx had a consistent treatment of the valuation of constant capital. But
for myself, I don't think this is the critical issue, since I take Marx's
labor theory of value as aimed at understanding the class division control
over social labor time, that is, current social labor time, and for this
one does not need a consistent valuation of constant capital.


Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947
e-mail: dkf2@columbia.edu