Re: Surplus Value or Profit

["CG" <claude.gnos@xxxxxxxxxxxxxx>]

----- Original Message -----
From: "Gunnar Tómasson" <gunnar.tomasson@xxxxxxxxxxx>
To: "Bruce McFarling" <ecbm@xxxxxxxxxxxxxxxxxxx>; <pkt@xxxxxxxxxxxxxxxx>
Cc: <gang8@xxxxxxxxxxxxxxx>
Sent: Saturday, November 24, 2001 1:31 AM
Subject: Re: Surplus Value or Profit


> >
> Consider the following two passages in Ch. 6:
>
> First.
>
> "The amount paid out by the entrepreneur to the other factors of
production
> in return for their services, which from their point of view is their
> income, we will call the *factor cost* of A.  The sum of the factor cost F
> and the user cost U we shall call the *prime cost* of the output A.
>
> "We can then define the *income* of the entrepreneur as being the excess
of
> the value of his finished output sold during the period over his prime
> cost."
>
> Second.
>
> "Furthermore, the *effective demand* is simply the aggregate income (or
> proceeds) which the entrepreneurs expect to receive, inclusive of the
> incomes which they will hand on to the other factors of production, from
the
> amount of current employment which they decide to give."
>
> At issue is what purports to be a *General Theory* - while Keynes does NOT
> explain how, in principle, *effective demand* can exceed the *factor cost*
> of A for any given "amount of current employment which [entrepreneurs]
> decide to give," yet he reasons AS IF it is not problematic how the
'surplus
> value or profit' rabbit can be pulled out of the hat.
>
> In this respect, the thrust of my argument is of the "no ticket, no
laundry"
> kind - that is to say, IF the rabbit has not been put into the hat, THEN
it
> cannot be conjured out of the hat.
>
> Gunnar
>
>
>


"If the rabbit ...."
That's correct.
But there is a coherent explanation available. In the GT profits are derived
from sales; i.e. they are earned at the expense of buyers. So profits, i.e.
every positive difference between prices and factor cost, divert a fraction
of the income (wages) created in the payment of factor cost. The theory of
profits underlying the principle of the effective demand is quite different
from Marx's theory of surplus value, according to which a surplus is created
before sales take place.

Claude Gnos
Université de Bourgogne et Centre d'Etudes monétaires et financières
Dijon, France