# [OPE-L:3599] Re: Re: Re: constant capital and variable capital

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Sat Aug 05 2000 - 03:49:02 EDT

Now, Fred's proposal suggests that the value of the constant capital seed
>corn should be measured by the money price of corn multiplied by the 'value of
>money' as derived by the NI approach. Now, given the money price of corn, we
>have determined the value of corn in this case without any reference to the
>live labor-time or the S+V element of the value of corn.

Ajit,
In Marx's transformation table he assumes that the value of the inputs is
the same as the production prices at which they were bought. This gives us
part of the the money investment in terms of which the capitalist will
claim profit.
But in terms of the logic of the transformation this is misleading, for the
value of the output will be based on the value of the constant capital
transferred. So once we realize that the price paid for the constant
capital is not its value, then we have to differentiate \$MP from the value
of the constant capital (C).

It has been misunderstood for years that the correction for which Marx is
calling is the transformation of the inputs from their money prices to
their values (exact opposite to how Bortkiewicz and Sweezy have put it) so
as to understand the logic of the transformation in each branch of
production. But even as the below allows for the price of the means of
production to differ the value of the constant capital--which seems to your
main criticism here-- this does not affect the total value produced or the
aggregate surplus value produced or the prices of production (pp); it just
changes our picture of what is going on in each branch of production. But
since Marx was concerned with the macro magnitudes, he simply does not
bother with it.

\$MP C V SV costprice value pp
80 70 20 20 100 110 124
60 70 30 30 90 130 112
90 85 15 15 105 115 131
50 55 25 25 75 105 93
_______________________________________
280 280 90 90 370 460 460

Rate of profit is 24%.

So in the first and third branches the price of production of the mp used
is greater than their value. And visa versa in branches two and four. That
is,
c+v<cost price in branches one and three and visa versa in branches two and
four.

That is, the above table provides in the C column the correction for which
Marx is here calling:

>"It was originally assumed that the cost price of a commodity equalled the
>*value* of the commodities consumed in its production. But for the buyer
>of a commodity, it is the price of production that constitutes its cost
>price and can thus enter into forming the price of another commodity. As
>the price of production of a commodity can diverge from its value, so the
>cost price of a commodity, in which the price of production of other
>commodities is involved, can also stand above or below the portion of its
>total value that is formed by the value of the means of production going
>into it."
>[C.III: 264-65]

Quoted by Gil.

Yours, Rakesh

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