[OPE-L:3642] Re: Re: Cost Price

From: Steve Keen (s.keen@uws.edu.au)
Date: Fri Aug 11 2000 - 00:11:10 EDT


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Dear Rakesh,

Re your comment on Ajit:
>But even in this demonstration in TSV Marx does not introduce the term cost
>price which is clearly defined in his volume 3 work.
>
>It is sad that we cannot use the concepts Marx developed with care and
>precision on even this list without giving a license to anyone to interpret
>those terms as he sees fit.

Consider:

"But what is a rise, and what a fall of prices? What is a high and what a
low price? A grain of sand is high when examined through a microscope, and
a tower is low when compared with a mountain. And if the price is
determined by the relation of supply and demand, by what is the relation of
supply and demand determined?
Let us turn to the first worthy citizen we meet. He will not hesitate one
moment, but, like Alexander the Great, will cut this metaphysical know with
his multiplication table. He will say to us: "If the production of the
commodities which I sell has cost me 100 pounds, and out of the sale of
these goods I make 110 pounds within the year, you understand that's an
honest, sound, reasonable profit. But if in the exchange I receive 120 or
130 pounds, that's a higher profit; and if I should get as much as 200
pounds, that would be an extraordinary, and enormous profit." What is it,
then, that serves this citizen as the standard of his profit? The cost of
the production of his commodities. If in exchange for these goods he
receives a quantity of other goods whose production has cost less, he has
lost. If he receives in exchange for his goods a quantity of other goods
whose production has cost more, he has gained. And he reckons the falling
or rising of the profit according to the degree at which the exchange value
of his goods stands, whether above or below his zero the cost of
production."

The author? Karl Marx, Wage-Labour and Capital.

Please tell me--and Ajit--how that can be "carefully and precisely"
interpreted without reaching the position Ajit has been putting to you.

Steve Keen

At 03:17 PM 8/10/00 -0400, you wrote:
>>I hope to clear up a bit of the confusion
>>concerning Marx's notion of cost price. If
>>I'm not mistaken, Marx uses the term differently
>>in Theories of Surplus Value than he does in
>>Capital, V3. In the former work, it means
>>price of production and clearly includes profit.
>
>John,
>Can't find it, John. In TSV III, Marx critiques the capitalist point of
>view because it takes elements of surplus value other than profit, i.e.,
>rent and interest, as part of cost. That is, from the capitalist point of
>view parts of the value product are understood as component parts thereof
>or independent elements in the actual constitution of value. A product of
>the process is turned into one of its preconditions.
>
>But even from the capitalist point of view, industrial profit does not
>enter into the constitution of industrial profit. Of course in the
>secondary literature, it is Lipietz who has developed this part of Marx's
>fetishism critique most brilliantly (see The Enchanted World) in terms of
>his distinction between the esoteric and exoteric.
>
>But even in this demonstration in TSV Marx does not introduce the term cost
>price which is clearly defined in his volume 3 work.
>
>It is sad that we cannot use the concepts Marx developed with care and
>precision on even this list without giving a license to anyone to interpret
>those terms as he sees fit.
>
>For Ajit, the inputs which go into the cost price have to include the same
>profit rate as the outputs so that the input unit prices would equal unit
>output prices. Having to approach the problem this way is supposedly
>forced upon us because Marx having left the input prices unspecified, left
>us no other way forward but Sraffian simultaneism, however redundant that
>may make value analysis.
>
> It is not that the exact term cost price even appears in Smith and Ricardo
>(or Ajit would have surely cited it by now). He knew he was dealing with a
>Marxian term but since he thinks this said identity must necessarily be
>posited, he simply redefined cost price to be consistent with his
>assumption of simultaneism which as you know Grossmann was the first to
>question.
>
>Yours, Rakesh
>
>
>
>
Dr. Steve Keen
Senior Lecturer
Economics & Finance
University of Western Sydney Macarthur
Building 11 Room 30,
Goldsmith Avenue, Campbelltown
PO Box 555 Campbelltown NSW 2560
Australia
s.keen@uws.edu.au 61 2 4620-3016 Fax 61 2 4626-6683
Home 02 9558-8018 Mobile 0409 716 088
Home Page: http://bus.macarthur.uws.edu.au/steve-keen/
Workshop on Economic Dynamcs: http://bus.macarthur.uws.edu.au/WED



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