# [OPE-L:963] Numerical examples: second posting

Alan Freeman (100042.617@compuserve.com)
Tue, 6 Feb 1996 01:02:20 -0800

[ show plain text ]

A couple of people have asked me which numerical examples
I refer to in OPE-L:943 and OPE-L:944, both of 4/2/96

They are OPE-L:828 of 22/1/96 and OPE-L:865 of 29/01/96.
In response to a request from Fred in OPE-L:878, Jerry
reposted this (thanx) to Fred and myself: in haste, I
mistakenly believed this had been reposted to OPE as a
whole and referred to it on a couple of occasions, which
may have caused some confusion.

Here for completeness and for reference, are the two
examples again.

Example 1 (with stocks):
On 22/1/96 in (OPE-L:828) Alan Freeman wrote

======================================================================
To illustrate the problem in its clearest form let us consider
the issue discussed (and solved differently than by Fred) in
Chapter 6 of Capital Volume III, where Marx assesses the impact
of price changes on stocks of raw materials.

Consider an economy which produces corn using corn and labour.

Suppose that this society, being prudent, sets aside a certain
amount of corn each year as a buffer stock, and uses a certain
amount of corn each year to produce more corn, to live on.

To put some numbers to this, suppose that at the beginning of
year 1 this society has 20 tons of corn.

Suppose it sets aside 5 tons, plants 5 gives 5 to the workers
and 5 to the capitalists.

Suppose this first year is a good one, and with the application
of 100 person-years of labour 15 tons are produced.

Production of corn then satisfies the following equations, if we use
v to represent the value of corn and keep to the simultaneous
method:

5v + 100 = 15v

The value of corn is thus 10 years per ton. The total value in society
is now equal to

5 tons of pre-period 1 stocks worth 10 years each= 50 years
15 tons of current production worth 10 years each= 150 years
Total 20 tons of corn worth 10 years each = 200 years

Now suppose period 2 starts exactly like period 1. 5 tons are set aside,
5 given to the capitalists, 5 to the workers, and 5 are planted.

But this year, production conditions worsen. 100 person-years produce only
10 tons.

Production of corn then satisfies the following equations:

5v + 100 = 10v

The value of corn is now 20 years per ton, according to the simultaneous
method. The total value in society is now equal to

5 tons of pre-period 1 stocks worth 20 years each= 100 years
10 tons of current production worth 20 years each= 200 years
Total 15 tons of corn worth 20 years each = 300 years

Society began the year with corn worth 200 years = 200 C + buffer stocks
It added 100 years of live labour = 100 new S+V created by labour
It consumed 10 tons of corn worth 200 years =-200 consumed S+V

The total value either preserved as stocks, transferred to
the product as C, or created by live labour, is thus

200 + 100 - 200 = 100 years

(you may value the consumed wages and profits at 100 if you wish;
this does not alter the problem)

Thus, by revaluing the existing stocks to the value of 20 years per ton,
at least 200 extra years of value have been created. But as Marx clearly
explains, new value can only be created by living labour. 100 years
of living labour have created 300 years of new value.

1) Where did the extra value come from?

2) How is it that a worse harvest, that is, a harvest in which people
produced less goods, has increased the value in society's possession by
50%?

3) If the harvest had been so bad that only 5 tons were produced (as happens:
that's why society laid up stocks), the value of a ton of corn would be infinite.
But society would weather this storm in physical terms without difficulty,
because it would draw on the laid-up buffer stocks.

How can this be?

This is also a question for the fundamental marxian theorem which assumes
a physical surplus of all goods, a condition which is almost never attained.

4) If the harvest had been even worse and produced only 4.99999 tons, the value of
a ton would be negative and the entire stock of society has an enormous negative
value. As before, society would survive using the buffer stocks.

How can this be?
======================================================================

Example 2 (without stocks)
in OPE-L:865 (29/01/96) Alan Freeman wrote:

======================================================================
The general case, in which a part of these previously-produced means of
production are still in existence, I discussed in the example provided
in [OPE:828, 22 January] where I think I have provided a pretty
strong case that Fred's interpretation leads to contradiction and that
an approach based on Marx's method of averaging over all stocks of
a commodity of the same type, is both what Marx had in mind, and the
only way to avoid the deduction that there is a source of value other
than labour.

I think that John is building up a pretty strong case also, in that
the capitalists have to recover the actual money they paid.

But even in the simplest possible case where there is no fixed capital
and no buffer stocks, so that these previously-produced means of
production have already been consumed, as far as I can see Fred's
citations - particularly this one - prove the opposite of what he
maintains.

Suppose on January 1st 1990, the capitalists buy 100 tons of corn for
money worth 100 hours and with it produce bread during 1990.

Suppose that at the end of 1990, the corn harvest yields 50 tons of
corn whose value is 100 hours, the harvest being a bad one.

Suppose that two days before the 1990 harvest begins, the last
ounce of 1989 corn gets turned into bread, and one day later, the

(a)Marx's citation specifically refers to "existing" corn. This
corn doesn't exist. It's been converted into bread, indeed
it has gone one stage further and been converted into workers,
or capitalists, as the case may be.

(b)How can this corn - or the bread - be revalued, when it doesn't exist
any more? And the labour power can't be revalued, because its
contribution to value is independent of the wage.

(c)If the corn is revalued, why stop at the corn produced in 1990? Why not
the corn produced in 1989, 1988, 1987,..........1641?

(d)If the corn produced in these previous years is to be revalued,
along with all other intermediate inputs, were we wrong or were we
right when, at the end of 1988, we calculated, without foreknowledge
of the 1990 harvest, an altogether different value to that which we
now impute to this long-gone corn?

(e) if the corn in all these previous years is not to be revalued,
so that only the outputs of 1989 are revalued, then how is it that
the inputs to 1989 are valued at their historic cost, but those
of 1990 are valued at their reproduction cost?
======================================================================

Yours
Exhausted of longitude 0.