[OPE-L:4371] Re: Re: Re: Re: Technical change and general truths

From: Steve Keen (s.keen@uws.edu.au)
Date: Tue Oct 31 2000 - 06:37:26 EST

Sorry Rakesh,

But I regard this particular argument of Marx's:

"As Fred says, the macro magnitudes are determined  prior to, and are 
determinative of, the micro magnitudes of the rate of profit and the 
prices of production (see also Blake, 1939; Mattick, 1983)."

(for once I can't quickly locate the original by Marx, but I do know it)

as one of the greatest kludges he ever attempted to pull. That capitalism,
which is inherently a competitive class system, should somehow operate as a
true collective of capitalists as to the division of surplus-value, I
regard as pure nonsense.

I'll leave it to Allin or Paul (if any of them have the energy) to delve
into your arithmetic below.

At 11:56 PM 10/29/2000 -0800, you wrote:
>>On Sun, 29 Oct 2000, Andrew_Kliman wrote:
>>>  The following, which Steve Keen wrote in OPE-L 4349, is false:
>>>  "The TSS approach to this is to dismiss consideration of a state in which
>>>  rates of [technical] change equal zero, and provide numerical examples
>>>  where the twin propositions above cannot be contradicted.
>>I think you have to cut Steve a little slack here, given that he
>>was engaging with Rakesh, whose special version of TSS (if it is
>>a version of TSS; maybe it isn't) does insist upon technical
>>change as a condition of maintaining Marx's two equalities...
>>except that it turns out that technical change is not in fact
>>sufficient to do the trick... (I feel saner since I withdrew
>>from that debate.)
>I am not sure why you don't think it did the trick.
>But let's play the game of simple reproduction. Let me ask that you 
>or Steve consider this one last reply before finally withdrawing; of 
>course if your sanity is at stake, please ignore this.  Of course I 
>have already suggested this repsonse to you in private 
>correspondence, so you can voice the same objection which you have 
>already expressed.
>take the traditional approach to the problem. No technical change at all!
>  The only difference is that I am keeping one invariance condition: 
>the total value/price remains the same in the unmodified and modified 
>  The changing of the price of the inputs should  have no effect on 
>the *value of the means of production consumed* in the ouput or the 
>new value added by labor since we are maintaining the same number of 
>workers (the quantity of wage goods used as inputs to hire workers is 
>not changed by the transformation of the price of the input wage 
>So total value/price remains 875 after the transforming of the inputs.
>The initial value table for Bortkiewicz-Sweezy-Cottrell:
>	  c	  v	  s     value
>    I  225.00   90.00   60.00   375.00
>   II  100.00  120.00   80.00   300.00
>  III   50.00   90.00   60.00   200.00
>Tot.  375.00  300.00  200.00   875.00
>A transformed scheme with a uniform profit rate in simple reproduction
will be
>(1) 225x+90y+r(225x+90y)=225x+100x+50x
>(2) 100x+120y+r(100x+120y)=90y+120y+90y
>(3) 50x+90y+r(50x+90y)=r(225x+90y)+r(100x+120y)+r(50x+90y)
>(4) 875- (225x+100x+50x+90y+120y+90y)=r(225x+90y)+r(100x+90y)+r(50x+90y)
>That is, the first three equations set the system in simple reproduction.
>but here's my innovation:
>The fourth equation says that the mass of surplus value [total
>  total cost price] does not equal but DETERMINES WHAT THE BRANCH PROFITS
>  TO.
>This is the meaning of the second equality: the mass of surplus value 
>determines  the sum of the branch profits. This is the macro part of 
>Marx's value theory.
>As Fred says, the macro magnitudes are determined  prior to, and are 
>determinative of, the micro magnitudes of the rate of profit and the 
>prices of production (see also Blake, 1939; Mattick, 1983).
>The iteration now follows as such:
>Marx's first-step transformation takes the given total s
>and distributes it in proportion to (c+v).  Thus:
>	  c	  v    profit   price   pvratio
>    I  225.00   90.00   93.33   408.33   1.0889
>   II  100.00  120.00   65.19   285.19   0.9506
>  III   50.00   90.00   41.48   181.48   0.9074
>Tot.  375.00  300.00  200.00   875.00   1.0000
>Keeping total value/price the same (875), we apply the PV ratios to the
>	  c	  v   profit    price   pvratio
>    I  245.00   85.56   86.60     417.  1.112
>   II  108.89  114.07   58.41     281   .9379
>  III   54.44   85.56   36.68     177   .885
>Tot.  408.33  285.19   181.5     875   1.0
>Then, following your lead,  we keep iterating until we arrive at 
>simple reproduction or the equilibrium state in which the economists 
>are so interested (how would I solve the above equations 
>simultaneoulsy? I don't have time for 45 or so iterations nor the 
>computer skills to write the algorithm.)
>  It is obvious that the mass of surplus value and the average rate of 
>profit will have changed from the value scheme. Only the total in the 
>value/price column will remain the same (875).
>The break with the Bortkiewicz-Sweezy-Cottrell tradition here is in 
>the so called equality I have decided to break. Unlike them, I am 
>keeping the total value/price sum the same in the unmodified and 
>modified schemes (875).
>*I do not understand the second equality to be an invariance 
>condition, so I am not breaking it.*
>So even if we transform the inputs into the same prices of production 
>as the outputs (if this is the kind of thing one has to do to solve 
>the transformation problem), one can still get a modified scheme in 
>simple reproduction (if this is what has to be demonstrated to 
>silence the critics).
>Total value remains the same (875), and the sum of surplus value 
>(total value- total cost price) DETERMINES the sum of the branch 
>In the iteration, this is simply done by modifying the inputs on the 
>basis of the PV output ratios and then subtracting the sum of these 
>new modified inputs from total value/price of 875. This gives the 
>bottom of the total profit column, which is then divided by the 
>modified cost prices to yield r (average rate of profit) which is 
>then applied to the modified cost prices in each branch to generate 
>new branch prices of production and PV ratios which are again applied 
>to the inputs. This is continued until the system settles into simple 
>If we hadn't modified the inputs, we would have gone wrong in the 
>determination of the rate of profit and the prices of production. 
>Marx was right about this.
>My simple solution can only be had if we maintain the second equality 
>as I define it. So not only have I maintained both equalities. I have 
>shown why they must be maintained in order to carry out the 
>transformation in an iterative manner.
>I know that I have defined the second equality in a radically 
>different manner than all commentators on the transformation problem. 
>But this seems to me exactly what Marx meant by the sum of the branch 
>profits being determined by the mass of surplus value.
>If we want to stick to simple reproduction/equilibrium prices, then 
>the entire transformation debate has been conducted on a 
>misunderstanding of the meaning of second equality, which is 
>correctly expressed in equation (4)
>The only way to defeat my argument is to show that I have 
>misinterpreted what Marx meant by the sum of surplus value equaling 
>the sum of the profits in the different branches. Was it meant as 
>invariance condition between the unmodified and modified scheme  or 
>is the mass of surplus value determined after the modified cost 
>prices have been subtracted from total value?
>If it's the former, the transformation problem remains; if it's the 
>latter, then I have presented a reasonable solution of the 
>transformation problem under the static conditions which resemble 
>general equilibrium theory. Of course I think such a solution is of 
>absolutely no real interest in the understanding of capital anyway.
>All the best, Rakesh
Dr. Steve Keen
Senior Lecturer
Economics & Finance
University of Western Sydney Macarthur
Building 11 Room 30,
Goldsmith Avenue, Campbelltown
PO Box 555 Campbelltown NSW 2560
s.keen@uws.edu.au 61 2 4620-3016 Fax 61 2 4626-6683
Home 02 9558-8018 Mobile 0409 716 088
Home Page: http://bus.macarthur.uws.edu.au/steve-keen/

This archive was generated by hypermail 2b29 : Tue Oct 31 2000 - 00:00:12 EST