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Hi Gil, Thanks for your request. Attached to this message are three papers in which I discuss Marx's key premiss of the prior determination of the total amount of surplus-value for the economy as a whole. I would of course be very interested in your comments. I look forward to resuming our discussion later in the summer. Comradely, Fred On Fri, 7 Jul 2000, Gil Skillman wrote: > Date: Fri, 07 Jul 2000 11:14:55 -0400 > From: Gil Skillman <gskillman@xxxxxxxxxxxxxxxxx> > Reply-To: ope-l@xxxxxxxxxxxxxxxxxxx > To: ope-l@xxxxxxxxxxxxxxxxxxx > Subject: [OPE-L:3574] Re: Re: Re: Re: Re: money-capital as initial givens > > Fred, I don't really understand this point. I know you're busy now, but > could you direct me to a particular paper in which you develop this > argument? Thanks, Gil > > >There is no contradiction between equations (2) and (4) if equation (2) is > >understood to apply to the economy as a whole (i.e. to capital in > >general), as I have argued in several papers. Equation (2) (or an > >equation similar to it in my papers) determines the total amount of > >surplus-value and the rate of profit, which then is taken as given in > >the determination of individual prices of production in equation (4). > > > >Comradely, > >Fred > > > > > >
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\fs20\cgrid {\fs24 THE \ldblquote NEW SOLUTION\rdblquote TO THE TRANSFORMATION PROBLEM:
\par A SYMPATHETIC CRITIQUE
\par
\par by Fred Moseley}{\up6 \chftn {\footnote\ftnalt \pard\plain \widctlpar\adjustright \fs20\cgrid {\up6 \chftn }{\fs24 Thi
s paper was written during my year as Visiting Professor at Universidad Autonoma Metropolitana - Iztapalapa in Mexico City, for which I am very grateful. An earlier version of this paper was presented at the 1997 meeting of the International Working Conf
erence on Value Theory and I received helpful comments from Duncan Foley and a number of other participants.
\par I also wish to thank Mark Glick for providing me with the translation of Dum\uc1\u233\'8enil\rquote s book (Dum\u233\'8enil 1986). }}}{\fs24
\par Universidad Autonoma Metropolitana - Iztapalapa (Mexico City)
\par Mount Holyoke College (Massachusetts)
\par }\pard \widctlpar\adjustright {\fs24
\par
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 \tab In the 1970s, the \ldblquote neo-Ricardian\rdblquote or \ldblquote Sraffian\rdblquote interpretation of Marx\rquote
s theory, as represented by the works of Meek, Dobb, Morishima, Steedman, etc. came to be the dominant, most widely accepted interpretation. By the \ldblquote neo-Ricardian\rdblquote
interpretation, I mean primarily that: (1) the fundamental givens in Marx\rquote s the
ory are assumed to be the physical quantities of the technical coefficients of production and the real wage and (2) the rate of profit is determined simultaneously with prices of production and both are derived from the above physical quantities.
\par \tab Since the early 1980s, there have been a growing number of challenges to this dominant neo-Ricardian interpretation of Marx\rquote
s theory. The first, and still the best known and most important, of these challenges to the neo-Ricardian interpretation has been the so-called \ldblquote new solution\rdblquote
to the transformation problem, which was first introduced independently by Dum\u233\'8enil (1980 and 1983-84) and Foley (1982 and 1986), and has since been followed by Lipietz (1982), Glick and Ehrbar (1989), Devine (1990), Mohun (1993), Cam
pbell (1997) and others. This paper presents a \ldblquote sympathetic critique\rdblquote of the \ldblquote new solution\rdblquote interpretation, from the perspective of my own \ldblquote macro-monetary\rdblquote interpretation of Marx\rquote
s theory. The paper is \ldblquote sympathetic\rdblquote in the sense that I think that the \ldblquote new solution\rdblquote
is a very important first attempt to break away from the dominant neo-Ricardian interpretation, but it remains a critique in the sense that I think that the \ldblquote new solution\rdblquote
has been only partially successful in making this break. The paper will concentrate on the works of Foley, Dum\u233\'8enil, and Mohun. The first section presents a brief summary of my own interpretation of Marx\rquote
s theory, as the perspective from which the \ldblquote new solution\rdblquote is considered. Special emphasis will be given to the determination of the inputs of constant capital and variable capital, since this is the key issue in the debate of Marx
\rquote s \ldblquote transformation problem\rdblquote .
\par
\par 1. \ldblquote MONETARY\rdblquote INTERPRETATION OF THE INITIAL GIVENS IN MARX\rquote S THEORY}{\up6 \chftn {\footnote\ftnalt \pard\plain \widctlpar\adjustright \fs20\cgrid {\up6 \chftn }{\fs24 See Moseley (1993) and (1997c) for a
more complete discussion of my interpretation of the monetary nature of the initial givens in Marx\rquote
s theory. Other authors who have presented similar interpretations include Carchedi (1991, Chapter 3), Mattick, Jr. (1981), and Mage (1963, Appendix A).}}}{\fs24
\par \tab The central concept of Marx\rquote s theory is the concept of }{\fs24\ul capital}{\fs24 , as the title of the book suggests. The concept of capital is defined by Marx in Chapter 4 of Volume 1 of }{\fs24\ul Capital}{\fs24 as }{\fs24\ul
money that makes more money}{\fs24 , i.e. as M - C - (M+\tab M). The key point to emphasize here is that Marx\rquote s key concept of capital is defined in terms of }{\fs24\ul money}{\fs24
, not in terms of labor-time. Capital is clearly and emphatically defined in terms of money in all the various drafts of }{\fs24\ul Capital}{\fs24 , including the }{\fs24\ul Grundrisse}{\fs24 (pp. 250-71) and the \ldblquote 1861-63 Manuscript\rdblquote
(Marx and Engels 1988, pp. 9-20), as well as the final published versions of Volume 1. The title of Part 2 of Volume 1 is \ldblquote The Transformation of }{\fs24\ul Money}{\fs24 into Capital.\rdblquote
The two chapters of the Grundrisse are entitled \ldblquote Chapter on Money\rdblquote and \ldblquote Chapter on Money as Capital.\rdblquote Of course, according to Marx\rquote
s theory, all money represents abstract labor-time, and so do these quantities of money capital. However, the specific phenomena to which Marx\rquote s concept of capital refers are flows of money capital. In discussing the circulation of cap
ital, Marx continually refers to the capital \ldblquote thrown into circulation\rdblquote and the capital \ldblquote withdrawn from circulation.\rdblquote
Clearly Marx is talking here about quantities of money capital advanced into and withdrawn from circulation. Money is not here merely an \ldblquote illustration\rdblquote
of quantities of labor-time. Marx is not talking about the labor-time embodied in the means of production or the means of subsistence thrown into and withdrawn from circulation.
\par \tab Similarly, the concept of surplus-value is also defined by Marx in Chapter 4 (and the various drafts of this chapter) in terms of money, as the increment of money, \tab
M, that emerges in the final phase of the circulation of capital. The main question addressed by Marx\rquote s theory of surplus-value in Volume 1 is the ori
gin and magnitude of this increment of money that is characteristic of capital. In Chapter 7 of Volume 1, Marx succinctly stated the conclusion of his theory of surplus-value as follows: \ldblquote The trick has at last worked: }{\fs24\ul money}{\fs24
has been transformed into capital.\rdblquote (p. 301; emphasis added)
\par \tab Constant capital and variable capital are then defined in Chapter 8 of Volume 1 as the two components of the money capital (M) that initiates the circulation of capital. In other words,
\par M = C + V. The key point to be emphasized again is that constant capital and variable capital, like the general concept of capital of which they are component parts, are also defined in terms of }{\fs24\ul money}{\fs24
. Constant capital is the money capital used to purchase means of production and varia
ble capital is the money capital used to purchase labor-power. Constant capital is not defined as the labor-time embodied in the means of production and variable capital is not defined as the labor-time embodied in the means of subsistence. Although the
se latter definitions are probably the most commonly accepted definitions of constant capital and variable capital, these definitions ignore Marx\rquote
s own definitions of the general concept of capital and its two component parts - all of which are clearly defined in terms of flows of money capital.
\par \tab Therefore, it seems clear that Marx\rquote s key concepts of capital, constant capital, variable capital, and surplus-value are defined in terms of money, not in terms of labor-time. The further question to be addressed
now is: how are the quantities of money constant capital and money variable capital, the two components of the initial money capital M, }{\fs24\ul determined}{\fs24 , first in Marx\rquote
s theory of surplus-value in Volume 1 and then in his theory of prices of production in Volume 3.
\par I argue that these quantities of constant capital and variable capital are }{\fs24\ul taken as given}{\fs24 in both of these stages of Marx\rquote
s theory. The same quantities of constant capital and variable capital are taken as given in both of these stages. The only di
fference is that in Volume 1 the aggregate amounts of constant capital and variable capital for the economy as a whole are taken as given, and in Volume 3 the disaggregated amounts for each industry are also taken as given. The sums of the individual amo
unts taken as given in Volume 3 are equal to the aggregate amounts iin Volume 1. Therefore, these amounts of constant capital and variable capital remain \ldblquote invariant\rdblquote
in the transition from Volume 1 to Volume 3 - because the same amounts of constant capital and variable capital are taken as given at both stages of this analysis. We will now review in greater detail each of these two stages of Marx\rquote s analysis.
\par a. }{\fs24\ul Marx\rquote s theory of surplus-value}{\fs24
\par \tab To begin with, it should be briefly mentioned that another important aspect of my interpretation, which I have discussed at length elsewhere (Moseley 1993, 1997a and 1998) is that I argue that Marx\rquote
s theory is based on the methodological principle that aggregate magnitudes are determined prior to the determination of individual magnitudes. This premise means that Volume 1 of }{\fs24\ul Capital}{\fs24
applies to the capitalist economy as a whole and is primarily about the determination of the total amount of surplus-value produced in the total economy. This total amount of surplus-val
ue is determined prior to the division of this total amount into separate, individual parts. The general rate of profit is also determined by this aggregate analysis prior to the determination of individual prices, as the total surplus-value divided by
the total social capital. The individual component parts of surplus-value are then determined in Volume 3, with the predetermined total amount of surplus-value and the general rate of profit taken as given. Marx expressed this assumed order of determina
tion between aggregate magnitudes and individual magnitudes in terms of the distinction between \ldblquote capital in general\rdblquote and \ldblquote competition\rdblquote (or \ldblquote many capitals\rdblquote
) (see Rosdolsky, pp. 41-50 and 367-75).
\par \tab In Marx\rquote s aggregate theory of surplus-value in Volume 1, I argue that the aggregate quantities of money constant capital and money variable capital are }{\fs24\ul taken as given}{\fs24
, as the initial quantities of money capital used to purchase means of production and labor-power in the first phase of the circulation of capital. Marx\rquote
s theory of surplus-value explains how this the initial quantity of money (M) is transformed into a greater quantity of money, and is thereby transformed into capital. Contrary to the prevailing neo-Ricardian interpretation, the initial givens in Marx
\rquote
s theory of surplus-value are not the physical quantities of the technical conditions of production and the real wage. Marx did not take these physical quantities as his initial givens and then derive constant capital and variable capital from these gi
ven physical quantities. Marx\rquote s question is not: how do given means of production and means of subsistence produce commodities that have a price greater than their cost? Marx\rquote
s question is rather: how is the given quantity of money transformed into capital by increasing its magnitude? The neo-Ricardian interpretation attributes to Marx\rquote s theory the logical method of Sraffa\rquote
s theory, i.e. the method of linear production theory. But Marx was writing 100 years before Sraffa and employed an entirely different logical method from Sraffa\rquote s linear production theory.
\par \tab I offer the following arguments and textual evidence to support this monetary interpretation of the initial givens in Marx\rquote s theory of surplus-value:
\par \tab To begin with, the general analytical framework for Marx\rquote s theory of surplus-value is the circulation of capital, which as we have seen is expressed symbolically by the general formula for capital, M - C - M\rquote
. This general formula itself suggests that the }{\fs24\ul starting-point}{\fs24 of Marx\rquote s theory is M, th
e initial sum of money invested as capital to purchase means of production (constant capital) and labor-power (variable capital). The purpose of Marx\rquote
s theory of surplus-value is to explain how this given initial sum of money is increased in magnitude through the purchase, production, and sale of commodities.
\par \tab Secondly, my interpretation is further supported by the logical relation between Parts 1, 2, and 3 of Volume 1 of }{\fs24\ul Capital}{\fs24 . In Part 1, }{\fs24\ul money}{\fs24 is derived as the necessary form of appearance of the v
alue of commodities. In Part 2, as we have seen, capital is defined in terms of this previously derived concept of money: as money that becomes more money, i.e. as M- C- M\rquote
. Part 3 then analyzes the origin of the increment of money that is characteristi
c of capital, with the initial money-capital taken as given. Marx did not suddenly in Part 3 ignore the prior logical development of money and capital in Parts 1 and 2 and introduce out of nowhere the technical conditions of production and the real wage
as the initial givens in his theory. Instead, Parts 1 and 2 provide the logical presuppositions (the \ldblquote givens\rdblquote ) for Marx\rquote
s theory of surplus-value in Part 3 and beyond. The neo-Ricardian interpretation, on the other hand, has no explanation for Marx\rquote s anal
ysis in Parts 1 and 2 or for the logical relation between these two parts and the theory of surplus-value in Part 3. These key parts of Volume 1 are simply ignored by this interpretation, and Marx\rquote s theory is turned into Sraffa\rquote
s theory, starting with the technical conditions of production and the real wage.
\par \tab As part of this analysis of the transformation of money into capital, Marx referred repeatedly to money as \ldblquote the }{\fs24\ul first form of appearance}{\fs24 \rdblquote of capital.\rdblquote In other words, Marx\rquote
s analysis of the circulation of capital }{\fs24\ul begins with money}{\fs24 , the \ldblquote first form of appearance\rdblquote of capital, and with a specific quantity of money that is invested to purchase means of production and labor-power.
\par Marx never said anything like \ldblquote the first form of appearance of capital is the means of production or the means of subsistence.\rdblquote
\par \tab Another related aspect of the logical structure of the first three parts of Volume 1 is that Parts 1 and 2 are about the \ldblquote sphere of circulation\rdblquote and Part 3 begins Marx\rquote s analysis of the \ldblquote sphere of production
\rdblquote (with the famous passage at the end of Part 2 about moving from the \ldblquote noisy sphere of circulation\rdblquote to the \ldblquote hidden abode of production\rdblquote
marking the transition between these two stages of the analysis). Marx argued that, in his theory of capital, the analysis of circulation is a necessary prelude to the analysis of production because }{\fs24\ul
capital appears first in the sphere of circulation}{\fs24 . Capitalist production is preceded by the investment of a given amount of
\par money capital in the sphere of circulation proper. Marx\rquote s analysis of the sphere of circulation provides the logical presuppositions (the \ldblquote givens\rquote
) for his analysis of the second phase of the circulation of capital in the sphere of production. Again, the neo-Ricardian interpretation of Marx\rquote s
theory completely ignores this initial phase of the circulation of capital in the sphere of circulation, and implicitly assumes that capital first appears, not in circulation, but in production, as the physical inputs to production. This is clearly not M
arx\rquote s logical method in the first three parts of Volume 1. The initial quantities of money capital that provide the givens in Marx\rquote s theory of surplus-value come from circulation, not from production.
\par }\pard \ri-288\sl480\slmult0\widctlpar\adjustright {\fs24 \tab Thirdly, my interpretation is also supported by Marx\rquote s general methodological principle of \ldblquote historical specificity\rdblquote
, according to which the explanatory concepts of a theory of capitalism should refer to those features which are historically specific to capitalism, and should }{\fs24\ul not}{\fs24 refer to the general feature
s which capitalist production shares with all form of social production (Korsch 1938, Chapter 2; Rosdolsky, pp. 77-80). Marx argued that these historically specific features are the determining factors in the development of capitalism, and therefore a th
eory of capitalism should focus on these determining factors (Marx, 1973; pp. 83-108). The technical conditions of production and the real wage are general features of social production, and thus cannot be the fundamental explanatory concepts of Marx
\rquote s theory. On the other hand, the concept of money-capital refers to specific features of capitalism and is therefore a fundamental explanatory concept in Marx\rquote s theory.
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 \tab Finally, my interpretation is also textually supported by the numerous passages throughout the various drafts of }{\fs24\ul Capital}{\fs24
in which Marx referred to the money-capital which initiates the circulation of capital as the \ldblquote }{\fs24\ul presupposed}{\fs24 capital\rdblquote or the \ldblquote }{\fs24\ul postulated}{\fs24 capital\rdblquote or the \ldblquote }{\fs24\ul
starting point}{\fs24 \rdblquote or the \ldblquote }{\fs24\ul point of departure}{\fs24 \rdblquote for his analysis of the circulation of capital. These references are especially prominent in Chapter 4 of Volume 1 of }{\fs24\ul Capital}{\fs24
, and the earlier drafts of this chapter in the }{\fs24\ul Grundrisse}{\fs24 (Marx 1973, pp. 250-64) and in the \ldblquote 1861-63 Manuscript\rdblquote (Marx and Engels 1987, pp. 501-07; Marx and Engels 1988, pp. 9-20). (This \ldblquote second draft
\rdblquote of }{\fs24\ul Capital}{\fs24 has only recently been published in English and is very interesting.) There are also numerous similar passages in the \ldblquote Results of the Capitalist Production Process\rdblquote
manuscript, published in the Penguin edition of Volume 1. One especially clear passage is the following:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
Here, where we are concerned with money only as the }{\fs24\ul point of departure}{\fs24 for the }{\fs24\ul immediate process of production}{\fs24 , we can confine ourselves to the observation: capital exists here as yet only as a }{\fs24\ul
given quantum of value}{\fs24 = M (money), in which all use-value is extinguished, so that nothing but the monetary form remains...
\par If the original capital is a quantum of value = x, it becomes capital and fulfills its purpose by changing into x + \tab x,
into a quantum of money or value = the original sum + a balance over the original sum. In other words, it is transformed into the given amount of money + additional money, into the }{\fs24\ul given value + surplus-value}{\fs24 .
\par ... As a }{\fs24\ul given sum of money}{\fs24 , x is a consta
nt from the outset and hence its increment = 0. In the course of the process, therefore, it must be change into another amount which contains a variable element. Our task is to discover this component and at the same time to identify the mediations by m
eans of which a constant magnitude becomes a variable one. (Marx 1977, pp. 976-77; emphases in the original)
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 Nowhere did Marx refer to the \ldblquote presupposed means of production\rdblquote or the \ldblquote postulated means of \ldblquote subsistence.\rdblquote Either Marx, who it should be remember
ed had a Doctorate degree in Philosophy and paid a great deal of attention throughout the various drafts of }{\fs24\ul Capital}{\fs24
to questions of logical method, was extremely sloppy in these many passages or Marx intended the usual methodological meanings to the terms \ldblquote given,\rdblquote \ldblquote postulated,\rdblquote \ldblquote presupposed,\rdblquote
etc., i.e. that they are the initial data with which his theory begins.
\par \tab Therefore, I conclude that the logical arguments and the textual evidence to support my \ldblquote monetary\rdblquote interpretation of the initial givens in Marx\rquote
s theory of surplus-value are much stronger than the arguments and the textual evidence to support the prevailing neo-Ricardian interpretation. Indeed, arguments and textual evidence are almost never presented to support the neo-Ricardian interpretation.
This interpretation is simply asserted, and unfortunately accepted uncritically by most Marxists.
\par \tab The initial money-capital that Marx took as given in his theory was assumed to be the objective \ldblquote form of appearance\rdblquote of abstract social labor. This funct
ion of money as the necessary form of appearance of abstract labor is the main conclusion of Marx\rquote s analysis of commodities and money in Part 1 of Volume 1. This important conclusion is then presupposed in the remainder of }{\fs24\ul Capital}{
\fs24 , and in his theory of su
rplus-value in particular. Thus the aggregate money- capital taken as given in his theory of surplus-value, like any other quantity of money, is assumed to represent a definite quantity of abstract social labor. The precise quantity of abstract social l
abor represented by a given quantity of money depends on the value of money, which Marx also took as given (Marx 1977, pp. 214, 683). The precise quantity of abstract labor represented by the given money constant capital is equal to (C*v}{\fs24\sub m}{
\fs24 ), where v}{\fs24\sub m}{\fs24 is the given value of money. Similarly, the precise quantity of abstract labor represented by the given money variable capital, or the \ldblquote necessary labor-time\rdblquote
required to produce the money equivalent of variable capital, is equal to (V*v}{\fs24\sub m}{\fs24 ). These quantities o
f abstract labor represented by the constant capital and the variable capital will be equal to the labor-times embodied in the means of production and the means of subsistence }{\fs24\ul only if}{\fs24
prices of the means of prodcution and means of subsistence are proportional to their respective labor-values, i.e. in general they will }{\fs24\ul not}{\fs24 be equal (more on this point below).
\par \tab In the aggregate theory of surplus-value in Volume 1, the two initial givens constant capital and money capital play entirely different roles in the d
etermination of the aggregate price of commodities and thus in the determination of the aggregate amount of surplus-value. The quantity of constant capital becomes one component of the aggregate price of the output. In other words, the constant capital
is \ldblquote transferred\rdblquote
to the price of the output. The amount of value transferred from the constant capital to the price of the output cannot be greater than the value of the constant capital. Hence the constant capital component of the price of commodities ca
nnot be a source of surplus-value. On the other hand, the variable capital does not become a component of the price of the output. Instead, the variable capital is replaced by current labor, and this current labor produces new-value, which becomes the s
econd component of the price of the output. This new-value component of the price of commodities both replaces the variable capital invested in labor-power and provides the surplus-value of capitalists.
\par \tab Marx\rquote s theory of the determination of the aggregate price of commodities can thus be summarized algebraically by the following equations:
\par (1)\tab P = C + MVA
\par (2)\tab MVA = mL
\par where P represents the aggregate price of commodities, C the constant capital, MVA the money value added produced by current labor, L the quantity of current abstract labor, and m is the \ldblquote monetary expression of value,\rdblquote
or the rate at which current abstract labor produces new-value per hour (which is equal to the inverse of the value of money and was taken as given by Marx; e.g. 0.5
shillings per hour). The givens in this theory of aggregate price are: C, m, and L. Note that the first component of the price of commodities, the \ldblquote value transferred\rdblquote
from the means of production to the price of the product, is equal to the given money constant capital consumed in the production of the commodities, whether or not this money constant capital is proportional
\par to the labor-time embodied in the means of production (more on this point below).
\par \tab From this theory of aggregate price, Marx derived the aggregate amount of surplus-value (S) produced within a given period of time. This derivation may be briefly summarized algebraically as follows:
\par (3)\tab S = P - K
\par \tab = (C + MVA) - (C + V)
\par \tab = MVA - V
\par \tab = mL - mL}{\fs24\sub n}{\fs24
\par \tab = m(L - L}{\fs24\sub n}{\fs24 )(4)\tab
\par \tab S = mL}{\fs24\sub s}{\fs24
\par where K represents the cost price of commodities (= C + V), L}{\fs24\sub n}{\fs24 the necessary labor-time or the time required for current labor to reproduce the equivalent of variable capital (= V/m), and L}{\fs24\sub s}{\fs24
the surplus-labor time.
\par \tab The
main points about this derivation for our purposes are the following: (1) the givens in this theory are C, V, L, and m, as discussed above; (2) the aggregate amount of surplus-value is derived as a function of the aggregate amount of surplus-labor; and (
3) this aggregate amount of surplus-value is then taken as given in Marx\rquote s subsequent analysis of the distribution of surplus-value and prices of production in Volume 3 of }{\fs24\ul Capital}{\fs24 , to be discussed below.
\par \tab In the above theory, the given quantities of money c
onstant capital and money variable capital are identically equal to the price of the means of production and the price of labor-power, respectively. Therefore, whether or not constant capital and variable capital are proportional to the labor-time embodi
e
d in the means of production and the labor-time embodied in the means of subsistence depends on whether or not the prices of the means of production and means of subsistence are proportional to their respective labor-values. Marx provisionally assumed in
Volume 1 that the prices of the means of production and the means of subsistence are proportional to their respective labor-values, because there was no basis for any other assumption consistent with the labor theory of value, since the determination of i
n
dividual commodities, or subsets of commodities such as the means of production and means of subsistence, are not considered in Volume 1. Strictly speaking, this exact proportionality between price and labor-time applies only to the aggregate commodity p
roduct. However, this provisional assumption plays no essential role in Marx\rquote s theory of surplus-value in Volume 1. The magnitudes of constant capital and variable capital are not }{\fs24\ul determined}{\fs24
as the labor-times embodied in the means of production and means of subsistence; i.e. they are not }{\fs24\ul derived}{\fs24
from given means of production and means of subsistence. The physical quantities of means of production and means of subsistence play no role in Marx\rquote s theory of surplus-value. Instead, the magnitudes of constan
t capital and variable capital are }{\fs24\ul taken as given}{\fs24 (\ldblquote presupposed\rdblquote
) as the quantities of money-capital that initiate the circulation of capital. The constant capital transferred to the price of the output is equal to the money used to purchase the means of
production, whether or not this money constant capital is proportional to the labor-times embodied in the means of production. Similarly, surplus-value is equal to the difference between the new-value produced and the variable capital used to purchase la
bor-power, whether or not this money variable capital is proportional to the labor-times embodied in the means of subsistence.
\par b. }{\fs24\ul Theory of prices of production}{\fs24
\par \tab As discussed above, the main subject of Volume 3 is the division of surplus-value into ind
ividual component parts and among individual capitalists. In other words, Volume 3 is concerned with the distribution of surplus-value, as subsequent to the production of surplus-value. Part 2 of Volume 3 analyzes the distribution of surplus-value among
the individual branches of production and Parts 4-6 analyze the further division of surplus-value into industrial profit, merchant profit, interest, and rent. In this analysis of the distribution of surplus-value, the total amount of surplus-value is }{
\fs24\ul taken as given}{\fs24 , as determined in the prior analysis of capital in general in Volume 1 (see Moseley 1997a and 1998).
\par \tab The \ldblquote transformation problem\rdblquote is of course concerned with the distribution of surplus-value among individual branches of production. Since the
distribution of surplus-value among branches of production is accomplished by means of the prices of production of individual commodities, this aspect of the distribution of surplus-value necessarily involves the determination of these individual prices o
f
production. In this analysis of individual prices of production, the general rate of profit is taken as given, as determined by the prior analysis of capital in general in Volume 1, and as equal to the total surplus-value divided by the total social cap
ital.
\par \tab Also taken as given in Marx\rquote s theory of prices of production are }{\fs24\ul the same quantities of constant capital and variable capital}{\fs24
that are taken as given in his theory of surplus-value in Volume 1. The only difference is that in Volume 3, not only are
the aggregate quantities of constant capital and variable capital are taken as given, but also the disaggregate quantities of these two components of money- capital for each industry (the sum of the latter is obviously equal to the former). This is the
k
ey reason why constant capital and variable capital do not change, or do not have to be transformed, in the transition from the aggregate analysis of surplus-value in Volume 1 to the disaggregate analysis of prices of production in Volume 3 - because the
s
ame quantities of constant capital and variable capital are taken as given in both of these stages of the analysis. The magnitudes of constant capital and variable capital are not first determined as the values of the means of production and the means of
subsistence, and then later transformed into the prices of these same means of production and means of subsistence, as in the neo-Ricardian interpretation. In his theory of prices of production, Marx did not suddenly adopt a different logical method, and
take the physical quantities of means of production and means of subsistence as his initial givens. Instead, he continued to take as given the same quantities of money-capital used to purchase the means of production and labor-power that he took as given
in Volume 1, except in disaggregated quantities. These given quantities of money capital \ldblquote remain invariant\rdblquote in the transition from the aggregate theory of surplus-value to the disaggregate theory of prices of production.
\par \tab The sum of constant capital and variable capital is defined by Marx as the \ldblquote cost price\rdblquote of commodities, i.e. k = c + v. \ldblquote Cost price\rdblquote is a key concept in Marx\rquote
s theory of prices of production, and is introduced in Chapter 1 of Volume 3 in order to lay the necessary groundwork for the theo
ry of prices of production presented in Part 2. Since, as we have seen above, constant capital and variable capital are defined in terms of money, their sum, the cost price of commodities, is also defined in terms of money, not in terms of labor-time. T
his cost price is referred to in Chapter 1 and in earlier drafts of this chapter as the money capital \ldblquote presupposed\rdblquote or \ldblquote postulated\rdblquote in the first phase of the circulation of capital. \ldblquote Profit\rdblquote
is also defined by Marx in this same Chapter 1 of Volume 3 as the excess of the money realized at the end of the circulation of capital over and above the \ldblquote presupposed\rdblquote cost price. In the more Hegelian language of the }{\fs24\ul
Grundrisse}{\fs24 , Marx defined profit as \ldblquote the }{\fs24\ul presupposed}{\fs24 capital, relating to itself\rdblquote (G. 762, emphasis added).
\par \tab In the earlier draft of Chapter 1 in the 1861-63 manuscript, Marx explicitly made the connection between the initial money capital M taken as given in his theory of surplus-value and the cost price k taken as given in this theory of prices of produ
ction, both of which are equal to the sum of constant capital and variable capital, M for the total economy and k for each industry. Marx commented:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
We have seen that the general form of capital is M-C-M\rquote . In other words, money, an amount of value, is thrown into circulation in order to extract from it a larger amount. ...
\par
\par We now return, therefore, to the point of departure from which we proceeded in considering the general form of capital. ...
\par
\par Profit therefore = the excess of value of the product or rather the amount of money realized in circulation for the product ... above the value of the capital which entered the formation of the product. (Marx and Engels 1991 , pp. 78-81)
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 Marx then defined the \ldblquote value of the capital which entered the formation of the product\rdblquote as the \ldblquote cost of production\rdblquote
of the commodity, which is the term Marx was using at this time for what he later called the \ldblquote cost price\rdblquote , i.e. the sum of constant capital and variable capital.
\par \tab In Part 2 of Volume 3, Marx stated explicitly several times (including algebraically and with numerical examples) that the }{\fs24\ul
cost price that is taken as given in the determination of the price of production of commodities is the same as the sum of constant capital and variable capital that is taken as given in the determination of the value of commodities}{\fs24
. The first such discussion is on pp. 263-65 of the Penguin edition. The first paragraph of this discussion (p. 263) states:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
If we take it that the composition of the average social capital is 80c + 20v, and the annual rate of surplus-value s\rquote
= 100 per cent, the average annual profit for a capital of 100 is 20 and the average annual rate of profit is 20 per cent. For any cost price k of the commodities annually produced by a capital of 100, their price
of production will be k + 20. In those spheres of production where the composition of capital is (80-x)c + (20+x)v, the surplus-value actually created within this sphere, or the annual profit produced, is 20+x, i.e. more than 20, and the commodity }{
\fs24\ul value}{\fs24
produced is k + 20 + x, more than k + 20, or more than the price of production. In those spheres of production where the composition of capital is (80+x)c + (20-x)v, the surplus-value or profit annually created is 20-x, i.e. less than 20, and the commodi
ty }{\fs24\ul value}{\fs24 therefore is k + 20 - x, more than k + 20, or more than the price of production. Leaving aside any variation in turnover times, }{\fs24\ul
the production prices of commodities would be equal to their values only in cases where the composition of capital was by chance precisely 80c + 20v}{\fs24 .
\par (emphasis added)
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 Here Marx is clearly saying that the }{\fs24\ul cost price (k) is the same}{\fs24
for both the value and the price of production of commodities. The only difference between the value and the price of production of commodit
ies is the difference between the surplus-value and the profit that is added to the cost price for any given commodity. In the case of a commodity produced by a capital of average composition, the surplus-value added to the cost price is equal to the pro
fit added to this same cost price, and hence the price of production of such an \ldblquote average\rdblquote commodity will be equal to its value. Marx repeated the same points in the next paragraph (pp. 263-64) and gave a simple numerical example.
\par \tab The next paragraph (pp. 264-65) is a well-known paragraph in which many critics claim that Marx \ldblquote admitted his error\rdblquote
of failing to transform the inputs of constant capital and variable capital from values into prices of production. Let us look again at this famous paragraph, within the context to the paragraphs just discussed:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
The development given above also involves a }{\fs24\ul modification in the determination of a commodity\rquote s cost price. }{\fs24 It was originally assumed that the cost price of a commodity equaled the value of the commodities
consumed in production. But for the buyer of a commodity, it is the price of production that constitutes its cost price and can thus enter into forming the price of another commodity. As the price of production of a commodity can diverge from its value
,
so the cost price of a commodity, in which the price of production of other commodities is involved, can also stand above or below the portion of its total value that is formed by the value of the means of production going into it. It is necessary there
f
ore to bear in mind this modified significance of the cost price, and therefore to bear in mind too that if the cost price of a commodity is equated with the value of the means of production used up inn producing it, it is always possible to go wrong. Ou
r present investigation does not require us to go into further detail on this point. It still remains correct that the cost price of commodities is always smaller than their value. For even if a commodity\rquote
s cost price may diverge from the value of the means of production consumed in it, this error is the past is a matter of indifference to the capitalist. }{\fs24\ul The cost price is a given precondition, independent of his, the capitalist\rquote
s, production, while the result of his production is a commodity that contains surplus-value, and therefore an excess value over and above its cost price}{\fs24 .
\par (Marx, 1981, p. 265; emphasis added)
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 \tab It seems to me that this passage says: (1) In Volumes 1 and 2, it was originally assumed that the prices of the means or production and the
means of subsistence are equal to their respective values. (2) However, once the prices of individual prices have been determined, we see that the prices of production of the means of production are in general not equal to their values. (3) Therefore,
if the price of the means of production is equated with their value, this would be a mistake. (4) (Most importantly for our purposes) }{\fs24\ul
even if the cost price of the means of production is not equal to the value of the means of production, it is this cost price that is taken as given (a \ldblquote given precondition\rdblquote ) in the determination of value and surplus-value}{\fs24
(i.e. in Volume 1). Surplus-value is the difference between the value of commodities and this cost price, or value is the sum of this cost price and the surplus-value produced. Therefore, I argue that this passage, instead of being an \ldblquote
admission of error,\rdblquote actually supports my interpretation that constant capital and variable capital are taken as given as sums of money-capital that initiate the circulation of capital.
\par \tab Marx noted just prior to these paragraphs on pp. 263-65 (including the missing paragraph) and just after these paragraphs that one component of the cost price is the }{\fs24\ul price of production}{\fs24
of the means of production, which in general is not equal to the value of the means of production. But in these paragraphs Marx emphasized nonetheless that the }{\fs24\ul same cost price}{\fs24
is an element of both the value and the price of production of commodities. In other words, Marx was saying that the fact that the pric
es of production of the means of production are not equal to their values does not affect the cost price of these commodities, because this cost price is taken as given, both in the determination of both the value and in the determination of the price of
production of these commodities.
\par \tab In Chapter 12 of Volume 3, Marx returned briefly to the point that the price of production of an \ldblquote average\rdblquote commodity is equal to its value:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
It is quite possible, accordingly, for the cost price to diverge from the value sum of the elements of which this component of the price of production is composed, even in the case of commodities that are produced by capitals of average composition...
\par
\par Yet this possibility in no way affects the correctness of the principles put forward
for commodities of average composition. The quantity of profit that falls to the share of these commodities is equal to the quantity of surplus-value contained in them. For the above capital, with its composition of 80c + 20v, for example, the important
thing as far as the determination of surplus-value is concerned is not whether these figures are the expression of actual values, but rather what their mutual relationship is; i.e. that v is one-fifth of the total capital and c is four-fifths. As soon as
this is the case, as assumed above, the surplus-value v produced is equal to the average profit. On the other hand, because it [the surplus-value; FM] is equal to the average profit, }{\fs24\ul
the prices of production = cost price + profit = k + p = k + s, which is equal in practice to the commodity\rquote s value}{\fs24 . (Marx, 1981, p. 309; emphasis added)
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 It seems to me that this passage says: (1) Cost price diverges from value even in the case of commodities these produced with capitals of average composition. (2) However
, the profit included in the price of these commodities is equal to the surplus-value contained in these commodities. (3) Most importantly for our purposes, the cost price of these commodities (which is }{\fs24\ul not}{\fs24
equal to the values of the means of production and means of subsistence) is one component }{\fs24\ul both }{\fs24 of the price of production of these commodities }{\fs24\ul and}{\fs24
of the value of these commodities. Again, this key point is indicated algebraically by the fact that, in Marx\rquote s equations, }{\fs24\ul the same k}{\fs24 (the cost price of commodities) is added }{\fs24\ul both}{\fs24
to the surplus-value to obtain the value of these commodities }{\fs24\ul and}{\fs24 is also added to the profit to obtain the price of production of these commodities. (4) Since the cost price is the same in the determination of both the value and
the price of production of these commodities, and since profit is equal to surplus-value for these commodities, the price of production of commodities of these commodities is equal to their value.
\par \tab Further textual evidence for this interpretation has been discovered recently by Alejandro Ramos-Martinez (and discussed on the OPE email network). Marx\rquote
s original manuscript of Volume 3 (written in 1864-65) has recently been published in German for the first time in the authoritative Marx Engels Gesamtausgabe
(MEGA) (this particular volume has not yet been translated into English or any other language and unfortunately will not be included in the 50-volume }{\fs24\ul Marx-Engels Collected Works}{\fs24 , which is being published by International Publishers).
\par Ramos examined Marx\rquote s original manuscript, and discovered that, for some inexplicable reason, Engel\rquote s version of Volume 3 }{\fs24\ul left out a crucial paragraph}{\fs24
which comes immediately prior to the paragraphs quoted above on pp. 263-65 of the Penguin edition. In this omitted paragraph, it is clearly stated both in words and algebraically that the}{\fs24\ul cost price of commodities is the same}{\fs24
for both the value and the price of production of commodities:}{\up6 \chftn {\footnote\ftnalt \pard\plain \widctlpar\adjustright \fs20\cgrid {\up6 \chftn }{\fs24
The full text of this paragraph, translated by Jens Christiansen (for which I am grateful) is as follows:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
If we know, e.g., that the advanced capital = 500, that the average profit in the given period = 10%, that 1/5 of these 500 consists of fixed ca
pital, of which in the same period say 10 goes into the commodity as depreciation, and that 400 = the circulating part of constant capital + the variable part of capital, then we know that the price of production of the commodity = depreciation /10 + con
s
umed capital / 400 + profit / 50 = 460. This price of 460 generates on the total advanced capital in the period of 500 a profit of 50 or 10%. The cost price is, as we see, always smaller than the value of the commodity. The price of production can
b
e smaller, bigger, or equal to the value of the commodity. The value of the commodity = the value of the capital consumed in the production of the commodity plus the surplus-value. If we take, as in the original development of the cost price (Chapter 1)
, cost price = value of the capital advanced in the production of the commodities, we have the following equations:
\par value = cost price + surplus-value\tab \tab \tab \tab V = K + s
\par \tab \tab or profit as identical with surplus-value\tab or = K + p
\par cost price = value - surplus-value\tab \tab \tab \tab or K = V - s
\par price of production = cost price + profit\tab \tab \tab P = K + p\rquote
\par calculated according to the general rate of profit = p\rquote .
\par Because K = V - s and V = K + s, the value of the commodity is always > than the cost price.
\par Depending on whether s or p of each special production sphere is bigger or smaller or equal, > < or = to the average profit determined by the general rate of profit, then P > < or = V.
\par Because V = K + s or p, and P = K + p\rquote , V = P when s = p\rquote , > than P when
\par p\rquote < s, and < P when p\rquote > s. (Marx-Engels, 1992b, pp. 239-40)}}}{\fs24
\par }\pard \widctlpar\adjustright {\fs24 \tab value = cost price + surplus-value\tab \tab \tab \tab \tab V = K + s
\par \tab ...
\par \tab price of production = cost price + average profit \tab \tab \tab P = K + p\rquote
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 We can see that }{\fs24\ul the same K}{\fs24
is added to the surplus-value on the one hand and to the average profit on the other hand to obtain respectively the value (V=K+s) and the price of production (P=K+p\rquote ) of commodities. The only diffe
rence between the value and the price of production of a given commodity is the difference between the surplus-value contained in it and the average profit alloted to it. If the surplus-value is greater (less) than the average profit, then the value is g
reater (less) than the price of production.
\par \tab Therefore, I conclude from the above textual evidence that Marx did }{\fs24\ul not}{\fs24 \ldblquote fail to transform the inputs of constant capital and variable capital from values into prices of production,\rdblquote as his critics claim. In
stead, Marx\rquote s theory takes as given }{\fs24\ul the same quantities}{\fs24 of constant capital and variable capital as sums of money-capital, in both the theory of value and the theory of price of production.
\par Constant capital and variable capital do not have to be transformed from value magnitudes to price magnitudes because constant capital and variable capital are }{\fs24\ul not determined first as the value of the means of production and wage-goods}{\fs24
and then later determined as the price of these given bundles of goods. Instead, th
e same quantities constant capital and variable capital are taken as given sums of money, in both the Volume 1 aggregate analysis of surplus-value and the Volume 3 disaggregate analysis of prices of production, regardless of whether or not the prices of t
he means of production and wage-goods are proportional to their values.
\par \tab Therefore, Marx\rquote s theory of prices of production of commodities can be summarized algebraically by the following equation (see Marx 1981, p. 265):
\par (5)\tab \tab p}{\fs24\sub i}{\fs24 = k}{\fs24\sub i}{\fs24 + r k}{\fs24\sub i}{\fs24
\par where p}{\fs24\sub i}{\fs24 stands for the price of production of each commodity, k}{\fs24\sub i}{\fs24
for the cost price of commodities in each industry (equal to the sum of constant capital and variable capital), and r for the general rate of profit (ignoring here the distinction between the stock and flow of capital). In this equation, k}{\fs24\sub i}
{\fs24 is taken as given sums of money, as the initial presuppositions of Marx\rquote s theory,
\par and r is taken as given as determined by the prior analysis of capital in general in Volume 1.
\par \tab Finally, it can easily be shown that, if this interpretation is accepted, then Marx\rquote
s two aggregate equalities (total gross price = total gross value and total profit = total surplus-value) are both true simultaneously, as Marx himself concluded (see Moseley 1993 for a simple demonstration of these two aggregate equalities).
\par \page 2. FOLEY\rquote S INTERPRETATION
\par \tab The version of the \ldblquote new solution\rdblquote most similar to my \ldblquote macro-monetary\rdblquote interpretation is that presented by Duncan Foley (1982, 1986). Foley\rquote s interpretation is similar to my interpretation, f
irst of all, in its general emphasis on money and the monetary nature of Marx\rquote s theory. Foley emphasizes that the general analytical framework of Marx\rquote
s theory is the monetary circuit of capital, represented by the familiar formula M - C ... P ... C\rquote - M\rquote
. This circulation of capital corresponds to the flows of money capital which are recorded in the bookkeeping accounts of capitalist enterprises.
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
A capitalist firm begins with value in money form and uses it to buy commodities, which are combined in pro
duction to yield a new commodity, one that is sold for more money than the capitalist advanced to begin with. Marx represents this motion in the diagram M - C ... P ... C\rquote - M\rquote
... This diagram of capitalist circulation corresponds directly to the income, or profit and loss statement, of a capitalist firm. (1986, p. 33)
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 Consistent with this emphasis, Foley defines the key variables in Marx\rquote s theory of surplus-value - constant capital, variable capital, value added and surplus-value - in terms of money,
as the flows of money capital within the general framework of the circulation of capital (1982, p, 38; 1986, Chapter 3). Foley also defines the key variables in Marx\rquote
s theory of prices of production - profit and prices of production - in terms of money (1982, p. 40; 1986, Chapter 6).
\par \tab Another important similarity between Foley\rquote s interpretation and my interpretation is its general emphasis on the methodological principle of the prior determination of aggregate magnitudes. Foley expresses this point as follows:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
In this paper I suggest ... viewing the labor theory of value as the claim that the money value of the whole mass of the net production of commodities expresses the expenditure of the total social labor in a commodity-producing economy ... This pat
h begins with the global value produced by the expenditure of labor, the value embodied in the whole mass of the net commodity product, and then asks how this value comes to be realized in the prices of particular commodities. The concept of value as a p
roperty of the whole mass of the net commodity product in this approach is }{\fs24\ul analytically prior}{\fs24 to the concept of price, the amount of money a particular commodity brings on the market. (1982, p. 37; emphasis added).
\par
\par }\pard \widctlpar\adjustright {\fs24 In (1986), the first chapter on Marx\rquote s method emphasizes that the fundamental determinations of capitalism are the aggregate magnitudes of the system as a whole and that these magnitudes are \ldblquote conserved
\rdblquote in the more concrete stages of the analysis. And in Chapter 3, Marx\rquote s theory of surplus-value in Volume 1 of }{\fs24\ul Capital}{\fs24
is presented as a theory of the total amount of surplus-value produced in the capitalist economy as a whole.
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 \tab Another important similarity is that Foley\rquote s interpretation assumes that }{\fs24\ul variable capital it taken as given in terms of money}{\fs24
, as the money wage paid to workers, rather than derived from a given quantity of wage goods, as in the neo-Ricardian interpretation. This given quantity of money variable capital remains invariant in the transition from the theory of surplus-value
in Volume 1 to the theory of prices of production in Volume 3, as in my interpretation.
\par \tab Foley\rquote s justification for this interpretation of variable capital is not presented in terms of Marx\rquote s general logical method, or the general nature of the givens in Marx\rquote
s theory, but is instead based on the specific nature of the relation between capitalists and workers in capitalist society. It is argued first of all that taking variable capital as given in terms of the money wage is a more accurate representation
of the actual exchange relation between capitalists and workers.
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
Workers in capitalist society do not bargain for, or receive, a bundle of commodities as payment for the labor power, they receive a sum of money, the money wage, which they are then free to spend as they wish ... (1982, p. 43)
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 \tab
Foley also argues that this interpretation also provides a better understanding of the specific nature of exploitation in capitalism and of the nature of the class struggle between capitalists and workers. He argu
es that this interpretation enables one to perceive that capitalist exploitation is not identical with the existence of a surplus product and that the goal of workers\rquote
struggles should not be the elimination of the surplus product per se, but should instead be the elimination of the social relations of capitalism in which the surplus product is appropriated by capitalists in the form of surplus-value.
\par \tab However, and here is where our differences begin, Foley\rquote s interpretation treats constant capital different
ly from variable capital, and hence treats constant capital differently from my own interpretation. Constant capital is not taken as given in terms of money, as the quantity of money used to purchase means of production, as in my interpretation. Instead
,
constant capital is derived from given physical quantities of means of production (i.e. the technical conditions of production), as in the neo-Ricardian interpretation. As a result, constant capital changes in the transition from the theory of surplus-v
a
lue in Volume 1 to the theory of prices of production in Volume 3. In Volume 1 constant capital is equal to the value of the given means of production, and in Volume 3 constant capital is equal to the price of production of the same given means of produc
tion.
\par \tab Therefore, I argue that there is a key methodological inconsistency in Foley\rquote
s interpretation between the determination of constant capital and the determination of variable capital. Variable capital is taken as given in money terms, but constant
capital is derived from given physical quantities. Foley does not provide a rationale for this inconsistent treatment of constant capital and variable capital. I argue that because constant capital and variable capital are specific forms of the general
c
oncept of capital, and are the two components of the initial money capital (M), they should both be determined in the same way. Either they should both be taken as given in terms of money or they should both be derived from given physical quantities. Si
milarly, constant capital and variable capital are the two components of the cost price of commodities in Marx\rquote
s theory of prices of production, suggesting again that they should be determined in the same way. Marx often wrote or expressed the determined t
he equation for the determination of prices of production as the sum of the cost price plus the average profit (k + rk), thereby leaving no possibility for different determinations of the two components of the cost price, constant capital and variable cap
ital. Nowhere in Marx\rquote
s writings is there a suggestion that constant capital and variable capital are determined in different ways, I have argued above that there are strong reasons for assuming that constant capital and variable capital should be taken
as given, as the two components of the money capital (M) or the cost price (k) that initiates the circulation of capital.
\par \tab In one passage, Foley seems to suggest that Marx took as given the entire money capital invested in capitalist enterprises - both the
constant capital and the variable capital - rather than deriving these components of capital from given physical quantities.
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24 One striking difference between Marx
\rquote s treatment of the problem and later treatments is that Marx describes the two economies solely in terms of the accounts of the capitalist firms; }{\fs24\ul he does not specify the actual production and distribution of use-values}{\fs24
. Later treatments, perhaps in the name of theoretical rigor, describe both economies in terms of the production and distribution of particular use-values, and }{\fs24\ul derive}{\fs24
the accounts of the capitalist firms from this assumed data on production and distribution. when one holds constant the production and distribution of use-values, it turns out that ... aggregate value added and aggr
egate profit cannot both be the same in the two [economies].
\par
\par I want to suggest that Marx had good theoretical reasons for describing the two economies in terms of the accounts of the capitalist firms rather than in terms of the production and distribution
of use-values. The social facts relevant to struggle and change in a capitalist society concern the production and distribution of value itself, and the actual production, distribution, and consumption of use-values that follow form these struggles take
a secondary place. (1982, p. 44; first emphasis added)
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 It seems to me that Foley\rquote
s argument could be applied to constant capital as well as to variable capital. However, Foley applies this argument only to variable capital, thus resulting in the inconsistent treatment of constant capital and variable capital.
\par \tab Foley\rquote s inconsistent treatment of constant capital and variable capital leads him to the following erroneous conclusions regarding Marx\rquote s theory of prices of production, which will be discussed fu
rther below: (1) Marx made a partial error in his determination of prices of production in Volume 3. Contrary to the standard interpretation, Marx did not fail to transform variable capital, because the same variable capital is taken as given in money te
r
ms in both Volume 1 and Volume 3. However, as in the standard interpretation, Marx did fail to transform constant capital, because constant capital is derived from given means of production, first as the value and then as the price of production of these
given means of production. (2) The total price of commodities also changes from Volume 1 to Volume 3, so that the total price is no longer equal to the total value of commodities. (3) The rate of profit also changes from Volume 1 to Volume 3, i.e. the
\ldblquote price\rdblquote rate of profit is not equal to the \ldblquote value\rdblquote rate of profit.
\par \tab Another important difference between Foley\rquote s interpretation and my interpretation is the nature of the determination of the rate of profit, just mentioned. Foley agrees with the neo-Ricar
dian interpretation that there are two rates of profit in Marx\rquote s theory - the \ldblquote value\rdblquote rate of profit determined in Volume 1 and the \ldblquote price\rdblquote
rate of profit determined in Volume 3 - and that these two rates of profit are in general not equal, so that the rat
e of profit changes as a result of the transformation of values into prices of production. Foley also agrees with the neo-Ricardian interpretation that the \ldblquote price\rdblquote rate of profit is determined }{\fs24\ul simultaneously}{\fs24
with prices of production, and is derived from the given physical quantities of the technical conditions of production and the real wage. In contrast, I have argued above that there is only one rate of profit in Marx\rquote s theory - the \ldblquote
price\rdblquote rate of profit - and that this rate of profit is determined }{\fs24\ul prior}{\fs24
to the determination of prices of production by the analysis of capital in general. Foley provides no justification for his interpretation, presumably because this interpretation has been the generally accepted interpretation. However, in my view, F
oley has accepted the erroneous neo-Ricardian interpretation on this crucial point.
\par }\pard \ri-720\sl480\slmult0\widctlpar\adjustright {\fs24 \tab It also seems to me that the simultaneous determination of the rate of profit is inconsistent
\par with the general methodological principle emphasized by Foley of the prior determination of
\par aggregate magnitudes. According to Foley, the prior determination of aggregate magnitudes
\par applies only to the following magnitudes: value added, variable capital, and surplus-value. It does
\par not apply to the following other variables: total price, constant capital, and the rate of profit.
\par Instead, these latter variables are determined simultaneously with individual prices of production.
\par It seems to me that this is another important methodological inconsistency in Foley\rquote s interpretation.
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 \tab Another difference between Foley\rquote s interpretation and my interpretation is that Foley redefines the aggregate price-value equality which Marx emphasized from the }{\fs24\ul gross}{\fs24
price of commodities to the }{\fs24\ul net}{\fs24 price of commodities, or the value added component of the gross price of commodities. Foley }{\fs24\ul assumes}{\fs24
that the aggregate net price-value equality is satisfied, i.e. it is assumed that the aggregate value added (after the determination of prices of production) is proportional to the total current labor.
In his system of equations that determine prices of production, this aggregate net price-value equality is the (n+1)st equation; it is assumed as a \ldblquote conservation principle\rdblquote or an \ldblquote invariance postulate\rdblquote
. This invariance postulate is essentially an express
ion of the methodological principle of the prior determination of aggregate magnitudes. It is assumed that the aggregate value added is determined Volume 1 and is taken as given in the determination of prices of production in Volume 3. The determination
of prices of production affects only the distribution of this given, predetermined amount of the aggregate value added.
\par \tab From this assumption, and the assumption discussed above that variable capital is taken as given as the money wage and remains invari
ant in the transformation, the other aggregate equality - that the aggregate profit is equal to the aggregate surplus-value - follows as a matter of simple algebra. However, according to Foley\rquote s interpretation, the aggregate }{\fs24\ul gross}{
\fs24 price-value equality will in general }{\fs24\ul not}{\fs24 be satisfied because the constant capital component of the gross price of commodities will in general not be equal to the labor time embodied in the means of production.
\par \tab Foley\rquote s justification for this redefinition of the aggregate price equality seems to be that what is most important in Marx\rquote
s theory is the relation between value added and current labor, because surplus-value is one part of the value added. This is the key relation that is assumed to be invariant in the transformation.
The relation between the gross price and the total labor is much less important.
\par \tab I agree in part with Foley\rquote s argument on this point. I agree that the most important point of Marx\rquote s labor theory of value is that value added is determined by current lab
or. I also agree that the aggregate value added remains invariant in the transformation and that the aggregate }{\fs24\ul net}{\fs24
price-value equality will be satisfied simultaneously with the aggregate profit-surplus value equality. However, I also argue (as above) th
at constant capital is determined in the same way as variable capital and therefore is determined in a different way from Foley\rquote
s interpretation. Constant capital is not derived from given means of production, but is instead taken as given in terms of mon
ey and remains invariant in the transformation, just like variable capital. On the 7basis of this interpretation of constant capital, the aggregate }{\fs24\ul gross}{\fs24
price-value equality is also satisfied simultaneously with the aggregate profit-surplus value equality, as Marx concluded, and as has been shown above.
\par \tab In sum, the most important difference between Foley\rquote s interpretation and my interpretation is the nature of the determination of constant capital. According to my interpretation, constant capital is d
etermined in the same way as variable capital - both are taken as the given quantities of money capital that initiate the circulation of capital. According to Foley\rquote
s interpretation, constant capital is determined differently from variable capital. Varia
ble capital is taken as given as a quantity of money capital, as in my interpretation, but constant capital is derived from given physical means of production, as in the neo-Ricardian interpretation. Thus, I argue that Foley only goes \ldblquote half way
\rdblquote in breaking away from the neo-Ricardian \ldblquote physical quantities\rdblquote interpretation of Marx\rquote s theory. If Foley were to accept my \ldblquote monetary\rdblquote
interpretation of constant capital, then all our other differences would disappear. We could then agree that: (1) Marx\rquote s theory of prices of production in Volume 3 is logically complete and consistent (i.e. Marx did not commit a \ldblquote
logical error\rdblquote , even a partial one, in the determination of prices of production); (2) the rate of profit would not change as a result of the determination of prices of production; and (3) the aggregate }{\fs24\ul gross}{\fs24
price-value equality is also satisfied simultaneously along with the aggregate net price-value equality and the aggregate profit-surplus value equality, as Marx concluded. These conclusions are more consistent than Foley\rquote
s prior conclusions with the important methodological presuppositions discussed in the beginning of this section: the monetary nature of Marx\rquote s theory and the prior determination of aggregate magnitudes.
\par
\par 3. DUM\u201\'83NIL\rquote S INTERPRETATION
\par \tab The next version of the \ldblquote new solution\rdblquote to be considered is that presented by Gerard Dum\u233\'8enil (1980, 1983-84, 1986).}{\up6 \chftn {\footnote\ftnalt \pard\plain \widctlpar\adjustright \fs20\cgrid {\up6 \chftn }{\fs24
Lipietz (1982) presents essentially the same interpretation as Dum\uc1\u233\'8enil, with more mathematical formalization and fewer supporting arguments.}}}{\fs24 Dum\u233\'8enil\rquote s interpretation is similar to Foley\rquote
s in the following general respects: (1) Dum\u233\'8enil also takes the money wage as an initial given, rather than the real wage; (2) Dum\u233\'8enil also redefines the aggregate price-value equality from gross to net terms; and (3) Dum\u233\'8e
nil also argues that Marx made a partial error in his determination of prices of production - that Marx forgot to transform constant capital (but not variable capital) from values to prices of production. Dum\u233\'8e
nil also concludes that the aggregate }{\fs24\ul net}{\fs24 price-value equality is satisfied simultaneously with the aggregate price-surplus value equality, but that the aggregate gross p
rice-value equality is not satisfied, and that the rate of profit changes in the determination of prices of production. There are also several differences between Dum\u233\'8enil\rquote s and Foley\rquote
s interpretations, which will now be discussed in turn.
\par \tab One minor difference is that Dum\u233\'8enil\rquote s justification for taking the money wage rather than the real wage as an initial given is somewhat different from Foley\rquote s. Dum\u233\'8e
nil presents similar justifications as Foley - that capitalists actually pay workers a money wage (not a real wage) and that capitalist exploitation should be defined in relation to this money wage (not in relation to the real wage). In addition, Dum
\u233\'8enil also presents additional arguments for taking the money wage as given and for the different methods of determination of constant capital and variable capital. With respect to the latter poing, Dum\u233\'8enil argues:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
In contrast with what is often contended, Marx does not treat constant and variable capital identically. Indeed, it is true that the capitalists }{\fs24\ul buy}{\fs24
constant capital, and the price of production must be used to evaluate this transaction. But capitalists do not buy the consumption goods of workers, but }{\fs24\ul pay}{\fs24 them wages.
\par (1986, pp. 15-16)
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 \tab This argument is very brief and seems to be missing several steps
, but the argument seems to be that, because capitalists directly buy means of production and do not directly means of subsistence, constant capital must first be evaluated as the value of the means of production and then transformed into the prices of pr
o
duction of these means of production. On the other hand, because capitalists do not buy means of subsistence directly, but rather pay workers money wages, variable capital is both initially and finally evaluated in terms of the money wage, or prices of p
roduction.
\par \tab But this argument is a non-sequitur. The fact that capitalists buy means of production directly does not mean that constant capital }{\fs24\ul must}{\fs24
be derived from given means of production, first as their value and then as their prices of production.
Capitalists just as surely pay money to purchase means of production as they pay money workers to purchase their labor-power. Constant capital could also be taken as given as this sum of money capital paid by capitalists to purchase means of production,
j
ust as variable capital is taken as given as the sum of money capital paid by capitalist to purchase labor-power. Indeed, as argued above, there are good reasons in favor of such a consistent, parallel determination of constant capital and variable capit
a
l. Since both constant capital and variable capital are specific forms of the general concept of capital, they should both be determined in the same way, and, specifically, they should be taken as given as the two components of the initial money capital
(M) that begins the circulation of capital.
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24 \tab Dum\u233\'8e
nil then presents the following textual evidence to support his interpretation:This fundamental difference is quite explicitly expressed in }{\fs24\ul Capital}{\fs24 . Concerning }{\fs24\ul constant}{\fs24 capital, Marx writes:
\par
\par \ldblquote The development given above also involves a modification in the determination of a commodity\rquote s cost price. It was originally assumed that the cost price of a commodity equaled the value of the commodities consumed in its production.
\par But for the buyer of a commodity, it is the price of production that constitutes its cost price and thus enters into forming the price of another commodity. (...)
\par Our present investigation does not require us to go into further details on this point.\rdblquote (Marx 1981, pp. 264-65)
\par
\par However, Dum\u233\'8enil argues, Marx\rquote s discussion of variable capital is quite different:
\par
\par \ldblquote As for variable capital, the average daily wage is certainly always equal to the value product of the number of hours that the worker must work in order to produce its necessary me
ans of subsistence; but this number of hours is itself distorted by the fact that the production prices of the necessary means of subsistence diverge from their values.\rdblquote (Marx 1981, p. 261)
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 \tab The first passage above is interpreted by Dum\u233\'8enil to be only about constant capital. But this interpretation is incorrect. The passage is about the }{\fs24\ul cost price}{\fs24
of commodities. We have seen above that cost price is defined by Marx in Chapter 1 of Volume 3, and used consistently throughout, as the }{\fs24\ul sum}{\fs24 of }{\fs24\ul both}{\fs24 constant capital }{\fs24\ul and}{\fs24
variable capital. It is true that this passage mentions specifically only the means of production (in a part not explicitly quoted by Dum\u233\'8enil) and does not mention the means of subsistence. However, in several other similar passages in whic
h Marx discussed the \ldblquote modified significance of the cost price,\rdblquote both constant capital and variable capital are explicitly mentioned (Marx 1981, pp. 261 and 308-09; Marx 1971, p. 167).}{\up6 \chftn {\footnote\ftnalt \pard\plain
\widctlpar\adjustright \fs20\cgrid {\up6 \chftn }{\fs24 Marx (1981, p. 161) is the second passage quoted by Dum\uc1\u233\'8enil above and will be discussed below. }}}{\fs24 Therefore, these passages are about the cost price, which is the sum of
both constant capital and variable capital, and whatever interpretation applies to constant capital also applies to variable capital. Either they are both taken as given as quantities of money capital or they are both derived from given physical quantit
ies. These passages are certainly not arguments for different determinations of constant capital and variable capital.
\par \tab This passage and the other similar passages cited above do }{\fs24\ul not}{\fs24 state or imply that the constant capital and the variable capital are fir
st determined as the value of the means of production and the means of subsistence and then are then later have to be transformed into the prices of production of these given physical quantities of goods. Rather, this passage says that, although it was o
r
iginally assumed that the prices of the means or production and the means of subsistence are equal to their respective values (as discussed in the first section above), this provisional assumption has nothing to do with the determination of constant capit
a
l and variable capital. Constant capital and variable capital are taken as given as the quantities of money used to purchase means of production and means of subsistence, whether or not the price of these means of production and means of subsistence are
e
qual to their values. Once it is determined that the prices of the means of production and means of subsistence are in general not equal to their values, this does not change the magnitude of the given constant capital and variable capital. Nor is the q
uantity of surplus-value affected, which remains the excess of the price of commodities over their cost price, or over the sum of the given quantities of constant capital and variable capital.
\par \tab My interpretation is supported by the continuation of the first passage quoted by Dum\u233\'8enil above:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24 For even if a commodity\rquote
s cost price may diverge from the value of the means of production consumed in it, this error is the past is a matter of indifference to the capitalist. }{\fs24\ul The cost price is a given precondition}{\fs24 , independent of his, the capitalist\rquote
s, production, while the result of his production is a commodity that contains }{\fs24\ul surplus-value}{\fs24 , and therefore an }{\fs24\ul excess value over and above its cost price}{\fs24 .
\par (Marx 1981, p. 265)
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 Thus we see that, even if the cost price of the means of production and the means of subsistence are not equal to their values, this cost price is still taken as given (a \ldblquote given precondition
\rdblquote ) in Marx\rquote s theory of surplus-value, and surplus-value is still the excess of the price of the product over this given cost price.
\par \tab The second passage above quoted by Dum\u233\'8enil (Marx 1981, p. 261) also does not support his interpretation that variable capital is determined differently from constant capital. The paragraph quoted by Dum\u233\'8enil begins as follows:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24 Apart f
rom the fact that the price of the product of capital B, for example, diverges from its value, because the surplus-value realized in B is greater or less than the profit added in the price of the products of B, the same situation also holds for the commod
ities that form the }{\fs24\ul constant part}{\fs24 of capital B, and indirectly, also, its }{\fs24\ul variable capital}{\fs24 , as means of subsistence for the workers. As for the }{\fs24\ul constant part}{\fs24
of capital is concerned, it is itself equal to cost price plus surplus-value, i.e. now equal to cost price plus profit, and this profit can again be greater or less than the surplus-value whose place it has taken. (emphasis added)
\par
\par }\pard \widctlpar\adjustright {\fs24 This passage then continues with the part quoted by Dum\u233\'8enil (and above)
\par
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24 As for the }{\fs24\ul variable capital}{
\fs24 ... \tab (emphasis added)
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 We can see that constant capital is discussed in a completely parallel fashion in the sentences immediately prior to the sentences on variable capital quoted by Dum\u233\'8e
nil. Marx is not suggesting in this paragraph that constant capital and variable are
determined differently. Rather, he is saying that both the constant capital and the variable capital, as the two components of the cost price, are now seen to be equal to the price of production of the means of production and the means of subsistence, r
a
ther than to the values of these goods, as originally assumed. However, as already discussed, these inequalities do not affect the determination of either constant capital and variable capital. Both of these components of the cost price continue to be
taken as \ldblquote given preconditions,\rdblquote as the sums of money capital consumed in the production of commodities.
\par \tab Dum\u233\'8enil also provides additional arguments for taking the money wage as an initial given, rather than the real wage. Dum\u233\'8enil argues that if the real w
age is taken as given, as in the neo-Ricardian interpretation, then: (1) it is necessary to assume that all workers consume the same goods; (2) the magnitude of surplus-value is affected by whether or not workers save; and (3) the rate of profit depends
only on the conditions of production in basic goods industries, and does not depend on the conditions of production in luxury goods industries, which is contrary to Marx\rquote
s theory. I agree in general with all three of these additional arguments for taking
the money wage as given. However, these arguments do not imply that constant capital should be determined differently, i.e. should be derived from given means of production. I have presented above substantial general methodological arguments and textual
evidence to support the interpretation that constant capital and variable capital should be determined in consistent, parallel fashion, and that both should taken as given as the two components of the money capital (M) that initiates the circulation of ca
pital. Dum\u233\'8enil\rquote
s more specific arguments relating to variable capital do not negate these general arguments for the parallel determination of constant capital and variable capital in terms of given quantities of money capital, but rather reinforce these mo
re general arguments in the specific case of variable capital.
\par \tab Dum\u233\'8enil also provides an additional argument to support the redefinition of the aggregate price-value equality from gross to net terms, besides the general argument emphasized by Foley that
the relation between value added and current labor is the most important aspect of Marx\rquote s labor theory of value. The additional argument is that the gross price-value equality involves \ldblquote double-counting.\rdblquote }{\up6 \chftn
{\footnote\ftnalt \pard\plain \widctlpar\adjustright \fs20\cgrid {\up6 \chftn }{\fs24 This argument has also been emphasized by other proponents of the new solution, such as Glick and Ehrbar, Devine, and Campbell.}}}{\fs24
The argument seems to be that, as an expression or measure of }{\fs24\ul current}{\fs24 labor, the gross price of commodities involves \ldblquote double-counting\rdblquote
. This statement is clearly true. However, this obvious statement does not alter the fact that Marx presented a theory of the gross price of commodities, not just a theo
ry of the net price of commodities, and that Marx clearly stated many times that the }{\fs24\ul gross}{\fs24
price-value equality is satisfied simultaneously with the profit- surplus value equality. I have shown above that, if constant capital is taken as given as the money expended to purchase means of production, as I argue Marx did, then Marx\rquote
s conclusion regarding the gross price-value equality is correct.
\par \tab Dum\u233\'8enil acknowledges Marx\rquote s many statements of the gross price-value equality, but he argues that Marx was co
nfused in these passages, because he had not yet written Volume 2, and in particular had not written Part 3 of Volume 2 on the reproduction schemes (1983-84, p. 449; 1986, p. 43). According to Dum\u233\'8e
nil, the main point of the reproduction schemes was to clarify the distinction between the gross price and the net price of commodities. If Marx had written Volume 3 with this clarity in mind, he would have emphasized the }{\fs24\ul net}{\fs24
price-value equality, instead of the gross price-value equality.
\par \tab In a general sense, I agree that the main point of the reproduction schemes was to clarify the distinction between the gross price and the net price of commodities. However, Marx\rquote s more specific point was essentially the }{\fs24\ul opposite}{
\fs24 of what Dum\u233\'8enil suggests. The reproduction schemes are primarily a critique of \ldblquote Smith\rquote s dogma,\rdblquote according to which the entire gross price of commodities \ldblquote can be entirely resolved into revenue,
\rdblquote i.e. into wages plus profit plus rent, or into the value added or the net price of commodities. Marx argued that Smith\rquote s dogma ignores the constant capital component of commodities. If Smith\rquote
s dogma were true, then capitalists would not be able to recover the constant capital consumed in the production of commodities, and hence would also not be able to repurchase and replace the consumed means of production. Therefore, Marx\rquote
s analysis of the reproduction schemes emphasizes that the reproduction of capital cannot be analyzed solely in terms of the value added (or \ldblquote revenue\rdblquote ) component of the price of commod
ities, but must instead by analyzed in terms of the gross price, including the constant capital component. (See Moseley 1997b for an extensive discussion of Marx\rquote s reproduction schemes and his critique of Smith\rquote s dogma.)
\par \tab This main point of the reproduction schemes was already clearly in Marx\rquote
s mind when we was writing Volume 3 in 1864. Marx had first developed these ideas during the early stages of the 1861-63 manuscript, while writing about Adam Smith (Sections 8-10 of Chapter 3 of what we know as Volume 1 of }{\fs24\ul
Theories of Surplus-value}{\fs24
). In a very interesting and important letter written by Marx to Engels in July of 1863, Marx presented his first sketch of the reproduction schemes (Marx and Engels, 1975, pp. 132-35). In this letter, Marx explicitly stat
ed and emphasized that the main point of the reproduction schemes was to refute \ldblquote Smith\rquote s dogma.\rdblquote Therefore, Marx\rquote
s analysis of the reproduction schemes provided no reason for him to change his many statements regarding the gross price-value equality to st
atements regarding the net price-value equality. If anything, this analysis provides additional reason for continued emphasis on the gross price equality.
\par \tab Dum\u233\'8enil (1983-84, pp. 448-49) also provides the following textual evidence from Chapter 9 of Volume 3 to support his interpretation that Marx was aware of the problem of \ldblquote double counting\rdblquote
of constant capital and that he even suggested that \ldblquote net price\rdblquote should be used instead of \ldblquote gross price\rdblquote in the aggregate price-value equality:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24 And in the same man
ner, the sum of prices of production for the commodities produced in society as a whole - taking the totality of all branches of production - is equal to the sum of their values.
\par
\par This seems contradicted by the fact that the elements of productive capita
l are generally bought on the market in capitalist production, so that their prices include an already realized profit and accordingly include the production of one branch of industry together with the profit contained in it, so that the profit in one bra
nch of industry goes into the cost price of another.
\par (Marx, 1981, pp. 259-60)
\par
\par }\pard \widctlpar\adjustright {\fs24 Then Dum\u233\'8enil quotes the following sentence from the next paragraph:
\par
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
To apply this method of reckoning to the total social product, we have to make certain rectifications, since,
considering the whole society, the profit contained in the price of flax, for instance, cannot figure twice, not as both part of the price of th linen and as the profit of the flax producers. (Marx, 1981, p. 260).
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 \tab However, the \ldblquote double counting\rdblquote that Marx is discussing here is the double counting of }{\fs24\ul profit}{\fs24 , not the double counting of constant capital, as in Dum\u233\'8enil
\rquote s interpretation.}{\up6 \chftn {\footnote\ftnalt \pard\plain \widctlpar\adjustright \fs20\cgrid {\up6 \chftn }{\fs24 I am indebted to an earlier, similar critique of Dum\uc1\u233\'8enil\rquote s interpretation of this pas
sage in Ramos-Martinez and Rodriquez-Herrera (1996, pp. 65-69) and to further suggestions from Ramos-Martinez in private correspondence.}}}{\fs24 Marx says nothing here (or elsewhere) about using the \ldblquote net price\rdblquote instead of the
\ldblquote gross price\rdblquote in the aggregate price-value equality in order to avoid \ldblquote double counting\rdblquote . Rather, the \ldblquote rectification\rdblquote
that Marx is talking about is made clear by following sentences which are in between the two passages quoted by Dum\u233\'8enil:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
If a certain sum p goes into the cost price of a commodity for the profit of the producers of the means of production and on this cost price a profit of p}{\fs24\sub 1}{\fs24 is added, the total profit P = p + p}{\fs24\sub 1}{\fs24
. The total cost price of the commodity, discounting all protions of the price that counts toward profit, is then its own cost price minus P. Using the symbol k again for this cost price, it is evident that k + P = k + p + p}{\fs24\sub 1}{\fs24 .
\par }\pard \widctlpar\adjustright {\fs24
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 It is this \ldblquote method of reckoning\rdblquote that needs to be \ldblquote rectified\rdblquote : If one considers a single commodity, then the total profit contained in it could
be considered as P = p + p}{\fs24\sub 1}{\fs24
(e.g the profit in the flax plus the profit in the linen). But if one consideres the whole economy (including the flax producers), this type calculation cannot be used, because this would count the profit in the flax twice. In this sense, a \ldblquote
rectification\rdblquote has to be made in the calculation of the total profit. In calculating the total profit in the whole economy, the entry for each industry should be only the profit received by that industry. In this way, there will be no dou
ble counting of profit. This passage does not support Dum\u233\'8enil\rquote s interpretation in any way. Nothing is said about the \ldblquote rectification\rdblquote being the use of the \ldblquote net price\rdblquote instead of the \ldblquote
gross price\rdblquote in the aggregate price-value equality. The \ldblquote gross price\rdblquote i
s still used. Marx is simply clarifying that, in the aggregate equality total profit = total surplus-value equality, the total profit should be calculated in the above way. Marx restated the aggregate price-value equality a few pages later (at the begin
ning of Chapter 10) and it is very clearly in \ldblquote gross\rdblquote terms:
\par }\pard \li1440\sl480\slmult0\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
The sum of the profits for all the different spheres of production must accordingly be equal to the sum of surplus-values, and the sum of prices of production for the total social product must be equal to the sum of its values. (Marx 1981, p. 273)
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 \tab Finally, we come to the most important difference between Dum\u233\'8enil\rquote s and Foley\rquote s interpretations. Unlike Foley, who argues that the key concepts in Marx\rquote
s theory (constant capital, variable capital, surplus-value, profit, prices of production, etc.) are defined in units of }{\fs24\ul money}{\fs24 , Dum\u233\'8enil argues that these concepts, even including the Volume 3 concepts of profit and \ldblquote
prices\rdblquote of production, are defined in units of }{\fs24\ul labor-time}{\fs24 . Dum\u233\'8enil argues that Marx\rquote s a
nalysis of prices of production has to do with the reallocation of social labor, which is a different process altogether from the expression of social labor-times as prices (1986, Chapter 1, \ldblquote Reallocated values and prices of production
\rdblquote ; 1983-84, pp. 436-41). \ldblquote Prices\rdblquote of production are defined as \ldblquote redistributed labor-times\rdblquote
, i.e. as the labor-times distributed to individual branches of production according to the equal profit rate rule, as opposed to labor-times distributed according to the surplus-value produced rule. Profit is defined as the \ldblquote surplus labor
\rdblquote that is received in each branch of production according to the equal profit rate rule. Constant capital and variable capital are also defined in units of labor-time; constant capital as the labor-tim
e embodied in the means of production and variable capital as the labor-time represented by the money wage.
\par \tab This aspect of Dum\u233\'8enil\rquote s interpretation obviously raises very important and fundamental issues, a full discussion of which is clearly beyond the
scope of this paper. However, I argue that this is a fundamental misinterpretation of Marx\rquote s theory and of the concepts in Marx\rquote
s theory. I have presented above a very different interpretation, which emphasizes that the key concepts of Marx\rquote s theory are
defined in terms of money, starting with the general concept of capital which is clearly defined as money that becomes more money. I have argued that Volume 3 is mainly about the distribution of the total amount of surplus-value (or the total increment o
f
money) that has already been determined by the aggregate analysis in Volume 1. Part 2 of Volume 3 is about the distribution of this total increment of money across individual branches of production by means of price of production. Price of production i
s
the sum of the cost price of commodities and the average profit. Cost price and profit are clearly defined in Chapter 1 of Volume 3 in terms of money, and their sum, the price of production of commodities is also clearly defined in Chapter 9 in terms of
money.
\par \tab Parts 4-6 of Volume 3 then analyze the further distribution of the total increment of money into the component parts of industrial profit, commercial profit, interest, and rent. All these components of surplus-value are clearly defined in terms of
money. A part of the increment of money that is received in each branch of production has to be \ldblquote shared\rdblquote
with commercial capital and with creditors as interest. In agriculture, a part of this increment of money has to be shared with landlords as rent.
To define prices of production and profit in terms of labor-time is to miss completely the phenomena that Marx was trying to explain in Volume 3 (the distribution of the total increment of money) and to lose the ctx14400\tx15120\tx15840\tx16560\adjustright {\fs24 \ldblquote
As for variable capital, the average daily wage is certainly always equal to th
e value product of the number of hours that the worker must work in order to produce its necessary means of subsistence; but this number of hours is itself distorted by the fact that the production prices of the necessary means of subsistence diverge from
their values. (Marx 1981, pp. 261)
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 Dum\u233\'8enil then argues:
\par }\pard \li1440\widctlpar\tx720\tx1440\tx2160\tx2880\tx3600\tx4320\tx5040\tx5760\tx6480\tx7200\tx7920\tx8640\tx9360\tx10080\tx10800\tx11520\tx12240\tx12960\tx13680\tx14400\tx15120\tx15840\tx16560\adjustright {\fs24
As a preliminary remark, Marx is referring here to a \ldblquote wage\rdblquote which is measured in labor time. It is therefore clear that all the amounts considered in this analysis are also measured in this unit: v
alues, wages, prices of production. (1986, p. 52).
\par
\par }\pard \sl480\slmult0\widctlpar\adjustright {\fs24 \tab I argue that Dum\u233\'8enil\rquote s misinterprets this passage. The wage is referred specifically here to the equal of the \ldblquote value product\rdblquote of a certain number of hours. Dum
\u233\'8enil interprets this \ldblquote value product\rdblquote in units of labor-time. If Dum\u233\'8enil\rquote s interpretation is accepted, then this sentence is redundant and nonsensical, i.e. it would mean the \ldblquote
number of hours that are the product of a certain number of hours.\rdblquote However, I argue that the \ldblquote value product\rdblquote here refers to the money value added by a certain number of hours. In other words, \ldblquote value\rdblquote
here refers to the \ldblquote monetary expression of value,\rdblquote a shorthand that Marx used throughout the three volumes of }{\fs24\ul Capital}{\fs24 . According to Marx\rquote s labor theory of value, each hour
of labor produces a certain amount of money value added (for example, in Marx\rquote s illustration of his theory of surplus-value in Chapter 7 of Volume 1, Marx assumed that each hour of labor produces a \ldblquote value product\rdblquote
of 0.5 shillings).
\par \tab Furthermore, even if Dum\u233\'8enil\rquote s interpretation of this passage is accepted, is spite of the above argument to the contrary, this one passage from Volume 3 would be a very slim basis for Dum\u233\'8enil\rquote
s sweeping generalization that all of Marx\rquote s key concepts are defined in units of la
bor-time, especially with all the evidence to the contrary that I have summarized above (starting with the fundamental concept of capital as money that becomes more money).
\par \tab It seems to me that Foley would agree with me that the key concepts of Marx\rquote s theory (e.g. capital, etc.) are defined in units of money and that these concepts correspond in principle to quantities of money entered in capitalists\rquote
bookkeeping accounts. These sums of money, like all sums of money, represent quantities of labor-time. But the concepts themselves are defined in units of money that circulate as capital in the real capitalist economy.}{\up6 \chftn {\footnote\ftnalt
\pard\plain \widctlpar\adjustright \fs20\cgrid {\up6 \chftn }{\fs24 Glick and Ehrbar (1987) present an interpretation of the \ldblquote new solution\rdblquote which seems to mostly follow Dum\uc1\u233\'8enil (e.g. emphasis on the \ldblquote
double counting\rdblquote argument for the net price-value equality). However, on this issue of whether Marx\rquote s concepts are defined in terms of money or labor-time, Glick and Ehrbar follow Foley, without however Foley\rquote
s overall emphasis on the monetary nature of Marx\rquote s theory. They do not mention that Dum\u233\'8enil presents an entirely different interpretation of Marx\rquote s concepts.}}}{\fs24
\par \tab In summary, the differences between Dum\u233\'8enil\rquote s interpretation and my interpretation are greater than my differences with Foley\rquote s interpreta
tion. In addition to the key difference regarding the determination of constant capital (and also the redefinition of the aggregate price-value equality from gross to net terms), there is also the even more fundamental difference with regard to whether t
he key concepts of Marx\rquote s theory refer to units of money or to units of labor-time. I have argued that, although Dum\u233\'8e
nil presents more arguments for the different treatments of constant capital and variable capital (and also for the redefinition of the aggregate price-value equality), these additional arguments are also unsatisfactory and no more convincing than Foley
\rquote s arguments. I have also argued that Dum\u233\'8enil\rquote s interpretation of the key concepts of Marx\rquote s theory in terms of labor-time is a fundamental misinterpretation of the phenomena which Marx\rquote
s theory, including his theory of prices of production, is intended to explain.
\par
\par 5. CONCLUSION
\par \tab I have argued that the \ldblquote new solution\rdblquote interpretation of Marx\rquote s theory is an important advance in Marxian scholarship, especially in Foley\rquote
s version. However, even Foley has been only partially successful in breaking away from the dominant neo-Ricardian interpretation of Marx\rquote s theory. Foley rightly emphasizes the monetary nature of Marx\rquote s theory and this leads hi
m to assume that variable capital is taken as given as the money wage and not derived from the given means of subsistence. However, Foley continues to assume that constant capital is derived from given means of production, as in the neo-Ricardian interpr
etation, and therefore ends up with inconsistent methods of determination of constant capital and variable capital. Also, Foley rightly emphasizes the macroeconomic nature of Marx\rquote
s theory of surplus-value in Volume 1, and this leads him to assume that the
aggregate value added is determined prior to its division into individual parts. However, Foley continues to assume that the rate of profit is determined simultaneously with individual prices, as in the neo-Ricardian interpretation, and therefore does n
ot consistently adhere to the principle of the prior determination of aggregate magnitudes.
\par \tab I have presented above and in other recent work arguments to support my interpretation that both constant capital and variable capital are determined in the same
way and that both are taken as given as the two components of the money capital (M) that purchase means of production and labor-power in the first phase of the circulation of capital. These arguments are: (1) the general formula for capital which begins
with M and which therefore suggests that the starting point of Marx\rquote s theory of capital is this initial money capital; (2) the logical structure of Parts 1, 2, and 3 of Volume 1 of }{\fs24\ul Capital}{\fs24
, according to which the analysis of money and circulation in Parts 1 and 2 provide the logical presuppositions for Marx\rquote
s theory of surplus-value in Part 3 and beyond; (3) the methodological principle of historical specificity, according to which the key concepts of a theory of capitalism should refer to its historically
specific features (e.g. money, capital, etc.) and not to the general features that capitalism shares with all modes of production (e.g. means of production); (4) the many passages throughout the various drafts of }{\fs24\ul Capital}{\fs24
that refer to the initial money capital (M) in the circulation of capital as \ldblquote given\rdblquote , \ldblquote presupposed\rdblquote , etc..
\par I would appreciate it very much if the proponents of the \ldblquote new solution\rdblquote would respond to these specific arguments and show how they are wrong, or perhaps lead to further difficulties. Because if these arguments are correct, then the
\ldblquote new solution\rdblquote remains inconsistent and has not gone far enough in breaking away from the dominant neo-Ricardian interpretation.
\par }\pard \qc\widctlpar\adjustright {\fs24 REFERENCES
\par }\pard \widctlpar\adjustright {\fs24
\par
\par Campbell, Al (1997). \ldblquote The Transformation Problem: A Simple Presentation of the \lquote New
\par Solution\rquote ,\rdblquote }{\fs24\ul Review of Radical Political Economics}{\fs24 29 (3): 59-69.
\par
\par Carchedi, Guglielmo (1991). }{\fs24\ul Frontiers of Political Economy}{\fs24 . London: Verso.
\par
\par Devine, James N. (1990). \ldblquote The Utility of Value: The \lquote New Solution,\rquote Unequal Exchange, and
\par Crisis,\rdblquote }{\fs24\ul Research in Political Economy}{\fs24 12: 21-39.
\par
\par Dum\u233\'8enil, Gerard (1980). }{\fs24\ul De la valeur aux prix de production}{\fs24 . Paris: Economica.
\par
\par }{\fs24\ul }{\fs24 (1983-84). \ldblquote Beyond the Transformation Riddle: A Labor Theory of Value,\rdblquote }{\fs24\ul Science and}{\fs24
\par }{\fs24\ul Society}{\fs24 47 (Winter): 427-50.
\par
\par }{\fs24\ul }{\fs24 (1986). \ldblquote From Value to Prices of Production: A Reinterpretation of the Transformation Problem.\rdblquote Unpublished English translation of Dum\u233\'8enil (1980) by Mark Glick:
\par
\par Foley, Duncan (1982). \ldblquote The Value of Money, the Value of Labor-Power, and the Marxian
\par Transformation Problem,\rdblquote }{\fs24\ul Review of Radical Political Economics}{\fs24 14 (Summer): 37-49.
\par
\par }{\fs24\ul }{\fs24 (1986). }{\fs24\ul Understanding Capital: Marx's Economic Theory}{\fs24 . Cambridge MA:
\par Harvard University Press.
\par
\par Glick, Mark and Hans Ehrbar (1987). \ldblquote The Transformation Problem: An Obituary,\rdblquote
\par }{\fs24\ul Australian Economic Papers}{\fs24 26: 294-317.
\par
\par Korsch, Karl (1938). }{\fs24\ul Karl Marx}{\fs24 . London: Chapman Hall. Reprinted (1963), New York: Russell.
\par
\par Lipietz, Alain (1982). \ldblquote The \lquote So-Called Transformation Problem\rquote Revisited,\rdblquote }{\fs24\ul Journal of}{\fs24
\par }{\fs24\ul Economic Theory}{\fs24 26 (February): 59-88.
\par
\par Mage, Shane (1963). }{\fs24\ul The Law of the Falling Rate of Profit}{\fs24 . Ph.D. dissertation, Columbia University. New York.
\par
\par Marx, Karl (1968). }{\fs24\ul Theories of Surplus Value}{\fs24 , Volume 2. Moscow: Progress Publishers.
\par
\par }{\fs24\ul }{\fs24 (1971). }{\fs24\ul Theories of Surplus Value}{\fs24 , Volume 3. Moscow: Progress Publishers.
\par
\par }{\fs24\ul }{\fs24 (1973). }{\fs24\ul Grundrisse}{\fs24 . Middlesex, England: Penguin Books.
\par }{\fs24\ul
\par }{\fs24 (1977). }{\fs24\ul Capital}{\fs24 , Volume 1. New York: Random House.
\par }{\fs24\ul
\par }{\fs24 (1981). }{\fs24\ul Capital}{\fs24 , Volume 3. New York: Random House.
\par
\par Marx, Karl and Frederick Engels (1975). }{\fs24\ul Selected Correspondence}{\fs24 . Moscow: Progress
\par Publishers.
\par
\par }{\fs24\ul }{\fs24 (1988). }{\fs24\ul Marx-Engels Collected Works}{\fs24 , Volume 30. New York: International Publishers.
\par
\par }{\fs24\ul }{\fs24 (1992a). }{\fs24\ul Marx-Engels Collected Works}{\fs24 , Volume 33. New York: International Publishers.
\par
\par }{\fs24\ul }{\fs24 (1992b). }{\fs24\ul Marx-Engels Gesamtausgabe (MEGA)}{\fs24 , Band 4, }{\fs24\ul Karl Marx Okonmische}{\fs24
\par }{\fs24\ul Manuskripte 1863-67}{\fs24 , Teil 2. Berlin: Deitz Verlag.
\par
\par Mattick, Jr., Paul (1981). \ldblquote Some Aspects of the Value-Price Problem,\rdblquote }{\fs24\ul Economies et Societes}{\fs24 ,
\par (Cahiers de l\rquote ISMEA Series) 15 (6-7): 725-81.
\par
\par Mohun, Simon (1993). \ldblquote A Re(in)statement of the Labor Theory of Value,\rdblquote }{\fs24\ul Cambridge}{\fs24
\par }{\fs24\ul Journal of Economics}{\fs24 18: 391-412.
\par
\par Moseley, Fred (1993). "Marx's Logical Method and the Transformation Problem,"
\par in Moseley (ed.), }{\fs24\ul Marx's Method in 'Capital': A Reexamination}{\fs24 , Atlantic Highlands NJ:
\par Humanities Press.
\par
\par }{\fs24\ul }{\fs24 (1997a). \ldblquote The Development of Marx\rquote s Theory of the Distribution of Surplus-value,\rdblquote
\par in Moseley and M. Campbell (eds.), }{\fs24\ul New Perspectives on Marx\rquote s Method in \lquote Capital\rquote }{\fs24 .
\par New Jersey: Humanities Press.
\par
\par }{\fs24\ul }{\fs24 (1997b). \ldblquote Marx\rquote s Reproduction Schemes and Smith\rquote s Dogma,\rdblquote in G. Reuten and
\par C. Arthur (eds.). }{\fs24\ul The Forgotten Volume: Essays on Volume 2 of Capital}{\fs24 . London: Macmillan.}{\fs24\ul
\par
\par }{\fs24 (1997c). \ldblquote The Return to Marx: Retreat or Advance?\rdblquote in A. Freeman (ed).
\par }{\fs24\ul New Direction in Marxian Economics}{\fs24 . Brookfield US: Edward Elgar.
\par
\par }{\fs24\ul }{\fs24 (1998). \ldblquote Hostile Brothers: Marx\rquote s Theory of the Distribution of Surplus-value in Volume
\par 3 of }{\fs24\ul Capital}{\fs24 ,\rdblquote in G. Reuten (ed.), }{\fs24\ul The Forms of Appearance of Capitalism: Essays on Volume 3}{\fs24
\par of }{\fs24\ul Capital}{\fs24 . Amsterdam: University of Amsterdam Press.
\par
\par Ramos-Martinez, Alejandro and Adolfo Rodriquez-Herrera, \ldblquote The Transformation of Values into
\par Prices of Production: A Different Reading of Marx\rquote s Text,\rdblquote in A. Freeman and G. Carchedi
\par }\pard \qc\widctlpar\adjustright {\fs24 (eds.), }{\fs24\ul Marx and Non-Equilibrium Economics}{\fs24 . UK: Edward Elgar Publishing.\page ENDNOTES
\par }\pard \widctlpar\adjustright {
\par }}Attachment:
DST.RTF
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}\margl1440\margr1440\enddoc\ftnrestart \sectd \sbknone\pgnx6120\pgny15120\endnhere
\pard \qc\sl0
{\plain HOSTILE BROTHERS: \par
}{\plain \par
}{\plain MARX\'92S THEORY OF THE DISTRIBUTION OF SURPLUS-VALUE \par
}{\plain \par
}{\plain IN VOLUME 3 OF }{\plain \ul CAPITAL}{\plain \par
}{\plain \par
}{\plain \par
}{\plain by Fred Moseley\par
}{\plain Mount Holyoke College\par
}{\plain \par
}{\plain \par
}{\plain December 1996\par
}\pard \sl0
{\plain \par
}{\plain \par
}{\plain \par
}{\plain \par
}{\plain \par
}\sect \sectd \sbknone\marglsxn4320\endnhere
\pard \sl0
{\plain Capitalists are like hostile brothers who divide among themselves
the loot of other people\'92s labor.\par
}{\plain \tab \tab \tab \tab \tab TSV.II. 29{\super\fs19 \chftn {\footnote \pard
{\plain \super\fs19 \chftn }{}{\plain The references to Marx in this paper utilize the following shorthand notation:\par
}}{\plain \tab C.I.\tab }{\plain \ul \tab Capital}{\plain , Volume 1.\par
}{\plain \tab C.II.\tab }{\plain \ul \tab Capital}{\plain , Volume 2.\par
}{\plain \tab C.III.\tab }{\plain \ul \tab Capital}{\plain , Volume 3.\par
}{\plain \tab G.\tab }{\plain \ul \tab Grundrisse.}{\plain \par
}{\plain \tab MECW.33. }{\plain \ul Marx\_Engels, Collected Works}{\plain , Volume 33.\par
}{\plain \tab SC. \tab }{\plain \ul \tab Selected Correspondence.}{\plain \par
}{\plain \tab TSV.II.\tab }{\plain \ul Theories of Surplus\_value}{\plain , Volume 2.\par
}{\plain \tab TSV.III. }{\plain \ul \tab Theories of Surplus\_value}{\plain , Volume 3.\par
}}\pard \sa240
{{\plain \tab WPP\tab \tab }{\plain \ul Wages, Price, Profit}}}
{\plain }{\plain \par
}{\plain \par
}{\plain In Book III we come to the transformation of surplus-value into its
different forms and separate component parts. \par
}{\plain \tab \tab \tab \tab \tab SC. 191{\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain This sentence comes from the beginning of a very interesting letter written by Marx in 1868 to
Engels that clearly summarizes each part of Volume 3. Excerpts from this letter will be given at
the beginning of each section of this paper. The reader is urged to study this letter in its entirely.
It is the best short introduction to Volume 3 that exists. }}}
}{\plain \par
}{\plain \par
}{\plain Rent, interest, and industrial profit are only different names for
different parts of the surplus-value of the commodity, or the unpaid
labor enclosed in it, and they are equally derived from this source,
and from this source alone.\par
}{\plain \tab \tab \tab \tab \tab WPP. 215\par
}{\plain \par
}{\plain The capitalist who produces surplus-value, i.e. who extracts unpaid
labor directly from the workers and fixes it in commodities, is
admittedly the first appropriator of this surplus-value, but he is my
no means its ultimate proprietor. He has to share it afterwards with
capitalists who fulfil other functions in social production taken as a
whole, with the owner of land, and with yet other people. Surplus-value is therefore split up into various parts. Its fragments fall to
various categories of person, and take on various mutually
independent forms, such as profit, interest, gains made through
trade, ground rent, etc. We shall be able to deal with these
modified forms of surplus-value only in Volume 3. \par
}\sect \sectd \sbknone\endnhere
\pard \qc\sl0
{\plain \tab \tab \tab \tab \tab C.I. 709 HOSTILE BROTHERS: \par
}{\plain MARX\'92S THEORY OF THE DISTRIBUTION OF SURPLUS-VALUE \par
}{\plain IN VOLUME 3 OF }{\plain \ul CAPITAL}{\plain \par
}{\plain \par
}\pard \qc\sl480
{\plain \par
}\pard \sl480
{\plain \tab It is argued in this paper that the main subject of Volume 3 of }{\plain \ul Capital}{\plain is the distribution of
surplus-value, i.e. the division of the total amount of surplus-value into individual component
parts, first into equal rates of profit across branches of production and then the further division of
surplus-value into commercial profit, interest, and rent. This subject is clearly stated in the
various quotations at the beginning of this paper. \par
}{\plain \tab The paper argues further that Marx\'92s analysis of the distribution of surplus-value is based
on the fundamental premise that }{\plain \ul the total amount of surplus-value has already been determined by
the prior analysis in Volume 1}{\plain . The main question addressed in Volume 3 is how this
predetermined total amount of surplus-value is divided up into its component parts. The analysis
of these individual component parts does not in any way affect the magnitude of the total surplus-value, since this total surplus-value is taken as a predetermined given in this analysis. We will see
that this key premise is explicitly stated and emphasized in Marx\'92s analysis of all the different
forms of surplus-value, and especially in the important concluding Part 7 on \'93Revenue and its
Sources\'94. (Marx\'92s discussions of this key premise in the earlier drafts of }{\plain \ul Capital}{\plain are examined in
(Moseley 1997c).){\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain Volume 3 of }{\plain \ul Capital}{\plain as we know it was written in 1864-65, just after the \'93Economic
Manuscript of 1861-63", which includes the }{\plain \ul Theories of Surplus Value}{\plain . In this 1861-63
manuscript, Marx developed for the first time his theory of the distribution of surplus-value which
is presented in Volume 3 of }{\plain \ul Capital}{\plain . The full 1861-63 manuscript has been recently been
translated into English and published as Volumes 30-34 of the 50-volume set of the }{\plain \ul Marx-Engels
Collected Works}{\plain , published by International Publishers. }}}
}{\plain \par
}{\plain \tab Marx expressed this fundamental premise of his theory - the prior determination of the
total amount of surplus\_value - in terms of the distinction between "capital in general" and
"competition" (or "many capitals"). Capital in general refers to the essential properties that all
capitals have in common. The most important common property of capitals is their capacity for
self\_expansion, i.e. their ability to produce surplus\_value. Since these common properties are
shared by }{\plain \ul all}{\plain capitals, the analysis of capital in general is necessarily an analysis of all the capitals
taken together, that is of the total social capital. Therefore, the main question addressed in the
analysis of capital in general is the determination of the total amount of surplus\_value produced in
the capitalist economy as a whole. Competition refers to the relations among individuals capitals,
and, in particular, to the distribution of surplus\_value among capitals.{\super\fs19 \chftn {\footnote \sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain \super\fs19 \chftn }{}{\plain Parts 1 and 3 of Volume 3 remain at the level of capital in general prior to the analysis of the
distribution of surplus-value. The distribution of surplus-value into individual parts is not
considered in these parts. Part 1 is a key transition from capital in general to competition that
introduces the concepts of profit and the rate of profit, and will be discussed below. Part 3 is of
course about Marx\'92s theory of the falling rate of profit. This theory clearly applies to the general
rate of profit for the total social capital. Marx emphasized explicitly the tendency of the rate of
profit to decline is derived prior to the division of surplus-value into industrial profit, merchant
profit, interest and rent. We are deliberately putting forward this law before depicting the decomposition of
profit into various categories which have become mutually autonomous. The
independence of this presentation from the division of profit into various portions,
which accrue to different categories of persons, shows from the start how the law
in its generality is independent of that division and of the mutual relationships of
the categories of profit deriving from it. Profit, as we speak of it here, is simply
another name for surplus-value itself, only now depicted in relation to the total
capital, instead of to the variable capital from which it derives. The fall in the rate
of profit thus expresses the falling ratio between surplus-value itself and the total
capital advanced; it is therefore independent of any distribution of this surplus-value we may care to make among the various categories. (C.III. 320)\par
}}{\plain Since the general rate of profit is nothing but the ratio of the total amount of
surplus-value to the total amount of capital employed by the capitalist class, we are
not concerned here with the different branches into which surplus value is divided,
such as industrial profit, interest, rent. Since all these different forms of surplus
value are only components of the total surplus value, one part may increase
because the other declines. We are concerned here, however, with a fall in the rate
of the total surplus value. (MECW.33. 104)\par
}\pard \sa240
{\plain Part 2 is discussed after Part 1 because of the logical connection between \'93the transformation of
surplus-value into profit\'94 in Part 1 and \'93the transformation of profit into average profit\'94 in Part 2.
Surplus-value is first transformed into profit by relating it to the total capital, and then profit is
further transformed into average profit by the equalization of profit rates across industries. Marx
argued that the second transformation is a necessary consequence of the first transformation.
Since capitalists measure surplus-value in relation to the total capital and attempt to maximize the
rate of profit rather than the rate of surplus-value, competition among capitals tends to equalize
rates of profit across industries. Therefore, Part 2 is discussed after Part 1 in order to maintain
this necessary connection between these two transformations of surplus-value into profit. But the
distinction between capital in general and competition would have been clearer if the order of
Parts 2 and 3 had been reversed. Part 3 will not be discussed further in this paper because it is
not directly related to the distribution of surplus-value. }}}
{\plain {\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain Include here a critique of Chris Arthur\'92s argument (this volume) that all of Volume 3 remains
at the level of capital in general, if he maintains that view. }}}
}{\plain \par
}{\plain \tab In Hegelian terms, which Marx emphasized throughout Volume 3, Marx\'92s theory of the
distribution of surplus-value explains the individual parts of surplus-value - industrial profit,
merchant profit, interest, and rent - as \'93forms of appearance\'94 of the unifying substance of surplus-value, which is produced by the unpaid labor of workers.{\super\fs19 \chftn {\footnote \pard
{\plain \super\fs19 \chftn }{}{\plain In a paper at the 1994 Bergamo conference on Volume 3, Schefold (1997) emphasized this
aspect of Volume 3. Schefold argued:\par
}\pard \sa240
}{\plain The distinguishing feature of the Marxian exposition in the chapters which
developed the division of profit into various forms of revenue like the profit of the
merchant, interest, the profit of enterprise and rent, is his use of the metaphor of
substances which change their form, i.e. his theory of the forms of value. The
origin of this metaphor is ... Hegel ... However, Schefold does not mention that related to this explanation of the various forms of
surplus-value as \'93necessary forms of appearance\'94 of a unifying substance is Marx\'92s key premise
of the prior determination of the total amount of surplus-value.}}}
{\plain These different forms of surplus-value
appear to the agents of capitalist production - and in general also to economists - to be separate
and independent sources of value and income. But Marx\'92s theory demonstrates that these forms
of income are all derived from the same source: the surplus-value produced by productive
workers. In other words, Marx\'92s theory demonstrates the \'93inner connection\'94 of the different
forms of appearance of surplus-value. Furthermore, Marx\'92s theory explains how the illusion that
these individual parts of surplus-value are independent sources of value and income is a
\'93necessary appearance,\'94 i.e. an appearance, although false, that necessarily arises on the basis of
capitalist production.{\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain This aspect of Volume 3 of explaining the \'93necessary forms of appearance\'94 of surplus-value is
emphasized by Patrick Murray\'92s paper in this volume.}}}
}{\plain Therefore, the purpose of Volume 3 is not only to explain these important
phenomena related to the distribution of surpus-value; it is also able to explain why these
phenomena appear differently to the agents of capitalist production (and to economists). Marx
announced his intention to explain these more concrete forms of appearance in the first paragraph
of Volume 3:\par
\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
Our concern is rather to discover and present the concrete forms which grow out
of the process of capital\'92s movement as a whole... The configurations of capital,
as developed in this book, thus approach step by step the form in which they
appear on the surface of society, in the action of different capitals on one another;
i.e. in competition, and in the everyday consciousness of the agents of production
themselves. (C.III. 117)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab These key points about Marx\'92s theory of the distribution of surplus-value in Volume 3
have not been sufficiently recognized in the Marxian literature. Sweezy\'92s classic Theories of
Capitalist Development discussed Part 2 (the \'93transformation problem\'94) and Part 3 ( the \'93falling
rate of profit\'94), but did not discuss the rest of Volume 3, and presents no interpretation of the
overall structure of Volume 3 and it relation to the first two volumes. Mandel\'92s Introduction to
the Penguin (1981) edition of Volume 3 mentions, but does not emphasize, that the subject of
Volume 3 is the distribution of surplus-value, and does not explicitly discuss Marx\'92s key premise
of the prior determination of the total amount of surplus-value. At an international conference on
Volume 3 in 1994 in Bergam, Italy (commerating the 100th anniversary of the publication of
Volume 3), there was very little discussion of Volume 3 as a whole as a theory of the distribution
of surplus-value and only two papers discussed Marx\'92s key premise of the prior determination of
the total amount of surplus-value, Andrew Kliman\'92s (Kliman 1997) and my own (Moseley
1997b).{\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain The papers from this conference will be published in two volumes in the near future, edited by
Riccardo Bellofiore. }}}
}{\plain The main exceptions to this general neglect of these key aspects of Volume 3 have been
Mattick, Rosdolsky, and Foley.{\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain Include here a critique of Chris Arthur\'92s interpretation of Rosdolsky (this volume), if he sticks
to it.}}}
}{\plain But no one has yet presented a comprehesive and detailed
interpretation of Volume 3 as a whole as a theory of the distribution of surplus-value. \par
}{\plain \tab In particular, the currently dominant neo-Ricardian interpretation of Marx\'92s theory has not
presented }{\plain \ul any}{\plain interpretation of Volume 3 as a whole and its relation to Volumes 1 and 2. Usually,
only Part 2 of Volume 3 (the infamous \'93transformation problem\'94) is discussed, in isolation from
the rest of Volume 3. And, in the neo-Ricardian interpretation of Part 2, the fundamental premise
of the prior determination of the total amount of surplus-value is ignored; indeed this
interpretation is based instead on an opposing premise: the simultaneous determination of the rate
of profit and prices of production. Therefore, I argue that the neo-Ricardian interpretation of
Marx\'92s theory of prices of production in Part 2 is a fundamental misinterpretation, which leads to
erroneous conclusions regarding the logical consistency of Marx\'92s theory. \par
}{\plain \tab This paper will review Marx\'92s theory of each of the individual components of surplus-value in Volume 3, and will also briefly discuss the few neo-Ricardian interpretations of individual
parts of Volume 3. \par
}{\plain \par
}{\plain PART 1: PROFIT AND THE RATE OF PROFIT \par
}\sect \sectd \sbknone\marglsxn4320\endnhere
\pard
{\plain Profit is for us first of all only }{\plain \ul another name}{\plain or another category of
}{\plain \ul surplus value}{\plain . As owing to the form of wages, the whole of labor
appears to be paid for, the unpaid part of labor seems necessarily to
come not from labor but from capital, and not from the variable
part of capital but from capital as a whole. In this way }{\plain \ul surplus
value}{\plain assumes the form of }{\plain \ul profit}{\plain , without }{\plain \ul any quantitative}{\plain
difference between the one and the other. (SC. 191-92)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab Part 1 of Volume 3 provides a transition from Marx\'92s analysis of capital in general to his
analysis of competition. Before Marx analyzed the division of the total surplus-value into
individual parts, he first derived new \'93forms of appearance\'94 acquired by surplus-value - profit and
the rate of profit. Profit is explained by Marx as surplus-value which is related to the total capital
invested (including constant capital), rather than just to the variable capital only, which acording
to Marx\'92s theory is the source of surplus-value. The rate of profit expresses this relation
mathematically, as the ratio of surplus-value to the total capital, as distinguished from the rate of
surplus-value which is the ratio of the same surplus-value to the variable capital only, the source
of surplus-value.\par
}{\plain \tab Marx emphasized, in all the drafts of this part of Volume 3, that in this analysis of profit
and the rate of profit, }{\plain \ul the amount of surplus-value has already been determined}{\plain , and is now }{\plain \ul taken
as given}{\plain in this further analysis of profit. Profit is thus the same magnitude as surplus-value, and
this magnitude has already been determined by the previous analysis of capital in general in
Volume 1. The amount of surplus-value obviously does not change is this expression of the same
amount of surplus-value as profit. The same amount of surplus-value is simply related to the total
capital, rather than just to the variable capital.\par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain When in general we speak of profit or the rate of profit, then }{\plain \ul surplus-value}{\plain is
supposed to be }{\plain \ul given}{\plain . The influences therefore which determine surplus-value
}{\plain \ul have}{\plain all operated. This is the presupposition. (TSV.III. 228)\par
}{\plain \par
}{\plain Capital is now posited as the unity of production and circultion and the surplus-value it creates in a given period of time ... In a definite period of time, ... capital
produces a definite surplus-value ... A capital of a certain value produces in a
certain period of time a certain surplus-value. Surplus-value thus measured by the
value of the presupposed capital, capital thus posited as \'93self-realizing value\'94 - is
}{\plain \ul profit}{\plain ... (G. 746-46). \par
}{\plain \par
}{\plain The }{\plain \ul surplus value}{\plain produced within a given period of circulation ... when
measured against the }{\plain \ul total capital}{\plain which has been advanced is called - }{\plain \ul profit}{\plain ...\par
}{\plain Considered with respect to its material, profit is absolutely nothing but surplus
value itself. Considered with respect to its absolute magnitude, it therefore does
not differ from the surplus value produced by capital over a particular turnover
time. It is surplus value itself, but calculated differently. (MECW.33. 69)\par
}{\plain \par
}{\plain Profit \_ as the first transformation of surplus\_value \_ and the rate of profit in this
first transformation \_ expresses surplus\_value in proportion to the individual overall
capital of which it is the product \_ treating all parts of this overall capital as
uniform, and relating to the whole of it as a homogeneous sum of value, without
regard to the organic relation in which the different components of this capital
stand towards the creating of its surplus\_value. (MECW.33. 100)\par
}{\plain \par
\sect \sectd \sbknone\endnhere
\pard
As this supposed derivative of the total capital advanced, the surplus-value takes
on the transformed form of }{\plain \ul profit}{\plain . (C.III. 126)\par
}\pard \sl480
{\plain This assumption of a given, predetermined amount of surplus-value remains Marx\'92s basic premise
throughout the remainder of Volume 3. \par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain \tab Marx emphasized further that, in these forms of appearance of profit and the rate of profit,
the source of surplus-value is obscured and not recognized by capitalists. Profit appears to arise
from both constant capital and variable capital equally. Marx argued that this illusion is not an
accident; rather it necessarily appears to capitalists because capitalists make no distinction
between constant capital and variable capital; to capitalists, both components of capital are
equally \'93costs\'94 and therefore surplus-value appears to arise equally from both of these \'93costs\'94. Profit, as we are originally faced with it, is thus the same thing as surplus\_value
save in a mystified form, though one that necessarily arises from the capitalist
mode of production. Because no distinction between constant capital and variable
capital can be recognized in the apparent formation of the cost price, the origin of
the change in value that occurs in the course of the production process is shifted
from the variable capital to the capital as a whole. (C.III. 127)\par
}{\plain \par
}{\plain Surplus value however necessarily assumes the form of }{\plain \ul profit}{\plain in the bourgeois
mind - and this is not just a way of looking at things. The relation of surplus value
}{\plain \ul as a relation of profit}{\plain dominates bourgeois production and determines the
distribution of the capitals in the different branches of production ... (MECW.33
72)\par
}{\plain \par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain PART 2: GENERAL RATE OF PROFIT AND PRICES OF PRODUCTION{\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain Please see Moseley 1993, 1997b and 1997c for more extensive discussions of Marx\'92s theory
of prices of production.}}}
}{\plain \par
}\sect \sectd \sbknone\marglsxn4320\endnhere
\pard
{\plain (The general) rate of profit ... can be nothing else but the }{\plain \ul surplus
value}{\plain produced (annually) by the }{\plain \ul capitalist class}{\plain in relation to the
total capital advanced by }{\plain \ul society}{\plain as a whole. For instance, if the
social capital = 400c + 100v and the surplus value annually
produced by it = 100s, then ... the rate of profit is 20 per cent. \par
}{\plain This is the }{\plain \ul general rate of profit}{\plain . (SC. 193)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab Part 2 is the beginning of Marx\'92s analysis of competition and the distribution of surplus-value. The distribution of surplus-value is first considered across different branches of
production. Marx assumed more or less as an empirical fact that the rates of profit in different
branches of production tend to be equalized as a result of competition among capitalists (although
he certainly recognized the many obstacles to this equalization. The important point is that this
empirical fact of equal rates of profit (or at least a tendency toward equality) appears to contradict
the labor theory of value and surplus-value, because profit appears to arise from the total capital,
rather than just from the variable capital. This apparent contradiction between the labor theory of
value and equal rates of profit was of course the main \'93stumbling block\'94 of Ricardian economics.
Marx called attention to this apparent contradiction in Chapter 11 of Volume 1 of }{\plain \ul Capital}{\plain , and
promised to explain this contradiction at a later stage of his analysis, according to his logical
method of first determining the total amount of surplus-value and then later determining the
individual component parts of surplus-value, such as the average profit collected in each industry.
Marx commented that \'93for the solution of this apparent contradiction, many intermediate terms
are still needed.\'94 (C.I. 421) The main \'93intermediate term\'94 that is needed for the explanation of
this apparent contradiction is the determination of the total amount of surplus-value and the
general rate of profit prior to the explanation of equal profit rates across industries. \par
}{\plain \tab The equalization of profit rates across industries is accomplished through the
determination of the prices of production of individual commodities, which are different form the
values of individual commodities. Therefore, Marx\'92s explanation of the equalization of profit
rates across industries is necessarily concerned with the determination of these prices of
production. The key point that I wish to emphasize is that Marx\'92s theory of prices of production
and the equalization of profit rates is based on the premise that the general rate of profit to which
individual rates of profit are equalized has itself already been determined prior to the
determination of prices of production, and is taken as given in this determination of prices of
production. The general rate of profit (R) is equal to the ratio of the total amount of surplus-value (S) to the total capital invested (C) in the capitalist economy as a whole; i.e. (R = S/C) (see
the quotation from Marx\'92s 1868 letter at the beginning of this section). The total amount of
surplus-value is determined by the prior analysis of capital in general in Volume 1 of }{\plain \ul Capital}{\plain , and
the total capital invested is taken as given in this prior analysis of capital in general, as the amount
of money-capital (M), invested in the first phase of the circulation of capital (M-C ... P ... C\'92-M\'92)
in the capitalist economy as a whole (see Moseley 1993 and 1997b for a further discussion of the
initial givens in Marx\'92s theory as quantities of money-capital).{\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain Include here a critique of Chris Arthur\'92s argument (this volume) that Marx\'92s discussion of the
\'93average\'94 rate of profit implies a fundamentally different method of determination than the
determination of the general rate of profit discussed in the text, if he maintains this argument in
the next draft. }}}
}{\plain \par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain The prerequisite [of prices of production] is the existence of a general rate of profit
... (C.III. 257) \par
}{\plain \par
}{\plain The general rate of profit is formed through the total surplus\_value produced being
calculated on the total capital of society (of the class of capitalists). \par
}{\plain (TSV.II. 427)\par
}{\plain \par
}{\plain Empirical or average profit ... relates the total amount of surplus\_value, hence the
surplus\_value realized by the whole capitalist class, to the total capital, or the
capital employed by the whole capitalist class, in exactly this way \_ it relates the
total surplus\_value as profit to that total capital of society, without regard to the
organic relation in which the individual components of that total capital have
participated directly in the production of that total surplus\_value ... \par
}{\plain (MECW.33. 100) \par
}{\plain \par
}{\plain The average rate of profit is nothing other than the total surplus\_value related to
and calculated on this total capital. (MECW.33. 104)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab Prices of production are then determined according to the following equation:\par
}{\plain (1)\tab \tab P}{\plain \sub i}{\plain = K}{\plain \sub i}{\plain + R C}{\plain \sub i}{\plain \par
}{\plain where R is taken as predetermined by the prior aggregate analysis of capital in general. \par
K}{\plain \sub i}{\plain is the costs of production of the given commodity (the sum of constant capital and variable
capital) (a flow variable) and C}{\plain \sub i}{\plain is the total stock of capital invested in the given industry. The
magnitudes of individual capitals consumed and invested in each industry (K}{\plain \sub i }{\plain and C}{\plain \sub i}{\plain ) are taken as
given, as the sums of money which initiate the circulation of capital in each industry. Therefore,
prices of production are determined by adding the average profit to the given costs of production
for each commodity, with the average profit determined as the product of the general rate of
profit and the given capital invested in each industry, and the general rate of profit determined by
the prior analysis of capital in general. In this way, the total amount of surplus-value is distributed
in such a way that all industries receive the same rate of profit.{\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain Tony Smith\'92s paper in this volume takes this interpretation of Marx\'92s method a step further
and applies it to the determination of what he calls \'93prices of expanded reproduction\'94, which
differ from prices of production in that profit rates are not equalized due to the effects of
technology rents, monopolies, etc. Smith\'92s interpretation of the determination of these \'93prices of
expanded reproduction\'94 is based on the same key premise emphasized in this paper - that the total
amount of surplus-value is determined prior to its distribution and is not affected by this
distribution. Smith addes the further corollary that the total amount of surplus-value is also not
affected by the inequalities due to monopolies, etc. If monopoly industries are able to secure for
themselves a higher than average rate of profit, this necessarily comes at the expense of lower
than average rates of profit in competitive industries. }}}
}{\plain \par
}\sect \sectd \sbknone\marglsxn2520\endnhere
\pard
{\plain If the limits of value and surplus-value are given, it is easy to grasp how the
competition of capitals transforms values into prices of production and still further into
commercial prices, transforming surplus-value into average profit. But without these
limits, there is absolutely no way of seeing why competition should reduce the general
rate of profit to one limit rather than to another, to 15 per cent instead of 1,500 per
cent. (C.III. 429)\par
}{\plain \par
}{\plain The formula that the price of production of a commodity = k + p, cost price plus
profit, can now be stated more exactly; since p = kp' (where p' is the general rate of
profit), the price of production = k + kp'. (C.III. 265) [Marx is here ignoring the
difference between the stock and flow of capital; FM]\par
}{\plain \par
}{\plain The prices of production arise from an adjustment of commodity values under which,
after the reimbursement of the respective capital values consumed in the various
spheres of production, the total surplus\_value is distributed, not in the proportion in
which it is produced in the individual spheres of production, ... but rather in proportion
to the size of the capitals advanced... It is the constant tendency of capitals to bring
about, by competition, this adjustment of the total surplus\_value which the total capital
produces ... (C.III. 895)\par
}\sect \sectd \sbknone\endnhere
\pard
{\plain \par
}\pard \sl480
{\plain \tab The average profit included in the price of each commodity (= R C}{\plain \sub i}{\plain ) will in general not be
equal to the amount of surplus\_value actually contained in that commodity, and hence the price of
production of each commodity will in general not be equal to its value or proportional to the
labor\_time required to produce it. However, the total amount of surplus\_value is not altered by
this redistribution of surplus\_value among the individual industries according to the total amount
of capital invested. Taken all together, the divergences of individual profits from individual
surplus\_values balance out so that the sum of individual profits is equal to the total amount of
surplus\_value (S), as determined in the Volume 1 analysis of capital in general. This can be trivally
shown as follows:\par
}{\plain \tab \tab E(R C}{\plain \sub i}{\plain ) = R E(C}{\plain \sub i}{\plain ) = RC = (S/M) M = S\par
}{\plain where E stands for summation. This result follows from Marx\'92s logical method employed in the
determination of prices of production. Because the total amount of surplus-value is taken as
given in the determination of prices of production, the total amount of surplus-value cannot
change as a result of this determination.{\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain It is just as easily shown that the sum of individual prices of production is equal to the
aggregate price determined in the Volume 1 analysis of capital in general; see Moseley 1993.
Contrary to the widely-accepted neo-Ricardian interpretation, both of these aggregate equalities
are true simultaneously, if Marx\'92s own logical method is followed. }}}
}{\plain \par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain The transformation of values into prices of production does not abolish the limits
on profit, but simply affects its distribution among the various particular capitals of
whch the social capital is composed ... (C.III. 1000)\par
}{\plain \par
}{\plain The equalization of the surplus\_values in the different spheres of production does
not affect the absolute size of this total surplus\_value; but merely alters it
distribution among the different spheres of production. The determination of this
surplus\_value itself, however, only arises out of the determination of value by
labor\_time. (TSV.II. 190-91)\par
}{\plain \par
}{\plain We have thus an absolute limit for the value component that forms surplus\_value ..;
this is determined by the excess of the unpaid portion of the working day over its
paid portion, i.e. by the value component of the total product in which this surplus
labor is realized. If we call this surplus\_value whose limits are thus determined
profit, when it is calculated on the total capital advanced, as we have already done,
then this profit, considered in its absolute amount, is equal to the surplus\_value, i.e.
it is just as regularly determined in its limits as this is. It is the ratio between the
total surplus\_value and the total social capital advanced in production. If this
capital is 500 ... and the surplus\_value is 100, the absolute limit to the rate of profit
is 20 percent. The division of the social profit as measured by this rate among the
capitals applied in the various different spheres of production produces prices of
production which diverge from commodity values and which are the actual
averages governing market prices. }{\plain \ul But this divergence from values abolishes
neither the determination of prices by values nor the limits imposed on profit by
our laws}{\plain ... This surcharge of 20 per cent ... is itself determined by the
surplus\_value created by the total social capital, and its proportion to the value of
this capital; and this is why it is 20 percent and not 10 percent or 100 percent. }{\plain \ul The
transformation of values into prices of production does not abolish the limits to
profit, but simply affects its distribution}{\plain among the various particular capitals of
which the social capital is composed ... (C.III. 999\_1000; emphasis added)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab The equalization of profit rates across industries further obscures the origin of surplus-value. Because profit is in fact distributed across industries according to the total capital invested,
and not according to the amount of variable capital, profit appears to come equally from both the
constant capital and variable capital components of the total capital. Marx argued that this
illusion is a \'93necessary form of appearance\'94 in capitalism because competition enforces the
equalization of profit rates of across industries. \par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain It is now purely accidental if the surplus-value actually produced in a particular
sphere of production, and therefore the profit, coincides with the profit contained
in the commodity\'92s sale price... The actual difference in magnitude between profit
and surplus-value in the various spheres of production ... now completely conceals
the true nature and origin of profit, not only for the capitalist, who has a particular
interest in deceiving himself, but also for the worker. (C.III. 267-68). \par
}{\plain \par
}{\plain Profit does not merely }{\plain \ul seem}{\plain to be different, but }{\plain \ul is}{\plain now in fact different from
surplus-value ... Capitals of equal magnitude yield equal profits; in other words,
profit is proportional to the size of the capital. Or profit is determined by the value
of the capital advanced. The relation of profit to the organic composition of
capital is completely obliterated and no longer recognizable in all these formulae.\par
}{\plain (TSV.III. 483)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab Marx argued that Ricardo and his followers were not able to provide a satisfactory
explanation of equal rates of profit and prices of productioin precisely because they failed to
follow the logical method of the prior determination of the general rate of profit. Instead, Ricardo
simply assumed equal rates of profit and prices of production in the very first chapter of his
}{\plain \ul Principles}{\plain without first explaining how the rate of profit is determined. \par
}\sect \sectd \sbknone\marglsxn2520\endnhere
\pard
{\plain Instead of postulating this general rate of profit, Ricardo should have examined how
far its existence is consistent with the determination of value by labor\_time and he
would have found that instead of being consistent with it, prima facie, it contradicts it,
and that its existence would therefore }{\plain \ul have to be explained through a number of
intermediary stages}{\plain , a procedure very different from merely including it under the law
of value. (TSV.II. 174; emphasis added)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain The most important "intermediary stage" omitted by Ricardo is the prior determination of the total
amount of surplus\_value and the general rate of profit, which is then taken as given in the
subsequent determination of prices of production.\par
}{\plain \tab Marx\'92s determination of prices of production summarized above is quite simple and
straightforward, and it is fundamentally different from the neo-Ricardian interpretation.
According to the neo-Ricardian interpretation, prices of production are determined simultaneously
with the rate of profit, and both are derived from given technical conditions and the real wage,
according to the well known equation:\par
}{\plain (2)\tab \tab p = (1 + r) (pA + pBL)\par
}{\plain where A is the given input-output matrix (the technical conditions of production) and B is the
given vector of wage-goods. A and B, defined in terms of physical quantities of goods, play no
role in Marx\'92s theory of prices of production given in equation (1) above.{\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain Riccardo Bellofiore\'92s paper in this volume presents a commplicated interpretation of Marx\'92s
theory, which involves going through all three volumes of }{\plain \ul Capital}{\plain and then returning to Volume 1
to reanalyze exploitation. While a full consideration of Bellofiore\'92s interpretation is beyond the
scope of this paper, it seems to me that, with regard to the determination of prices of production
in Volume 3, Bellofiore follows Shaikh\'92s (1977) iterative method, which I argue is essentially
Sraffian in nature in the following key respects: the initial givens are the physical quantities of
means of production and means of subsubsistence (rather than the monetary quantities of constant
capital and variable capital), the rate of profit is determined simultaneously with prices of
production, and the rate of profit changes from Volume 1 to Volume 3.}}}
}{\plain \par
}{\plain \tab I have argued more fully in Moseley (1993) that, if the interpretation of Marx\'92s logical
method presented here is accepted, including the key premise of the prior determination of the
general rate of profit, then the following conclusions follow: (1) Marx\'92s theory of prices of
production is not \'93incomplete\'94, i.e. Marx did not fail to transform the inputs of constant capital
and variable capital from values into prices of production, because these inputs are taken as given
as quantities of money capital, not derived as the values or prices of production of given means of
production and means of subsistence. The SAME quantities of money capital taken as given in
Marx\'92s theory of surplus-value in Volume 1 and in his theory of prices of production in Volume
3. The only difference is that in Volume 3 the disaggregated quantities of constant capital and
variable capital in each industry are taken as given, rather than the aggregate quantities of
constant capital and variable capital, as in Volume 1 (the sum of the disaggregated quantities of
capital are by assumption equal to the aggregate quantities of capital). (2) Marx\'92s two aggregate
equalities both are true simultaneously, as Marx himself concluded. (3) The rate of profit does
not change as a result of the determination of prices of production. Instead, the rate of profit is
taken as given in Marx\'92s theory of prices of production, as determined in the prior aggregate
analysis of capital in general in Volume 1. (4) The labor theory of value is not \'93redundant\'94,
because values as defined by Marx cannot be derived from the technical conditions of production.
The prices of production as determined by Marx\'92s theory are different from the prices of
production determined by the technical conditions of production (as in the Sraffian interpretation
of Marx\'92s theory), or in Sraffian theory. The question remains which of these two theories
provides a better explanation of prices of production, but it is not true that these two theories are
the same, and therefore that the value theory is redundant.\par
}{\plain \par
}{\plain Part 4: COMMERCIAL PROFIT \par
}\sect \sectd \sbknone\marglsxn4320\endnhere
\pard
{\plain Previously we have dealt only with }{\plain \ul productive capital}{\plain . Now
modifications occur caused by }{\plain \ul merchant capital}{\plain . ... Let the
merchant capital = 100. The 100s has now to be calculated on 600
instead of 500. The general rate of profit if therefore reduced from
20 per cent to 16 2/3 per cent. (SC. 194)\par
\sect \sectd \sbknone\endnhere
\pard \sl480
\tab The next component of surplus-value explained in Volume 3 is commercial profit, or the
profit collected by commercial capital. Commercial capital is capital which functions solely in the
sphere of circulation, i.e. performs only the pure circulation functions of buying and selling, and
activities related to buying and selling (accounting, advertising, credit, etc.). Since according to
Marx's theory, these functions by themselves are "unproductive", i.e. produce no value or
surplus\_value (see Moseley 1992, Chapter 2, for a further discussion of Marx's concept of
unproductive labor), the existence of commercial profit seems to contradict this assumption of
unproductive labor. Marx called attention to this apparant contradiction between the labor theory
of value and commercial profit in Chapter 5 of Volume 1, and again promised to explain this
apparent contradiction at a later stage of his theory, according to his logical method of first
determining the total amount of surplus-value and then later determining the individual parts of
surplus-value, such as commercial profit. Marx remarked that in order to explain these apparently
contradictory phenomena, \'93a long series of intermediate steps\'94 is necessary, which are \'93entirely
absent\'94 in the analysis so far. \par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain In the course of our investigation, we will find that merchants\'92 capital and interest-bearing capital are derivative forms [of industial capital]. (C.I. 267){\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain We can see from this sentence that the same method of investigation also applies to Marx\'92s
analysis of interest. }}}
}{\plain \par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab Marx's explanation of this apparent contradiction is that commercial capital receives its
profit as a deduction from the surplus\_value produced by industrial capital. The general
mechanism through which this deduction of commercial profit from the total surplus\_value occurs
is through the difference between commercial capital's buying price and its selling price.
Commercial capital buys commodities at less than their price of production and then sells these
commodities at their price of production. This difference enables commercial capital to recover
its cost and to collect the average rate of profit.\par
}\sect \sectd \sbknone\marglsxn2520\endnhere
\pard
{\plain Since commercial capital does not itself produce any surplus\_value, it is clear that }{\plain \ul the
surplus\_value that accrues to it in the form of the average profit forms a portion of the
surplus\_value produced by the productive capital as a whole}{\plain . The question now is
this: How does commercial capital attract the part of the surplus\_value produced by
productive capital that falls to its share? ... \par
}{\plain \par
}{\plain It is clear that the merchant can obtain his profit only from the price of the
commodities he sells, and also that this profit which he makes on the sale of his
commodities must be equal to the difference between his purchase price and his sale
price; it must be equal to the excess of the latter over the former. (C.III. 395\_96;
emphasis added)\par
}{\plain \par
}{\plain Commercial capital does not have a direct effect on the creation of profit or surplus-value and it enters as a determining element into the formation of the general rate of
profit only is so far as it draws its dividends from the mass of profit that industrial
capital produces, according to the proportion that it forms in the total capital. \par
}{\plain (C.III. 424)\par
}{\plain \par
}{\plain If }{\plain \ul the limits of value and surplus-vaue are given}{\plain , it is easy to perceive how the
competition between capitals transforms values into prices of production and still
further into commercial prices, transforming surplus-value into average profit.\par
}{\plain (C.III. 429)\par
}\sect \sectd \sbknone\endnhere
\pard
{\plain \par
}\pard \sl480
{\plain \tab How then are the purchase price and the selling price of commercial capital determined?{\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain I will consider here only the simple case in which there are no additional costs of circulation
beyond that necessary to purchase the commodities. For a consideration of the more complicated
case with additional costs of circulation, see Moseley (1997a).}}}
}{\plain \par
}{\plain With the inclusion of commercial capital, the general rate of profit (R') is now determined as the
ratio of the predetermined total amount of surplus\_value to the sum of industrial capital (C}{\plain \sub p}{\plain ) and
commercial capital (C}{\plain \sub c}{\plain ), not just to the industrial capital as before:\par
}{\plain (3)\tab \tab R' = S / (C}{\plain \sub p}{\plain +C}{\plain \sub c}{\plain ) < R = S / C\par
}{\plain Therefore, the general rate of profit is less than what it was in the absence of commercial capital
(as stated in the letter quoted at the beginning of this section).\par
}{\plain \tab Commercial capital's "wholesale" price (WP) (or industrial capital's selling price) is then
determined as follows (considering both the total industrial capital and the total commercial
capital, rather than individual capitals):\par
}{\plain (4) \tab WP = K}{\plain \sub p}{\plain + R'(C}{\plain \sub p}{\plain )\par
}{\plain where K}{\plain \sub p}{\plain is the cost of production (the sum of variable capital and constant capital consumed).
Since R' < R, the average profit added to the costs of production by industrial capital is less than
in the absence of commercial capital. In this way, industrial capital appropriates a smaller share of
the total surplus\_value. \par
}{\plain \tab The remainder of the total surplus\_value is then received by commercial capital by adding
the average profit to its buying price to determine its selling or "retail" price (RP):\par
}{\plain (5)\tab \tab RP = WP + R'(C}{\plain \sub c}{\plain )\par
}{\plain This then is Marx's explanation of how commercial capital receives a share of the total surplus-value even though it produces no surplus\_value. It is trivial to show that the sum of industrial
profit (R\'92C}{\plain \sub P}{\plain ) and commercial profit (R\'92C}{\plain \sub C}{\plain ) determined in this way is equal to the predetermined
total amount of surplus\_value:{\super\fs19 \chftn {\footnote \pard \sa240
{\plain \super\fs19 \chftn }{}{\plain Similarly, the sum of the "retail" prices of commercal capital is equal to the total price of
commodities determined in Volume 1 and the sum of prices of production in the earlier case
without commercial capital. }}}
}{\plain \par
}\pard
{\plain \tab \tab R\'92 C}{\plain \sub P}{\plain + R\'92 C}{\plain \sub C}{\plain = R\'92 (C}{\plain \sub P}{\plain + C}{\plain \sub C}{\plain ) = S / (C}{\plain \sub P}{\plain + C}{\plain \sub C}{\plain ) * (C}{\plain \sub P}{\plain + C}{\plain \sub C}{\plain ) = S\par
}{\plain \par
}\pard \sl480
{\plain The only difference is that a portion of this total amount of surplus-value is now collected by
commercial capital rather than by industrial capital by means of the above relative price
mechanism. (Marx presented a numerical example of this method of determination on p. 398 of
Volume 3, and gave a similar example in the 1868 letter to Engels quoted throughout this paper.)\par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain Commercial capital does not have a direct effect on the creation of profit or
surplus-value and it enters as a determining element into the formation of the
general rate of profit only in so far as it draws its dividends from the mass of profit
that industrial capital produces, according to the proportion that it forms in the
total capital. (C.III. 424)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab In Volume 2 of }{\plain \ul Capital}{\plain , Chapter 6 (\'93The Costs of Circulation\'94), Marx stated that the
\'93general law\'94 for these costs of circulation is that they are recovered out of the surplus-value
produced by productive capital, which is taken as given in this analysis of commercial profit.\par
}\sect \sectd \sbknone\marglsxn2520\endnhere
\pard
{\plain The general law is that all circulation costs that arise simply from a change in the form
of the commodity cannot add any value to it. They are simply costs involved in
realizing the value or transferring it from one form to another. The capital expended
in these costs (including the labor it commands) belongs to the }{\plain \ul faux frais}{\plain of capitalist
production. The replacement of these costs must come from the surplus product, and
}{\plain \ul from the standpoint of the capitalist class as a whole it forms a deduction of surplus-value}{\plain ... (C.II. 225-26; emphasis added)\par
}{\plain \par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain \tab The collection of profit by commercial capital further obscures the origin of surplus-value.
Since commercial profit receives a profit proportional to its total amount, just like industrial
capital, it looks like profit is produced by commercial capital as well as by industrial capital. This
illusion is enhanced by the effect that the rate of turnover of commercial capital has on the rate of
profit, e.g. a faster rate of turnover of commercial capital increases the rate of profit (see Chapter
18 of Volume 3). Again, these illusions arising from circulation necessarily arise in capitalism
because the products of capitalism are commodities which must pass through the phases of
circulation and because capital must be invested to carry our these necessary functions of
circulation, even though these functions do not themselves directly product surplus-value. As the reader will have recognized in dismay, the analysis of the real, inner
connections of the capitalist production process is a very intricate thing and a work
of great detail; it is the task of science to reduce the visible and merely apparent
movement to the actual inner movement. Accordingly, it will be self-evident that,
in the heads of the agents of capitalist production and circulation, ideas must
necessarily form about the laws of production that diverge completely from these
laws and are merely the expression in consciousness of the apparent movement.
The ideas of a merchant, a stock-jobber or a banker are necessarily quite upside-down. (C.III. 428)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab There has been one attempt to integrate commercial profit into a Sraffian interpretation of
Marx\'92s theory - by L. Cuyvers (1978). Cuyvers attempts this integration by adding a commercial
technology input matrix and a commercial labor input vector to the production technology input
matrix and the production labor input vector. According to Cuyvers\'92 interpretation, the initial
givens in Marx\'92s theory are still assumed to be the physical quantities of inputs and outputs, but
now the physical quantities also include commercial inputs as well as production inputs. Relative
prices and the rate of profit are then determined simultaneously as before by the following
equation, which is a modification of equation (2) above to include these additional commercial
inputs:\par
}{\plain (6)\tab \tab p = (1 + r) (pA}{\plain \sub p}{\plain + pBL}{\plain \sub p}{\plain + pA}{\plain \sub u}{\plain + pBL}{\plain \sub u}{\plain )\par
}{\plain \tab Again we can see the fundamental differences between Marx\'92s logic and the Sraffian \par
}{\plain interpretation of Marx\'92s logic. In this Sraffian interpretation, the rate of profit is not determined
prior to the determination of prices of production, but is instead determined simultaneously with
price of production. Furthermore, commercial profit is not a deduction from a predetermined
total amount of surplus-value. Indeed, there is no explanation at all of how commercial capital as
a entity separate from productive capital receives its profit. There is no determination of
wholesale prices as the means by which commercial capital recovers its costs and collects its profit
as a portion of the total surplus-value produced by productive capital. Only retail prices of
production are determined. Furthermore, it appears to be }{\plain \ul impossible}{\plain within the Sraffian
interpretation to determine wholesale prices because this requires a prior determination of the rate
of profit (see equations (3) and (4) above) and in the Sraffian interpretation, the rate of profit is
not determined prior to prices, but is instead determined simultaneously with retail prices of
production. Therefore, Cuyvers\'92 Sraffian interpretation of commercial profit is clearly contrary to
Marx\'92s own theory of commercial profit.\par
PART 5: INTEREST\par
}\sect \sectd \sbknone\marglsxn4320\endnhere
\pard
{\plain Next comes the splitting up of this profit into entrepreneur\'92s profit
and interest. (SC. 195).\par
}{\plain \par
}\sect \sectd \sbknone\marglsxn2520\endnhere
\pard
{\plain \tab The next component part of surplus-value explained by Marx in Volume 3 is interest.
According to Marx's theory, interest is simply a part of the total surplus\_value which the
"functioning" capital (either industrial capital or commercial capital) has to pay to the lenders of
capital for the use of the lenders' capital. Again, the total amount of surplus\_value is
predetermined and taken as given in the analysis of the division of this surplus-value into "profit of
enterprise" and interest. }{\plain \ul Interest ... is ... nothing but a part of the profit, i.e. the surplus\_value}{\plain , which the
functioning capitalist, whether industrialist or merchant, must pay to the owner and
lender of capital is so far as the capital he uses is not his own but borrowed. \par
}{\plain (C.III. 493)\par
}{\plain \par
}{\plain \ul Where a given whole such as profit is to be divided into two, the first thing that
matters is of course the size of the whole to be divided }{\plain ... And the circumstances that
determine the magnitude of the profit to be divided, the value produce of unpaid labor,
are very different from those that determine its distribution among these two types of
capitalist ... (C.III. 482; emphasis added)\par
}{\plain \par
}{\plain The ratio in which profit is divided, and the different legal titles by which this division
takes place, already assume that profit is ready-made and presuppose its existence...
(P)rofit is produced before this division takes place and before there can be any talk of
it. (C.III. 504-05)\par
}{\plain \par
}{\plain With the division into interest and profit of enterprise, the average profit itself sets the
limit for the two together. }{\plain \ul It supplies the given amount of value they have to share
between them, and this is all they have to share}{\plain . (C.III. 1001; emphasis added)\par
}{\plain \par
}{\plain \ul Interest is therefore nothing but a part of the profit (which, in turn, is itself nothing by
surplus\_value, unpaid labor)}{\plain , which the industrial capitalist pays to the owner of the
borrowed capital with which he "works", either exclusively or partially. Interest is a
part of profit \_ of surplus\_value \_ which, established as a special category, is separated
from the total profit under its own name, a separation which is by no means based on
its origin, but only on the manner in which it is paid out or appropriated. (MECW.32.
469; TSV.III. 470\_71; emphasis added) \par
}\sect \sectd \sbknone\endnhere
\pard
{\plain \par
}\pard \sl480
{\plain \tab Marx argued that there are no general, systematic laws that determine the rate of interest,
as there is with the rate of profit. Therefore, there are no general laws that determine the relative
shares of "profit of enterprise" and interest in the total surplus\_value. The rate of interest is
instead determined by the supply of and demand for capital as borrowed funds. The most relevant
point for our purposes is that the maximum rate of interest is the rate of profit. This relation
between the rate of interest and the rate of profit follows from the determination of the rate of
profit prior to the division of the total surplus\_value into "profit of enterprise" and interest. \par
}{\plain \tab Marx called interest the \'93most fetishistic form of surplus-value,\'94 because interest appears
to arise solely for the nature of capital itself, with no necessary relation to labor or even
production. Marx argued that this fetishism necessarily arises in capitalism because of the actual
emergence of loan capital and the consequent actual division of the total surplus-value into
interest and profit of enterprise. Even capitalists who do not operate with borrowed capital
nonetheless often divide their \'93gross profit\'94 into interest and \'93net profit.\'94{\super\fs19 \chftn {\footnote \pard
{\plain \super\fs19 \chftn }{}{\plain Geert Reuten\'92s paper in this volume presents a very negative assessment of Marx\'92s theory of
interest presented in Part 5 of Volume 3 - mainly that it is not a systematic dialectic presentation
and that the indeterminancy of the rate of interest is a serious weakness. However, Reuten does
not discuss the most important aspects of Marx\'92s theory of interest emphasized here - that interest
is a part of a predetermined total amount of surplus-value and that the payment of interest on
capital makes it appear as if capital is an independent source of value. It is certainly true that this
part is a very rough draft - Marx\'92s first draft of this part and the roughest draft of all of Volume 3.
In this manuscript, Marx was exploring many concrete aspects of interest and the credit system,
along with the more abstract theoretical points. But this roughness should not distract from the
main theoretical points, which are clear enough and which are clearly related to the overall logical
structure of Marx\'92s theory of the distribution of surplus-value in Volume 3 as a whole. \par
}}\pard \sa240
{}{\plain Martha Campbell\'92s paper in this volume presents a much more positive assessment of Part 5
and discusses the same important theoretical points that I have emphasized. Campbell also
emphasizes that Marx\'92s theoretical analysis of interest provids the basis for his more concrete
analysis of the credit system. }}}
{\plain \par
}\sect \sectd \sbknone\marglsxn2520\endnhere
\pard
{\plain The division of profit into profit of enterprise and interest ... completes the
autonomization of the form of surplus-value, the ossification of its form as against its
substance, its essence... (I)nterest then seems independent both of the wage- labor of
the worker and the capitalist\'92s own labor; it seems to to derive from capital as its own
independent source. (C.III. 968)\par
}{\plain \par
}{\plain It is in interest-bearing capital - in the division of profit into interest and profit - that
capital finds its most objectified form, and the nature of surplus-value is presented as
something which has altogether lost its identy. Capital - as an entity - appears here as
an independent source of value ... (TSV.III. 498-99)\par
}\sect \sectd \sbknone\endnhere
\pard
{\plain \tab \par
}\pard \sl480
{\plain \tab There has been one attempt to integrate interest into a Sraffian interpretation of Marx\'92s
theory - by Carlo Panico (1980). Panico attempts this integration by adding to the technology
input matrix and the labor input vector a \'93credit input vector\'94 (Q), which is \'93the amount of loans
per unit of output of each industry,\'94 and a \'93deposit input vector\'94 (D), which is \'93the amount of
amount of deposits per unit of output of each industry.\'94 Both of these input vectors are measured
by the money value of the loans and deposits, deflated by money wages. The initial gives in
Marx\'92s theory are thus still interpretated to be the physical quantities of inputs to production, but
now there are additional givens - these financial quantities measured in labor-time units. \par
}{\plain \tab There are also now two additional variables to be determined - the rate of interest on loans
(i) and the rate of interest on deposits (j). Therefore, two additional equations are needed to close
the system of equations. Panico takes the rate of interest on deposits as given (d}{\plain \sub 0}{\plain ) and adds the
following equation for the total amount of loans (Q):\par
}{\plain (7)\tab \tab Qi = (pK}{\plain \sub b}{\plain + pL}{\plain \sub b}{\plain B) (1 + r) + Br + Dj\par
}{\plain where K}{\plain \sub b}{\plain and L}{\plain \sub b}{\plain are the material and labor input vectors, respectively, of the credit sector. The
price of production equation for the industrial sector then becomes:\par
}{\plain (8)\tab \tab p = (1 + r) (pA + pBL) + Qi - Dj\par
}{\plain \tab We can see once again the fundamental differences between Marx\'92s logic and the Sraffian
interpretation of Marx\'92s logic. In this Sraffian interpretation, the rate of profit is not determined
prior to the determination of prices of production, but is instead determined simultaneously with
price of production. Furthermore, interest is not a deduction from a predetermined total amount
of surplus-value, but is instead the rate of interest is determined simultaneously with the rate of
profit. The rate of interest is not determined by the supply of and demand for loans, but is instead
determined by the whole system of equations including production inputs, etc. Therefore,
Panico\'92s Sraffian interpretation of interest is clearly contary to Marx\'92s own theory of interest and
the rate of interest. \par
}{\plain \par
}\sect \sectd \sbknone\marglsxn4320\endnhere
\pard
{\plain PART 6: RENT Transformation of surplus profit into rent. (SC. 195)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab The final component of surplus-value explained by Marx in Volume 3 is land rent. Rent
is explained as a part of the total surplus\_value which landlords are able, by their monopoly of the
land (and other natural resources), to appropriate for themselves, rather than this surplus\_value
being distributed among all capitalists. In this theory of rent, the total amount of surplus\_value is
again taken as a given magnitude, as determined by the prior analysis of capital in general. This
total amount of surplus\_value is "split" into profit and rent, and rent does not enter into the
equalization of profit rates across industries. \par
}\sect \sectd \sbknone\marglsxn2520\endnhere
\pard
{\plain All ground-rent is surplus-value, the product of surplus labor. (C.III. 772-73)\par
}{\plain \par
}{\plain The analysis of landed property in its various historical forms lies outside the scope of
the present work. We are concerned with it}{\plain \ul only in so far as a portion of the surplus\_\par
}{\plain \ul value that capital produces falls to the landowner}{\plain . (C.III. 751; emphasis added)\par
}{\plain \par
}{\plain In our analysis of ground\_rent, we intend to proceed first of all from the assumption
that products that pay a rent of this kind \_ which means that}{\plain \ul a part of surplus\_value... \par
}{\plain \ul is reducible to rent}{\plain \_ are sold like all other commodities at their prices of production... \par
}{\plain (C.III. 779; emphasis added)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab Marx\'92s theory of rent assumed that agriculture is organized on a capitalist basis, and that
capital invested in agriculture receives the same average rate of profit as all other industries.
However, agriculture is unique in that productivity differentials of different lands are due in part
to unequal natural fertilities, which cannot be eliminated by competition and the transfer of
capital. As a result, the price of production of agricultural goods is determined by the labor\_time
requirements on the least fertile land, rather than the labor\_time requirements on the land of
average fertility. The greater quantity of goods produced by the same amount of labor on the
more fertile lands will sell at the same price as goods produced on the least fertile land.
Therefore, the goods produced on the more fertile land will contain a sustainable "surplus profit",
i.e. a profit over and above the average rate of profit. This surplus profit is transformed into
(differential) rent that must be paid to landlords because of the landlords' private ownership of the
land and thus their monopolization of the benefits of the greater natural fertility. \par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain Capital-profit (profit of enterprise plus interest) and ground-rent are thus nothing
but particular components of the surplus-value; categories in which this surplus-value is distinguished according to whether it accrues to capital or landed property;
desesignations which in no way affect its essence. Added together, they form the
total of surplus-value. Capital directly pumps from the workers the surplus labor
that is expressed in surplus-value and surplus product. (C.III. 959-60)\par
}{\plain \par
}{\plain This ownership [of natural resources] is a means of obstructing the process which
takes place in the rest of the capitalist spheres of production, and of holding on to
this surplus\_value created in this particular sphere, so that it is divided between the
capitalist and the landowner in that sphere of production itself. (MECW.31. 276;
TSV.II. 42).\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab The collection of rent by landlords further obscures the origin of surplus-value because it
makes it appear as if surplus-value arises from the natural fertility of the land. Indeed to some,
like the Physiocrats, it even appears that all of surplus-value, not just rent, originates from the
natural fertility of the land.\par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain Finally, besides capital as an independent source of surplus-value, there appears
landed property, as a limit to the average profit which transfers a portion of the
surplus-value to a class that neither works itself not directly exploits workers, and
cannot even, like interest-bearing capital, launch forth in edifying homilies about
the risk and sacrifice in lending capital. Since in this case one part of the surplus-value seems directly bound up not with social relations but rather with a natural
element, the earth, the form of mutual alienatioin and ossification of the various
portions of surplus-value is complete, the inner connection definitively torn
asunder and its source completely buried, precisely through the assertion of their
autonomy vis-s-vis each other by the various relations of production which are
bound up with the different material elements of production process. (C.III. 968)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab There have been no explicit attempts to integrate rent into the Sraffian interpretation of
Marx\'92s theory, but there has been a recent attempt to present a theory of rent within the
framework of Sraffian theory - by Bill Gibson and various co-authors (1983a and 1983b).
Gibson, et al. do not explicitly say that this could be an interpretation of Marx\'92s theory of rent,
but rather present it as an extension of Sraffa\'92s theory. However, if there were to be a Sraffian
interpretation of Marx\'92s theory of rent, it would have to be essentially the same as Gibson, et al.\'92s
extension of Sraffian theory. \par
}{\plain \tab Gibson, et al. extend Sraffian theory to include rent by distinguishing between two sectors
- industry and agriculture - and by adding to the technology input matrix and the labor and wage
goods input vectors a land input vector (T), which is the amount of land per unit of output,
measured in acres. The initial givens are still assumed to be the physical inputs to production, but
in the case of agriculture, these inputs now include land. There is also an additional variable to be
determined - the rent of land (g) (measured per acre). Therefore, an additional equation is needed
to close the system of equations. Gibson, et al. provide different additional equations for the two
different cases of \'93intensive\'94 rent (rent for the same quality of land, but with different capital
inputs) and of \'93extensive\'94 rent (rent for different qualities of land). In the case of \'93intensive\'94 rent,
the additional equation describes an alternative method of production on the same quality of land.
Relative prices, the rate of profit, and the rate of rent are then determined simultaneously by the
following system of equations, with the third equation representing the alternative method of
production in agriculture. \par
(9)\tab \tab p = (1 + r) (pA + pBL)\par
}{\plain (10)\tab \tab p = (1 + r) (pA + pBL) + gT}{\plain \sub 1}{\plain \par
}{\plain (11)\tab \tab p = (1 + r) (pA + pBL) + gT}{\plain \sub 2}{\plain \par
}{\plain \tab The case of \'93extensive\'94 rent is more complicated and leads to a surprising conclusion.
The further complication arises because the additional equation for agriculture now includes yet
another variable to be determined - the rent on the second quality land (g}{\plain \sub 2}{\plain ) and so on for the third
quality of land (g}{\plain \sub 3}{\plain ), etc. The system of equations is finally closed by assuming that there is no rent
on the least fertile land, i.e. that there is no \'93absolute\'94 rent. In other words, this Sraffian theory
requires that there be no \'93absolute\'94 rent. This theory takes us back to Ricardo, who argued that
rent on the least fertile land is impossible, or can only be explained as a monopoly rent.\par
}{\plain \tab Thus we can see once again very clearly how different this Sraffian theory of rent is from
Marx\'92s theory of rent. In this Sraffian theory, the rate of profit is not determined prior to prices
of production, but is instead determined simultaneously with prices of production. Rent is not
explained as a part of a predetermined total amount of surplus-value, but is instead determined
simultaneously with the rate of profit and prices. And this Sraffian theory of rent requires that
there there be no absolute rent. Marx\'92s theory, on the other hand, argues that absolute rent is
possible because because the composition of capital in agriculture may be less than the average
composition for the total economy, in which case the value of agricultural goods will be greater
their price of production. Hence the price of agricultural goods may rise above their price of
production without necessarily being greater than their value, and this excess of the actual price
over the price of production is the source of absolute rent on the least fertile land (see Moseley
1997a for a further discussion of Marx\'92s theory of absolute rent). Therefore, Gibson, et. al.\'92s
Sraffian theory of rent is completely different from Marx\'92s theory of rent.\par
}{\plain \par
}{\plain PART 7: REVENUE AND ITS SOURCES \par
}\sect \sectd \sbknone\marglsxn4320\endnhere
\pard
{\plain At last we have arrived at the }{\plain \ul phenomena}{\plain which serve as the
}{\plain \ul starting point}{\plain for the vulgar economist: rent originating from the
land, profit (interest) from capital, wages from labor. But from our
point of view the thing now looks differently. The apparent
movement is explained. (SC. 195)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab We come finally to Part 7, entitled \'93Revenue and its Sources,\'94 which is seldom discussed
in the literature, but which I think is very important. Part 7 provides a culmination of Marx\'92s
theory of the distribution of surplus-value in Volume 3 of }{\plain \ul Capital}{\plain . It makes very clear the main
points of Volume 3: the distribution of surplus-value into its component parts, the prior
determination of the total amount of surplus-value, and the necessary appearance of the individual
parts of surplus-value as separate and independent \'93sources\'94 of value. \par
}{\plain \tab As we have seen, Marx\'92s theory of the distribution of surplus-value in Volume 3 explains
the different forms of income - industrial profit, commercial profit, interest, and rent - as
component parts or \'93forms of appearance\'94 of the underlying substance of surplus-value. We have
seen that the premise throughout Volume 3 is that the total amount of surplus-value is determined
prior to its division into individual parts. This premise is once again emphasized in the
culminating Part 7. \par
}\sect \sectd \sbknone\marglsxn2520\endnhere
\pard
{\plain Profit (profit of enterprise plus interest) and rent are nothing more than characteristic
forms assumed by particular portions of the surplus\_value in commodities. The size of
the surplus\_value sets a quantitative limit for the parts it can be broken down into.
(C.III. 971)\par
}{\plain \ul \par
}{\plain The sum of average profit plus ground\_rent can never be greater than the quantity of
which these are parts, and this is already given before the division. (C.III. 972) \par
We have thus an absolute limit for the value component that forms surplus\_value and
can be broken down into profit and ground\_rent; this is determined by the excess of
the unpaid portion of the working day over its paid portion, i.e. by the value
component of the total product in which this surplus labor is realized. (C.III. 998\_99)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab Marx\'92s theory of the total amount of surplus-value, presented in Volume 1, is of course
based on the labor theory of value. The labor theory of value is itself based on essentially the
same premise - that the total amount of value, or the total price, is determined prior to its division
into individual parts, or individual forms of income. Leaving aside the constant capital component
of the total price, the total new-value produced in a given period may be divided into wages plus
the various forms of surplus-value discussed in Volume 3. Marx emphasized repeatedly in Part 7
(and especially in Chapter 50) that the labor theory of value assumes that the total amount of
new-value is determined prior to its division into wages plus profit plus rent, etc. \par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain The distribution rather presupposes this substance as already present, i.e. the total
value of the annual product, which is nothing more than objectified social labor.\par
}{\plain (C.III. 961)\par
}{\plain \par
}{\plain Apart from lue by
the addition of three }{\plain \ul independent}{\plain values, thus converting the aggregate value, from
which rent, profit, and interest are derived, into an arbitrary magnitude. \par
}}\pard \sa240
{{\plain (p. 216-17)}}}
{\plain \par
}\sect \sectd \sbknone\marglsxn2520\endnhere
\pard
{\plain (I)t is correct to say that the value of a commodity, in so far as it represents freshly
added labor, is always reducible to three elements, wages, profit, and rent, which
constitute the three forms of revenue, while the respective value magnitudes, i.e. the
aliquot parts that these form of the total value, are determined by different specific
laws that have already been developed. It would be wrong however to say that the
value of wages, the rate of profit and the rate of rent are independent constituent
elements of value, with the value of the commodity ... arising from their combination;
in other words, it would be wrong to say that these from constituent components of
commodity value or the price of production. (C.III. 993)\par
}{\plain \par
}{\plain Thus if the portion of commodity value representing labor freshly added ... breaks
down into different portions, which assume mutually independent shapes in the form of
revenues, this does not in any way mean that wages, profit, and ground\_rent are now
to be considered as the constituent elements, with the governing price of commodities
... itself arising from their combination or sum ... }{\plain \ul In actual fact commodity value is the
quantitative premise, the sum total value of wages, profit and rent, whatever their
relative mutual magnitudes might be}{\plain . In the false conception considered here,
however, wages, profit and rent are three independent value magnitudes, whose total
produces, limits and determines the magnitude of commodity value. (C.III. 1002;
emphasis added)\par
}{\plain \par
}{\plain This new value of 100 is all that is available for division into the three forms of
revenue. If we call wages x, profit y and ground-rent z, the sum of x+y+z, in our
present case, is always = 100. In the minds of the industrialists, merchants and
bankers, and the vulgar economists as well, things proceed quite differently. For them
it is not the commodity value that is given as 100, after this 100 then being divided up
into x, y, and z. Instead, the price of the commodity is simply put together out of the
value magnitudes of wages, profit, and rent, which are determined independently of
the commodity\'92s value and of one another ... (C.III. 1007)\par
}\sect \sectd \sbknone\endnhere
\pard
{\plain \par
}\pard \sl480
{\plain \tab Marx argued that this illusion (the opposite view) necessarily arises in capitalism because
individual capitalists, in their everyday practical calculations, do in fact regard these different
forms of income as given and independent magnitudes, i.e. as the magnitudes then prevailing in
the economy. Individual capitalists are not interested in a scientific analysis of value and
distribution. They simply take the forms of income as given, as they actually exist in the
economy. These forms of income appear to be determined in separate and independent ways, and
the total price appears to be determined as the sum of these individual parts.\par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain The breakdown of surplus-value, that is, of part of the value of commodities, into
these special headings or categories, is very understandable and does not conflict in
the least with the law of value. But the whole matter is mystified because these
different parts of surplus-value acquire an independent form, because they accrue
to different people, because the titles to them are based on different elements, and
finally because of the autonomy with which certain parts of surplus-value confront
the production process as its conditions. From parts into which value can be
divided, they become independent elements which }{\plain \ul constitute}{\plain value ... How their
apparent independence as conditions of the process is regulated by the inherent law
and that they are only }{\plain \ul apparently}{\plain independent, does not become evident at any
moment in the course of the production process, nor does it act as a determining
motive. The highest consistency which can be assumed by this semblance of
results taking the form of independent conditions becomes firmly established when
}{\plain \ul parts of surplus-value}{\plain - in the form of conditions of production - are included in
the price. (TSV.III. 511)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab Marx also argued in Part 7 that \'93vulgar economics\'94 simply took these everyday
perceptions of individual capitalists at its starting point and tried to give these perceptions some
coherence and profundity. \par
}\sect \sectd \sbknone\marglsxn2880\endnhere
\pard
{\plain Vulgar economics actually does nothing more than interpret, systematize, and turn
into apolegetics the notions of agents trapped within bourgeois relations of
production. (C.III. 956)\par
}{\plain \par
}{\plain (T)he vulgar economist does nothing more that translate the peculiar notions of the
competition-enslaved capitalist into an ostensibly more theoretical and generalized
language, and attempt to demonstrate the validity of these notions. (C.III. 338)\par
}{\plain \par
}\sect \sectd \sbknone\endnhere
\pard \sl480
{\plain \tab Therefore, at the end of Volume 3, Marx arrived at the point that he promised in the first
paragraph of Volume 3 - the explanation of the forms of appearance of capital on the surface of
capitalist society and in the consciousness of individual capitalists. \par
}{\plain \par
}{\plain \tab This last part of Volume 3 has never been discussed from the perspective of Sraffian
theory, so far as I know. We can see from the above that there is good reason for this neglect.
The main themes of this part are so clearly contrary to the Sraffian interpretation of Marx\'92s theory
- the prior determination of the total amount of surplus-value and the \'93inner connection\'94 of
industrial profit, commercial profit, interest, and rent, as \'93necessary forms of appearance\'94 of the
prior determined surplus-value. If the Sraffian interpretation of Marx\'92s theory is accepted, then
what Marx is saying in Part 7 of Volume 3 is complete nonsense. Indeed, since Part 7 is a
summary of the main points of Volume 3 as a whole, if the Sraffian interpretation is accepted,
then Marx is talking nonsense in all of Volume 3. However, I have shown in this paper that the
Sraffian interpretation of Marx\'92s theory is fundamentally and thoroughly mistaken. It is not
Marx\'92s Volume 3 that is nonsense, but the Sraffian interpretation of Volume 3 and of Marx\'92s
theory as a whole. \par
}{\plain \par
}{\plain CONCLUSION\par
}{\plain \tab This paper has presented a considerable amount of textual evidence to support the
interpretation (1) that the main subject of Volume 3 of }{\plain \ul Capital}{\plain is the distribution of surplus-value
into its individual component parts; (2) that this analysis of the distribution of surplus-value is
based on the fundamental premise that the total amount of surplus-value has already been
determined by the prior analysis of capital in general in Volume 1; and (3) that Marx explained
these components parts as \'93necessary forms of appearance\'94 of the common substance of surplus-value. This paper has also shown that the Sraffian interpretation of Volume 3 and of Marx\'92s
theory as a whole is fundamentally mistaken. This interpretation does not explain the different
form of revenue discussed in Volume 3 as the necessary form of appearance of a predetermined
amount of surplus-value (predetermined by the surplus labor of workers), but instead explains
each of these forms of revenue as part of a general system of equations in which all variables are
determined simultaneously. Therefore, the Sraffian interpretation of Marx\'92s theory, which
currently dominates Marxian scholarship, should be rejected, and Marx\'92s theory should be
thoroughly reexamined on its own terms, i.e. in terms of its own logical method, which presumes
that the total amount of surplus-value is determined prior to its division into individual parts.\par
}{\plain }\pard\page
\pard \qc\sl480
{\plain REFERENCES\par
}\pard
{\plain \par
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}{\plain Moseley, Fred (1993). "Marx's Logical Method and the Transformation Problem,"\par
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}{\plain Schefold, Bertram (1997). \'93The Relation between the Rate of Proit and the Rate of Interest:\par
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}{\plain \par
}{\plain Shaikh, Anwar (1977). \'93Marx\'92s Transformation of Value and the \'91Transformation Problem,\'94 in \par
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}{\plain \par
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}{\plain \par
}{\plain \par
}{\plain \par
}{\plain }\pard\page
\pard \qc
{\plain ENDNOTES\par
}\pard
{\plain \par
}{\plain \par
}{\plain \par
}}
- [OPE-L:3555] Re: Re: Re: money-capital as initial givens, Gil Skillman Mon 03 Jul 2000, 20:40 GMT
- [OPE-L:3556] Postscript to 3555, Gil Skillman Mon 03 Jul 2000, 21:17 GMT
- [OPE-L:3573] Re: Re: Re: Re: money-capital as initial givens, Fred B. Moseley Fri 07 Jul 2000, 13:58 GMT
- Message not available
- [OPE-L:3574] Re: Re: Re: Re: Re: money-capital as initial givens, Gil Skillman Fri 07 Jul 2000, 15:11 GMT
- [OPE-L:3577] Re: Re: Re: Re: Re: Re: money-capital as initial givens, Fred B. Moseley Mon 10 Jul 2000, 14:28 GMT
- Message not available
- [OPE-L:3589] Re: Re: Re: Re: Re: Re: Re: money-capital as initial givens, Gil Skillman Wed 26 Jul 2000, 23:28 GMT
- [OPE-L:3554] Re: money-capital as initial givens, Gil Skillman Mon 03 Jul 2000, 18:03 GMT
- [OPE-L:3553] Re: Re: Re: money-capital as initial givens, Paul Cockshott Mon 03 Jul 2000, 09:38 GMT
- [OPE-L:3552] Re: Re: Re: Re: Re: money-capital as initial givens, Rakesh Bhandari Sun 02 Jul 2000, 16:44 GMT