[OPE-L:4288] Re: Re: Re: Re: Part Two of Volume III of Capital

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Thu Oct 26 2000 - 00:07:25 EDT

re Allin's 4281:

>One more thought on the matters we've been debating.
>You're insistent upon "realism".  That's reasonable in itself,
>but I'd point out that your commitment to realism is selective. 
>You totally reject simple reproduction as too unrealistic to
>bother with, yet you're willing to accept a perfectly equalized
>rate of profit, at least for the sake of argument.

You also wrote further below:

>My inclination is to minimize the "transformation problem" along
>the lines proposed by Farjoun and Machover in their "Laws of
>Chaos" (Verso, 1983), rather than trying (for the nth time, and
>quite hopelessly) to reverse the historic judgment enacted upon
>the transformation (on the maintained hypothesis of an equalized
>rate of profit) by the economics profession since Bortkiewicz.

I need not make the argument from the perspective of realism. Let's 
make it matter of formally interpreting Bortkiewicz.

It's a mathematical result after all; it has to be interpreted.

I got lost in the Ingrao and Israel analysis of Wald (working now on 
learning some mathematical techniques), but the point is clear: Wald 
analyzed in formal terms the conditions which must hold for there to 
exist an equilibrium solution to the price problem.

One could then interpret Bortkiewicz's finding as simply implying 
that Marx's transformation/value theoretic determination of r can 
hold only if prices are not in equilibrium. If the goal of economic 
theory had not been the determination of the vector of equilibrium 
prices,  Bortkiewicz's finding would have been considered 
intrinsically uninteresting since it is obvious that this restriction 
would never be imposed in a dynamic capitalist economy, anyway. 
(In the Freeman and Carchedi volume, Michele Naples makes some quite 
brilliant comments in this regard, pp. 100-1).

It comes back to Alejandro's point why Sweezy and the economics 
profession did not interpret Bortkiewicz that way.  The 
transformation problem is indeed a problem in the sociology of 
(bourgeois) knowledge.  The question comes back to 1)why the 
determination of a vector of equilibrium prices is considered the 
goal of economic theory  and 2) why Bortkiewicz's finding was 
interpreted as demonstration of a fatal logical error, instead of a 
specification of the restrictions on a value theoretic 'solution' to 
the average profit rate. The answer to both questions of course is 
the same...

>You may say, "But the equalized rate of profit is the terrain of
>the argument between Ricardo and Malthus -- Marx had to accept
>it, in order to intervene effectively."  I respond: One always
>has a choice between (a) accepting one's opponents' chosen
>terrain for the sake of argument, and making the best of it, or
>(b) stating a case for the principled rejection of one's
>opponents' terrain of argument.

It's not a choice. Marx does both.

>It's my impression that some real capitalist economies over some
>(relatively brief) historical periods may have more or less
>approximated simple reproduction;

But Marx's point is exactly that in early capitalism, capital markets 
had not developed to serve as a mechanism for the equalisation of 
profit rates. Said tendency is the *historical result* of a dynamic, 
growing capitalist system in which BTW the condition input 
prices=output prices simply has no chance of realisation. Therefore 
the restriction on the solution itself is of no interest,  an 
intrinsically uninteresting finding which makes no real positive 
contribution to economic knowledge.

>on the other hand, I don't
>believe that _any_ real capitalist economies over any historical
>period have closely approximated an equalized rate of profit.

Both the tendency towards the equalisation of profit rates and the 
search for surplus profit (grossmann, mandel) are strengthened by the 
development of capitalism; they are both its historical results, both 
the consequence of the search for maximum profit.  Why does Marx 
abstract from the latter in the transformation? Simply because he 
wants to show that equalisation itself gives rise to those estranged 
forms in terms of  which bourgeois economists, apologists that they 
are, happily base their analyses. So near the end of chap 10 Marx 
highlights this immanent critique of classical economics.

Unlike Ajit and Duncan, I do not read Marx here saying that 
competition is pushing prices towards their long term equilibrium (i 
think these are the passages Duncan has in mind, he has not given any 
page numbers); rather he is saying that due to competition, the 
equalizing of the profit leads to the obscuring of the determination 
of economic magnitudes by value, explaining why economists are so 
happy to lose themselves in the categories derived from and 
constitutive of everyday bourgeois practice.

Which to me suggests that one has a better chance of understanding 
Marx if one works from the sociologist Bourdieu (recalling my class 
with Loic Wacquant and reading of Postone) than Marxist economists:

"Habitus is the product of the work of inculcation and appropriation 
necessary in order for those products of collective history, the 
objective structures (e.g. of language, economy, etc) to succeed in 
reproducing themselves more or less completely, in the form of 
durable dispositions, in the organisms (which one can, if one wishes, 
call individuals) lastingly subjected to the same conditionings." 
(outline of a theory of practice, p.86)

In fact, one may even have a better chance of understanding Marx's 
analysis of these estranged forms if she begins with the pompous 
Heidegger's jargon of publicness and everydayness (to recall my 
philosophy course with Hubert Dreyfus years ago).

Yours, Rakesh

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