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As I check out, I must assume that the absence of a reply means that we are
all agreed that
1. Sweezy totally misread Marx in order to give the latter's imprimatur to
Bortkiewicz's transformation problem. Since almost everyone has followed
Sweezy's interpretation of Marx, almost all post war marxists have not
2. That what Marx is really saying what that while he had assumed in his
tableau that the value transferred from the means of production was equal
to the price paid for them,the inputs would have to be corrected into
values, for his transformation logic has shown that the means of production
could not have been bought at their value. That is, Marx is saying the
exact opposite of what Sweezy is claiming.
As Marx drops the value=price assumption, he is not recognizing a need to
transform the inputs from values to prices. It is true that in the
formation of prices of production, the average rate of profit will be added
to the cost price of the commodity in which the money laid out for the
means of production is included; however to understand the value
transferred from these means of production into the social pool of total
surplus value, we have to account for how their values diverged from the
price paid for them.
3. That Marx is further saying that unless we know whether wage goods sold
above or below or value in the previous period, we don't know how many
workers can be hired out of the money sum of variable capital that
entrepreneurs have laid out and we therefore don't what the rate of
Which is to say that in the tableau, the v has to be the money sum laid out
as variable capital, as Fred says--this is why Marx refers to c+v as the
cost price of the commodity: they are both already in the money form. The
value of a commodity however is constant capital + new value added which
then decomposes into the replacement value of the variable capital and
surplus value, itself divided between a fund for accumulation and a fund
for capitalist consumption.
4. Consider two possibilities: in the previous period means of production
sold below and wage goods above value. This means the value transferred is
greater than indicated by money price paid for the means of production as
shown in the tableau while the rate of exploitation is less. Or assume that
the means of production sold above value and the wage goods below value.
This means that the value of the means of production consumed in the
commodities is less than indicated by the money price of the means of
production while the rate of exploitation is higher than the 100% Marx
These corrections however change nothing about the form in which the law of
value asserts itself. The true unknowns in Marx's tableau--aside from the
prices of production--are the value of the means of production consumed in
the commodity output and the rate of exploitation. They are given in the
tableau, but Marx recognizes that they will depend on the nature of
price-value divergences in the immediately previous period. If we don't
remember this, it is always possible to go wrong.
The point however is that whatever these (value of means of production
consumed in the commodity output, rate of exploitation) turn out to have
been--and that they can't precisely be known is central to Marx's theory of
the obfuscatory nature of the price or monetary (mis-)representation of
value--they do not affect how the law of value governs bourgeois society
through the formation of an average rate of profit out of the mass of
surplus value in the system as a whole.
Prices of production of course will be calculated in terms of the cost
price of commodities plus that average rate of profit.
But Marx is not obviously not interested in an exact price theory as much
as a theory of the form through which the law of value must assert itself,
which explains not only why phenomena cannot be directly identical with the
law of value but also thereby why its workings are denied by those caught
up in bourgeois society.
That Marx is not interested in an exact price theory is revealed by his
failure to deduct, among other things, interest and rent payments out of
the mass of surplus value from which he determines the average industrial
rate of profit.
5. Since Marx is dropping the vol 2 assumptions of exchange at value,
annual turnover of fixed capital, constant relative and absolute value (or
price), it would be nonsense for him to construct a vol II-like model of
simple reproduction in which the same prices of production hold for both
the inputs and outputs while carrying over one condition or another from a
value denominated model of simple reproduction.
In vol III, reproduction must now be studied in the absence of the
simplyfying assumptions of vol II; for example, this is why in his
transformation tableau marx drops the assumption of annual turnover of
fixed capital and differentiates between c and used up c. This correction,
among others, is lost in Bortkiewicz's formulation of the problem which
reveals neglect of Marx's method of successive approximations, as
reconstructed by Grossmann, which Sweezy surprisingly claimed to be
In short there is no transformation problem. Fred is correct that the
various Shaikh-Foley-Dumenil solutions all accept the wrong starting point:
that c's and v's in the transformation tableau are not in values but
already prices. They are components of the cost price.
However, Fred, Alejandro R and others are incorrect that Marx sees no need
to transform the inputs in order to understand the transformation. The
transformation of the inputs (viz the means of production) however is in
the exact opposite direction in which Sweezy and those who have followed
him (which is almost everybody: Desai, Gouvernor, Howard and King, Kuehne,
Roemer, Meek, Dobb, Steedman, Sinha, etc) have claimed.
Which is to say that marxist economists are guilty of a massive campaign
of obfuscation against Marx either to discredit him or to prove some
acquaintance with mathematical tools which are entirely inappropriate to
the problem at hand (either way the underlying problem is the same--to gain
respectability in the fraternity of bourgeois economists). Particularly
egregious has been the repeated claim that Marx admitted the same problem
which the economists have been trying to solve through the methods devised
by Bortkiewicz, Sraffa and others.
All the best, Rakesh
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