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John Eatwell

In Theories of Surplus Value Marx identified a common theoretical struc- ture running from Quesnay, through Smith and Ricardo, to his own work :

the attempt to construct an analysis of production and distribution around a concept of surplus . Savran's attack (Savran, 1979) on Sraffa's Production of Commodities is directed not at the particular form in which Sraffa presented his analysis of surplus, but on the aspects of Sraffa's theory which derive from this common structure . He is thus attacking the analytical foundations of all theories of surplus value, including that

advanced by Marx. The core of Savran's position is that it is not possible to express, as an

independent variable, either the wage or the rate of profit in a manner which will ensure that it is consistent with the reproduction of given con- ditions of production . Hence a theory of value and distribution which rests on the proposition that one of the distributional parameters is an indepen- dently given magnitude is 'theoretically inconsistent' . Savran also makes a number of subsidiary points specifically aimed at Sraffa, claiming,, for example, that the construction of the standard commodity is an essential component of Sraffa's argument, ignoring Sraffa's point that it is 'a purely auxilliary construction' (Sraffa, 1960 ; p. 31) using 'particular proportions . . . [which] . . . may give transparency to a system and render visible what was hidden, but emphasis added) ; and that changes in the conditions of production of the subsistence component of the wage 'cannot influence the rate of profit' (Savran, 1979, note 7) (it should be 'may not', but we'll leave that aside) again ignoring Sraffa's discussion this time of the problem of dividing the wage into subsistence and super-subsistence components (Sraffa, 1960 ; pp. 9-10). [11 I will concentrate on the main point.

. . .

cannot alter its mathematical properties' (p . 23,


Savran's attack is focussed on, the fundamental proposition of theories of surplus value - the proposition that in the analysis of value and



distribution one of the distributional parameters may be taken as a datum

independent of the magnitude of social product, the other parameter and

prices .being consequentially determined . Suppose, for example, that the real wage, expressed as the value of a unit of labour-power, is taken as given . Competitive determination of the conditions of production, includ- ing the length of the working day, establishes the relationship between gross and net product and the total quantity of labour employed (and hence the value of variable capital) . We can then construct Marx's funda- mental equation (Marx, 1976, pp . 320-332) :

surplus value = value of net product minus value of variable capital

But this equation would be empty of meaning if social product and the wage were not independent (otherwise, for a given wage, the single equa- tion would contain two uknowns, the value of social product and the surplus value) . Thus Marx, at the beginning of his survey of theories of surplus value, taking the real wage as the parameter, argued that

The foundation of all modern political economy, whose business is

the analysis of capitalist production, is the conception of the value of labour-power as something fixed, as a given magnitude - as indeed it

is in practice in each particular case where

this value of labour-power is manifested in the price of the necessary means of subsistence, hence in a sum of definite use-values (Marx,

1969 ) p . 45; see also Marx 1976 ; chpts . 9, 'The rate of surplus-value' and 17, 'Changes of magnitude in the price of labour-power in

surplus-value') .

The proposition of a given distributional parameter, given indepen-

dently of social product, is prior to the issue of how the magnitudes are to be expressed, as quantities of socially-necessary abstract labour time or as 'bundles of commodities' for example, an issue which was much debated

in the pages of the old Bulletin of the Conference of Socialist Economists .

It is also prior to the question of which distributional parameter, the wage or the rate of profit, should be taken as given . Yet it is the initial, fundamental, proposition to which Savran objects, arguing that the magnitude of the independent variable may be inconsis- tent with the conditions of reproduction . At the formalistic level of argu- ment adopted by Savran, he is trivially correct . If two magnitudes are

independently determined then there is no a priori reason to suppose one

to be greater or less than the other - hence all versions of the theory of surplus-value are, in Savran's words 'inconsistent and untenable' . In

Savran's discussion of this 'inconsistency' he takes the independent variable as either the wage expressed 'as a price' [2] or the rate of profit,

but his argument clearly applies equally well to the case of a given real wage, and hence the target of his attack is as much Marx as Sraffa .

What Savran has clearly failed to understand is the location of the theory of surplus-value within the context of the capitalist mode of



production ; i.e. in the historical context of a specific form of social and material reproduction. Within this context the development of the material conditions of reproduction (the social productivity of labour), the distri- bution of income, and the size and content of the social product are related to one another ; and their interactions both characterise important aspects of the historical process, and define a viable system. But these interactions are treated as separable from the analysis of value and distri- bution at each particular stage . Thus, on the determination of the value of labour-power, Marx argued

the number and extent of his [the worker's] so-called necessary

. . . . requirements, as also the manner in which they are satisfied, are them- selves products of history, and depend on the conditions in which, and consequently on the habits and expectations with which, the class of free workers has been formed . In contrast, therefore, with the case of other commodities, the determination of the value of labour-

power contains a historical and moral element . Nevertheless, in a given country at a given period, the average amount of the means of

subsistence necessary for the worker is a known datum. (Marx, 1976; p . 275, emphasis added) .

Similarly the development of the labour-process, the level of social accumulation and the composition of social demand determine 'at a given period' the level of social product. But the argument that the magnitudes of the independent variables must be related to the real characteristics of their historical setting is just the sort of argument which Savran airily dismisses as merely 'plausible' . Sraffa has, of course, wrought a radical change on the structure of the theory of surplus-value by proposing that the rate of profit rather than the real wage be taken as the given distributional parameter, (Sraffa, 1960; p . 33) hence opening the way to a discussion of the relationships between the independently determined profit-rate, the wage 'as a price' and prices of production . This change is worth discussing on its merits, that is, on the same terms as the proposition that the real wage may be taken as given, and within the context of development of the capitalist mode of production and the specific institutional form which the conditions of social and material reproduction, and hence of the class-struggle, assume in a given epoch . But the change does not alter the fundamental theoreti- cal proposition of theories of surplus-value which Marx and Sraffa share . It is for this reason that Savran's position may be shown to be false on the basis of Marx's theoretical argument. Finally, it may be noted that Savran's position is not at all new . A similar proposition was stated, somewhat more perspicuously, more than one hundred years ago by Jevons (1970, p. 256),Walras (1954, pp .424-425) and Wicksell (1969, p. 205) . Commenting on an equation of the same form as that used by Marx, Jevons argued that

A plain result also is drawn from the formula ; for we are told that if wages rise profits must fall, and vice versa . But such a doctrine is radi- cally fallacious, it involves the attempt to determine two unknown quantities from one equation .



He advances instead a theory whereby . . . . the wages of a workingman are ultimately coincident with what

he produces, after the deduction of rent, taxes and the interest of capital. (Jevons, 1970 ; p. 256)

i.e. the marginal productivity theory of distribution . In this theory Savran's 'problem' will never arise . Thus it is toward the neoclassical theory of value and distribution that Savran's argument ultimately leads . Is this what he really intended?


The author is a Fellow of Trinity College, Cambridge .



These points are ably disposed of by Steedman (1979) .


Savran suggests that there are three ways in which the given tional parameter may be


expressed . as a real-wage, as the

'wage as a . The notion of the 'wage as a price' is a purely formalistic one, with no economic content, as Savran acknow- ledges (Savran, 1979, p . 136)

price', and the rate of profit

. But he dismisses even conclusive economic argument, such as that advanced on this point by Sraffa (1960, p . 33), as being merely 'plausible'

. Arguments concerning the impossibility of nega- tive prices or negative outputs would, presumably, suffer the same fate. (Lest it should be thought that I am attacking a straw-man, it should be

noted that Savran (1979, note 13) suggests that interest may exceed the value of social net product, a condition possible only if wages are tive


.) It is perhaps worth emphasising that although Sraffa discusses at length the relationship between the wage 'as a price' and the rate of

profit, he does so in the context of the rate of profit being the indepen- dent variable

. Sraffa argues explicitly that the independent variable can be only either the real wage or the rate of profit.


Jevons, W .S., 1970, The Theory Penguin . Marx,

K., 1976, Capital I .,

of Political Economy, Harmondsworth,

Harmondsworth, Penguin .

Marx, K., 1969, Theories of Surplus Value I.,

London, Lawrence and Wishart . ., 1979, On the theoretical consistency of Sraffa's economics Capital and Class, 7. Sraffa, P

Savran, S


., 1960, Production of Commodities by Means of Commodities, Cambridge, CUP.

Steedman, I ., 1979, On an alleged inconsistency Capital and Class,


in Sraffa's economics,

Walras, L., 1954, Elements of Pure Economics,

Wicksell, K

Homewood, Ill, Irwin . ., 1969, Selected Papers on Economic Theory, New York, Kelley .