[OPE-L:3942] Re: Re: The Transformation Problem

From: Tsoulfidis Lefteris (lefteris@uom.gr)
Date: Tue Oct 03 2000 - 03:58:40 EDT

Ajit Sinha wrote:

Many scholars have argued that the divergence of total profit from

> total surplus value or the total prices  of  production  from  the
> total value is not all that damaging for Marx's basic  proposition
> about exploitation, since it can be proven that positive profit is
> possible if and only if  there  is  positive  surplus  value  (see
> Wolfstetter, 1973;  Morishima,  1973,  Morishima  and  Catephores,
> 1978). Recently Sinha (1991, 1996) has argued in favour  of  using
> the condition that  total  value  is  equal  to  total  prices  of
> production as an outside constraint  on  the  system,  given  that
> values are substance and it is neither created or destroyed in the
> process of exchange.  Moreover,  the  system  must  be  put  in  a
> balanced state since only  in  a  balanced  state  the  prices  of
> production could actualise. In this  case,  Morishima  (1973)  has
> shown that Marx's average rate of profit will come out to  be  the
> correct solution if there is zero consumption by the  capitalists,
> ie. all the surplus value is reinvested or  accumulated.  However,
> this, in general, will not be true  in  the  case  of  capitalists
> consuming a part of the surplus value. Shaikh (1984)  argued  that
> this happens because capitalists' consumption becomes part of  the
> revenue and falls out of the circuit  of  capital.  Since  we  can
> explain the divergence of prices of production from values as well
> as the divergence of total profit from total surplus value on  the
> basis of the value analysis  itself,  the  transformation  problem
> should be considered solved.
> Note: the reader should know that I'm not convinced with Shaikh's argument. The
> point has been left uncriticized there. Ajit Sinha

In my view the transformation problem (that you summarized in your posts) has been
discussed extensively in the decades of 1970's and early 1980's and the solution
proposed independently by Morishima (1973), Okishio (1973?!) and Shaikh (1973,
1977, 1984) deals with the issues of logical consistency and all that in (my view)
a satisfactory way. In addition the solution by Shaikh (1984) includes also a
discussion of the circuits of revenue and capital which present (besides the
mathematical) a conceptual explanation of the possible divergence of total surplus
value and profit. These two magnitudes normally are expected to differ from each
other and only in the improbable case that there is no circuit of revenue (i.e. the
economy expands along a von Neumann ray) the two totals equal to each other. I am
very much interested in your critique to this thesis.

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