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This post is a companion to the post just sent on "surplus value and
transferred" and should be read after the previous post. It
will briefly present the key textual evidence to support the
interpretation of transferred value presented in the previous post.
As discussed in that post, there are two controversial aspects of my
interpretation of transferred value (TV): TV is defined as a quantity of
MONEY, not a quantity of labor-time; and (2) the "past labor" (Lp) that
determines TV is not equal to the labor-time embodied in the means of
production, but is instead equal to the labor-time represented by the given
money constant capital (= C/m); i.e. TV is in general not proportional
to the labor-time embodied in the means of production.
1. TRANSFERRED VALUE IS A QUANTITY OF MONEY
In Chapter 7 of Volume 1, the key chapter in which Marx presented his basic
theory of surplus value, transferred value is discussed throughout as a
quantity of money. In Marx's first numerical example, the transferred
value is 12 shillings (10 shillings for the cotton and 2 shillings for the
spindle). In the second numerical example, the transferred value is 24
shillings (20 shillings for the cotton and 4 shillings for the spindle).
This TV is added to the new value produced by the current labor (3
shillings in the first example and 6 shillings in the second example) to
obtain the value of the yarn (15 shillings in the first example and 30
shillings in the second example) and the surplus value produced (0 in the
first example and 3 shillings in the second example). All these variables,
including TV, are defined in terms of money-prices.
This is also true in the important Chapter 8, in which Marx introduced his
key concepts of constant capital and variable capital. Transferred value
is also discussed as a quantity of money, e.g. £1000 invested in a machine
with an expected lifetime of 1000 days (TV = £1 per day) (p. 312) and £150
invested in raw materials (TV = £150) (p. 314). Also, the key paragraphs
at the end of Chapter 8, in which Marx made clear that his concept of
constant capital, and hence the transferred value, is the current cost of
the means of production, not the historical cost, he described the change
in the value transferred from the cotton to the yarn due to a change in the
PRICE of the cotton from sixpence to one shilling.
Similarly in Chapter 9, TV continues to be discussed as a quantity of
money; in the opening example of the chapter, TV = £90 (pp. 320-22). In
another example, Marx returned to the second example of Chapter 7 of 20 lb.
of yarn, in which TV = 24s (p. 329).
Transferred value continues to be expressed as quantities of money
throughout the three volumes of Capital. For another important example,
see Chapter 1 of Volume 3 on Marx's concept of "cost price". In the main
example of this chapter, TV = £200.
Therefore, I conclude that there is very strong textual evidence to support
the interpretation of TV as a quantity of money. To those who argue that
TV is defined as the quantity of labor-time embodied in the means of
production, I would ask: How do you explain the key passages above in
which Marx expressed TV in terms of money? And what other textual evidence
can you provide to support your interpretation?
As I have argued in a recent post, Ajit's quote from the beginning of
Chapter 8 of Volume 1 does not count as unambiguous evidence that TV is
defined in terms of the labor-time embodied in the means of production.
The labor-time embodied in the means of production is never mentioned in
this paragraph, only the "transferred value". Therefore, Ajit's
interpretation of this passage assumes what is supposed to be proved.
Indeed, with all the contrary evidence surrounding this passage in Chapters
7, 8, and 9 and elsewhere, it would seem that Ajit's interpretation is
2. TRANSFERRED VALUE IS DERIVED FROM THE GIVEN MONEY CONSTANT CAPITAL
The more difficult issue is: how is the money transferred value (TV)
determined? Is it derived from the given constant capital, as I have
argued, or is it determined as proportional to the labor-time embodied in
the means of production? The answer is not unambiguously clear in Volume
1; since Marx assumes that price = value in Volume 1, the text is
consistent with both interpretations. However, it becomes more clear in
Volume 3, when prices are no longer equal to values, that the the TV
component of the value of commodities is derived from the given constant
capital, which in general is not proportional to the labor-time embodied in
the means of production.
I argued in the previous post that TV = m Lp, and Lp = C/m (where Lp is
"past labor", m is the money new value produced per hour of abstract
labor, and C is the constant capital. In effect, since m(C/m) = C, TV is
equal to C, the given money constant capital. Now let's review the
VOLUME 1, CHAPTER 7
In Chapter 7 of Volume 1 (pp. 293-94), Marx calculates Lp as follows: first
he adds together the price of the consumed cotton (10 shillings) and
spindle (2 shillings), which is equal to the constant capital invested in
these consumed means of production. Then he says: "If then, 24 hours of
labor, or two working days, are required to produce the quantity of gold
represented by 12 shillings [i.e. m = 0.5 shillings per hour], it follows
first of all that two days of labor are objectified in the yarn." Notice
that Lp is not derived from the labor required to produce the cotton and
the spindle, but is instead derived from the price of the cotton and the
spindle, i.e. the constant capital (C), and the labor required to produce a
quantity of gold that is equal to 12 shillings, i.e. 1/m.
VOLUME 1, CHAPTER 9
In Chapter 9 of Volume 1 (on "The Rate of Surplus-Value), the value
transferred is identified explicitly with the money constant capital (which
was introduced and defined in Chapter 8). For example:
"We know that the value of the CONSTANT CAPITAL IS TRANSFERRED to the
product, and merely reappears in it... If c, the constant capital, = 0,
... there would be NO CONSTANT CAPITAL TO TRANSFER to the product."
(C.I: 321; emphasis added).
In this chapter the well known equation for the value of commodities (value
= C + V + S) is introduced for the first time. This equation is expressed
in terms of money and TV is expressed as C:
"30s. value of yarn = 24s. constant + 3s. variable + 3s. surplus."
This equation is introduced in the preceding paragraph as follows:
"Let us now return to the example [from Chapter 7] which showed us how the
capitalist CONVERTS MONEY INTO CAPITAL^Å The product of a working day of 12
hours is 20 lb. of yarn, having a value of 30s. No less than eight-tenths
of this value, or 24s., is formed by the mere re-appearance in it of the
value of the means of production (20 lb. of cotton, value 20s., and the
worn part of the spindle, 4s.). In other words, THIS PART [i.e. TV]
CONSISTS OF CONSTANT CAPITAL."
This interpretation of the determination of TV from the price of the
consumed means of production, or the constant capital invested in the
consumed means of production, is also supported by two passages from the
important manuscript, "The Results of the Immediate Process of Production"
(intended as summary of Volume 1 and a transition from Volume 1 to Volume
2, and included as an appendix to the Vintage edition of Volume 1). Here
"Since wheat, hay, cattle, seed of all kinds, etc. are sold as commodities
..., it follows that they enter production as COMMODITIES, i.e. as MONEY.
Like the products, and as their ingredients, the conditions of production
are indeed themselves products and they too are thus reduced to
commodities. And as a consequence of the valorization process they are
included in the calculations as sums of MONEY, i.e. as the autonomous form
of exchange value." (C.I.: 952; emphasis added)
"Since, with the exception of the additional labor, the elements of the
capitalist production process already enter the process of production as
COMMODITIES, i.e. with specific PRICES, it follows that the VALUE ADDED BY
THE CONSTANT CAPITAL is already GIVEN in terms of a PRICE. For example, in
the present case £80 for flax, machinery, etc. (C.I: 957; emphasis added)
VOLUME 3, CHAPTER 1
Similarly, in Chapter 1 of Volume 3, the transferred value is again
identified with the constant capital. To pick one passage out of many:
"We know from Volume 1 (Chapter 9, p. 320) [just discussed above] that the
value of the product newly formed, in this case £600, is composed of (1)
the REAPPEARING VAULE OF THE CONSTANT CAPITAL of £400 spent on the means of
production, and (2) a newly produced value of £200... [T]he value of the
means of production consumed, a total of £400, is transferred from these
means of production to the product. This old value reappears ... because
it existed previously as a component of the capital advanced. The
CONSTANT CAPITAL that was spent is thus REPLACED by the portion of
commodity value that it itself adds to this commodity value."
(oops, I forgot to include the page number; it is in the first few pages
of the chapter)
However, Marx assumed in all the above passages (Volume 1, the "Results",
and Chapter 1 of Volume 3) that the price of commodities is equal to their
values. Therefore, TV derived in this way from the given money constant
capital will be proportional to the labor-time embodied in the means of
production (Lmp). Therefore, the key question becomes: how does Marx
determine TV in Volume 3 when prices are no longer proportional to values?
VOLUME 3, PART 2
In my "new solution" paper, I have presented and discussed several passages
from Volume 3 which I think clearly indicate that TV is equal to the given
money constant capital, which in general is not proportional to the
labor-time embodied in the means of production. These passages state that
the cost price (= constant capital + variable capital) that partly
determines the price of production of commodities in Volume 3 IS THE SAME
as the constant capital and variable capital that determine in part the
value (or the aggregate price) of commodities in Volume 1. The only
difference between the value and the price of production of commodities is
whether surplus value or profit is added to this identical cost price.
>From this equality of the cost price in the determination of both the price
of production (ppd) and the value (V) (or aggregate price, P) of
commodities, it can be easily deduced that TV = C, as follows:
ppd = K + PR (PR stands for profit)
V = K + S
= (C + V) + S
= C + (V + S)
= C + NV
Since, as we have seen in ( ):
V = TV + NV
it follows that TV = C.
The first passage to be discussed is on p. 263 of Volume 3:
"If we take it that the composition of the average social capital is 80c +
20v, and the annual rate of surplus-value s' = 100 per cent, the average
annual profit for a capital of 100 is 20 and the average annual rate of
profit is 20 per cent. For any cost price k of the commodities annually
produced by a capital of 100, their price of production will be k + 20. In
those spheres of production where the composition of capital is (80-x)c +
(20+x)v, the surplus-value actually created within this sphere, or the
annual profit produced, is 20+x, i.e. more than 20, and the commodity VALUE
produced is k + 20 + x, more than k + 20, or more than the price of
production. In those spheres of production where the composition of
capital is (80+x)c + (20-x)v, the surplus-value or profit annually created
is 20-x, i.e. less than 20, and the commodity VALUE therefore is k + 20 -
x, more than k + 20, or more than the price of production. Leaving aside
any variation in turnover times, THE PRODUCTION PRICES OF COMMODITIES WOULD
BE EQUAL TO THEIR VALUES ONLY IN CASES WHERE THE COMPOSITION OF CAPITAL WAS
BY CHANCE PRECISELY 80c+ 20v."
Here Marx is clearly saying that the cost price (k) IS THE SAME for both
the value and the price of production of commodities. The only difference
between the value and the price of production of commodities is whether
surplus-value or profit is added to the cost price. In the case of a
commodity produced by a capital of average composition, the surplus-value
added to the cost price is equal to the profit added to this same cost
price, and hence the price of production of such an "average" commodity
will be equal to its value. This equality of the value and the cost price
of commodities produced with capitals of average composition is possible
only if the cost price is the same for the determination of both value and
price of production. Marx repeated these same points in the next paragraph
(pp. 263-64) and gave a simple numerical example.
In the next paragraph (pp. 264-65), Marx again states that the value of
commodities is equal to the cost price + surplus-value, from which it
follows, as we have seen above, that TV = C.
"The cost price is a given precondition, independent of his, the
capitalist's, production, while the result of his production is a commodity
that contains surplus-value, and therefore an excess value over and above
its cost price." (Marx, 1981, p. 265; emphasis added)
Marx noted just prior to these paragraphs on pp. 263-65 and also just
after these paragraphs that one component of the cost price is the price of
production of the means of production, which in general is not equal to the
value of the means of production. But in these paragraphs Marx emphasized
nonetheless that THE SAME COST PRICE is an element of both the value and
the price of production of commodities. In other words, Marx was saying
that the fact that the prices of production of the means of production are
not equal to their values does not affect the cost price of these
commodities, because this cost price is taken as given, both in the
determination of both the value and in the determination of the price of
production of these commodities.
Further textual evidence from Chapter 9 for this interpretation has been
discovered recently by Alejandro Ramos-Martinez (and discussed on OPEL;
Alejandro, are you there?). Marx's original manuscript of Volume 3
(written in 1864-65) has recently been published in German for the first
time in the authoritative Marx Engels Gesamtausgabe (MEGA) (unfortunately,
this particular volume will not be included in International Publishers's
50-volume Marx-Engels Collected Works). Alejandro examined Marx's original
manuscript, and discovered that, for some inexplicable reason, Engel's
version of Volume 3 LEFT OUT A CRUCIAL PARAGRAPH which comes immediately
prior to the paragraphs quoted above on pp. 263-65 of the Vintage edition.
In this omitted paragraph, it is clearly stated both in words and
algebraically that the cost price of commodities IS THE SAME for both the
value and the price of production of commodities:
"value = cost price + surplus-value V = K + s
price of production = cost price + average profit P = K + p' "
We can see that again THE SAME K is added to the surplus-value on the one
hand and to the average profit on the other hand to obtain respectively the
value (V = K + s) and the price of production (P = K + p') of
commodities. The only difference between the value and the price of
production of a given commodity is the difference between the
surplus-value contained in it and the average profit alloted to it. If
the surplus-value is greater (or less) than the average profit, then the
value is greater (or less) than the price of production.
In Chapter 12 of Volume 3, Marx returned briefly to the point that the
price of production of an "average" commodity is equal to its value (this
is a paragraph I discussed last week in response to Rakesh):
"It is quite possible, accordingly, for the cost price to diverge from the
value sum of the elements of which this component of the price of
production is composed, even in the case of commodities that are produced
by capitals of average composition..."
"Yet this possibility in no way affects the correctness of the principles
put forward for commodities of average composition. The quantity of profit
that falls to the share of these commodities is equal to the quantity of
surplus-value contained in them. For the above capital, with its
composition of 80c + 20v, for example, the important thing as far as the
determination of surplus-value is concerned is not whether these figures
are the expression of actual values, but rather what their mutual
relationship is; i.e. that v is one-fifth of the total capital and c is
four-fifths. As soon as this is the case, as assumed above, the
surplus-value v produced is equal to the average profit. On the other
hand, because it [the surplus-value; FM] is equal to the average profit,
THE PRICES OF PRODUCTION = COST PRICE + PROFIT = K + P = K + S, which is
equal in practice to the commodity's VALUE." (C.III: 309; emphasis added)
It seems to me that this passage says: (1) Cost price diverges from value
even in the case of commodities these produced with capitals of average
composition. (2) However, the profit included in the price of these
commodities is equal to the surplus-value contained in these commodities.
(3) Most importantly for our purposes, the cost price of these commodities
(which is not equal to the values of the means of production and means of
subsistence) is one component both of the price of production of these
commodities and of the value of these commodities. Again, this key point
is indicated algebraically by the fact that, in Marx's equations, THE SAME
K (the cost price of commodities) is added both to the surplus-value to
obtain the value of these commodities and also added to the profit to
obtain the price of production of these commodities. (4) Since the cost
price is the same in the determination of both the value and the price of
production of these commodities, and since profit is equal to surplus-value
for these commodities, the price of production of commodities of these
commodities is equal to their value.
I conclude from these passages from Part 2 of Volume 3 that, for Marx, the
TV component of the value of commodities is equal to the money constant
capital invested in the consumed means of production, an element of the
cost price which is taken as given, and which is general is not
proportional to the labor-time emboded in the consumed means of production.
I look forward to comments on this textual evidence for the
"macro-monetary" interpretation of Marx's theory.
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