[OPE-L:3015] Re: Need 3 corection to my last

From: Andrew_Kliman (Andrew_Kliman@email.msn.com)
Date: Fri May 05 2000 - 01:17:55 EDT


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In reply to Chris Arthur's 0PE-Ls 2985 & 2995.

Many thanks for your thoughtful reply to my paper, and especially for
the correction. I kept puzzling over the original version of your reply,
but the new version is very clear.

I'm very glad to see that we're in agreement about the main issue. That
is, Marx holds that the value transferred from the means of production
depends on their cost when they enter production, not their
post-production replacement cost. As you put it, "the reproduction value
at the beginning of year 2 is [not] 1/qr. It is unchanged at 2. This is
because the new technique has not yet been applied. It is just a glint in
the farmers' eye."

I think this is a good formulation. It distinguishes between a
commodity's (the seed corn's)*reproduction* cost and its *replacement*
cost, and explains why they differ.

Some more specific comments:

Regarding your point (a)
------------------------
"... the new technique has not yet been applied. It is just a glint in
the farmers' eye. Only at the end of year 2 is the new snlt *socially
validated*."

I didn't understand the last part. I had thought "socially validated"
was a value-form term used to argue that the labor incorporated in a
commodity isn't value-producing unless and until the commodity is sold.
In Marx's example, however, what's at issue is the amount of labor
incorporated. Only at the end of year 2 does the labor incorporated in a
qr of corn change.

"Thus only at the start of year 3 is unit reproduction value 1 and the
seed corn remaining from the end of year 1 suffers moral depreciation
accordingly."

I agree, to the extent there are any stocks of seed at the start of year
3 (end of year 2) left over from year 1. They're not mentioned in Marx's
example. The seed planted at the start of year 2, of course, does not
continue to exist at the end of the year.

Regarding your points (b), (c) and (d)
--------------------------------------
"suppose the new technique is applied first in the Southern hemisphere
...."

You corrected the conclusions you drew from this by saying

"Introducing the South was a red herring. It merely signals that *in
future* replacement cost is cheaper. The argument in (a) still holds and
the value of the input remains 2 per unit. There is no reason why the
output shuld not be sold for 200 at the end of year 2."

I agree (except that I would use Marx's term, reproduction cost, not
replacement cost). If a change in the cost of seed occurs *at any time
after* the seed has already entered production, the sum of value
transferred from the seed to the product is not affected.

"It is in year three that the actual input price of 1 would result in
the 200 units of output being valued at 180."

Agreed. The value of corn falls by half at the *end* of year 2, so that
the value transferred from the seed employed after that point falls from
40 to 20. The value of the output consequently also falls by 20, from
200 to 180.

"(note that if improved corn from the South arrived in year 1 then the
Northerners could gloomily anticipate devalorisation of their 100 units
of OUTPUT.)"

I agree with you about the timing. I also agree that the value of
Northern corn depends on what takes place in the South, because value in
Marx's theory is determined by *socially necessary* labor-time, which is
here established on a world scale. But I don't think the actual volume
of trade is a determinant of value. Thus, if Southern corn, produced in
the middle of the North's year 1, is cheaper, this will lower the
*social* value of the North's corn at the end of year 1 whether or not
trade actually takes place.

Regarding your points (e) and (f) as expanded
---------------------------------------------
"Consider the following sequence. ... If you accept these prices are
intuitively acceptable ...."

Intuitively acceptable, yes, but not only that. I believe they are *the
correct* prices (or values) under the conditions you stipulate, given an

unchanged monetary expression of labor-time (MELT). Your calculations
are the TSS calculations.

"If you accept these prices are intuitively acceptable, my question is
this. *How do they relate to value?* The simplest solution is to say
the values are identical with the prices."

That's indeed what I say. It helps to recall how and why, in Marx's
theory, price comes to differ from (social) value:

(1) Value is "transferred" or "redistributed" across sectors. But here
there's only one sector, so that isn't the case.

(2) The price falls below the value due to lack of demand. Again that's
not the case here.

(3) There is a *nominal* change in value; the MELT is changing. But
that's not the case here; Marx writes that "Since the 200 qrs [produced
in year 2] are the product of the same amount of labour [as in year 1],
then once again they are likewise = only 200." Same labor-time, same
monetary value.

I don't know of any other source of price-value discrepancies in Marx's
theory. None of these three is present. Hence the prices are values.

"But this suffers a grave defect if you hold a theory of value which
relates it exclusively to determinants in production and not
circulation."

I don't think Marx "relates it exclusively to" production or says that
that value is "determined" exclusively in production. Rather, value is
CREATED or PRODUCED exclusively in the immediate process of production.
That doesn't imply that other processes have no EFFECT on the amount of
value in existence at any moment. Even though exchange can only
redistribute value, not create it, exchange can cause the amount of value
in existence to be altered. For instance, newly produced means of
production have a value of X but a price of Y. The sum of value they
transfer to their products is not X but Y.

In any case, the issue here is different. The sphere of circulation is
not responsible for any of the changes in value, or price.

"For the only year in which there was a change in the conditions of
production was year 2. Hence only in that year could a discrepency
between the input value and the output value be possible. The price
changes in subsequent years could not reflect value changes since in
years 3, 4, 5, etc the conditions of production are stable. It might be
concluded then that the only change in value occurred in year 2 and this
then exercised a gravitational pull on prices which were out of line with
value for years 2 onwards but spiralled into it after 4 years or so."

I don't see a grave defect here, or even a tiny one. The sole cause of
the changes in price (value) is a change in the labor-time socially
necessary for production. Circulation, etc., have nothing to do with
it.

What seems to concern you is that the effect outlasts the cause. I don't
find this problematic. I'm not aware of any place in which Marx says
that the effects of a change in productivity must be confined to the
period in which the change occurs.

That the effect outlasts the cause is a very common phenomenon in both
the physical and the social realms. For instance, when a lit match is
applied to a pile of rubbish, the rubbish continues to burn even after
the match is extinguished. Or in Keynesian economics, a decline in
investment spending will cause GDP to decline period after period, even
though investment drops only once. (This is the famous "multiplier"
process.) So why not with the changes in productivity that cause changes
in value?

Regarding Sinha's attack on Marx
--------------------------------
"I turn Ajit's complaint (2988) about the table over to Andrew."

Since he is attacking the author of the example (Marx), not me, I see no
need to respond. According to the all-knowing Sinha, Marx's example is
"mathematical nonsense," "meaningless," and "nonsensical." I feel
honored to be included in Marx's company in this way. As referee on the
_Review of Radical Political Economics_, Sinha has used these and similar
terms to dismiss my work, and the TSS interpretation of Marx's value
theory, in order to justify his and his colleagues' attempts to suppress
it and block its publication. If he wants to debate me, *publicly* and
*in print*, about the meaning and significance of Marx's work, I am
ready. Otherwise I have nothing to say to him.

Thanks again for your thoughtful comments, Chris

Andrew Kliman



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