**Next message:**Allin Cottrell: "[OPE-L:4376] Re: Re: Re: Re: Technical change and general truths"**Previous message:**Rakesh Narpat Bhandari: "[OPE-L:4374] Re: Re: Re: Re: Re: Re: Re: Technical change and general truths"**In reply to:**Rakesh Narpat Bhandari: "[OPE-L:4374] Re: Re: Re: Re: Re: Re: Re: Technical change and general truths"**Next in thread:**Andrew_Kliman: "[OPE-L:4377] Re: Re: Re: Technical change and general truths"**Messages sorted by:**[ date ] [ thread ] [ subject ] [ author ]

Forget it Rakesh, You're never going to convince me on this, and I'm never going to convince you. Cheers, Steve At 03:20 PM 10/30/2000 -0800, you wrote: >Re 4373 > >>Marx used it to "collectivise" surplus before undertaking the >>transformation, Rakesh. That, to my mind, is a kludge. > >Steve, you first argued that Marx assumed that capitalists operated >as a true collective which decided to share surplus value equally >among themselves. As a Marx expert you were not embarrassed by this >characterization. I reminded you that Marx assumed that as >capitalists seek to make the maximum profit, their *competitive* >behavior would engender a tendency towards the equalisation of profit >rates. The question for Marx was what the magnitude of that equalized >profit rate would be. As a Marx expert you have doubtless heard it >said that Marx criticized Smith and Ricardo for failing to understand >that competition itself could not explain said magnitude. > >Now you do not blame the capitalists but Marx for collectivizing >surplus value. Do note the unsubtle shift in your position. > >Yes, this is exactly what Marx does. Now *why* is it a kludge, >whatever that means? Marx's argument is that the individual >capitalists cannot be concerned with the total surplus value in the >system; they are only concerned with making the greatest profit on >their capital investments. This will lead to an equal apportioning of >the total surplus value. > >But why is it a kludge for Marx to define that mass of surplus value >as total value-total cost price/total cost price? > >Are you suggesting that there is some sort of illicit holism in >Marx's method? If so, this is indeed an interesting criticism, and >leads us to the heart of the macro part of Fred's method. > > >>As for your arithmetic, if you want to get my interest and undertake the >>intellectual task to which you seem to aspire, restate your entire system >>as a set of ordinary differential equations, and then I will take an interest. >> >>Steve > >My goodness, Steve, you just told me that transformation has to be >generalized to cases with zero rates of change. So then I try to do >it, and now you tell me to put it in differential equations. Wow! > > >If I were still trying to convince you that inputs should be >transformed into different unit prices of production than the >outputs, then I would need to do this. But you have closed your ears. > >So I am making another criticism in terms of simple reproduction. > > >The transformation debate has been conducted on a misunderstanding of >the two equalities which need to hold from the unmodified so called >value scheme to the modified so called price scheme. > >the first equality is that the sum of the output prices in both the >unmodified and modified scheme should equal the same total value >(which is 875 in the bort-sweezy-cottrell scheme). > >the second equality is not an equality but a determination: the mass >of surplus value determines the sum of the branch profits. > >Since the mass of surplus value is defined by Marx--as I have >shown--as total value, less cost price, the modification of cost >prices due to the transformation of the inputs means that the mass of >surplus value and thus the average rate of profit and branch profits >will indeed be different in the transformed so called price scheme >than in the unmodified so called value scheme. > >One will indeed go wrong if one does not transform the inputs and >thereby modify the cost prices. > >Now take what Allin has given us: >_______________ >The initial value table: > > 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 > >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 >___________________ >Now what I am saying is simple. > >1. Apply the PV ratios to the inputs. >2. Sum the new modified cost prices, the new totals in the c and v columns. >3. Subtract the total modified cost prices from the same total value of 875 >4. Divide this sum of modified SURPLUS VALUE by the modified total cost prices, > given in the second step, to arrive at r >5. Multiply the branch cost prices by this new r to arrive at branch profit. >6. Add each branch profit to each branch cost price to arrive at prices of > production for each branch. >7. Determine new PV ratios on that basis. >8. Apply the PV ratios to the inputs. >9. Iterate until you arrive at equilibrium. > >the final tableau will have the new output prices equal the same >total value in the unmodified scheme of 875. > >the sum of surplus value will determine the sum of the branch >profits. This is implied in steps 4 and 5. > >Both equalities as Marx, not Bortkiewicz and almost everyone, meant them! > >the same procedure can be put in simultaneous equations. > >(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) > >the invariance condition is that the sum of output prices remains >determined by the total value in the system of 875. > >I have shown that the transformation debate has been conducted on one >questionable assumption (the inputs should be transformed into the >same prices of production as the outputs) and a misinterpretation of >what Marx meant by the sum of surplus value equalling (DETERMINING!) >the sum of branch profits. > > >All the best, Rakesh > > > > > > > > > > > > > > > > > > > >> >>At 10:11 AM 10/30/2000 -0800, you wrote: >>>re 4371 >>>>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. >>> >>>Steve, Marx is saying that it is exactly by inherent competition in >>>search of the maximum profit that capitalists tendentially come to >>>share equally in the mass of surplus value which the working class as >>>a whole produces (there are of course tendencies working towards the >>>disruption of equalisation from which we abstract at this point.) >>> >>>It is the linchpin of Marx's critique of Smith and Ricardo of course >>>that competition itself cannot determine the magnitude of the >>>resultant average rate of profit . This is determined behind the >>>backs of the capitalists in terms of the total value produced, less >>>total cost price/total cost price. >>> >>>The macro part of Fred's method is perfectly sound. >>> >>>Now note what happens when we keep to Marx's definition of surplus >>>value: total value-total cost price. I have already provided the >>>quote. >>> >>>It becomes impossible to maintain that the mass of surplus value will >>>remain the same after the inputs are transformed into prices of >>>production and cost prices modified thereby. It becomes impossible to >>>assume that Marx meant for there to be an invariance condition such >>>that the same mass of surplus value will determine the sum of branch >>>profits in both the unmodified so called value scheme and the >>>transformed so called price scheme. >>> >>>What then is the meaning of the so called second equality? It means >>>that the sum of surplus value not only has to be determined prior to >>>but also itself determines the sum of branch profits. >>> >>>Once one understands the second equality in such terms, it's a matter >>>of solving the following set of transformation equations. >>> >>>And here are the transformation equations for the >>>bort-sweezy-cottrell value scheme: >>> >>> >>> >>>(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) >>> >>>The left hand in the 4th equation gives us the mass of surplus value >>>(total value, less modified cost price); the right hand of this >>>equation has the mass of branch profits set equal to it. The second >>>equality is maintained. total value has been held invariant. >>> >>>solve for x, y, and r. I took a few steps via an iterative method. >>>How would one do it with the less cumbersome method of matrix algebra? >>> >>>all the best, r >>> >>> >>> >>> >>> >>> >>> >>> >>> >>> >>> >>> >>> >>> >>> >>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 >>Australia >>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/ > > 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 Australia 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/

**Next message:**Allin Cottrell: "[OPE-L:4376] Re: Re: Re: Re: Technical change and general truths"**Previous message:**Rakesh Narpat Bhandari: "[OPE-L:4374] Re: Re: Re: Re: Re: Re: Re: Technical change and general truths"**In reply to:**Rakesh Narpat Bhandari: "[OPE-L:4374] Re: Re: Re: Re: Re: Re: Re: Technical change and general truths"**Next in thread:**Andrew_Kliman: "[OPE-L:4377] Re: Re: Re: Technical change and general truths"**Messages sorted by:**[ date ] [ thread ] [ subject ] [ author ]

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