[OPE-L:56] [OPE-L:289] Negative Value Added and the MELT

Alejandro Ramos (aramos@btl.net)
Wed, 04 Nov 1998 21:38:20 -0600

Duncan writes:

>We can see the relation between the NI MELT and the TSS MELT:
>m1 = u1 + (((u1/u0)p0-p1)Ax/lx)

Alejandro asks:

May you kindly clarify this derivation in your interesting post? I don't
have a lot of time to go through it right now. Also, may you use a clearer
presentation of the fractions and time subindices?... I mean, is your
expression equivalent to

(------ * p[o]-p[1])*AX
m[1] = u[1] + -------------------------- ?

>This shows that the difference involves the change in the >valuation of
the stocks already existing at the beginning of the >period due to price
changes during the period. The TSS MELT >attributes this value to the labor
time expended during the >period, while the NI MELT does not.
>4) From a purely formal point of view, the TSS MELT has a >property,
nonnegativity, that the NI MELT lacks. From my >perspective, the TSS MELT
has an offsetting formal disadvantage, >which is that it can be measured
only by stipulating an initial >period MELT, u0. We know from Andrew's
examples in other >contexts that the choice of this initial value can lead
to quite >different time series for the TSS MELT, and it is not clear how
>we can make the measurement of the crucial u0 operational.

I recall that, in the 1997 IWGVT Conference, Alan Freeman presented a paper
in which he deals with this issue, and he told us that he'd got with an
operational TSS MELT. I think he maintained that the error introduced by
the initial condition was eliminated (or at least reduced) in someway when
you calculate a large series. However, I don't have Alan's paper. Perhaps
he could explain the point.

>But I don't think this issue can be settled on purely formal >grounds,
because it has a real economic content. The question is >whether it makes
sense within the framework of the Marxian labor >theory of value to
attribute the change in the value of stocks >through a period due to price
changes to the expenditure of >labor within that period. In my reading Marx
is quite explicit >and clear in viewing labor in production as adding value
to the >value of the raw materials it works with, which seems to me to
>correspond to the NI definition of the MELT.

I agree with Duncan that one can easily find the NI MELT in Marx's text.
However, I think Marx doesn't deal with the problem of a *changing* MELT
due, e.g. to innovations. He always maintains constant the relation between
money and social labor time, which is equivalent to measure the value
magnitudes in labor-time. But one can ask, what would be the procedure to
calculate the MELT allowing for a variable relationship between the two
aspects of value, as it arises, for example, from a labor-saving
innovation? Marx doesn't consider this problem explicitly so, perhaps, we
cannot use its specific formulation(s) of the MELT in dealing with such
situations. In other words, maybe the NI MELT is an unproper generalisation
of this central Marx's concept.

Alejandro Ramos
(happy survivor from hurricane Mitch! During the events I thought in people
who like sea as... Jerry... I don't understand you... BTW Jerry, isn't
possible to eliminate the immense accumulation of "Re Re Re Re Re Re Re Re
Re Re" that the server Galaxy allows in the subject entry of the ope-l
posts? In the end one cannot say if Steve is writing about Debreu or Day
and this is not indifferent!!!)