[OPE-L] valorisation and realisation

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Fri Sep 21 2007 - 10:41:45 EDT


As I have noted on OPE-L a few times, for Marx the concepts of valorisation
of capital and realisation of capital are not the same. Some Marxists e.g.
Mohun and Mattick argue that valorisation includes both production and
circulation, but this is not Marx's concept. Valorisation refers to the
growth in the VALUE of capital WITHIN the production process, AFTER
purchases and BEFORE sales (a moment in the whole process during which the
elements of capital are WITHDRAWN from the market), through the applications
of living labour. Valorised capital and realised capital are at any time or
during an interval of time different magnitudes, and there exists no logical
reason nor empirical reason to believe that the sum of prices must
necessarily equal the sum of values at any stage of aggregation, as a "tidy
accounting sum", anymore than total profits from new gross output must equal
total surplus values. These identities are assumed by Marx only to model the
distribution of newly created surplus value in the context of
intercapitalist competition. The reason for the non-identity is simply that
at any time the commodities can be bought or sold above or below their

All this is obvious to anybody familiar with national accounting practice,
which is the most conceptually rigorous system for empirical price
aggregation that exists (even if in reality the empirical estimates are not
very rigorously obtained as the case might be). Marx generally assumed a
MELT of some sort in order to be able to talk of goods being traded above or
below value, and he argued that the differences between total values and
total prices pertaining to the gross output (the "value of production")
would not be so great. But most probably, not having access to comprehensive
economic data, he conflated idealisations and the empiria. It is not
necessary for total prices and total values to be equal for Marx's theory to
be valid, the only requirement is that there must be a determinate
quantitative relationship between them. But that determinate relationship
cannot be empirically proved, only empirically corroborated, in particular
if it is not feasible to operationalise a MELT empirically in any accurate
way. It remains a theory or hypothesis which if true would explain a lot. If
the validity of Marx's theory is staked on the ability to achieve a "nice
and tidy accounting sum" in an idealised model, this is a big
epistemological error for many reasons which I cannot all go into now, but
not the least because the people actually doing the base accounts already
have trouble to achieve an exact consolidation.

Contrary to the Marxists, I argue that the surplus value contained in the
Marxian value product is not "redistributed" among capitalists, within
Marx's model (abstracting from state redistribution) because that would mean
parts of surplus value are transferred between capitals. In reality it is
just that some capitals realise more of the valorised capital value, and
some realise less than the valorised capital value. The aim of capitalist
production is to buy below value, produce below value and sell above value
as much as possible. Marx's principle is that for goods sold above value,
other goods are necessarily sold below value, but this is more or less a
tautology. This is also what he says in the Wagner quote, i.e. the more a
commodity is sold over its value, the more other commodities will be sold
under their value "by exactly the same amount, even if their own money price
does not fall". But it is not even necessary that they will be sold under
their value "by exactly the same amount".

Ever since Leontief, partly inspired by Marx, invented input-output
economics, the economics profession has buzzed with the notions of inputs
and outputs which have also been used in national accounts and increasingly
used in management of all kinds. But this focus on inputs and outputs is in
many respects confusing, since these things refer to accounting flows
computed from expenditures and revenues in line with certain accounting
definitions. Marx himself was primarily concerned not with inputs and
outputs, but with how a sum of capital is converted into a larger sum of
capital through production, and how this capital is distributed. What makes
his theory unique is that he argues that the distribution of newly produced
capital is fundamentally determined by the conditions of its mode of
production, exactly the reverse of the way in which it appears to most

If this interpretation is correct it does not mean that only a qualitative
value theory is possible - we can measure and quantify a lot of things
empirically which can provide useful insight. It means only that we are able
to theorise far more, and in far greater complexity, than we are actually
able to observe or measure.


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