|31 May 2008 @ 03:10, by Roberto Massera|
The essay is based on the philosophy of the I Ching and is in two parts:
The first regards the positive definition of economic value. It shows that in every considered period of time the price of the gross product’s represents the whole time of labor of the system, independently from the function of commodities - i.e. the distinction between means of production and consumer goods - and independently from how they are distributed - i.e. how prices can vary accordingly.
The second part shows how the idea of value as incorporated labor, with the consequent concept of the transfer of means of production’s value into the produced commodities - implying a coincidence between the totality of labor of the system whit the only net product’s value instead of the gross product’s - conceals the relationship between prices and quantities of labor, and the real, or absolute value of the various currencies remains unknown.
One - Positive
According to the Principles of Changes of the I Ching, the phylosophy of which is also known as Dualistic, or Dialectical Monism, every thing changes, and every change has a Sense that is generated, can be understood and represented by means of couples of opposite and identical, or different but complementary polar attributes.
This simple consideration is perfectly fit for the definition of the nature of economic value, where we deal with 6 all intertwined relationships of identity and duality:
- Unity of the economic system and multiplicity of the firms that make it up.
- Physical transformation and social transformation, also called production and distribution.
- Labor and commodity - or creative value and material value - and
- Production and consumption in physical transformation, and
- Commodity and price - or material value and exchange value - and
- Buying and selling in social transformation.
An economic system is a unit, 1, made up by a multiplicity, k, of firms that produce and exchange commodities, therefore there are two kinds of transformation: physical transformation, or production, result of the relationship between humans and physical world, and social transformation, regarding the distribution by means of the negotiated exchange of the result of those physical transformations between the firms that produce them, making of the economic system an organic unit.
Since the two kinds of transformation are different, their characteristics can and must be considered separately, but since one of them cannot exist without the other, they must also be considered in their oneness.
Every physical transformation is just but one event, and this event is made up by two elements, or values, that cannot exist one without the other: labor and commodity, which are of different fabrics but are also identical. Labor decides the Sense of the transformation according to a plan, a project, and is the essential, or creative value of the event, while the corresponding commodity, for its physical characteristics, is the (receptive) material value, or use value of that transformation.
As the whole economic system is a unit, the gross product can be considered as a single commodity which use value is the material life of the whole system, and its creative value the totality of labor. The use value of a commodity cannot be expressed as a mathematical fraction of the gross product's use value, but its creative value is a fraction of the whole system's time of labor.
Physical transformation occurs as a process that is in the same time consumption and production, which, once again, are opposite and identical. The identity-duality relationship consumption-production is generated by the same physical transformation considered in the two opposite - positive and negative - directions, and the identity between labor and product is as well an identity between labor and consumption.
Regarding physical transformation, these considerations don't dependent on distribution and are valid no matter what the commodities' exchange value, or price, will be.
Every firm yields the produced commodities to any other firm of the system in exchange for a quantity of commodities produced by them. Commodities are exchanged because they have different use values that satisfy various common needs, and a relation between different use values, as just said, cannot be expressed in mathematical terms.
A commodity, indeed, though, is such not for its use value, but because in distribution it is in an identity relationship with a price, which expresses the quantitative exchange relationship of every commodity with all the other commodities.
The relationship of identity between material value and price goes together with the relation of identity-duality of buying and selling, opposite and identical, as the price for which every single commodity is sold is also the price for which it is bought. This is also true for the whole system, for the gross product, but while every commodity can be exchanged with different commodities and their price change accordingly, the gross product is always exchanged with itself, so that its price is constant, and it is the mathematical one, 1, the unity of the system, to which all prices refer as a fraction of.
Price expresses the quantitative relationship between unity and multiplicity, between every commodity and the gross product - or every firm and the whole system - and, consequently, between every single commodity.
These considerations about distribution are made without any reference to production.
In the negotiated exchange, a commodity is bought for its material value, while the quantity of labor spent in production is invisible and is only one, though primarily important, of the many causes for the magnitude of price. Therefore, as creative value and exchange value belong to different transformations, there is no reason for them to coincide, that is, the relation between quantity of labor of a firm and quantity of labor of the system, which is constant, doesn't have to be necessarily equal to the fraction of the gross product represented by its price, which is variable.
But the commodity belongs perfectly to both physical and social transformation, which imply one another through the whole system. And for the whole system both the gross product’s creative and economic value, as well as its material value, are constant for every possible distribution.
If the economic value is expressed in monetary terms, the whole price, Mt, of all the commodities exchanged in a given period of time, or Gross Product, GP, is the representation of the totality of time of labor, Lt, that produces them:
Mt ≡ GP ≡ Lt
and the mathematical relation:
Mt = Lt
determines the absolute value of the currencies in terms of quantities of social labor, fraction of the time of labor of the economic system, of the labor of one for another.
Prices always represent precise quantities of time of quantified human existence, independently from the commodities' material value and the way they are distributed, that is, whatever they are used as means of production or consumer goods, and however the magnitude of prices can vary in order to ensure the condition of balance - buying-selling identity for each firm and for the whole system - for different possible distributions.
Two - Negative
For Marx and the classical economists, though in slightly different terms, the objective value, or simply value, of a commodity is the quantity of labor spent to produce that commodity. If a commodity is produced by using freely available natural elements, its value is just the quantity of time of live labor. If, instead, it is produced by using other commodities, or means of production, its value is calculated as the sum of the quantity of live, or new labor, directly employed to produce that commodity, plus the quantity of labor previously spent to produce the used means of production, which value is considered as indirect, or dead, or crystallized, or embodied labor that transfers itself into the produced commodities.
Following that conception, the representation of the economic activities during the considered period of time comprehends commodities that are different because produced in different periods of time, that is, the consumed means of production, produced in the previous period of time, and the commodities produced during the considered period. Those commodities, therefore, should be represented with different letters, but then only a linear unchangeable process would be visible; it would be impossible to study the variation of price for different hypothetical distribution of the same commodities, i.e., the relation between prices and quantities of labor.
Fort his reason, the economists suppose that the commodities maintain the same function, so that commodities of two different periods can be represented with the same letters.
Since the two kinds of commodities must be kept distinct, though, it is also necessary to suppose that production takes place all along the considered period, and distribution, instead, in an instant only at the end of that period and before the beginning of the next one.
But since commodities are of different periods, they remain diverse, and even if they have the same use value and are represented with the same letters, there is no reason to believe that the price of the consumed means of production is equal to those of the produced ones, as they could be distributed in a different way.
In order to study the variation of the characteristics system for a variation of distribution, therefore, it is also necessary to suppose that the economic system is static, retroactively static one should say, that is, that in every period commodities are produced and exchanged in the same way, so that, as well as their material value, even the price of the consumed commodities can be equal to the price of the produced ones.
In reality, the economic activities are a constant flow where the two kinds of transformations take place contemporaneously; the commodities represented are only and all those produced and exchanged during the considered period, so that the price for which they are sold is necessarily the same for which they are bought, and there is no need to consider the system as "static". The static-ness hypothesis forces upon the wrong framework the condition that is always true for the correct one.
In that conception, the quantity of labor embodied into the commodities cannot be "calculated" by considerations regarding only production because it depends on how the means of production are distributed. Physical transformation and social transformation are overlapped and confused, and the same representation is used to calculate both embodied labor and prices.
In this situation, the classical theory of value establishes that the quantity of labor incorporated into the commodities coincides - or is precisely indicated - by the prices calculated in the representation of the socialistic distribution not deformed by the existence of profit, that is, when the net product - for the static-ness hypothesis composed of final consumer goods - is distributed only in proportion to the quantities of labor spent.
In this case, indeed, since the quantity of labor embodied in the means of production produced is equal to the quantity of labor embodied into the means of production consumed, the value of the net product coincides with the totality of live labor, so that, as in a system where means of production don't exist, everyone receives from society a quantity of commodities embodying a quantity of social labor equal to the quantity of labor given to society by producing only one kind of commodity.
The identity between totality of live labor and net product's value is justified by considering the consumer goods as the real end of the whole economic activity, and therefore, directly or indirectly, of the whole labor.
But since in every period all the commodities - consumer goods and means of production - are consumed and reproduced, if this were true the quantity of labor embodied in the consumed commodities would be constantly greater than the quantity of labor that produces them all.
Though this absurdity is not recognized as such, other contradictions pop up when considering a variation of distribution.
The variation of prices, indeed, is explained as the effect of a redistribution of the value embodied into the commodities that takes place with the redistribution of the commodities themselves, requiring therefore prices different from values, though without changing the quantity of labor they objectively embody. But if the price of the net product is constant and coincides with the totality of live labor, a variation of distribution, which implies a variation of all prices, also implies a variation of the gross product's price, which becomes bigger or smaller than the price calculated without profit, that is, than the quantity of labor objectively embodied.
The economists finally recognize this as an unacceptable contradiction, known as the transformation problem, which conceals the currencies' absolute value.
It must be noticed that the conception of the transfer of the means of productions’ value into the produced commodities is shared by all of the economists, as they consider the net product’s value as value added.
In reality, in the physical transformation the relation of identity between labor and commodity, or creative value (which is not embodied labor) and use value, is simple and direct, and comprehends both labor-production and labor-consumption identities, and and holds true for whatever kind of distribution.
And in the representation of distribution the sum is between price of the final consumer goods and price of the means of production, or income and capital, where income is proportional to the quantity of labor, but, as well as the capital, is social value, not creative value.
In every period of time, in order to exist, labor must use, though in different ways, means of production and consumer goods, and is employed contemporaneously in part in the production of means of production and in part in the production of consumer goods. Therefore, even in a socialistic distribution, the salary - the quantity of social labor indicated by the consumer goods’ price - is inferior than the quantity of labor given to the system. Both creative value and price of the gross product are constant, but while the net product’s creative value is constant, its social value changes.