Re: [OPE-L] Ajit's Paper on Sraffa and Late Wittgenstein

From: Philip Dunn (hyl0morph@YAHOO.CO.UK)
Date: Fri Jun 02 2006 - 06:57:49 EDT

Hi Ian

The question that occurs to me is the following. How
does the labour value of capitalists' consumption get
transferred to the commodity produced? I can
understand how the labour value of constant capital
productively comsumed gets transferred. Is
capitalists' consumption to be regarded as productive?

I would take the view that consumption by capitalists
or workers is destructive of value. The value of what
they consume does not get back into the process of
value production.

Does the labour value of worker's comnsumption get
transferred to the commodity produced also?


--- Ian Wright <wrighti@ACM.ORG> wrote:

> Hi Allin
> > Could you expand on this briefly?  What is the
> formula you say is
> > wrong (for r = 0), and what is the one you would
> regard as
> > correct?
> I'll be brief, and give assertions.
> According to Sraffa, prices are proportional to
> labour values only
> when r=0. Setting r=0 in Sraffa's dated labour
> representation gives
> the following formula for labour values:
> v = l(I-A)^{-1}
> where l is the vector of direct labour coefficients,
> I is the identity
> matrix, and A is the technology matrix (apologies if
> your font is not
> so good at distinguishing l and I). This is the
> standard formula
> employed by neo-Ricardian critics of Marx's value
> theory. For example,
> Samuelson uses it in his 1971 Sraffa-inspired
> critique of Marx's
> theory, and Steedman uses it in Marx After Sraffa.
> Briefly, this formula only holds in the case of
> simple commodity
> production, that is production absent a capitalist
> class. In
> conditions of capitalist production, the correct
> formula is:
> v'=l(I-A*)^{-1}
> where v' is the vector of real-cost labour values,
> and A* is the
> technology matrix augmented by capitalist
> consumption.
> Alternatively, there is another, equivalent
> representation of v',
> which does not require knowledge of capitalist
> consumption:
> v' = (I-A(1+r))^{-1}l(1+r)
> where r is the value rate of profit (= S/(C+V)). The
> value rate of
> profit may be calculated from the technology A and
> the real wage
> (i.e., it is independent of price magnitudes).
> Using v under conditions of capitalist production is
> a real-cost
> accounting error. Why? Because the formula for v
> fails to vertically
> integrate over the whole real cost structure. In
> particular it does
> not integrate over the real cost of the
> money-capital supplied to
> production by capitalists. That is why labour-value
> is not conserved
> in price in the neo-Ricardian critique. The
> conditions under which
> Marx's assertions were considered to hold -- zero
> profits, uniform
> organic compositions of capital, and production in
> standard
> proportions -- are in fact the cases in which the
> neo-Ricardian
> real-cost accounting error is accidentally
> consistent with the general
> principle of conservation of real cost in price.
> Notably, the formulae for v' can be derived from
> within Sraffa's
> system. It turns out that prices of production are
> proportional to v'
> under conditions of simultaneous determination. This
> is the case in
> which the transformation problem has traditionally
> been discussed.
> This result says very little about the stability of
> a state of
> profit-rate equalisation or the dynamics of new
> surplus-value
> production.
> Best wishes,
> -Ian.

Phil Dunn

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