[OPE-L:5185] Re: Re :

Duncan K. Foley (dkf2@columbia.edu)
Thu, 5 Jun 1997 06:39:47 -0700 (PDT)

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In reply to Rieu's OPE-L:4484 (below).

I finally had time to look at chapters 18 and 19 of Volume II again (in the
International edition.) In these chapters Marx gives a very useful summary
of his analysis of capitalist production, and lays the groundwork for his
analysis of the schemes of simple and expanded reproduction. He makes
points that bear on our discussions of the theory of money, as well as on
the monetary expression of labor time.

On money capital, Marx ends chapter XVIII by saying:

We see that inasmuch as the need for money-capital originates in the length
of the working period, it is conditioned by two things: First, that money
in general is the form in which every individual capital (apart from
credit) must make its appearance in order to transform itself into
productive capital; this follows from the nature of capitalist prodution
and of commodity production in general. Second, the magnitude of the
required money advance is due to the circumstance that labour-power and
means of production are continually withdrawn from society for a
comparatively long time without any return to it, during that period of
products convertible into money. The first condition, that the capital to
be advanced must be advanced in the form of money, is not eliminated by the
form of this money itself, whether it is metal-money, credit money,
token-money, etc. The second condition is in no way affected by what
money-medium or in what form of production labour, means of subsistence,
and means of production are withdrawn without the return of some equivalent
to the circulation. (_Capital_, Volume II, p 358 International Publishers.)

In Chapter 19, Marx reviews Smith's discussion of value-added accounting. I
take it he agrees with Smith that the value of the net product can be
resolved into wages, profit and rent, but chides Smith for not sufficiently
distinguishing between the total product and the net product, and thus
"spiriting away" constant capital. (I don't think Dumenil or I are guilty
on this point, since we clearly include constant capital in the treatment
of the circuit of capital. The point under discussion is our recommendation
to define the monetary expression of labor as the ratio of the value added,
or value of the net product, to living labor, and whether or not it is
coherent to include the value of the total product in the numerator of the
monetary expression of labor time.) Marx also makes a critique of Smith's
adding-up version of the labor theory of value (in which Smith tries to
determine the value of the commodity by adding up the wages, profit and
rent contained in it, rather than determining the value by the labor time
required to produce it) along the same lines as Ricardo.

In terms of our debates the following passages seem to me to be relevant.

Marx writes (p 376-77)

Now Adam Smith's first mistake consists in equating the _value_ of the
annual _product_ to _the newly produced annual value_. The latter is _only_
the product of labour of the past year, the former includes besides all
elements of value consumed in the making of the annual product, but which
_were produced in the preceding and partly even earlier years:_ means of
production whose value merely _re-aoppears_ -- which, as far as their value
in concerned, have been neither produced nor reproduced by the labour
expended in the past year. By this confusion Adam Smith spirits away the
constant portion of the value of the annual product. This confusion rests
on another error in his fundamental conception: He does not distinguish the
two-fold nature of the labour itself: of labour which creates value by
expending labour-power, and of labour as concrete, useful work, which
creates articles of use (use-values). The total quantity of the commodities
fabricated annually, in other words, the _total annual product_ is the
product of the _useful_ labour active during the past year; it is only due
to the fact that socially employed labour was spend in a ramified system of
useful kinds of labour that all these commodities exist; it is due to this
fact alone that the value of the means of production consumed in the
production of commodities and re-appearing in a new bodily form is
preserved in their total value. The total _annual product_, then, is the
result of the _useful_ labour expended during the year; but only a part of
the _value_ of the annual _product_ has been created during the year; this
portion is the annual _value-product_, in which the quantity of labour set
in motion during the year is represented. (Emphasis in original)

What Marx calls the "annual value-product" is clearly the modern concept of

On p 384 we read:

One point herein is correct: that the matter presents itself differently in
the movement of social capital, i.e., of the totality of individual
capitals, from the way it presents itself for each individual capital
considered separately, hence from the standpoint of each individual
capitalist. For the latter the value of commodities resolves itself into 1)
a constant element (a fourth one, as Adam Smith says), and 2) the sum of
wages and surplus-value, or wages, profit, and rent. But from the point of
view of society the fourth element of Adam Smith, the constant
capital-value, disappears.

Immediately thereafter in Section 5 (Recapitulation) (p 384), Marx says:

The absurd formula that the three revenues, wages, profit, and rent, form
the three "component parts" of the value of commodities originates with
Adam Smit from the more plausible idea that the value of commodities
"resolves itself" into these three component parts. This is likewise
incorrect, even granted that the value of commodities is divisible only
into an equivalent of the consumed labour-power and the surplus-value
created by it.... The production of a use-value, and even that of a
commodity (for this can be carried on also by independent productive
labourers), is here only a means of producing absolute and relative
surplus-value for a capitalist. For this reason we have seen in the
analysis of the process of production that the production of absolute and
relative surplus-value determines 1) the duration of the daily labour
process and 2) the entire social technical configuration of the capitalist
process of production. Within this process there is realised the
distinction between the mere conservation of value (of the constant
capital-value), the actual reproduction of advanced value (equivalent of
labour-power), and the production of surplus-value, i.e., of value for
which the capitalist has neither advanced an equivalent previously nor will
advance one _post festum_.

Remembering that the definition of the monetary expression of labor time
has to do with measurement after the fact of production and circulation,
not with problems of realization or crisis, these passages seem to me to
support the notion that Marx saw the relation between money and labor in
the terms proposed by the New Interpretation: that the living labor
expended in a period takes the form of the money value added (not the total
value) in the commodities produced in the year.


>In [OPE-L:4475], Ale said :
>>>How does New Interpretation "manage" with e.g. Vol.II, Ch.19 comments on
>>>Smith? I would want to know if there are written works on this point. <<
>>>I just remember that Rieu D-M has worked the issue. Perhaps he can <<
>>>illustrate us about this<<
>I'm sorry, Ale. To my knowledge, nobody in N.I.(A.Lipietz, D.K. Foley or
>G. Dumenil etc.) explicitly treated this problem, i.e. whether Marxs critique
>of Smith dogma is right or not. I,too, want to know what they think of this.
>Isnt there Duncan on this net?
>My idea is this : Basically, I agree with I.Steedman on his critique of Marx
>in "Marx on Ricardo"(1982 paper). I'm sorry that I cant summarize its content.
>It takes too much time for me to reproduce its content in English without
>original text. Unfortunaaely its 250 miles away now.
>But, just one point : What was M.'s point in the critiqu of S. dogma?
>M. was to solve the problem of "reproduction of constant capital".
>In TSV vol.1, he treated "how it is possible for the annual profit and wages
>to buy the annual commodities?" Yes, Marx's point was this. Even though S. dog
>dogma itself is correct, it cannot automactically guarantee the realization
>problem. I agree to Steedman's technical critique, but I still agree with
>Marx in this respect.

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