# Re: [OPE-L] questions on the interpretation of labour values

From: Diego Guerrero (diego.guerrero@CPS.UCM.ES)
Date: Fri Feb 23 2007 - 03:40:01 EST

```Hi Ian,

You say: 1. “I have some more questions because I do not yet understand. In your approach, is it possible to have input prices = output prices as a special case?”

I am not sure of understanding this question. I am not defending TSS’s idea that the prices of the outputs are different from the price of the inputs. I do the opposite and not only in a “special case”, but as a universal necessity. The price of an output that firm A is selling to firm B, the buyer, is at the same time the price of the input that B is buying indeed.

What I say is that this price is market price (m) that differs in general from price of production (p). Foley told me that I should take into account that there are a lot of fluctuations in the day-to-day behaviour of m as is this was a reason for using p instead of m. But note that this is not the case. The m do not need to fluctuate around the p. I made a research some years ago about the Spanish economy following the lines of Shaikh, Ochoa, etc. It is obvious that apart from the deviations of p from values (w) you have structural and permanent deviations between m and p due to, among other things, taxes. Sectors like petrol, tobacco, alcoholic drinks have m above their p because they are highly taxed, whereas sectors like train transport or subsidized private education have m lower than their p by the opposite. So I ask you: should we compute the value of a taxi service “at value” without taking into consideration that the petrol they buy as an input has a price much higher due to taxes? Etcetera.

You say: 2. “If so, what is your formula for labour values in the case of simple commodity production? And if profits happen to be equalized, and market prices equal prices of production, what is your formula for labour values in this case too?”

The formula is the same in both cases: wH = l + mH·A. That is values are the sum of direct labour (l) plus the value of the inputs (measured by the labour-equivalent of market prices). Note that this is not a contradiction but represents Marx’s idea that in the analysis of the process of value formation what matters is the duration, the intensity and other aspects of the process of spending living labour whereas the value of the inputs is a secondary issue so that they can be taken as given (data). This is why I quoted Marx’s about the “retorts and other vessels” being necessary to a chemical process, BUT DISTINCT FROM IT, which is what really matters.

So, wH = l + mH·A is the general formula. But if you are temporarily assuming m = w, as does Marx in Capital I and II, this formula becomes wH = l + wH·A, and then you can calculate values as usual, as vertically-integrated labour coefficients. Likewise, if you are temporarily assuming m = p (Capital III), then you can write prices of production as pH = pH·(A+B)·(1+r) instead of the more general pH = mH·(A+B)·(1+r) and can calculate pH as the eigenvector of (A+B) associated to (1/(1+r)).

In my view then the formulae are:

wH = l + mH·A or wH = mH·(A+B(1+ρ))

pH = mH·(A+B)·(1+r)

ρ = (l-mH·B)/mH·B

r = (l-mH·B)/mH·(A+B),

where l and the mH are data.

Regards,

Diego

----- Original Message -----
From: Ian Wright
To: OPE-L@SUS.CSUCHICO.EDU
Sent: Thursday, February 22, 2007 6:13 PM
Subject: Re: [OPE-L] questions on the interpretation of labour values

Hi Diego

Thanks for your answer. I have some more questions because I do not yet understand. In your approach, is it possible to have input prices = output prices as a special case? If so, what is your formula for labour values in the case of simple commodity production? And if profits happen to be equalized, and market prices equal prices of production, what is your formula for labour values in this case too?

Thanks,
-Ian.
```

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