# [OPE-L:7321] [OPE-L:850] Re: Aggregate

John R. Ernst (ernst@PIPELINE.COM)
Thu, 08 Apr 1999 03:37:26

Re: Chai-on's 849

>My question: I'm not sure what you mean when you say that as we
>consider the aggregate -- the labor accounting seems okay.
>
>Do you simply mean that we know the sum of living labor time
>spent in all sectors? If so, what do you do with constant
>capital -- advanced and used up? How do we know labor time
>involved in the aggregate?
>
>It seems to me that for the aggregate we would agree that what
>we know is the total labor time, the total price of all the
>constant capital, and the total price of all outputs including
>the fixed capital that can be used to produce the next aggregate.
>

Chai-on wrote:

I would like to intervene above. When we take the aggregate, it is said,
value equals price of production becuase there can be no differences of
organic compositions of capital between sectors. If then value and price of
production must have some common measure. Otherwise, we can get the
equality of the two terms.

As long as price of production and labor-value both have a common measure,
we can measure both in the same labor terms or money terms.

My comment: If we say that the total value of the output is equal
to the total price of production in the aggregate, then it seems
to me we need to discuss how we see this equality. Starting from
the "givens" in my query to Ajit, all we see are prices and the
total labor time spent in production. To get to values we need
to think about the conversion of those prices to labor time.

Here more questions come to mind.

1. Is the labor time observed and summed in terms of hours concrete
or abstract? If there is an assumed relation between money and
labor time, then we could say something like one hour of abstract labor
is represented in \$10 or in x dollars.

2. Are we assuming that the output prices we observe are prices of
production in the sense that all sectors are earning an equal
rate of profit?

Chai-on wrote:

What I want to complain about Andrew Kliman is that he put "commodity
value=constant capital value + the amount of direct labor." How can we
measure the direct labor amount? He pretends to be able to measure the
labor amount in terms of labor-hour. This is impractical. As far as the
measurement is concerned, we have no other way than this, "the direct labor
amount = the size of variable capital * (1+ the general rate of
exploitation). Someone might criticize this as a Bernstein-like
circularity. But my reply is that the issue of measurement is different
from that of determination.

My comment: How do you get the general rate of exploitation starting
from the aggregate? That is, is it the ratio of profits/wages?

Chai-on wrote:

After all, we can measure the labor-value in terms of market value. The
measurement is in the reversed direction of the causality, the reversed
direction of the determination.

Conceptually we know the amount of labor determines the magnitude of value.
But when we measure them, we must follow in a different way.

My comment: The reversal is problematic in today's world. What you
seem to be saying is that A causes B, but I can only "know" A if I
know "B." We then face the question of how we know that A causes B.

Chai-on wrote:

In conclusion, if only my method can be admitted, we can prove that Marx's
original transformation was correct even with the TSS.

My comment: I'm not sure what you mean by "even with the TSS." TSS
is, by its very nature, true to Marx in the sense that it would be
absurd to transform the inputs based upon the prices of the outputs
produced with those inputs.

John