[OPE-L:4479] Re: Re: adding up theories of price

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Tue Nov 07 2000 - 13:13:15 EST

As Marx assumes throughout a constant monetary expression of labor 
value (see Grossmann), total output whose value remains a fixed 
magnitude (as it does throughout the transformation exercise) cannot 
rise in price simply by a change in cost alone.

The completed transformation exercise attempts to modify cost price 
by a transformation of the inputs. If costs change while total value 
remains constant, prices simply cannot rise, though they do in 
Sweezy's and Duncan's solutions. But this is ruled out in Marxian 
theory due to its acceptance of Ricardo's critique of Smith.

Therefore,  the consequence of a change in cost prices can only be an 
opposite change in the other component into which total value is 
resolved: surplus value.

It has never made any sense to postulate that the mass of surplus 
value  remain invariant in the transformation.

(1) C => k + s

If not only C but also the monetary expression of labor value remains 
constant--as they do in the transformation--then it is impossible  for

(2) (k+a) + s = C + a {a can be positive or negative)

Under both Ricardian and Marxian assumption, this expresses the 
consequence of a modification of cost price (k + a), the whole point 
of the completed transformation

(3) C => (k + a) + (s-a)

The conditions which a successful complete transformation must meet 
rather are the following:

A. the modified sum of surplus value still determines the sum of profits
B. the sum of profits still derives entirely from unpaid newly added value by

This gives the transformation equations which I have proposed.

(5) c1 + v1 +s1 = c1 + c2 + c3 (C)
(6) c2 + v2 +s2 = v1 + v2 + v3 (V)
(7) c3 + v3 +s3 = s1 + s2 + s3 (SVA)
(8) (C + V + SVA) - (C + V) = s1 + s2 + s3

  the set of transformation equations should then be:

(9)  (1+r) c1x + v1y = Cx
(10) (1+r) c2x + v2y = Vy
(11) (1+r) c3x + v3y = r(Cx + Vy) (SVB)
(12) (Cx + Vy + SVB) - (Cx + Vy) = r(c1x + v1y) + r(c2x + v2y) + r(c3x + v3y)

The invariance condition of course is

(13) (C + V + SVA) = (Cx + Vy + SVB),

In my equations, x, y and r can be solved; the equations do not 
overdetermine the system

As the total value remains as constant the monetary expression of 
labor value throughout out the transformation exerise, the sum of 
prices in both schemes have to be set to equal each other, which is 
given in (13).

There is no other invariance condition allowable on Marxian premises.

The mass of surplus value is also set to equal to the sum of branch profits.

SVA does not and should not equal SVB as cost prices have been 
modified. See (1)-(3)

There are two equalities indeed but only the one invariance condition 
which derives from Marxian theory.

All the best, Rakesh

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