[OPE-L:4553] transformation

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Tue Nov 21 2000 - 12:08:27 EST

re 4551

>On Mon, 20 Nov 2000, you wrote:
>>  >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 would ask you to retract that or find some publication of mine
>where I have made such an accusation against Marx. The only
>publication that I have on the transformation problem says that
>it is probably a non-problem because market prices are as
>close to untransformed values as they are to prices of production.

Paul C,

I am sorry to have assumed that you shared Allin C's assessment that 
though Marx's transformation procedure logically collapses upon the 
inclusion of the inputs, the labor theory of value still holds 
empirical validity in direct or untransformed or "Ricardian" terms, 
i.e., in the ability of embodied labor coefficients to account for 
market prices.

Of course this whole debate began with Allin C's defense of the 
Bortkiewicz-Sweezy findings. I have obviously made a mistake in 
thinking that you agreed with Allin. So I retract my statement that 
you too agree that Marx's transformation procedure breaks down due to 
a logical defect.

  I have objected to the way in which Allin C carried out the 
iteration on two grounds: the idea that the inputs can be transformed 
in terms of the output PV ratios and the idea that the mass of 
surplus value should remain invariant.
I'll repeat the latter criticism here.

  If surplus value and cost price are to remain inversely related 
components of total value, it is not possible to hold one invariant 
while the other is being changed if total value is taken as fixed 
(assuming a constant value of money or that the unit of account 
remains an hour of labour.).  So the Meek-Cottrell idea that Marxian 
theory stipulates that the mass of surplus value has to be held 
invariant  only applies when the transformation is done exclusively 
on the outputs.

Since the complete transformation is more complicated than the one 
Marx completed, it needs more than the two steps which Allin 
proposes. I have argued that in Marxian terms the iteration requires 
nine steps, which do assure at every step that the mass of surplus 
value is derived entirely from unpaid labor and that the mass of 
profits at the completion of each iteration has been determined by 
the mass of surplus value. Moreover, it is in the very nature of the 
iterative method that the final  equilibrium prices of production 
have indeed been derived from the initial value data alone.

I understand the iteration which I propose then to be full a 
vindication of Marx's positive theory: the mass of surplus value has 
to be determined before the average rate of profit is formed out of 
competition in each new iteration; the mass of surplus value derives 
entirely from unpaid labor; the final price data have been derived 
from the value data;  upon the inclusion of the inputs  the average 
rate of profit and prices of production do indeed change, 
substantiating Marx's intuition that it is possible to go wrong if 
cost price is left unmodified; cost price and surplus value at all 
times remain inversely related, resolved components of total value.

Allin has objected that I have kept the mass of surplus value = mass 
of profit by definition. But the point is that by doing so, one has a 
determinate course for the iteration which does indeed succeed in 
that one arrives at a vector of equilibrium prices which allows for 
positive rate of profit. That is, by keeping the second equality, 
there is no collapse of Marx's transformation procedure.

The academy's attempt to throw Marx's value out of the game of 
explanatory power solely on the grounds of a logical defect is shown 
to be unjustifiable.

Yours, Rakesh

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