Re: [OPE-L] workers' consumption and capitalists' consumption

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sat Jun 03 2006 - 20:06:07 EDT

On Sat, 3 Jun 2006 13:40:26 -0700
  Ian Wright <wrighti@ACM.ORG> wrote:
> I basically agree with Jerry: capitalist consumption is required to
> reproduce the capitalist class, which is socially necessary cost under
> conditions of capitalist production.
Hi Ian,
Would it be relevant to ask how Malthus theorized the necessity
of rentier or landlord consumption for the accumulation of capital?
And what was Marx's critique of Malthus's theory of consumption.
I'll have to check TSV later. This may not be relevant but thought I would
mention it if it helps the conversation along.
Yours, Rakesh

ps to David Y, I'll check my files later.

> This need not imply that the supply of money-capital is "productive"
> in the same sense that the supply of labour is productive.
> Counterfactually, the same net product could be produced without
> money-capital, but it could not be produced without labour.
> But the input-output representation simply counts inputs and outputs.
> In simple reproduction, capitalists supply money-capital and receive
> consumption goods. The money-capital commodity has a labour cost that
> can be counted.
> Paul has provided important feedback on an earlier version of the
> paper, and his points have always been challenging and to the point.
> We are at the stage of understanding what we disagree about.
> Paul wrote
>> However, I am not convinced that this use of 'socially
>> necessary' corresponds at all to that which Marx meant
>> and as such I dont see that it resolves the transformation
>> problem. He has redefined value using a different meaning
>> of socially necessary labour, and as such has avoided
>> the original contradiction. The question however as it
>> first arose is whether there is a contradiction between
>> the Ricardo/Marx account of labour value determination
>> and the equalisation of profit rates.
> There are two different issues here:
> (i) whether the Sraffian or real-cost definition of labour-value more
> closely corresponds to what Marx meant, and
> (ii) which of the two definitions of labour-value is theoretically correct.
> With regards (i):
> I deduce a different definition of labour value from Sraffa, whether
> it is nearer or further away from what Marx really meant I'm not so
> sure. I have an open mind about it. This requires textual evidence and
> analysis.
> The real-cost definition of labour value certainly departs from Marx
> regarding the non-proportionality of prices and labour values. But
> only in the special case of self-replacing equilibrium. My feeling is
> that price-value disproportionality due to new surplus-value
> production will be important in dynamics, so the significance of this
> result may be restricted to showing the logical incoherence of the
> neo-Ricardian critique.
> The Sraffian definition of labour value certainly departs from Marx
> regarding the aggregrate identities and the logical priority of labour
> values over prices. The existence of the transformation problem is
> substantial evidence that the Sraffian definition of labour value is
> not what Marx meant.
> There's work to do in order to determine which definition more closely
> matches Marx's texts, if that is a question that can be given a
> definitive answer.
> With regards (ii):
> Regardless of (i) I believe that the real-cost definition of labour
> value is the correct one on theoretical grounds. The basic reason is
> simple: the modern, linear production definition of labour value is
> intended to "vertically integrate" over the cost structure in order to
> count all the direct and indirect labour required to produce
> commodities. The Sraffian definition of labour value does not
> vertically integrate over labour cost of money-capital. That is an
> accounting error. Labour time was expended in previous conceptual
> "rounds" of production to produce the commodities that capitalists
> consume. This labour is not counted in the Sraffian formulae. This
> real cost of production is missing. This explains the existence of a
> "transformation problem" in Sraffa's theoretical framework. In other
> words, Marx's theory of value is neither inconsistent or redundant,
> rather there is a pervasive real-cost accounting error in the
> neo-Ricardian critique of it.
> The reasons why this has not been noticed are complex but
> understandable. I try to explain why in the paper.
> Paul wrote
>> If one redefines value you can get round it, but I suspect
>> that his new theory is just a relabeling of price of production
>> theory - ie, it homomorphic to it.
> I don't think it's possible to have a theory of value in a static
> equilibrium framework. The paper is intended as an immanent critique
> of Sraffa, or at least some of the value-theoretic conclusions his
> book has engendered.
> Certainly there is "homomorphism" in the sense that prices of
> production are proportional to labour values. But this is not a simple
> relabelling of price of production theory, for a number of reasons.
>First, labour values are independent of prices, and can be derived
> without reference to them. Second, the formulae for labour values are
> derived from a real-cost analysis of equilibrium, in contrast to the
> neo-Ricardian definition of labour value, which is normally stated as
> self-evident (to be blunt: pulled out of a hat). Third, the
> theoretical reason for the "homomorphism" is provided: Sraffa does not
> count the labour-value of money-capital. Finally, all this holds
> within Sraffa's theory. So this is not a new theory of value, but an
> investigation of some of the hidden consequences of Sraffa's single
> production framework.
> There is a great deal of symmetry in a state of self-replacing
> equilibrium, so indeed there are lots of "homomorphisms": the dual
> accounting systems of labour-value and price are mutually consistent.
> Look down every arm of the balance in equilibrium and we see the same
> real costs: it's like a hall of mirrors.
> All sides of the value controversy agree that prices are proportional
> to labour values under conditions of simple commodity production.
> Would we then describe Sraffian labour values as "just a relabeling"
> of simple price theory?
> Paul wrote
>> However, I think the real insights of his theory probably
>> apply to the problems of socialist planning.
> Maybe you could expand on this?
> Best wishes,
> -Ian.

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