# [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
labor

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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