# [OPE-L:3748] Re: Re: Re: Re: Re: surplus value and transferrred value

From: Ajit Sinha (ajitsinha@lbsnaa.ernet.in)
Date: Tue Sep 05 2000 - 03:09:44 EDT

Fred B. Moseley wrote:

> Ajit, thanks for your latest post (3741). Because of the number of points
> raised, I will respond in two or three posts. This first post focuses on
> the middle parts of Ajit's post, from the introduction of his equation
> (1) through his reply to my previous #2 ("no problem to solve").
>
> In order to clarify and economize my responses below, I will very briefly
> summarize my understanding of the logical relation between Volume 1 and
> Volume 3 of Capital (in half a page!), which I have presented in several
> papers, but which Ajit chooses to ignore.
>
> There are two main points:
>
> 1. Volume 1 is mainly about the determination of dM (for the economy as a
> whole). Marx's theory of dM in Volume 1 can be concisely summarized by
> the following simple equations:
>
> (1) dM = S = NV - V
>
> = m (L - Ln)
>
> where m, L, and V are taken as given and Ln = V/m.

___________________

But you did not answer the main question Fred! Please tell us how is your "m" given?

_________________

> Fred:
>
> Please notice that these equations for the determination of dM do not
> include prices of production in any way. In other words, the
> determination of dM is prior to and independent of the determination of
> prices of production.
>
> 2. In Volume 3, prices of production are determined (along with other
> forms of the distribution of surplus-value) according to the equation:
>
> (2) ppd = (Ci + Vi) (1 + r)
>
> where r = dM / M, or = S / (C + V), and Ci and Vi are taken as given
> (and ignoring the difference between fixed and circulating capital.

_____________________

But your dM is not determined because your "m" is neither given nor determined. So
your "r" is not determined either. By the way, how is your Ci and Vi taken as given
unless you know the input-output structure of the system as well as the prices of
constant capital and wages. The problem with your argument is that you don't seem to
understand that in theory when you say that something is given, there is always some
explanation or meaning to what that given means. You need to explain your givens.
______________________

> Fred:
>
> In other words, the dM determined in Volume 1 becomes one of the
> determinants of ppd in Volume 3.
>
> Now, within that context, let us turn to Ajit's latest post, starting with
> his equation (1).
>
> On Thu, 31 Aug 2000, Ajit Sinha wrote:
>
> > ... Anyway, let's move on, this
> > disaggregated \$x, say \$x(i) for sector (i) is supposed to stand in a
> > particular relation with the total revenue earned after sales of the ith
> > sectors final outputs. And this particular relationship is like this:
> >
> > \$x(i) + \$x(i) r = \$y(i) -- eq. (1);
> >
> > where r stands for the rate of profit and
> > y as the total gross revenue. (Of course, Fred has forgotten the variable
> > capital here in this equation, but since he takes that as given too, that's
> > not much of a problem at this stage.)
>
> Ajit, this is your equation, not mine! My equation for prices of
> production (see above) always includes variable capital. But you are
> right that variable capital is also taken as given in my interpretation,
> along with constant capital.

_______________________

This is what makes me mad! This is not my equation! Why don't you ever quote me in
the context? Do i do this kind of a thing to you? That equation is an interpretation
of your highly confused text. I tried to make your point clearer to you and others.
If you think it is a misinterpretation of your text, then you should have put your
text and my interpretation and then critiqued it. By suggesting that it is my
equation, you are giving people an impression that that's how i interpret the
transformation equations. Of course, i don't believe in any such equation. This is
simply not fair!
_______________________
Ajit:

> > Now, in the above equation, either we must know the r to solve for y(i) or we
> > must know y(i) to solve for r. So up till now, Fred's system is indeterminate.
> > He has not told us whether he takes y(i) or r as given in his system.
> Fred:
> Ajit, again!! I have said repeatedly in papers and posts that the rate of
> profit is determined prior to the determination of prices of production by
> the analysis of capital in general in Volume 1, as the ratio of the total
> surplus-value to the total capital invested. The rate of profit is then
> taken as given in the determination of prices of production (analogous to

_______________________

Fred, as i have explained above your rate of profit is not determined by the way you
think it is. Neither your "m" nor your Ci and Vi can be taken as "given". Since you
have said it repeatedly in print does not make it a done thing.
________________

>
> Ajit:
> > Fred says, "Unit prices could be determined on the basis of Marx's theory by
> > dividing
> > the prices of production (or total industry revenues) by the industry
> > quantities." So now, do we have y(i's) as given too? How did we get that? And
> > how did we get the physical quantity of total output of sector i? In any case,
> > I would like the reader to take a serious note of this.
> Fred:
> Again, the y(i)'s (or prices of production) are determined by my equation
> (2) above.
>
> Unit prices play no essential role in the three volumes of Capital, as
> summarized above. In one place (that I know of) Marx discussed briefly
> the determination of unit prices, as I mentioned in my last post, in the
> "Results" manuscript (C.I: 957-67), which was intended as a transition
> from Volume 1 to Volume 2. So prices of production have not yet been
> determined and the discussion is in terms of the value of commodities
> (i.e. the price that would obtain if prices were proportional to their
> labor-times). Marx argued that unit prices are derived from total
> industry value, by dividing the total industry value by the quantity of
> output, NOT the other way around; i.e. the industry totals are NOT
> determined as the product of unit prices and the quantity of output. The
> same point would apply after prices of production are determined. The
> quantity of output is simply assumed for the purpose of this minor point.

________________________

If "Unit prices play no essential role in the three volumes of Capital, as
summarized above", how did you take your Ci and Vi as given? Furthermore, as "
[Fred] argue[s] that unit prices are derived from total industry value, by dividing
the total industry value by the quantity of output, NOT the other way around", he
must take the total output of industries in physical terms as given too. So, in
Fred's system, the right hand side of the input output system is taken as given but
the left hand is not.
_______________________

> Ajit:
>
> > Still no answer to our problem. Now we are told that the main problem he is
> > concerned with is to show where does dM come from. From our equation (1)
> > above, we don't know whether there is any dM in the system unless we take that
> > either r or y(i) is given.
> Fred:
> Here is a fundamental confusion, mixing up different levels of abstraction
> in Marx's theory: the theory of dM in Volume 1 and the theory of prices
> of production in Volume 3. As discussed above, prices of production
> (Ajit's y(i)'s) have nothing to do with Marx's theory of dM; therefore, it
> is not necessary to take the y(i)'s (or r) as given in order to explain
> dM. Rather, dM is explained prior to the determination of the y(i)'s and
> then used to determine the y(i)'s.

_____________________

Your dM is not determined, Fred! Because your "m" is arbitrary. Why can't you
understand this simple point? So I was showing you another way of determining dM in
your convoluted system. But this determination of your dM will have no relation with
_______________

> Fred:
> Ajit appears no have no understanding of Marx's logical method of the
> determination of different sets of variables at different levels of
> abstraction. For him, all variables are determined simultaneously within
> one system of equations. The latter is not Marx's method.

__________________

But Fred, what you are talking about is neither logic nor method. And unfortunately
you keep attributing this mumbo jumbo to Marx. I mean, why can't we just keep Marx
aside and discuss the rigor of your theory?
__________________

> Ajit:
>
> > From the above statement, it appears that Fred
> > takes y(i's) as given. In this case, as i had suggested in my earlier post,
> > the dM is simply determined by taking [sumof y(i's) - (C + V)], all of which
> > is taken as given by Fred. Thus dM can be determined in his system without any
> > regard to L.
> Fred:
> As explained above, dM is determined in Volume 1 by the equation:
>
> dM = m (L - Ln)
>
> and therefore dM depends clearly and crucially on L. Why is this so hard
> to understand?

_________________

Not really! I can get same dM for different quantities of L by arbitrarily changing
the value of "m".
________________

> Ajit:
> > Otherwise, he has to give up that y(i's) are given. Then in that
> > case, he has no way of determining the prices of production as he had
> > suggested above.
> Fred:
> More confusion. As explained above, the y(i)'s (i.e. prices of
> production) are determined by equation (2) above and then taken as given
> in the determination of unit prices. No problem.

__________________

Neither Ci nor Vi or r can be taken as given in your equation (2), unless it is
explained what one means by taken as given. Do you think that capitalists in various
sectors divide their money-capital between C and V arbitrarily? Cheers, ajit sinha
________________

>
>
> Further responses to the remaining points in Ajit's post to follow. Ajit,
> thanks again for the discussion.
>