# [OPE-L:4505] Re: Re: Re: What is Volume 3 about?

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Sun Nov 12 2000 - 12:27:57 EST

```Almost everyone concedes that no complete transformation can maintain
the sum of prices in the unmodified scheme equal to the sum of prices
of production in the modified scheme *and* the sum of surplus value
in the unmodified scheme equal to the sum of surplus value in the
unmodified scheme.

My wholly original argument has been that the labor theory of value
itself implies that modification of cost price brought about by
completing the transformation on the inputs should change the mass of
surplus value in the modified scheme in the opposite direction of the
modification of cost price.

I argue that the idea of surplus value as an invariance condition is
the invention of Bortkiewicz, Sweezy and Meek (who give different
reasons for why the mass of surplus value should be invariant!). It
is also not necessary for the mass of surplus value to remain
invariant to ensure that surplus value is derived entirely from
unpaid labor. If the modification of cost price means that surplus
value is now total value minus modified cost price or paid direct and
indirect labor, then  surplus value still originates entirely in
unpaid labor.

The labor theory of value of course also implies that this modified
sum of surplus value should then determine the sum of branch profits
in the modified scheme. But this is given in the set of
transformation equations which I propose. It is even clearer in the
iteration which I have proposed.

_______________
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.

That is, in each new iteration, the mass of surplus value is
determined first in step 3 by substracting from total value the
(modified) sum of paid direct and indirect labor, leaving of course
the sum of unpaid labor as surplus value; then steps 4 and 5 ensure
that the mass of profits will be equal to it.

In each new iteration,the mass of surplus value has determined the
sum of branch profits. And in each new iteration the sum of surplus
value has derived entirely from unpaid labor.

Allin followed Bortkiewicz and Sweezy in modifying the cost prices
and then adding on the same old surplus value (200) so that a change
in costs alone resulted in rising prices (1000, instead of 875).

that the labor theory of value itself implies that the sum of profit
should move in inverse direction to the modification of cost price.

Following Ricardo's critique of Smith, Marx argues that the value of
a product is not determined by adding up wages, profit and rent.
Rather he maintains that the size of a product's value--as determined
by the quantity of (indirect and direct) labor expended in its
production--is the *primary*, basic magnitude that then is resolved
into or breaks down into cost price and surplus value. It is
therefore obvious that once the entire magnitude (the value of the
product) is given in advance as a fixed entity (being dependent on
the quantity of labor needed to produce it), any increase in one of
its parts (cost price) will invariably lead to a fall in the other
(surplus value). [see II Rubin, A History of Economic Thought, p. 259)

So since at no point in the completion of the transformation have we
changed the indirect and direct labor embodied in the output, the sum
of prices in the unmodified scheme (875) should remain equal to the
sum of the prices of production. Which means of course that if cost
price is modified upward, the sum of profit has to be modified
downward, not held invariant as 100 years of dogma has insisted!

all the best, RB
```

This archive was generated by hypermail 2b29 : Thu Nov 30 2000 - 00:00:05 EST