Re: (OPE-L) transfers of surplus value among capitalists

From: Cyrus Bina (binac@MRS.UMN.EDU)
Date: Mon Feb 16 2004 - 01:23:42 EST


Dear Jerry, Paul C., and Rakesh:

Sorry for my delayed response.  Here you are with my points.  As usual, I am
struggling for finding time.  Upon my return fro Atlanta by February 23rd,
my response to Rakesh concerning the oil, scarcity, etc. will be
forthcoming. Thanks.

Warmly,

Cyrus




A NOTE ON THE RATE OF SURPLUS VALUE


Cyrus Bina
Copyright  Cyrus Bina 2004


1. Following Marx and relying on the interpretation of Marx's labor theory
of value (LTV) that rejects 'value' as an approximation or a homogeneous
mental construction beneath the apparent reality of market prices, I simply
distinguish between production of value and formation of value.  While
production of value is always within the sphere of production, formation of
value is though the dialectics of production, on the one hand, and exchange
and circulation, on the other hand.  This position neither endorses the
exclusivity of production in the formation of value (as the 'capital
logicians' do) nor subscribes to the variety of circulationist arguments on
the subject of value.  This (i.e., value formation) is prior to the
'transformation problem' (i.e., the transformation of values to production
prices in Vol. III), since one has to first establish that the source of
surplus value is surplus labor.  Therefore, speaking of the rate of surplus
value prior to the formation of value is like putting the proverbial cart
before the proverbial horse, which a cardinal sin in realm of methodology.

Marx's LTV is not about the aggregation of labor time, which, among others,
poses the ideal reduction and thus construction of 'homogeneous' labor in
order to fit the ready made recipe of value formation in production, and
worse in a single sector, alone.  As Ben Fine demonstrated, ". [a]n
implication of Marx's value theory is that prices diverge from value not
only qualitatively but also quantitatively. The Theory poses the need to
analyze the relations by which values are formed in exchange as prices, so
that there can be no presumption that the two are numerically equal" (Fine,
Economic Theory and Ideology, New York, 1981, p. 125, emphasis is mine).
The qualitative aspect of Marx's value formation stems from the fact that
the 'equivalence' of all the 'concrete' labors-including labor associated
with the various skills-will be obtained through exchange of commodities.
This 'equivalence,' which is an outcome of the real process production in
exchange is none other than 'abstract' labor in Marxian parlance.

This implies that those LTV theories that claim to the formation of value
and thus surplus value (in a single sector) prior to the exchange of
commodities (i.e., in the presence of 'concrete labor' that yet to be
transformed to the 'equivalence' of 'abstract labor') are idealistic for two
reasons: (1) without the actual formation of 'abstract labor' there will
remain no basis for (Marxian) value formation in both logical and historical
sense, and (2) attempting to fill the bridge between 'concrete' and
'abstract' labor, other than bridging it through the actual exchange of
commodities, is an outright ideal construction.  The quantitative aspect of
Marx's value, however, lies in the production and distribution of surplus
value.  Thus, as Fine indicates, Marx had to analyze the production of
surplus value (i.e., the source of profits) before the derivation of prices
from values can be accomplished (Ibid., p. 126).  Consequently, if value
and, its measuring rod-'abstract labor'-are to be emerged through production
and exchange of commodities, then, the formation of surplus value and its
rate also must be the outcome of such a production in conjunction with such
an exchange.  In other words, one cannot (methodologically!) speak of the
formation of the rate of surplus value before the formation of value itself.
And, if one decides to speaks of such a rate, before obtaining the (actual)
formation of such a measuring rod, one is up to one's neck into mental
construction.  Formation of value, so defined, corresponds with differing
rates of profit in a single sector.  And, given the intervention of landed
property (defined and clarified in my Twin Notes earlier), the existing
differential productivity, and thus differential profitability, will turn
into differential rents.

2. Given the above point, moving from value (Vol. I) to the production
prices (Vol. III) follows the same argument.  The major difference in the
formation of production prices is the uniform rate of profit in the presence
of different prices of production that, in turn, correspond with the
different compositions of capital.  Formation of uniform rate of profit
itself is the result of the competition of capitals of different
composition.  That means that '. capitalist[s] would share in the surplus
value produced according to their share in capital advanced.  It is as if
each capitalist receives a dividend on an equity share in the economy as a
whole' (Ben Fine and Alfredo Saad-Filho, Marx's Capital, 2004, p. 127).
Now, how one can reconcile the origin of surplus value in production as
unpaid (surplus) labor, (i.e., the product of purposeful human activity), on
the one hand, and the formation of uniform rate of profit in the presence of
differing levels of composition of capital, on the other hand?   This
question is indeed a slightly reformulated question that was raised by Jerry
Levy in his revised posting of February 4, 2004 as follows:

"On second thought, some of my post from Sunday, February 1,
on "s/v & c/v: macroeconomic categories only?" was confused.
So, let me try again, expressing an issue as a question:

For those who hold that there is one rate of surplus value and
that it is a macroeconomic rate, how do you show -- and
empirically calculate -- the transfers of value and surplus value
among capitalist firms both within an industry and in different
branches of production?

The first part of Jerry's question is bearing on the empirical calculation
of  'the transfer of value and surplus value among the capitalist firms both
within an industry and in different branches of production.'  While this a
question on its own right, it is not a question (I mean a relevant question)
within Marx's value theory.  Why?  Because Marx's objective in value theory
(Capital, I-III) is to show that (1) profits (in their apparent form) are
the result of the transformation surplus value and thus unpaid (surplus)
labor in production (and hence Vol. I on production), (2) the capitalists
are shared in this booty based on their capital advanced, despite their
different composition of capital.  Indeed, these two objectives are
intertwined and the outcome is the result of actual process of accumulation
in capitalism.

Let me ask on behalf of our deceased colleague and friend: Why do we need to
measure the transfer of value and surplus value between firms and
industries?  And what do we want to measure by that?  The results of such
transfers are apparent in the formation of the rate of profit already.  And
one cannot measure value before the formation of its measuring rod (i.e.
socially necessary abstract labor).  The rate of exploitation (measured by
the rate of surplus value), therefore, is a macroeconomic entity that
belongs to the entire social capital.

      3.    Jerry continues:

"(This is a simplified posing of the
question since there is _also_ the transfer of surplus value to
non-industrial capitalists and to land owners. The transfers of
surplus value to the state doesn't (shouldn't) pose a measurement
problem.)"

Certainly.  In the case of the intervention of the landed property, direct
transformation of differential productivity associated with intra-marginal
land (oilfields, etc.), will be transformed to differential profitability
and thus differential rents.   Jerry thus concludes with his last inquiry:

 "If it is not possible to show these transfers of surplus value,
then why isn't -- or is it? --merely a metaphor?"

It is not a metaphor because it is the consequence of an actual process,
namely the formation of uniform rates of profit and its actual distribution
based on the capital advanced.

4. Now let me take issue with some of the points raised by Paul Cockshott in
his February 4, 2004 posting in connection with my January 31, 2004 posting
addressed to Rakesh Bhandari.  For the sake completeness, allow me to
reproduce the pertinent paragraphs here:

Point #1: ". In capitalist mode of production proper (CMP), given the
frequent transfer of value among the existing sectors of the economy (i.e.,
formation of prices of production in conjunction with uniform rates of
profit), one would not know in advance how much value (and thus surplus
value) will be transferred from one sector to another, and which sector(s)
will be exactly the receivers and which sector(s) the producers of such
values."

Point #2: "Moreover, the notion of 'average' sector is an ideal one.  We do
know, however, that those sectors with the larger (than 'average') 'capital'
advanced are in the receiving end of such 'value transfers'."

Point #3: "Thus, both theoretically and empirically, speaking of the rate of
surplus value at the levels of the firm and industry does not make any
sense.  The question, therefore, is not whether the 'relationship' [i.e.,
statistically] between value and prices is 'weak' or 'strong,' but whether
it is conceptually relevant.  Therefore, I repeat my earlier point that the
Rate of Surplus Value, as a category, is relevant to the realm of
macroeconomic alone."

 Now, a footnote on differential oil rents:  given the intervention of
'landed property,' a portion of surplus value in the global oil industry is
regularly appropriated by the rentier (state and private).  This portion,
therefore, is already excluded from the formation of uniform rate of profit
and thus, theoretically as well as empirically, can be exclusively dealt
with under the rubric of rent."

 Responding my point #1, Paul Cockshott wrote:

"This seems to be more an ideal type of a capitalist mode
of production than a real system."

My reaction to this has been properly captured in the Sections 1 and 2 of
this note.  Moreover, a note on methodology is in order here.  To call
something an ideal type is to say that something is the product of one's
imagination or a construction that is produced by the actual process
(reality) itself.  First, in Sections 1 and 2, following Marx, I am
demonstrating that the rate of surplus value is a rate that is being formed
through the competition concrete commodities (and thus the products of
concrete labor), and thus, without the formation of abstract labor (the
measuring rod of value), it would be silly to talk about measurable value to
begin with.

Secondly, the laws are all tendencies in Marx.  Thus, the uniformity of
profit rate is not an ideal type.  Finally, real conceptions are usually not
the same as the empiricist ones.  The sword of here is double-edged: one
edge is idealism, pure and simple, and the other edge, idealism disguised in
empiricist cloak.  One is advised to avoid both.

Responding to my point #2, Paul indicted:

"There is some evidence for this, but there is
also evidence for a negative correlation between
sectoral organic compositions and sectoral profit
rates. This undermines your next sentence: [meaning my Point #3]."

Again, the question is what evidence and what that means.  If one has no leg
to stand on theoretically and methodologically, what is the use of
extrapolation of the so-called data and ad hoc theorizing?  Thus, one has to
know in advance what is the question thoroughly in connection with organic
composition of capital in Marx.  What is really Marx's question?  Is it
relevant to the dynamics of accumulation in capitalism?  We need to respond
to these questions first, and by doing so we are able to dismiss or accept
the type of questions that Paul or Jerry are posing.  Therefore, given
Section 1 and 2 of this note, I stand by my Point #3 above.

Paul Cockshott makes the final points:

If prices are as closely correlated to values as they
are to prices of production, then a higher than average profit
to wage ratio in a sector may be explained as the sum of two
factors [:]

1. A contribution due to higher exploitation in that sector[,]
2. A contribution due to sales of the product at a price above its value.

It is relatively easy, using i/o tables, to separate out these
two factors.

 My response is simply this:

The empirical ability to decompose the effects of 'exploitation' and those
of the 'contribution due to sales' is a wonderful exercise.  However, just
to name a few objections, it is neither necessary (for Marx's question) nor
is reasonable due to (1) ideal reconstruction (and decomposition) of profit
rate in price terms and (2) the fact that wages are not the same as the
value of labor power.

In closing, the controversy over Marx's value theory and its manifold
interpretations are crucial for posing ones own question in respect to the
reality of contemporary capitalism.  I am delighted that we are having these
conversations regardless of the extent to which we agree (or disagree) with
each other in this magnificent forum.  Thanks.


Cyrus Bina
Sunday, February 15, 2004
Camden Hall
UMM, Minnesota, USA
binac@mrs.umn.edu




----- Original Message -----
From: "gerald_a_levy" <gerald_a_levy@msn.com>
To: <OPE-L@SUS.CSUCHICO.EDU>
Sent: Wednesday, February 04, 2004 10:12 AM
Subject: (OPE-L) transfers of surplus value among capitalists


> On second thought, some of my post from  Sunday, February 1,
> on "s/v & c/v: macroeconomic categories only?" was confused.
> So, let me try again,  expressing an issue as a question:
>
> *  For those who hold that there is one rate of surplus value and
> that it is a macroeconomic rate,  how do you show -- and
> empirically calculate -- the transfers of value and surplus value
> among capitalist firms both within an industry and in different
> branches of production?  (This is a simplified posing of the
> question since there is _also_ the transfer of surplus value to
> non-industrial capitalists and to land owners. The transfers of
> surplus value to the state doesn't shouldn't pose a measurement
> problem)
>
> If it is not possible to show these transfers of surplus value,
> then why isn't -- or is it? --  merely a metaphor?
>
> I address the above to anyone who wants to answer it.
>
> In solidarity, Jerry
>


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