[OPE-L:4187] Re: Re: Part II of Volume 3 of Capital

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Fri Oct 20 2000 - 13:32:05 EDT

Re Paul C's 4186

>Paul C:
>I agree that the examples used by Marx in his price of production
>theory are not reproduction schemes.
>On the other hand, if his tranformation technique were to be both
>consistent and general, it would apply under conditions of
>simple reproduction.

Why exactly are unit output prices changing from unit input prices 

As for generality, this makes little sense to me.

The equalisation of profit rates is very much the result of 
capitalist development. For Marx, the more capital develops, the more 
the average rate of profit becomes the form in which the law of value 
asserts itself. There is this crucial historical dimension to the so 
called transformation.

Now it seems entirely inappropriate to me to analyze a highly 
developed and dynamic capitalist society in which capital markets are 
sufficiently sophisticated that they can actually enable a tendency 
towards the equalisation of profit rates in terms of simple 
reproduction or equilibrium. This is exactly not the kind of system 
in which there would be a tendency towards the equalisation of profit 

In other words, why should a value based transformation be general 
enough to apply to cases in which the average rate of profit itself 
is an anachronism or non entity? Why should it have to conform to 
special assumptions (input prices=output prices) which cannot be 
generalized to a highly developed capitalist society in which the 
tendency towards the equalisation of profit rates actually does 
assert itself?

>The temporalist arguements seem to me to involve finding special
>cases where extended reproduction will cause Marx's transformation
>technique to give the right answer.

No the temporalist approach obviously involves exactly those cases 
which are  typical of capitalist development. Remember Allin's simple 
reproduction scheme, reconfigured to allow for exactly a 
characteristic interperiodic increase in productivity. Such a system 
can be shown to exhibit exactly the small, if not statistically 
insignificant, interperiodic changes in unit prices of production, r, 
s/v that are typical of capitalist reality. This is a realistic time 
path for the system.

Again, it is the invocation of the special, unrealistic, irrelevant 
and anachronistic assumptions of equilibrium or simple reproduction 
which cause Marx's transformation technique to give the wrong answer.

>Nobody will dispute that there are special cases where it works.

Of course it is simple reproduction and equilbrium which are special 
cases where it does not work. Indeed they are cases of the same 
realistic force as the reconquest of the earth by dinosaurs computed 
from ancient DNA.

It is similar to falsifying the universal generalisation of black 
ravens by pointing to the existence of an imagined non black raven in 
a science fiction story. Not the kind of imaginative falsification 
Popper had in mind.

>One does not have to bring time into this, for example if all
>organic compositions are the same it will work.

But this would be an unreasonable assumption to maintain for a highly 
developed capitalist economy. Again, Marx is dropping the vol 2 
assumptions--an economy wide VCC, exchange at value, constant value, 
annual turnover of fixed capital. These enables a closer 
approximation to the dynamic reality of capital accumulation.

>The question
>has always related to the generality of such solutions.
>Those objecting to Marx's technique have produced examples
>where they produce pathological results, positive profits
>with negative surplus value in Steadman's examples.

In the simultaneist method.

>It is not an adequate response to say that there are other
>special cases where Marx's method produces good results.

Again the power of projection. It is not an adequate response  to 
point to the existence of bizarre, irrelevant conditions in which 
there would not even be the principle of the average rate of profit 
as cases where Marx's method produces bad results. It doesn't need to 
produce results in such conditions.

>  Fair
>enough, but you need some response to the critique of lack
>of generality.
>Such a critique would have to be based on some argument
>either about the likelihood of certain classes of examples
>occuring, or from actual empirical observations of how
>often they occur.

This is exactly how I responded to Allin.

All the best, Rakesh

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