[OPE-L:3960] :TheTransformationProblem

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Wed Oct 04 2000 - 23:11:04 EDT

In reply to 3956:

"The case where labour-saving technical progress is proceeding at a
rate g is formally identical.  Again it calls for "marking up" the
past labour input in forming rational plan prices.  There's one twist:
with labour-saving technical progress you'd get the right prices by
using historic labour embodied rather than the VILCs computed in terms
of the current I-O matrix."

Well this is neat. Only if commodities sell at the labor historically
embodied in them, rather than the socially necessary labor time to
reproduce them presently, will the market clear at equilibrium. This is of
course no point at all since the output produced in terms of the VICLs of
the current I-O matrix is not even available to compete.

So this is dynamic in the sense that we have quantities in time subscripts
allowing us to determine unknowns, e.g, equilibrium prices, as they unfold
in terms of one equilibrium state following upon another. A kind of dynamic
comparative statics, I suppose. 

This also has nothing to do with Marx's vision of how the capitalist
process works. 

In your example, the only wine or grape juice available at any point will
have been produced  at the same time, under the same conditions. That is,
built into this example has to be the unrealistic condition that the fixed
capital used in wine or juice production turnover entirely with its
commodity output. 

But what happens one year into wine making (t-1), another more advanced
winery (b) is set up on the basis of technologies which will last longer
than the two year production period while the older winery (a) at the point
of its renewal (t) has recourse to even more advanced technique. Though the
new winery (b) will sell alone at (t+1), both wineries (a and b) will
compete at (t+2). 

In order to ensure amortization of its investment, b will have to have as
much output to sell at (t+1) as possible. This means it will have to resort
to overwork and intensification of the labor process. Hence, the cruel
paradox of machinery. 

All this is obvious once we drop the assumption of the annual or periodic
turnover of fixed capital, which again Marx only used to simplify the
reproduction schema in order to show the *possibility* of growth without
permanent underconsumption; the assumption was not meant as a controlling
methodological postulate. 

 Aside from the already quoted passage which shows  that Marx was not up to
such unrealistic exercises as Wiseacre and Samuelson, consider this one
from later on in Capital 1:

"science and technology give capital a power of expansion which is
independent of the given magnitude of the capital actually functioning.
They react at the same time on that part of the original capital which has
entered the stage of its renewal. This, in passing into its new shape,
incorporates, free of charge, the social advances made while its old shape
was being used up. of coure, this development of productivity is
accompanied by a partial depreciation of the functioning capital; but in so
far as this depreciation makes itself acutely felt in competition, the main
burden falls on the worker, in whose increased exploitation the capitalist
seeks compensation for its loss." p. 754

So the episodicness of technological innovation  is overcome by the
"endogenization" of science and technology over time. This of course is
meant as a reply to 3959

Yours, Rakesh

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