YET ANOTHER VALUABLE PIECE OF RESEARCH INVALIDATED BY USING ANNUAL COMPENSATION INSTEAD OF VARIABLE CAPITAL
January 2, 2024 11 Comments
ERRATA. the date this article was published was in fact the 31st December 2023.
I hope this will be the last time I have to correct a notable article for failing to use turnover in its calculations. This article and the previous two form a trilogy which demonstrates in a practical manner why turnover cannot be excluded, and why when excluded, it results in false positives, aka a misinterpretation of reality.
THEPLANNINGMOTIVE.COM 
Hello, at the end of this post you mention that “turnover in fact could have been derived from the national accounts because these accounts are based on Marx’s categories as found in Volume 2.” Could you refer me to a source discussing the historical/intellectual connections between the system of national accounts and Capital Volume 2?
Firstly, before proceeding have you studied volume 2.
Yes I have. I know of the attempts of the early Soviet economists to use it to model the national economy as a unified whole of production and circulation, particularly through the reproduction schemas, but I’m missing the link to the SNA’s as constructed by economists today. I’ve also heard others mention this link so I’m curious.
The reason you are finding it difficult to find the origins of the SNA is that Kuznets and Leontief who were well versed in Marx’s method, being Russian emigres refused to acknowledge their sources, in order to protect their reputations in academic circles in the West. They together with the British economist Richard Stone are the architects of the SNA. Leontief played a pivotal role with his elaboration of the input-output tables which is the sinews of the Accounts for which he was awarded the Nobel Prize in 1973 https://www.nobelprize.org/prizes/economic-sciences/1973/leontief/facts/ This site clearly shows he was a student in the USSR during the early twenties.
I wrote the following article linking Volume 2 to the SNA by showing how Marx’s tables in the section on simple reproduction could be re-interpreted in a modern way. Notably, it was Marx’s analysis which showed that the value of the final sales was equal to all the value added during the chain of production which was to become the cornerstone of the SNA as it equates to GVA which once adjusted for net inventories forms GDP. Here is the link to my article https://theplanningmotivedotcom.files.wordpress.com/2018/08/linking-the-sna-to-book-2-kapital-final-pdf3.pdf
I hope that my answer satisfies your quest.
thank you, that is very helpful, both your article and the pointers to the key figures. I’ll look into it further with these clues. Thanks again!
You dated the article as Dec 31, 2019– you mean 2023?
Oops
Read this article again, and it seems to me that all of the circulating capital thrown into the markets gets returned (theoretically or hopefully) in the period of turnover, not just the variable capital. Certainly the difference between “working capital” and “annual cost” applies to all the elements of production in which the value is totally consumed and absorbed in the value of the resulting commodities. Shouldn’t the amounts advanced specifically for elements that do not constitute fixed capital be adjusted similar to “V” based on the rate of turnover?
You are correct. Circulating capital based on sales revenue covers c + v where c stands for inputs plus depreciation. It excludes s which does not enter cost price being unpaid. Therefore circulating capital is equal to the sum of cost prices aggregated over a single circulating cycle. This is the beauty of the turnover formula. Some other analysts trying to calculate circulating capital have added inventory plus wages. But worked up inventory contains wages expended on working it up. Thus they end up with a duplicated value.
I hope this answers your concerns.
Circulating capital based on sales revenue covers c + v where c stands for inputs plus depreciation. It excludes s which does not enter cost price being unpaid”
While s doesn’t enter cost-price, circulating capital, as opposed to working capital, based on sales revenue certainly has to include surplus value. Otherwise there’s no point to capitalist production. The question Ihave is — are all following turnovers after the first turnover without cost to the capitalist because c+v+s are returned in that first turnover? Try and picture a containership that makes the cycle between Shanghai and Long Beach every 8 weeks. A new route or new technology reduces the cycle to 6 weeks. Profit is augmented by the improved asset utilization, but there are still increased costs of fuel, food, port fees, et
Anti, I am using AGGREGATED data which is why the formula for circulating capital is gross output (equal to the price of total sales) minus the net surplus yielding the COST of gross output. In turn the cost of gross output would be equal to the sum of cost prices in a given period which in turn would be the same as the quantity of paid labour in the form of capital expended.
So gross output you are right to conclude would indeed be equal to c + v + S which is why I have had to deduct s in the form of the net surplus. Now you know why it has taken so long for these formulas to have emerged.
Incidentally the cost of gross output in the national accounts is also equal to inputs plus worker renumeration providing an additional proof.