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*>Just to set the record straight, there's no assumption in the NI that
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*>input and output prices are equal. You don't need this to define
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*>value added at market prices. When prices are changing you do need to
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*>make some correction for the change in value of stocks, a point
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*>Andrew, John, and I among others have discussed at considerable
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*>length.
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*>Duncan
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Duncan,

In your lucid Understanding Capital (which I imagine now rivals Sweezy's

Theory of Capitalist Development in terms of influence of interpretation),

I read an attempt to determine the relation between values and prices in

conjoined vol 2-3 model in which the annual turnover of fixed capital is

assumed and unit price of inputs is set at the unit price of outputs (steel

and wheat in your example).

That is, I understand you to imply that the tranformation must be

understood and modelled in terms of Vol 2 assumptions, save exchange at

value which is no longer assumed since an identical VCC is also no longer

being assumed. So really two assumptions are being dropped.

Yet this seems to me to miss Marx's method of sucessive approximations as

reconstructed by Grossmann. We know that Vol 1 has an excess of form, for

that assumes a closed capitalist economy with no foreign trade, no credit,

value of money constant, two classes only, all goods conceived as aliquot

parts of total value. In Volume 2 Marx gives the whole circulation system,

but still limited by assumptions; in volume 3 there is finally a relaxation

of assumption and prior exclusions and we now approximate the economic

history of living capitalism. Critics speak of a discrepancy when they

should speak of expansion of static concepts into their dynamic action.

This is why Marx did not then attempt to put his Vol 3 transformation

tableau back into the straighjacket of vol 2 assumptions which should thus

not be carried over, though vol 2 may have allowed Marx to demonstrate that

there need not be a permanent consumption deficit in a closed capitalist

economy, which takes us back to Paul Z's important arguments).

Yet if we are to study the actual dynamics of reproduction or input-output

relations--which is what I understand to be Marx's goal in vol 3--then we

will have to do so without the assumptions of exchange at value, constant

value, annual turnover of fixed capital, an economy wide VCC, etc.

Could it be, as Alan F and Grossmann before him have argued, that because

there are not the needed mathematical tools to handle dynamic problems

especially as they derive from the constant revolution in values that

Marxists have tried to solve problems they can handle in terms of the

mathematical knowledge available to them? Wasn't this also why Schumpeter

never could formalize his theory, meaning that it would be forgotten in the

post war period except by scholars such as Nathan Rosenberg and Wolfgang

Stolper? It's funny that they both speak directly to Marxists but Marxists

don't speak back to them.

Yours, Rakesh

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