[OPE-L:3657] Re: Re: Re: Re: Re: Re: Re: Re: constant capital and variable capital

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Mon Aug 14 2000 - 11:41:48 EDT

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

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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