# [OPE-L:7326] [OPE-L:855] Re: Re: Aggregate

Chai-on Lee (conlee@chonnam.chonnam.ac.kr)
Thu, 08 Apr 1999 21:59:30 +0900

Dear John,

John commented to mine:

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.

Chai-on:
--------
Rather the other way. We have to think about the conversion from labor time
to prices.
Moreover, I would argue that prices are also to be valued in labor terms
because price of production is not of ordinary price forms. It is of an
intrinsic form while the others are of an external form. By "external
form", I mean that the price is defined as an exchange relationship between
two commodities or between money and a certain commodity.
Once the price of production is seen as having an intrinsic form that can
exist independently from external exchange relation, the labor value and
the price of production can be seen as valued in common labor terms. We can
measure both of them in the same labor terms.
Otherwise, it is absurd to reallocate the surplus value across sectors of
production in proportion to the sizes of capital and then make the prices
of production.
My concept of price form is as the following.

FORM
--------------------------------------------------
substance internal form external form
--------------------------------------------------------------

Vlue: Labor Value Direct Price

Pr.Pr.: Labor Poduction price Money price of production
--------------------------------------------------------------------

Here John's more questions.

>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.
>

Chai-on:
--------
No, we cannot assume such a relationship a priori. We can only say total
amount of direct labor is a certain multiple of aggregate variable capital.
The multiple should be defined as (1 + the general rate of exploitation).

>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:
--------
We can make such an assumption temporarily. But it doesnot matter even if
they are not equal to prices of production. We only use market values to
measure the constant capitals and the variable capitals(usinf the market
value of labor-powers). The market values may not correspond to the exact
values of constant and variable capitals. But value is not such a concept.
We mean value in the sense that the newly created value is in proportion to
the amount of direct labor. But price of production is in proportion to the
amount of capital size. As far as we observe this rule, the value of
capital advanced in the past may be valued variably according to market
situations.

>John's 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:
--------
Yes. aggregate profit/aggregate variable capital.
You may say it is circular. When we measure a body-temperature by the
height of mercury, we do not say the height of mercury determines our
body-temperature. Measurement is not the determination. It is okay provided
that we know in advance that the rate of exploiation determines the ratio
of aggregate profit/aggregate variable capital.

John's 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:
--------
As far as the measurement goes, we take the reversed direction like the
Christians measure the existence of the creator by reference to his
creature. An essential question is this, how we know in advance that the
rate of exploiation determines the ratio of aggregate profit/aggregate
variable capital.

For this very reason, I suggested in my papers that the issue of the
substance of value must have been put in a different context from that in
whcih we discuss the magnitude of value. And both of them must be put again
in different contexts from the issue of the value-price transformation. The
triad issues, substance, magnitude and transformation, are to be discussed
in three distinct contexts just like Hegel's three stages of Essence,
Phenomenon and Actuality.

On the relationship between Marx's triad issues and Hegel's three stages, I
am sorry as I have only discussed in my PhD thesis. If needed, I shall
prepare it in an independent paper form.

>John's 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.

Chai-on:
-------
You are correct. I made a mistake. I intended to write "even without the
TSS" but wrote it as "even with the TSS". It was my slip.