# [OPE-L:1729] Re: Re: Re: Re: determination of value transferred

Subject: [OPE-L:1729] Re: Re: Re: Re: determination of value transferred
From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Tue Nov 23 1999 - 11:41:35 EST

This is a reply to Andrew K.'s 1698. Thanks very much to Andrew.

I start at a point where Andrew quotes my previous post:

> Fred: "Furthermore, if there is no further change in the price of
> cotton before this batch of yarn is sold, then the value
> transferred from the cotton to the yarn will be equal to this new
> current price of cotton, will it not? In other words, won't the
> price of cotton as input by assumption will be equal to the price
> of cotton as output, even though they are not determined
> simultaneously from given physical quantities?"

Then Andrew continues:

> I'm not sure I understand this. Let me take a wild stab. Cotton
> was harvested last month, and won't be harvested for another year.
> So its price as an output was its price last month, say 10. If
> some of this cotton enters production of yarn today, then, ceteris
> paribus (i.e., excluding stuff like changes caused by speculation,
> dumping of cotton stocks on the market, etc.), its price is still
> 10, so 10 is the sum of value transferred to the yarn produced
> today (and by "reaction," to all pre-existing stocks of yarn).

In other words, the value transferred to the pre-existing stock of yarn
will be = 10, even though the price of the cotton consumed in the yarn may
have been = 5 when this cotton first entered production, right?

And, as I asked before: if there is no further change in the price of
the cotton before this batch of yarn is sold, then the price of the cotton
as input will continue to be = 10, up until the time the yarn is sold,
right? And when the yarn is sold, then the price of cotton as input (10)
will be equal to the price of cotton as output (10), right?

Andrew continues:

> But this is NOT what is meant by the "price of cotton as input
> [... is] equal to the price of cotton as output."

But wait a minute, Andrew: This IS PRECISELY what I mean by "the price of
cotton as input is equal to the price of cotton as output". This is
exactly what I said this equality means in the paragraph from my previous
post quoted above to which you are responding. How can you say this is
not what I mean?

Andrew continues with his own interpretation of what I mean by the
equality of intput prices and output prices.

> What this
> phrase refers to is the postulate that, in the phase of the
> circuit of capital C ... P ... C', the cotton price that pertains
> to C is the same as the cotton price at the time C' is produced.

It is not entirely clear to me how this is different from what I have said
(or indeed what Andrew has said in the above example), but my guess is
that Andrew is (once again) attributing to me the Sraffian method of
determination of the prices of inputs and outputs, according to which both
the price of the means of production as input and the price of the means
of production as output are derived from a set of simultaneous equations,
with the physical quantities of inputs and outputs as the initial givens.
According to this interpretation, constant capital does not exist prior to
the sale of the output. Constant capital ( = the price of the means of
production as inputs) exists only at the time of the sale of the output,
and is determined by the current price of the means of production as
output.

BUT THIS IS NOT (repeat NOT) WHAT I AM SAYING.
Please, read my words. I am saying (and have said many times) that
constant capital exists prior to the sale of the output. Constant capital
exists from the moment money-capital is invested to purchase means of
production. Its magnitude is taken as given, initially as the actual
historical price of these means of production (as I have said many times).

However, the prior existence of constant capital does not imply that the
precise magnitude of constant capital cannot change, if there is a change
in the value of the means of production. Indeed, we have seen that Marx
said in many passages throughout his economic manuscripts that, if there
is a change in the value of the means of production, then the value of
constant capital already in circulation will change accordingly. Constant
capital continues to be taken as given, but the precise magnitude of
constant capital that is taken as given changes. Because the given
constant capital is assumed to change to reflect the current price of the
means of production, when the output of a given circuit of capital is
finally sold, the price of the means of production as inputs will be equal
to the price of the means of production as outputs. But this equality has
NOTHING TO DO with the Sraffian method of determination of intput prices
and output prices. Rather, this equality follows simply from Marx's
assumption that the magnitude of the constant capital that is taken as
given is equal to the CURRENT price of the means of production.

I look forward to further discussion.