A friend’s warning to quantitative scientific marxism

The present text would amount to a very first measure of the world market, and a first formalization of Ruy Mauro Marini's organic composition determination on value flows, creation and appropriation

Value flows measured through trade, are not real value flows. The unequal exchange figures by Roberts and Carchedi, Freeman, etc, all have quantitative and empirical problems: the equalization of the profit rate and production prices between trade partners, needs to be conceived entirely on dollars or one single common denominator being usually dollars. If this is not the case, and if we use national currencies without a common denominator, then the equalization of profit rates and prices of production supposedly belonging to unequal exchange and trade, produces the same dollars equivalent according to the exchange rate.

For example, we have here the calculations proposed by Roberts:

 

If we used some hypothetical local currency for the production process in the south, with some hypothetical exchange rate of 2, we might think it would be the same proportions that are present in dollars, but just doubled up. That is not the case.

The process in the south would be:

80c+120v+120s= 320v

with the same profit rate of 60%

 

Then we would have two possibilities: adding up both processes even though they’re not presented in dollars or the same common denominator, or taking for granted the average profit rate without mixing the two processes which are presented through different units of measurement (dollars and the hypothetical local currency). In the first case, the average profit rate would be 0.63% instead of 40%, which would give us still the same result as if we didn’t mixed up the different currencies and assumed a 40% average profit rate: the south wouldn’t be at a loss, but a gain of 3, whether in the local currency or converted to dollars. The process in the north would gain 23, and barely reach the south. So the biggest the gain for the north, is actually barely reaching the south, and the exact inverse proportion of gains and losses between north and south is completely lost. In the second case, the profit rate would be 0.46%, and if it equalizes through 0.46%, then the result would be the same instead of being unequal: it would gain 140v from 140v, without any loss at all. There wouldn’t be any sense of exports for some having bigger gains than the others, since they would gain exactly the same, without any structural inequality nor inverse proportion between gains and losses, etc. If these results come up with only an hypothetical exchange rate of 2, it's completely possible that all measures being used to measure the world market, all different exchange rates and different equivalences, are going through the same quantitative problem.

Even more: instead of comparing profit against compositions of capitals and organic compositions, prices of production end up being contrasted against other set of prices of production, which are always conceived in dollars or some common equivalent, and if they’re not considered in terms of dollars and a homogeneous GDP, and we use local currencies instead, then the equalization process yields the same amount in dollars according to the exchange rate. That means: a bigger or smaller amount of value, is considered not against compositions of capitals, but against prices between each other. This is where the equalization aspect is erasing the heterogeneity of the 60% and 40% proposed in the Robert’s example. Actually, whether in dollars or local currencies, the process in the south is earning a bigger profit rate, which is what 160v or 320v measures against their C and V. The very same example created by Roberts shows a process earning 60 against 20, and because of equalization of prices of production, ends up assuming they both win the same %, and so, the same prices of production, with gains for some and loses for some. Equalization and prices of production are never meant to erase the actual profits earned by each process. They’re meant as the equalization arithmetic mean around which the heterogeneous amounts of profit and value earned, tend to fluctuate. They’re meant as the transformation from market prices to prices of production, but not as prices of production being actual value and profit created and appropriated. Both heterogeneous profits and values coexist with the equalized ones, which is the beauty of the complexity of the marxian formulation. The equalization of prices of production cannot in no marxist sense, be used to make believe that the value flows, the value earned, and the value appropriated, whether internally or externally, is equalized only. This would mean we would take equilibrium as the mark for value, and even worst, an homogeneous intake of profits and value, around an equilibrium point just like the prices of production themselves. Both of these measure problems are related to one single problem: the homogeneous character of National Accounts, especially the use of dollars as common denominator or common equivalent, which totally distorts actual value flows. Value, actually, is not a flow at all. Value is the quantitative relationship between primary income from external economies (both external FDI and external portfolio and equity) and local GDP, and it’s respective C and V, plus exploitation rate, profit rate, and the rest, against any other societies very same variables. This is where it should be said: there’s no mathematical equation for value flows, but there is indeed a quantitative relationship. Which one? The quantitative magnitude is the composite relative consideration of variables like the exploitation rate, the profit rate, profits and value, etc, against compositions of capitals of each nation. There’s no world profit rate, and there’s no possibility for a zero-sum of all nations. The world market is simply not a “big country”, or a “big nation”, nor an aggregate of nations. An absolute amount in dollars might be bigger than the other, with a higher profit rate, and still earn less absolutely than the country with a smaller value-added and smaller profit rate. The so called “value flows” are non-existent, and is better to proceed through already existing measures like this one made by us, to get an actual picture of how the world multinational market creates and distributes value.

Finally, just like we found exchange rates and currencies hide actual profits and value created and appropriated compared against their compositions of capitals, and just like we have found this is consonant to the criticism raised against National Accounts’ homogeneity, its also necessary to point out that we have made an exercise with a constant 'function' of investment and production, which reproduces simple and expanded reproduction for two societies: one dominant and the other dependent, with their respective exchange rates, and with one society reproducing the same investment 'function' in the other society, both of each other investing in their own societies, plus the other society, using each other’s strong and weak currency depending on the location they’re producing. We have found that both profits and value both get incommensurable, in the very same sense pointed out here to measures made with a common denominator usually being the dollar, even though they’re exactly the same and identical. With each cycle of reproduction, the numbers show an increasing inequality between both processes, even though they have the same exchange rate, and are completely identical.