[OPE-L:6278] RE: Historical, real and current costs

andrew kliman (Andrew_Kliman@CLASSIC.MSN.COM)
Sun, 15 Mar 98 17:53:35 UT

A reply to the PIAF:

From: owner-ope-l@galaxy.csuchico.edu on behalf of Gerald Levy
Sent: Sunday, March 15, 1998 3:19 AM
To: ope-l@galaxy.csuchico.edu
Cc: multiple recipients of list
Subject: [OPE-L] Historical, real and current costs

I had written:

"Yes, there are stocks of widgets. The workers' use their wages to acquire
some (or all) of these stocks."

Jerry asked: "Since you are assuming a one-commodity economy, how can the
workers purchase all of the commodity product? Is it assumed that Moneybags
can live on air? If there is no surplus product (since workers would receive
in wages a monetary amount equivalent to the value of the total product), how
can there be exploitation of the workers?"

Appearances notwithstanding, this is a very complex set of questions, and it
will take a while to explain thoroughly. And, in the hope that Jerry's
question was motivated by his desire to gain a fuller understanding of the
issues, I will be thorough. So I'd like to ask him to study my response
carefully, and then tell me which parts he agrees with, which he doesn't agree
with (and why), and ask me about those things that remain unclear.

Stocks are different from products. How? Not physically, and not even
necessarily functionally. They differ *temporally*.

Let's call the day referred to in the example "March 14" Then the stock of
widgets that exists at 5 p.m. on March 14 includes all widgets ever produced
before then, minus all widgets ever consumed before then, minus all widgets
ever used up in production before then (the example only assumes the absence
of constant capital on March 14), minus all widgets that have ever been
destroyed, lost, etc.

If the commodity product of March 14 is understood to be 100 dried widgets, it
does not exist until 9 p.m.

So, although the workers can conceivably use the wages they receive on March
14 to purchase all of the *stocks* which exist at 5 p.m., they purchase *none*
of that day's *product*.

Even if the workers do purchase all stocks existing at 5 p.m., Moneybags
(a.k.a. J. V. Dzugashvili) does not necessarily live on air. For instance, it
might be that, on March 14, he consumed the *whole* product of March 13 before
5 p.m., while the workers purchase only stocks that existed already through
March 12. And there are myriad other possibilities. (That's the beauty of
reality, vs. models.)

I think there *is* a "surplus product" produced on March 14, both in the
"Sraffian" sense of the term, and (possibly) in Marx's sense of the term. In
the "Sraffian" sense, there's a surplus product because the workers' wages
allow them to consume 99 widgets, but they receive these wages as compensation
for a day's work in which they produced a net (and gross) product of 100
widgets. So there's a surplus product of 1 widget.

In Marx's sense, it is harder to determine whether there's a surplus-product.
We need to first determine how much labor-time is represented by the $99 in
wages. One possibility (there are others) is that productivity has been
unchanging, so that, just as 100 labor-hours are needed to produce 100 widgets
on March 14, so too, before that, one labor-hour was needed to produce each
widget. IF that is the case, then, because there's also no redistribution of
value in a one-commodity economy, the $99 in wages represent 99 labor-hours
($1 = 1 widget = 1 labor-hour). But, in return for these wages, the workers
work 100 hours. So there's 1 hour of surplus-labor extracted. Now, the
surplus-product in Marx's sense is the portion of the total product that
represents the amount produced during the surplus labor-time. In the present
example, since there's no constant capital, it's very simple: 100 hours of
living labor produce 100 widgets, so each widget represents 1 labor-hour.
Hence, since there's 1 hour of surplus-labor, the surplus-product is 1 widget.

So I think workers *are* exploited in this example. They perform 1 hour of

The issue, then, is whether proponents of the New Interpretation, and other
proponents of the simultaneist MELT, also come to the conclusion that the
workers are exploited on March 14. The problem is as follows. The 100
widgets produced on March 14 sell for a total of $98. The workers receive $99
in wages. There's no constant capital. Hence profit might be said to equal
$98 - $99 = -$1. So the workers seem to be exploiting the capitalists. But
we've concluded above that there's both surplus-labor and (possibly)
surplus-product. Moreover, the reason profit might be said to equal -$1 is
simply a drop in the price level. Had it remained the same (or risen), the
capitalists would have exploited the workers, instead of the opposite.

It is possible that proponents of the simultaneist MELT would not say that the
profit of March 14 is -$1. I suspect that, if they do not, they will reason
as follows: 2% deflation occurs between the time wages are paid and the time
the output is produced and sold. So, to get *real* profit, one needs either
to deflate the wages by 2% or "reflate" the revenue by 2%. In either case,
real profit will be positive.

I accept this reasoning. In fact, this is exactly what the temporalist MELT

Yet perhaps there is another way of avoiding the conclusion that profit is
negative in this example. I can't think of one, but I'm willing to be shown

Andrew Kliman