[OPE-L:4549] Re: Imperialism

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Mon Nov 20 2000 - 14:34:54 EST

>I would like to raise a new topic.

That's fine, Paul C. But do note that for decades now critics like 
you have been accusing Marx of having suffered from a fatal logical 
defect to which only obscurantists can remain blind. This is a 
serious charge which has been made with absolute arrogance.

I have tried to meet this argument head on, given the assumptions of 
the critics, viz. that the inputs have to be transformed into the 
same prices of production as the outputs. Nor have I denied that Marx 
did not include the inputs in his transformation procedure.

Now I have won enough high school and college debating rounds and 
tournaments at the state and national level to know that you want to 
move on before responding to my counterargument.

1. I assume the unit of account is a unit of labor time. Ajit has 
cried that this is bloody arbitrary, but note that Bortkiewicz and 
Sweezy never claimed that it was any less justified than choosing 
Dept III's good as both the value and price unit, thereby setting p3 
or z at 1. In fact Bortkiewicz and Sweezy themselves begin with my 
assumption, and Sweezy grants that it is a perfectly logical 
assumption in the handling of the transformation problem (see p. 117 
and 122). In fact it is less arbitrary than assuming that Dept III is 
only gold production, and that since gold is the money commodity, 
Dept III can be set equal in the value and price schemes (look at the 
mental gymnastics Sweezy peforms to justify this assumption at the 
bottom of p. 117).

2. On the basis of this assumption of one hour of labor as the unit 
of account, Sweezy initially (and correctly) sets the sum of prices 
in the unmodified scheme equal to the sum of the prices of production 
in the modified scheme. He then has this invariance condition plus 
the three Dept transformation equations (see top p. 117). The reason 
Sweezy gives for not proceeding on this basis is not that this set of 
equations is incorrect (in fact I and many others have argued that it 
is the only invariance condition permissable in terms of Marxian 
theory) but rather that it is too mathematically complicated (4 
equations, 4 unknowns), so he searches for a way to reduce the 
problem to 3 equations, 3 uknowns (p.117-18).

3. Meek then argues that proceeding this initial way is even more 
damaging to Marxian theory because the sum of profits will no longer 
in any meaningful sense be derivable from the predetermined sum of 
surplus values in the unmodified scheme (see Meek, Smith, Marx and 
After, also p. 117).

4. I argue that it is grossly antithetical to Marxian theory to 
suppose that if we are given a commodity output with a fixed 
magnitude of value or price (its monetary expression), a modification 
in cost price will not lead to an inverse modification in that 
predetermined sum of surplus value. Meek is simply wrong that the sum 
of surplus value should on the basis of Marxian theory remain 
invariant as the inputs are included in the transformation procedure.

  Total value is always broken down in Marxian theory into the 
components of cost price and surplus value which vary inversely. 
Since the complete transformation modifies cost price on the basis of 
the transformation of the inputs, it must allow for the mass of 
surplus value to be modified in the opposite direction if both cost 
price and surplus value are to remain inversely related, resolved 
components of total value, rather than independently determined 
magnitudes.  This simply follows from Ricardo's critique of Smith's 
adding up theory of price.

5. This means that the complete transformation procedure in which the 
inputs are included is much more complicated than Bortkiewicz or 
Sweezy or Meek or Cottrell realize.

For now we can no longer assume that we are simply distributing the 
same fixed magnitude of surplus value. The mass of surplus value will 
change in opposite direction to the change in cost prices brought 
about by the transformation of the inputs. We have to allow for this 
modification of surplus value while still having the sum of Dept 
profits set equal to this modified sum of surplus value.

6. Towards that end, I have proposed both a set of equations and a 
method of iteration by which a. the mass of surplus value remains 
derived entirely from unpaid labor, thereby not putting a chink in 
the theory of exploitation and b. the sum of profits in the modified 
scheme has been determined by the sum of surplus value.

You have questioned the unit of account which I suppose, though you 
do not deny that for the purposes of the transformation it not 
unreasonable to assume that the unit of account is a unit of labor 
time; Allin has argued for a different definition of surplus value 
without proving that with his definition he will not be caught in 
adding up theory of price any time the cost price of a commodity is 

You are of course free to ignore this message. But I don't take to 
being called an obscurantist lightly, and I don't think Marx's value 
theory is in the least damaged by completing the transformation so 
that the inputs are included. It may still be true that the neo 
Ricardian method for profit and price determination is superior due 
to its ability to handle joint production, the long life of capital 
goods and various other real world complications, but Marx's value 
theoretic transformation procedure does not collapse upon inclusion 
of the inputs.

Yours, Rakesh

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