[OPE-L:3917] Fwd: Re: Re: Marxists AND Sraffians Misinterpreting Sraffa

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Sun Oct 01 2000 - 06:58:22 EDT

attached mail follows:

>A response to OPE-L 3914. > >Rakesh: "Andrew, don't forget that you seemingly forgot to reply to me >months back about whether Grossmann was correct to highlight that Marx >himself thought the rate of accumulation would speed up even as--or >indeed because--the rate of profit was falling;remember the long passage >from Marx which I typed out?)" > >Andrew: Not really. Can you please supply me with the post number? And what >was the issue under discussion? Did I write something about the >relation between the two rates? Me: Well, what do you think of the possibility that the rate of accumulation can speed up even as the rate of profit falls? This kind of dynamic is in the Bauer scheme which Grossmann extends. If I remember correctly, you thought this to be an *absurd* feature of the extended scheme (you have had only the most disparaging things to say about my hero), but then what do you make of Capital 3 Penguin, p.375?! > > >Rakesh seems to deny that Marx's theory holds that the magnitude of value >cannot be altered in exchange. Me: While no new value is created in exchange, this does not mean that the value substance is not altered in and through ex-change. I said this in my reply to you and my clarification to Alejandro, so how I could seem to be denying this is beyond me. > > I must say I'm surprised. What is Ch. 5 >of Capital I about? What is Ch. 9 of Capital III about? What about the >numerous other instances in which Marx says just what I cited? Of course what is Capital I, part one about if not the necessity of money or, to put it another way, money as the necessary form of appearance of value? In my reading, the value substance is transformed in and through ex-change from potentiae to actuality. Marx speaks throughout here of metamorphoses and conversions in ex-change which should be recognized as a more dynamic process than treating it simply as the medium in which value is conserved would allow. Marx's metaphors here are from life processes not physical ones, e.g., laws of conservation. The exchange process is a moment of metamorphosis or alteration not of value as quantity but of value as actuality. Value or valorisation is a monetary process through and through and thus has to be studied with money at the bookends (M-C-M'). Value simply is not actualised outside this money form, so if we are interested in the transformation from value to price of production we must then begin with sums of money, not technical conditions, plus the real wage. I understand Alejandro to be following Fred on this point, and I wholeheartedly agree. But I don't fully agree with them (as I have said to Allin): Marx had to initially assume that the money invested directly for means of prod and indirectly for wage goods is determined by the value of these means of prod and wage goods since he has only logically derived the category of price of production *after* the transformation tableau was complete. If Marx had already assumed the "inputs" sold at their prices of production, he would have had to anticipate the results of the science before the science. I think the charge made by Sweezy, Duncan and others that marx's second tableau (Capital 3, p. 256) makes a logical mistake because the inputs are left untransformed is, frankly speaking, absurd. As just noted, Marx has only derived the category of price of production *after* the second tableau was complete, so how could he possibly have had the inputs at the beginning of the table already purchased in terms of a yet underived category of price of production? It would have been illogical to have had the inputs already transformed since Marx had not yet demonstrated how and why value differs from price of production. To be sure, one can then argue that a third table should be constructed in which the inputs are bought at prices of production (in terms of the second tableau, the means of prod could sell above and wage goods below value or vice versa). It seems to me all wrong however to have the transformed input prices be the same as the output prices. So I would say that there is not enough data in the tableau to actually transform the inputs. That they are untransformed in the second tableau is only something of which we have to make a note. At any rate, it would not matter--and this is the crucial point--what the actual cost prices were to understand how it can be that the claiming of average rate of profit which seems most decisively to contradict or at least modify the law of value becomes the form in which the law of value asserts itself, the more capital develops. In other words, let bygones be bygones. However much money the capitalists actually had to lay out for the inputs is simply now a given precondition. Whatever it was, it was. One can't go back and actually transform the inputs. it may be that means of prod sold above and wage goods below value or vice versa. The cost prices in each branch had to have been different than shown in the tableau; and the total cost price may have been different as well. The point is simply whatever the total cost price (sigma k) turned out to have been, it is subtracted from total value to give us total profit which is then divided by total cost price to give us r and correlatively the respective prices of production of kr. None of this seems to get off the ground unless we know the monetary expression for total value. One could not determine the price of gold (assuming here of course that gold is the money commodity) however unless one took into consideration rent, and this would mean that all deductions from surplus value should be taken into account before determining the average industrial rate of profit and relative prices. But this problem is no longer tractable. Plus if profit has to be explained on the basis of the law of value, one must assume a constant monetary expression of value to rule out profit via simple inflation, as Fred has noted. So for Marx's transformation tableau the value of m has to be taken as *constant* and *given*, say $1 as an hour of socially necessary labor time. The value of m would be necessary to determine, along with many other factors, to arrive at the correct average rate of profit and relative money prices; it need not be known however to resolve in logical and abstract terms the contradiction between the law of value and the average rate of profit. But Malthus argued that this contradiction could not be overcome while preserving the law of value (see marx's TSVII, p.174 and 191), and economists whether neo Ricardian or otherwise have all agreed. The critics of Marx walk in the footsteps of the parson who in his critique of Condorcet and Godwin had heaped the greatest calumny ever on the human race. > "I reject this stru..." But doesn't Marx deduce the equilibrium condition for interdepartmental exchange as necessary for not only for the realisation of the produced surplus value but also for the continuing reproduction of capital? How is the repro scheme analysis not structuralist as you have defined it? > > >Rakesh: "there must be some principles of organisation which must be more >or less respected if a system is to reproduce and develop." > >Of course. But the properties and motion of the system cannot be deduced >from the "requirements" of reproduction and development. To understand >them, one needs to focus on the actual "principles of organization" and >other determinants of the system's properties and motion. I suppose that I am not unhappy with the focus there. Best, Rakesh

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