# [OPE-L:3235] RE: TSS and value added

andrew kliman (Andrew_Kliman@msn.com)
Wed, 2 Oct 1996 20:16:18 -0700 (PDT)

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I very much appreciated Fred's ope-l 3207. He said what I had been trying to
say about the IVA issue, but did it better. The key point is that Duncan's

"equation and decomposition makes it appear as if the IVA affects the
magnitude of the value added. ...

"But this interpretation is mistaken. In Andrew's example, the total value
added is determined prior to the determination of p(t) and then used to
determine p(t). The total value added is assumed to be equal to 100, which is
determined by the living labor and is independent of the IVA."

In relation to this, let me note that Duncan's value added equation

p(t) - p(t)a(t) = l(t)

can be decomposed as follows:

p(t) - p(t-1)a(t) - [p(t) - p(t-1)]a(t) = l(t)

or

p(t) - p(t-1)a(t) = l(t) + [p(t) - p(t-1)]a(t).

Multiplying by output, X, and dropping time subscripts on X, a, and l, this
gives us:

p(t)X - p(t-1)aX = lX + [p(t) - p(t-1)]aX.

p(t)X is the value of the product and p(t-1)aX is the consumed part of the
constant capital-value advanced (equal to the whole of constant capital-value
advanced in the absence of fixed capital). Both Duncan and I are willing to
take these as *data* (i.e., as the labor-time magnitudes corresponding to
money price data). The difference between them, p(t)X - p(t-1)aX, is, as I
interpret Marx, the value added through extraction of living labor in
capitalist production, lX.

In Duncan's formula, this isn't the case, due to his *revaluation* of the
constant capital, the [p(t) - p(t-1)]aX term. That this formula revalues
constant capital has nothing to do with different concepts of value added,
pace Bruce. It *was* p(t-1)aX --- this is a *datum* --- and it gets
transformed into p(t)aX.

The above does not dispose of the claim that Marx revalues the constant
capital, which is the main basis of Fred's and Bruce's opposition to the TSS
interpretation. It does, however, indicate the following: If one agrees,
as I think Duncan does, that changes in the (aggregate) value of inventories
over the production period are not attributable to the (aggregate) value added
by the extraction of living labor in capitalist production, then the
temporalist equation, which excludes them, is right, and the simultaneist
equation, which includes them, is wrong. The simultaneist equation counts
these changes in the aggregate value of inventories as part of value added and
thus either (a) fails to attribute all value added to living labor extracted,
or (b) uses "value added" to mean something different from the value of the
product minus the value laid out for means of production consumed.

Andrew Kliman