[OPE-L:4599] Re: Re: My confusion on transformation

From: Ajit Sinha (ajitsinha@lbsnaa.ernet.in)
Date: Mon Dec 04 2000 - 03:16:18 EST

John Ernst wrote:

> I had written:
> > Given that we are to use an average RRI in computing prices
> > of production,  I'm still unclear and repeat my question.
> >
> > "How do you compute the values that are to be transformed from a given
> > set of physical quantities?"
> ____________________
> Ajit wrote:
> It is because computation of values from a given set of physical
> quantitites has nothing to do with RRI. Cheers, ajit sinha
> My question:  Ajit,  are you saying that one can compute values in the
> usual way and then use those values to derive a set of prices assuming
> equal RRI's?   If so, would we not have to know something of how much
> of the value remains in the fixed capital not yet used up?


John, my comment was regarding your first comment. As far as labor-values
are concerned, they can be directly computed by the physical data, without
any regard to RRI's, etc. Your second problem is about moving from values so
derived to prices of production. Now let us first talk in terms of only
circulating capital model, if prices of production is nothing but what
classical economists called "natural" prices, then they can be easily
derived from either given values or physical data--hence the redundancy of
labor-values on this ground. Now, most of the marxists would like to reject
the redundancy charge by arguing that the labor-value concept allows us to
reveal the inner exploitative nature of the capitalist system, which remains
hidden if only physical data and the natural prices are taken into account.
Now, to prove this point one needs to establish some kind of relation
between the labor-value accounts and the prices of production accounts. And
this is the crux of the transformation problem. All such attempts that i'm
aware of has one problem or the other, and to that extent the problem has
not been solved. My suggestion for sometime has been that the relevance of
labor-values must be sought somewhere else instead of in the theory of value
and distribution. It's relevance may be found in the theory of technical
change, and from there we may be able to relate it to a dynamic theory of

Now, as far as fixed capital is concerned, I have not much thought about it
because i think one needs to solve a logical problem in a simple model first
before introducing second order complications. But in any case, I think at
any time there exists some kind of understanding about what is the average
economic life time of a new machine. After this we only need to assume
somekind of principle of depreciation, say st. line etc., to solve for
values and prices. If this is not acceptable then one should use Sraffa's
joint production method, but then labor-values are not needed here.

> I suspect I may be in *some* agreement with you on this as starting with
> the usual notion of value and then transforming those values into prices
> of production with a uniform RRI seems, at best, problematic. One has
> to ask how useful the usual notion of value is when it comes to using
> the RRI.


As I said above, its relevance should be sought somewhere else. Cheers, ajit

> Thanks,
> John

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