[OPE-L:4346] Re: Technical change and general truths

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Sat Oct 28 2000 - 13:40:27 EDT

re 4344

>I hope I'm not being unfair in juxtaposing these two snippets from recent
>posts by Steve K and asking him to comment:
>to Andrew K [#4218]
>I don't per se object to open-dimensional analysis, by the way: strictly
>speaking, capitalism is open-dimensional because technical change keeps
>generating new products ... But I would object to it if it were undertaken
>solely to avoid the TP.
>on Rakesh [#4228]
>	It is possible to characterise the "simultaneist" analysis of the
>	transformation problem as a dynamic solution in which all rates of
>	are set to zero. The conclusion of all these analyses is that the
>	theory of value cannot be right. What you are alleging is that,
>	effectively, the labor theory of value is only correct for positive
>	of technical change, etc. If so, then it is not a general truth, and
>	approach to eliminating the transformation problem is as much a
>	of the labor theory of value as any simultaneist formulation. This
>is the
>	point I believe that Allin was trying to get through to you (and as
>	know, I believe it is untrue at any rate of change).
>To take the second except first -- Steve, would I be right in thinking that
>by "general truth" you do NOT mean a claim like "the square root of two
>cannot be expressed as the ratio of two integers"?
>But in that case, what *do* you mean: a statement true about capitalism in
>If so, then isn't the claim that the LTV is not a general truth about
>capitalism belied by your comment in the earlier post?
>Here I'd like to take you up on what you mean by a "positive rate of
>technical change" [second post]; I'd guess that you mean "one which keeps
>generating new products" (and deleting older ones?) [first post] -- in which
>case I suppose a *negative* rate of technical change would be one in which
>*old* products were revived (and newer ones deleted).
>The point is that while a negative rate of technical change in this sense is
>clearly logically conceivable (I've just done it), I simply can't accept
>that such a thing is compatible with the continued existence of capitalism.
>One of the most striking features of capitalism is that it is the first
>social system in which the ruling class has an indispensable need for
>continual technical innovation.
>I think I'd support a claim that this is not only because of the undoubted
>competitive motivation, but also because innovation helps legitimate the
>At all events, I'm sure that if society was to suffer technical regression,
>it would have to suffer social regression as well, e.g. revert to feudalism
>or slavery.


I think what Steve is saying is that Marx's value theory has to be 
generalized to the case of general equilibrium if his fellow 
economists are going to take it seriously (even if the case of 
general equilibrium can in no conceivable way be generalized to the 
case of capitalism). Of course the whole tradition stands on the 
belief that Marx himself thought all economic problems should be 
solved in terms of constant values or stationary prices. But Marx 
never laid this out as a controlling methodological postulate; he 
only thought that he would be able to handle the complex problem of 
how surplus value is realized if he simply assumed constant values 
(ie. no technical change), annual turnover of fixed capital, exchange 
at value.  Then Marx's pointing out that the inputs would have to be 
transformed into prices of production now that the category has been 
derived was read as Marx's own wish that there again should be 
constant values or unit prices of production into which the inputs 
and outputs should be simultaneously transformed. So then vol 3's 
transformation and vol 2's simple reproduction were married 
(eventually only the assumption of equilibrium prices was kept from 
simple reproduction). Marx is explicit in vol 2 that he is making 
completely unrealistic assumptions. So the 
Bortkiewicz-Sweezy-Foley-Cottrell vol 2-3 hybrid models are therefore 
all based on completely unrealistic assumptions (constant values) 
which had been made for the purposes of cognitive tractability, but 
they do not mention this; it's not even pointed out that there is a 
transformation problem because they have decided to retain an 
unrealistic assumption which Marx only made for the purpsoes of 
cognitive tractability in the study of an unrelated problem. This is 
simply because for economists constant value and constant or 
stationary unit prices of production are not a simplfying assumption, 
as they were for Marx; they are methodological postulate built into 
their very understanding of what it is economic science is trying to 
prove or solve. So the only ones who make such assumptions are those 
who have already have general equilibrium theory in their head. And 
once the transformation problem is reconfigured as a problem in 
general equilibrium theory, they finally have something on which they 
can respectably work in economics departments even if this means 
turning Marx's value theory into an arbitrary or logically invalid 

All the best, Rakesh

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