Re: [OPE-L] monetary macro interpretation

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sat Jun 03 2006 - 10:28:01 EDT

>Time's up for your answer to this key quantitative question!
>It's time to tell us:  what are the quantitative implications
>of your interpretation of the total surplus-value?

Well there are logical and political implications.  King's
Lexis dissolves the transformation problem and
the "unequal exchange" theory of the transfer of value.

First, an individual firm's quantity of surplus
value is not transformed into so much profit after surplus
value has been aggregated and redistributed according to an equal
profit rate rule.  The individual firm simply
never appropriated, was never in possession of so much surplus value.
There is no transformation of a firm's surplus value into a firm's profit.
There is only a distribution of total surplus value at an irreducibly
macro level to
profit at the micro level of the firm. Distribution moves from macro to micro,
from essence to appearance.
Lexis' response to Engels'  challenge seems not to solve the transformation
problem but to dissolve it.

Moreover, that surplus value may or may not
be distributed according to an equal profit rate rule.
  The rise of monopoly capital
interferes with distribution according to that rule; monopoly price can
exacerbate crises, preventing the price
deflation and/or scrapping that
  would stimulate new investments. That was central
to Preobrazhensky's crisis theory.
  The Sraffian theory, which  must assume profit rate equalization
for the equations to be soluble, cannot
handle this bit of reality. Since it has no theory of the firm, it can't
have a theory of monopoly firms.

Secondly, surplus value is  never transferred between
firms or branches, though it is obviously not
distributed in a rational way to meet social needs.

Surplus value, OCC, s/v are categories for the understanding
of total social capital, understood as a concrete individual.

The law of value asserts itself in a shortage of surplus value in
the system as a whole to sustain accumulation, resulting in
a general crisis (Grossman, Mattick).
That is, the law of value makes itself known
as the law of gravity asserts itself at the point a ceiling falls
down on one's head.

Marx's theory of surplus value is not a micro theory of relative
prices prices but a macro theory of collapse, though even at the micro
level the law of value makes itself felt in the changing of relative exchange
values over time.

Marx's theory is meant to show how the law of value asserts itself despite
non-accidental immediate appearances to the contrary.

>In the past, you have said that you agreed with Shaikh's interpretation.

No, no I don't think the inputs were left in the form of values or
simple prices.
Marxists have misread Marx for over a century. I partially agree with
your argument.
But if one accepts the traditional transformation problem,
Shaikh seems to vindicate Marx just fine. Though I don't think your or Shaikh's
macro understanding of surplus value is macro enough in that it sees
total surplus
value as the sum of each firm's surplus value.

>Rakesh, do you agree or disagree that this is Marx's theory of the total

But why is this any more a theory of surplus value than I had offered?
As for the question of theory, I am saying that surplus value is best
thought of a production of the organism of total capital. The magnitude
of surplus value is determined by the OCC and S/V of the organism as a whole.

Because there is no ex ante planning, both the magnitude of surplus value
and its distribution are realized, i.e. made real, only
ex post facto at the moment of sale.

>In my last post, I asked Rakesh:
>>  > Rakesh, how do you determine the quantity of the total surplus-value?
>And Rakesh replied:
>>  That would just be the M', less the M in the economy as a whole.
>In other words:  S  =  dM  =  M' - M
>But this is just a definition of surplus-value, not a theory of
>determination.  In order to have a theory of determination of the total
>surplus-value, one must have a theory of M' and M.  Marx initially took M
>(= C + V) as given (later explained), and assumed the following theory of
>M' and dM:
>         M'  =  C  +  N  =  C + m Lc
>         dM  =  (C  +  m Lc )  -  (C + V)
>                =  m (Lc - Ln)  =  m Ls
>All these variables are aggregate magnitudes.

I have some disagreements on the how the value transferred from
means of production and raw materials is determined.

>Then, Marx's theory of prices of production in Volume 3 is summarized by
>the following:
>1.  Assume a given total surplus-value , as determined by the prior
>aggregate analysis..
>2.  Determine the general or average rate of profit, as the ratio of the
>(predetermined) total surplus-value to the total capital advanced.
>         R  =  S / (C + V)  =  dM / M
>3.  Determine the price of production of each industry as the product of
>the general rate of profit (as determined above) and the capital advanced
>in each industry:
>         PPi  =  (Ci + Vi) (1 + R)
>This determination of prices of production seems to be missing in Lexis.

I don't see why it's missing. He seems to have spelled it out.

>But maybe he figured it out.  After all, it is not that hard.  As Marx
>said, while working on the details of his theory of prices of production
>for the first time in the Manuscript of 1861-63:
>         "The matter is itself extraordinarily simple."  [!]  (TSV.II. 181)
>Unfortunately, a century of misinterpretations of Marx's theory has made
>the matter much more complicated and difficult than it actually is.
>Engels exaggerated the difficulty with his "contest".

That damn Engels, the last metaphysician.

>  I guess in order to
>show Marx's superiority.  But Marx's superiority is his logical method -
>the prior determination of the total surplus-value and the general rate of
>profit.  Once this is seen, the theory of prices of production is easy.
>It would be very interesting to obtain a copy of Lexis' article and see
>all of what he said.  I wonder if there is any algebra?
>Rakesh, do you agree or disagree with this interpretation of Marx's theory
>of the general rate of profit and prices of production, which is
>consistent with, and indeed follows from, Lexis' emphasis on the prior
>determination of the total surplus-value?

As usual, I have only quibbles with your interpretation since I learned Marx
as I was reading your interpretations.

>It follows from Marx's theory summarized above that the total
>surplus-value does not change as a result of the determination of prices
>of production; i.e. total profit = total surplus-value.  The total amount
>of surplus-value produced by the collective worker is not altered by the
>distribution of this total amount to individual capitalists.  As Lexis put
>it (quoted by Engels, p. 99):  "But since the losses and gains in
>surplus-value cancel one another out within the capitalist class, the
>overall amount of surplus-value is the same as if prices are equal to
>Nor does the total price change as a result of the determination of prices
>of production; i.e. total price of production = total value.  Both of
>these aggregate equalities follow simply and straightforwardly from Marx's
>logical method.  These two aggregate equalities are not conditional
>equalities, that may or may not be true, depending on the compositions of
>capital of individual industries (as in the standard interpretation of
>Marx's theory), but are instead identities, that are always true, by
>assumption, or by the nature of Marx's logical method - the determination
>of the total surplus-value prior to its distribution.
>Rakesh, the method of determination of the total surplus-value and the
>general rate of profit and prices of production summarized above is
>different from Shaikh's interpretation, which does not determine the
>general rate of profit from a predetermined total surplus-value, prior to
>prices of production, but instead determines the general rate of profit
>simultaneously with prices of production, and the total surplus-value
>plays no role whatsoever in the theory (as in the Sraffian interpretation
>of Marx's theory).  And the total surplus-value changes as a result of the
>determination of prices of production; i.e. total profit is not equal to
>total surplus-value.

But the changes from Shaikh's method are only nominal. I don't see
the important difference between you and Shaikh. Between you and Shaikh
and the American economics profession I do see quite a gulf, however.

Yours truly,

>Are you rethinking that, given your current emphasis on the production of
>the total surplus-value by the collective workers prior to its
>distribution among individual capitals?
>In my last post, I asked Rakesh further:
>>  > What are the equations?
>         [that express his interpretation of the determination
>         of the total surplus-value]
>>  >
>>  > Are they any different from my equations above?  If so, how?
>  > > If not, then what is the siginficance of the difference you are getting
>>  > at?
>And Rakesh replied:
>>  I am hoping that Chris Arthur deepens the conversation since
>>  I think he knows what I am getting at. But let me save my answer
>>  for now, though I am getting at the reality of a class
>>  subject against the bourgeois ontological commitment to the reality of
>  > concrete individuals alone.
>>  Marxist philosophy needs to take an ontological turn and enquire into
>>  the nature
>>  of being! Too much epistemology, methodenstreit.

>Thanks very much for the discussion.

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