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It seems to me that the discussion between Fred and
Ajit is not really a discussion at all. At best, they
are like ships passing in the night. Sadly, the disagreements
make it appear as though they are going in the same direction.
For Fred, the task is to explain the existence of
prices of production in terms of Marx's value theory.
For Ajit, the point is derive prices of production given
values or a structure of production. I think it is
fair to say that Ajit finds Marx's attempt to deal
with the transformation inadequate and in need of
correction. Fred, on the other hand, attempts to defend Marx.
Fred's efforts are useful (I have problems with his
simultaneous valuation.) if and , let's be real, only if
Ajit's interpretation is invalid. I maintain that it is.
Put simply, given we are dealing with capitalism as Marx presents
it, it is impossible to derive relative prices given only the
physical quantities used in production. Why?
First, we run into the problem of absolute rent. Granted
Sraffa is clear that there can be non-differential rent
on the worst land. But clearly no reading of Marx can
find Sraffa's concept of "absolute rent" equivalent to that
Second, Marx's concept of moral depreciation undercuts any attempt
to derive his prices of production from knowledge of the physical
quantities of inputs and outputs. That is, in order to derive
relative prices and a rate of return for a system in which fixed
capital is used, one must know the economic life times of the
elements of fixed capital. But in order to compute those lifetimes,
you have to know the prices of production. Hence, prices of production
simply can't be derived using Marx's notion of depreciation.
Now we can try to get out of this dilemma by ignoring moral depreciation and
imputing to Marx the idea that all depreciation is physical. In this
way, we can generate criticisms of Marx's transformation procedure.
But then we have a procedure that only works for systems in which
there is no moral depreciation. To use that procedure to critique Marx's
does not seem valid.
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