Value product

The value product (VP) is an economic concept formulated by Karl Marx in his critique of political economy during the 1860s, and used in Marxian social accounting theory for capitalist economies. Its annual monetary value is approximately equal to the netted sum of six flows of income generated by production: 'The habit of representing surplus-value and value of labor-power as fractions of the value created — a habit that originates in the capitalist mode of production itself, and whose import will hereafter be disclosed — conceals the very transaction that characterizes capital, namely the exchange of variable capital for living labor-power, and the consequent exclusion of the laborer from the product. Instead of the real fact, we have false semblance of an association, in which laborer and capitalist divide the product in proportion to the different elements which they respectively contribute towards its formation.' The value product (VP) is an economic concept formulated by Karl Marx in his critique of political economy during the 1860s, and used in Marxian social accounting theory for capitalist economies. Its annual monetary value is approximately equal to the netted sum of six flows of income generated by production: The last five money-incomes are components of realized surplus value. In principle, the value product also includes unsold inventories of new outputs. Marx's concept corresponds roughly with the concept of value added in national accounts, with some important differences (see below) and with the provision that it applies only to the net output of capitalist production, not to the valuation of all production in a society, part of which may of course not be commercial production at all. The concept is formulated more precisely when Marx considers the reproduction and distribution of the national income (see e.g. his manuscript called 'Results of the Immediate Process of Production', available in English in the Pelican edition of Das Kapital), and also online; and the last chapters of Das Kapital Volume 3). Marx wrote this in 1864, i.e. about 70 years or so before the first comprehensive Gross National Product and Capital Formation statistics were pioneered by the likes of Wassily Leontief, Richard Stone, Simon Kuznets and Colin Clark (the United Nations standard accounting system was first finalised in 1953). Marx's manuscript for Das Kapital Vol. 3 ends with a discussion of 'relations of distribution', but he did not live to complete his analysis. In outline his approach is quite clear however. Marx called gross output (or the total value of output sales) the 'value of production' ('VPn'). If variable capital paid = V {displaystyle =V} , circulating constant capital consumed = C c {displaystyle =C_{c}} , fixed capital consumed = C f {displaystyle =C_{f}} , and surplus value produced = S {displaystyle =S} , then: