# [OPE-L:4002] transforming the inputs (was no subject)

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Sat Oct 07 2000 - 01:16:59 EDT

```re 3995

>
>And I'm saying (this _is_ a response, though you may not like it
>or agree with it) that the Malthus/Ricardo problem cannot be
>resolved if we can't specify precisely the theoretical
>relationship between (a) the hypothetical system in which prices
>correspond to values and (b) the hypothetical system in which
>prices correspond to prices of production.  At some points I'm
>getting the impression that you agree Marx didn't quite manage
>to do this; at others you seem to deny this.

Allin,
I am quite happy that you have responded to me. Let's leave TSS and
everyone else out of this but Marx, you and me. And I shall be quite
simple and as brief as I can.

Please go to the tableaux Capital 3, p.256.

Total cost price=\$500, assuming the monetary expression of one hour
of labor time is \$1.

But the inputs are not transformed.

Yet what happens if the profit rate had been equalized in the previous period?

Remember \$500 is the total value of the means of production and wage
goods bought as inputs.

If value had been redistributed in the previous period to equalize
profit rates, the total value of those means of prod and wage goods
simply could not have changed as a result thereof--the logic of this
is clear from looking at the second tableau. If they had been bought
at prices of production, the total cost price would remain  \$500 for
the capitalists in this period.

However, knowing this does not allow one to modify the cost prices in
the individual five branches because we don't know whether means of
prod sold above value and wage goods below or vice versa. And even if
we did, strictly speaking, we still can't transform the inputs.

So if we can't transform the inputs, we can't modify the cost prices
of the individual branches but the total cost price will have to
remain the same as in the second tableau; more importantly r would
have been unchanged had we been able to write up a third tableau with
modified cost prices for the respective branches.

Moreover, if total value and total prices of production and total
surplus value and total profit are equal in the second tableau, there
is no way that they could become unequal from the transforming of the
inputs. Logically speaking, transforming the inputs--that is
redistributing the \$500 used to purchase the inputs so that the
sellers of those inputs would have enjoyed the same profit rate--can
in no way affect the two equalities in this period. We still have the
same total value and total cost price and total profit and total
surplus value from the second tableau; they are necessarily
unaffected by transforming the inputs.

So what does the inability to transform the inputs mean? Only that we
can't figure out the k or cost price for each industry and thus the
kr for the outputs of each branch. For people like Ajit and
Borkiewicz, this is an admission of failure for a theory of value has
to be explain, even determine, relative prices. And this leads to an
embrace of another method by which the labor theory of value is
rendered redundant (whether it can actually determine relative prices
is another question of course).

Marx has indeed not provided us with a complete solution to price
determination.
I do not wish to evade this.

In search of a price theory, this has led most Marxists to simply
abandon Marx's own tableaux. They don't even appear in most exegeses
of his work (Sweezy, Catephores, even Duncan who also claims that
there is a logical error in the second tableau though I simply don't
understand why Marx is expected to have had the inputs already sold
in terms of a category which had not been been derived rigorously
until the completion of the tableau).

But Marx was not after a price theory; r will not only remain
unchanged however the respective cost prices are modified, r will
still be determined (and this is obviously the main point) by the law
of value in the same way.

Modifying the cost prices--that is redistributing the value of the
inputs in such a way that profit rates would have been equalized
among the sellers of those inputs--can in  no way change the value
determination of r or break the two equalities in this period.
However the cost prices in the individual branches should be
modified, we still have the same total value from the second tableau,
and the same total cost price, which is subtracted from the former to
give the same total profit, divided then by the same total cost price
to give the same r, now however multiplied by individual k's which
are unknown. So we also have unknown kr's as a result of having to
transform the inputs.

*But despite this underdetermination of the k's and kr's, Marx's
analysis is NOT incomplete, for he has indeed completed the problem
he set himself--the reversal of Malthus' critique of Ricardian value
theory, the resolution of the contradiction between the law of value
and the principle of the average rate of profit.*

He has not provided us with an instrument however to determine
prices. But the explanandum of value theory is no longer prices. The
theory of value simply now has a different focus; indeed the theory
of value no longer claims even to be able to determine relative unit
prices.

Those who are trying to go back to price theory are basically trying
to stuff the Marxian system back in the old bag, much like many have
tried to stuff the Darwinian system back into one teleological bag or
another and thereby abort the revolution in human thought.

Forget prices.

All the best, Rakesh
```

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