[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.

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 
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 

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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