Once cost prices are modified, capitalists will first take from total value what is needed to cover their modified cost prices. This changes the sum of surplus value which is available for redistribution in terms of a uniform profit rate; however, this modified mass of surplus value still determines the sum of branch profits. This maintainence of the second equality is given in the equation system which I propose. I have not in any way relaxed the value determination of the profit rate simply because after the modification of cost prices, the magnitude of the surplus value in terms of which branch profits is determined has changed (surplus value after all is total value minus cost price). For example, in my equation system the sum of surplus value is first *modified* on the left hand side by subtracting from total value the new input/cost prices; I then have this modified mass of surplus value determine the right side of the sum of branch profits (assumed to be distributed uniformly). In the iterative method this logical sequence is even clearer, so the iterative method is superior for demonstrating the point. After the modification of cost prices through the application of output PV ratios on the inputs, we are left with a different sum of surplus value which is now total value, less than this modified cost price. In Gouverneur's iteration it is in fact this modified sum of surplus value, divided by modified cost prices, that determines in an asymmetric, macro manner first the average price rate of profit and then each branch's profits in price terms. After each iteration the mass of branch profits is equal to the mass of surplus value. It is simply a fallacy, implied by Sweezy and Allin, that if throughout the transformation (or iteration) one does not maintain as invariant the profit rate or the sum of surplus value derived from the unmodified so called value scheme, one necessarily undermines Marx's macro, asymmetric theory of value determination of economic magnitudes or breaks one of the two equalities. But...after no single step in Gouverneur's (or my proposed 9 step) iteration is the sum of profits not determined by the modified sum of surplus value; at no point has any other data than the original so called value magnitudes been used to determine economic magnitudes (this is brilliantly implied by the iterative method!); at no point do the prices of production exceed the the system's total value which should not indeed change since we are only changing the outward price appearance of the system, not the direct and indirect labor which the commodity output embodies. So the equality of the sum of surplus value and sum of branch profits does not imply that sum of surplus value or profit rate should remain invariant as do total value/price. Nor it is implied that if they do not remain invariant that Marx's macro, asymmetric, value theoretic determination of price phenomena has in any way been undermined. The iteration does no harm to Marx's value theory while substantiating his intuition that one will go wrong in the determination of the profit rate and prices of production if the cost prices are left unmodified. My equilibrium solution to the transformation problem is simply the slogan: *2 equalities means 2 invariance conditions. Not!* my other non equilibrium slogan was: *the inputs and outputs at identical prices of production? What kind of static shit is that?!* I have t-shirts for sale. Only 10% more for both slogans on the front, with a beautiful picture of an arm and hammer busting an armchair on the back. Yours, Rakesh ps there is another one in the making: it has the faces of Bortkiewicz, Sweezy, Samuelson, Sraffa, Steedman and written below them-- "The Transformation Problem: A Great Comedy of Error." If you order now, you can have your t shirt before the next conference of that oxymoron of Marxist economists. All proceeds will go to aid war veterans seizing back their land in Zimbabwe.
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