[OPE-L:4566] Re: Re: Re: Re: transformation

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Wed Nov 22 2000 - 15:34:34 EST

re 4565

>On Tue, 21 Nov 2000, Rakesh Narpat Bhandari wrote:
>>  The second equality states that the sum of surplus value
>>  determines the (maximum) sum of capitalists' profits.
>This is a neologistic use of the term "equality".  It is quite
>different from Marx: "the sum of the profits in all spheres of
>production must equal the sum of the surplus-values".

Allin,  what is surplus value? You have to give a clear answer to this.

I argue that first we have total price which is determined as the 
product of the commodity output's value (the indirect and direct 
labor objectified therein) and the monetary expression of labor value 
(which I will assume constant for the moment).  That total price  is 
then resolved into cost price and surplus value.

I argue that surplus value is a resolved component of total price, so 
that if cost price rises, due say to an increase in the value of wage 
goods or a rise in their price due to greater ground rent, surplus 
value is thereby diminished as long as total price remains constant.

This means that surplus value *is* total price minus cost price. Your 
own uncorrupted quotation said the same thing.

Which means that though the surplus value column comes first in 
Marx's tableaux (p.256), the numbers can only be determined after we 
have final prices from which we then subtract the respective cost 
prices to arrive at the respective entries for surplus value and 
infer the rate of exploitation.

Marx fully allows that if wage goods sell above or below value, then 
the rate of exploitation has to be modified (look at the bottom of 
the first full paragraph, p. 309). At this point, the rate of 
exploitation will be below or above the 100% which Marx had assumed. 
Marx himself says his tableaux would have to be modified to reflect 
the changed relationship between surplus and necessary labor 
consequent upon the transformation of the input wage goods from 
simple prices to prices of production. Marx does not say that he 
assumes the rate of exploitation to remain constant upon the 
transformation of the inputs (I believe this is Laibman's wrong 
idea). This means that he does not expect the sum of surplus values 
to remain constant.

So if you follow my iteration, we first modify the cost prices by 
applying the output PV ratios on the respective cost prices. We then 
substract each respective modified cost price from its respective 
final price. We then take these respective *Dept surplus value(s)*; 
then sum them; then divide that sum by the total modified cost price 
to arrive at r; we then multiply each modified dept cost price by 
that r to get *Dept profits* which in the aggregate equal the 
modified sum of surplus value.

In each iteration we can see clearly the difference between the Dept 
surplus value and Dept profit while the sum of surplus value remains 
equal to the sum of profit.

Moreover, at no point in this iteration will Marx's transformation 
algorithm break down; at no point will the  total price have to be 
resolved wholly into cost price, leaving nothing for surplus value 
and thereby collapsing the transformation procedure.

>  Besides,
>your use of "maximum" is unwarranted.  Are you being misled by
>the fact that the sum of profit is less than the sum of surplus
>value in the numerical example we've been looking at?  With
>different assumptions regarding organic compositions, the
>post-transformation sum of profits might just as well exceed the
>pre-transformation surplus value.

Exactly. If after the transformation both means of production and 
wage goods sell below value, then the sum of surplus value will 
increase as will the sum of branch profits.

>OK, your "adding up" critique.  I think this is a red herring.
>I'm quite willing to accept imposing total price = total value
>on the transformation, at least for the sake of argument.  In
>that case, as you say, the sum of profit will not remain
>invariant if the sum of cost-prices changes in the
>transformation.  That's precisely the Bortkiewicz/Sweezy point:
>the sum of profit will not remain equal to the
>pre-transformation surplus value.

Again what is the definition of surplus value?

>(A problem will holding total price = total value is that it may
>be inconsistent with the monetary side of the system, if, as in
>Marx, money is a commodity with definite conditions of
>production and also subject to profit-rate equalization.)
>Allin Cottrell.

This doesn't matter.

In the Bortkiewicz-Sweezy solution the monetary expression  of labor 
value rises. Sweezy is correct that the reason the price sums are not 
equal is simply because of a change in the value of the unit of 

Sweezy argues that the problem arises because of the change in ratio 
of surplus value to cost price or r.

In their transformation cost price rises because the two depts 
together which produce the inputs for the system as a whole have a 
higher average OCC than the third dept; the equalisation of the 
profit rate thus raises the prices of Dept I and II's ouputs and thus 
the prices of the inputs and the cost prices in the system as a whole.

You are correct that I am giving a different gloss to their solution. 
I argue that the labor theory of value itself implies that if cost 
price rises relative to the total, then surplus value must fall 
relative to the total. So the fall in the rate of profit does no 
damage to the labor theory of value. If for example after the 
transformation, total price had to be resolved entirely into the 
raised cost price, leaving nothing for surplus value, then the 
transformation procedure would have collapsed upon completion. But 
the point is that paid (indirect and direct) labor or cost price 
remains less than total value or price after the complete 
transformation; total profit remains derived entirely from unpaid 
labor. There is not a chink in the theory of exploitation.

Yours, Rakesh

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