[OPE-L:4153] Re: RE: Part Two of Volume III of Capital

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Thu Oct 19 2000 - 01:14:19 EDT

Duncan K Foley (dkf2@columbia.edu)
Mon, 15 Jan 1996 12:34:48 -0800

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If you write down an explicitly disequilibrium model with time subscripts
differentiating commodities at different times, thus allowing for prices
of inputs and outputs to differ, one solution will be the equilibrium
prices where the inputs and outputs have the same (relative) prices. This
is also the easiest solution to analyze, and its existence is a good
indication that the equations make sense. As an historical aside, this
seems to be the approach Marx took, for example, in his work on
reproduction schemes.
As I have tried to show in my previous post, this reference to 
equilibrium prices in the reproduction schemes turns a  justifiable 
simpflying assumption (contant value) in the context of the analysis 
of a circulation problem into a controlling methodological postulate 
for all economic analysis.  As I have already pointed out, Marx is 
explicitly talking about why prices of production change in vol 3, 
part 2: the first reason, a change in the general rate of profit, 
manifests itself clearly only in the long run, leaving us to assume 
that manifest shorter term changes in prices of production are caused 
by changes in the values of the commodities themselves. There are 
countless references to changes in productivity, making it 
unbelievable that Marx had not abandoned the assumption of constant 
value or unit prices. There is simply no methodological reason to 
import the completely unrealistic, albeit simplfying, conditions from 
vol 2 into volume 3. And if Marx's value-theoretic equations for r 
and prices of production make no sense due to the misuse of 
assumptions  retained because they give us "the easiest solution to 
analyze", why should we leave Marx's value theory vulnerable on such 
(flimsy) grounds?

Is it not possible to save honor all sides?  There is indeed a 
transformation problem in terms of the easiest solution to analyze 
(equilibrium prices or simple reproduction); there need be no 
transformation problem in conditions which pay the least respect to 
reality, however more difficult these realistic conditions may be to 

Would any other theory but a revolutionary critique of bourgeois 
society be thought to have fatal logical problems if only the 
introduction of reality was needed for it to make sense?

All the best, Rakesh

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