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I was very glad to receive your recent post and that you have joined the
discussion. It was weird trying to carry on the discussion without you
(and Mike). This is only a partial response. There is much more to
discuss. This post has to do with the quantitative theory of value added
provided by VF theory.
QUANTITATIVE THEORY OF VALUE ADDED
1. Geert says that my equation P = mL should be instead Y = mL, where Y
is the value added component of the price of commodities. Geert must be
assuming that L in my equation is current labor only. But I was assuming
instead that L also includes the past labor required to produce the
current means of production (i.e. L = Lc + Lp and P = mLc + mLp). So
there is no disagrement here. I am happy to restrict the discussion to
value added and current labor, and will do so below.
Geert argues that value-form theory does indeed present a quantitative
theory of value added (and surplus-value), which is represented by the
same kind of equation as in my interpretation of Marx's theory:
(1) Y = m L
If I was wrong about VF theory on this point, I would be happy to admit
it. But I would like to understand better the precise meaning of this
equation, according to the VF theory. How is it similar to Marx's
theory and how is it different?
Equation (1) has three variables: Y, m, and L. In order for this equation
to represent a meaningful theory, two of the these three variables must be
determined independently of this equation. These two variables would then
mutually determine the third variable.
Therefore, if this equation is to express a meaningful theory of value
added, then the other two variables, L and m, must somehow be determined
outside this equation, and taken as given in this equation. Otherwise,
the equation would be a tautology (true by definition) or indeterminant
(two unknowns with one equation).
2. According to my interpretation of Marx's quantitative theory of value
added, L in this equation is ABSTRACT labor (La), in which quantities of
skilled labor and more intensive labor (Li) have been converted into
equivalent quantities of simple labor by means of multipliers or
"reduction coefficients" (ki) that Marx took as given; i.e.
(2) La = SUM ( ki Li)
This quantity of abstract labor is taken as given in Marx's theory of
The m in equation (1), according to my interpretation of Marx's theory of
value added, is the money-value-added per hour of simple labor, which is
also taken as given and which Marx assumed is determined by the inverse of
the value of the money commodity (e.g. gold).
Geert (and Mike and others): do you disagree with this interpretation of
3. In value-form theory (or at least the RW version, as I understand it;
please correct me if I am wrong), the L in equation (1) is also taken as
given. But it is not taken as given as abstract labor, in which the above
conversion of skilled and more intensive labor to simple labor is assumed
to take place. Instead, L appears to be taken as given as the ACTUAL
number of labor hours of different kinds, with no distinction made between
different skills and different intensities. Geert and Mike, does this
mean that it is assumed that the many different kinds of labor all produce
the same amount of value in an hour?
If VF theory is to provide a determinant quantitative theory of value
added, then the m in equation (1) also must be taken as given, and
must be determined independently of this equation and of value added.
It is not entirely clear to me exactly how the m is equation (1) is
determined, according to VF theory. As I understand it, labor in
different industries and different firms will have different mi's. Right?
But what determines the magnitudes of these mi's? Is the determination of
these mi's related in any way to different skills and intensities?
Are they determined independently of equation (1) and value added?
Geert and Mike (and others), thanks in advance for your clarifications.
I look forward very much to further discussion. The continuing discussion
should be very interesting.
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