[OPE-L:3968] Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: TheTransformationProblem

From: Allin Cottrell (cottrell@wfu.edu)
Date: Thu Oct 05 2000 - 10:45:25 EDT

On Thu, 5 Oct 2000, Rakesh Bhandari (bhandari@Princeton.EDU) wrote:

Moral depreciation:

> My first answer is the intensity of labor and the magnitude
> of overwork. The paradox is that the higher the rate of the
> reduction of socially necessary labor time, the greater the
> threat of moral depreciation, and the more overworked and
> exploited the proletariat is. Why this was so baffled that
> molehill on the flat plains of bourgeois thought.

I'm going to think about this some more.  Reply coming later.


> disagree. Just think about marx's paean to the bourgeoisie's
> continuous revolutionisation of the productive forces as
> early as the CM. Marx left Prodhoun behind because by
> studying Ure and Babbage, he understood his epoch. Do you
> really think this chap would have wanted to work within the
> framework of comparative statics?

It's not so much a question of what Marx _wanted_ but what he
did.  He certainly "thought dynamically" about various issues,
and talked in terms of continuous change.  That doesn't mean he
was able to offer an actual dynamic analysis of those issues.


> But Marx is talking (we're now looking at vol. 3, ch. 9) about a
> hypothetical equilibrium state in which the rate of profit is
> equalized for all capitals. "
> Agreed. 
> " There's simply no (temporal) change going on in the main
> argument of this chapter."
> [T] mistake you are making here is thinking that Marx wants
> to derive the prices at t+1 via a determination of the
> average rate of profit.

No, I don't see any "t"s in this analysis.  

> Marx's main concern is not price determination. It is to
> solve a major problem which bedeviled Ricardian value
> theory.

False opposition.  The only way for Marx to solve that "major
problem" (as he saw it -- as you know Paul and I think it's not
so major after all) is to show the precise theoretical
relationship between the system of values and the system of
prices of production.  Hand-waving won't do: that's just what
Marx claims is inadequate about Ricardo's own treatment of the

>  "Dynamic stuff is off the agenda for the moment.  
> When we get past the main transformation argument we get a whiff
> of dynamics: "In spite of the great changes occurring
> continually, as we shall see, in the actual rates of profit
> within the individual spheres of production..."  Note: "as we
> shall see": this will come later, it's not germane to the
> transformation argument as such."
> Notice that you didn't give the page numbers here. Why? 

No particular reason.  Moscow ed., p. 166.

> Simply because Marx here is assigning a wholly different
> validity to the Ricardian law of value than you and Paul C
> do.
> ... Marx is not saying that price in any snapshot of time is
> determined by value (there's that mediation of the average
> rate of profit after all) but rather that changes in
> relative prices over time can on good approximation be
> accounted for by changes in the underlying values of the
> commodities in their natural units.

That is, precisely what Ricardo said.  Have you read his

> "In the given theoretical context, then, a difference between
> input and output prices for a given commodity can only be a
> symptom of an incomplete analysis."
> 1."Then"?? did I miss the proof, argument here? 

In using the term "incomplete" I'm assuming a background
knowledge of the idea that Marx's tableau represents the first
step of an iterative solution (Morishima, Shaikh and others).

> 2. Note that you have said incomplete, not logically
> incorrect, as Ajit does. That is, you seem to be agreeing
> that Marx was correct not to have the inputs in the second
> tableau in prices of production because the very category is
> not derived until the completion of the tableau.

In step 1 of an iteration the inputs must in values.  There's
also the simultaneous equations solution, though (which jumps
straight to the result upon which the iteration converges, as
Lefteris has pointed out by analogy with the Keynesian

> 3. We seem to be both agreeing that there could be a third
> tableau, but as I shall point out, such a tableau is not
> needed for Marx to complete his reversal of the Malthus
> critique.
> Which is to say Marx could now concoct a third tableau in
> which the cost price is no longer equal to c+v....

It's not a matter of "concocting" anything: it's a matter of
replacing the cost-prices you started with, with cost-prices
revalued in terms of the (first-step) prices of production you
just derived.  And so on.

> It simply does not matter....

That's what Marx said, off-handedly.  We know now he was wrong.  
The properties of the fully-transformed system are subtly
different from those Marx asserted on the basis of a first-round
transformation.  Have you looked at, say, Sweezy's exposition of
Bortkiewicz?  (A clear, relatively non-technical treatment.)  
Whether this "matters" in a larger theoretical sense depends on
how seriously you take the equalized-profit benchmark.  Marx
took it seriously.

> However in this hyothetical third tableau total value will
> equal total price, total profit equal total surplus value.

In the nth such tableau these results will, in the general case,
not both hold.  This is very well known.

> 4. What you seem be saying is that the only way to modify
> the cost prices in a non arbitrary way is to do so on the
> basis that prices of production are the same for the inputs
> as the outputs--that is, to determine the prices of
> production of the inputs on the basis of the IDENTICAL data
> as the outputs, thereby creating a replicating system as if
> the economy were a crystal.

You can if you wish pack in all sorts of real-world dynamics,
try to analyse the transformation as a real-time process with
ongoing technical change and so on.  But it's clear that's going
to make the analysis _much_ more difficult, and it's simply
changing the subject in relation to what Marx tackled in vol 3
ch 9.

>  " It has nothing to do with dynamics, because no dynamics
> have been posited or specified.  What is it that is supposed
> to be "changing" that accounts for any such difference? "
> We are only working on the assumption that the I-O matrix in
> the previous period from which the inputs came is not
> identical to this one by which the outputs will be produced.
> There are a million reasons why we can expect inter-periodic
> change. What is supposed to be constant that does not allow
> for any change?

Let me try again.  Marx's thought experiment is this:  Consider
a state A in which organic composition differs across sectors
and commodities exchange at their values, and consider a state B
in which everything that can be held the same is held the same,
except that all capitals gain a common rate of profit -- what is
the relationship between these states?  He makes a pretty good
stab at the problem, but his solution can be faulted in this
way: His state B is a hybrid, in that it represents an economy
in which all commodities have exchanged at their values right up
till the beginning of the current "period" (inputs were
purchased at their values) but "now", all of a sudden, today's
profit rates are equalized.  Almost all comentators on Marx
(sympathetic and unsympathetic) have argued that the second term
in the hypothetical comparison should be an economy in which
profit rates have "always" been equalized.  (Note, state A is
implicitly one in which commodities have "always" exchanged at
their values, since input prices = output prices = values.)

So how do you figure what prices would look like in an economy
where profits have "always" been equalized?  Either you follow
Marx in starting from values, but continue the iteration till
prices of production stop changing significantly from one step
to the next, or you solve the simultaneous equations a la

Allin C.

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