[OPE-L:4614] Re: Re: Re: Re: Re: Re: Re: Part of My Confusion ontheTransformation

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Tue Dec 05 2000 - 13:15:22 EST

re Ajit's 4611

>Be careful. Don't make Marx look like an idiot by saying all kinds 
>of things in
>his name. The question of a measure and its invariance depends upon the
>problematic one is dealing with. Ricardo was interested in establishing a
>relationship between rate of profits and wages. His problem was that 
>changes in
>distribution (everything else remaining constant) would in general 
>affect all the
>prices in all sorts of ways including the money commodity. The 
>variability of the
>money commodity in this case implied that the size of the cake 
>changes by how do
>you cut it. This of course is unsatisfactory for the theory and does not allow
>Ricardo to establish any precise relation between wages and rate of 
>profits. Thus
>it becomes a theoretical requirement for his theory to find the 
>condition under
>which a commodity or a bundle of commodity will not vary in prices 
>due to changes
>in distribution. If this theoretical commodity could be found than 
>he could use
>it as the money commodity for his theoretical purpose. Ricardo could not find
>such a commodity in his life time, but Sraffa's standard commodity 
>is a solution
>to this problem. Ricardo was also interested in finding an invariable measure
>over historical period so that he could tell which commodity and by 
>how much has
>changed in prices under the condition of diminishing returns in 
>agriculture. This
>problem now we know has no solution.

Well there seems to be the danger of distorting Ricardo to make him a 
precursor of Sraffa (see for example, Terry Peach, Interpreting 
Ricardo, pp.289-90; I found most interesting the discussion of the 
perfect measure, pp. 225-27).

>The problematic of the transformation problem is of different 
>nature. Marx works
>out his analysis of the capitalist economy on the assumption that commodities
>exchange in the same proportion as their labor-value ratios. On this 
>one can easily determine what is the labor-value of a unit of the 
>money commodity
>(say gold). Or how much of labor-time is represented by one unit of money or
>gold. This is your 'monetary expression of vlaue'. The problem now 
>is that once
>you relax the assumption of value-price proportionality, and say that
>equalization of profit rates require that value-price proportionality must be
>broken for all commodities, there is no way of knowing how much of 
>labor-time a
>unit of gold would represent in the market when rate of profits is equalized.

Even before this point, if one allows for the value of money to be 
determined by  the labor needed to reproduce itself,instead of fixing 
it and holding it constant, the value of commodities could fall while 
prices rise due to technological revolutions in mining. Marx would 
then have no constant reference point, so Marx has to take as given 
and fixed the value of money in his theoretical study from the outset.

Marx is not allowing the value of money to change  before the 
transformation; and he doesn't allow it to change in the 

>Thus to insist that my earlier 'monetary expression of value' must remain
>unaltered is to simply insist on a nonsense. And if you think that marx was
>insisting on this then, in my opinion, you are insisting that marx 
>was an idiot.

But Marx does not think that there is actually an invariable standard 
of value. This is why he has to invent the constant reference point, 
fully aware that it is a purely fictitious assumption.

>Exactly my point. It is not arbitrary. And heat variability in any 
>other matter
>does not affect the measuring rod.
>Exactly my point again.

Well since I was quoting Grossmann, perhaps you will find it 
illuminating to read him.

>There will, of course, be no change in capital value measured in labor-time
>units. However, as the monetary expression of the same value and surplus value
>changes, no claim here is made that certain aggregates in terms of labor-value
>and their monetary expression must remain equal. All he is saying is 
>that for him
>real measure is the labor-value measure and monetary measures are 
>apparent only.
>Instead of labor-value measures some one may prefer to take the 
>physical measures
>and call them real and monetary measures as apparent or nominal. Of 
>course, the
>real ones will not change in either case. All your quotations only 
>go to prove my
>points and also that marx measured value the way I argue he did.

No you argue that Marx allowed the value of money to be determined by 
the labor time needed for its production, but this would make the 
measure of value variable. But since vol 1 Marx has fixed the value 
of money in order to have a constant reference point. As I noted to 
you long ago, it would have been impossible for Marx to rule out the 
explanation of dM due to the depreciation of money otherwise.

>By the way what
>was there in the ellipsis?

Let me check. I was quoting Grossmann.

>No problem. All Marx is saying here is that if there is a 
>proportional change in
>technology in all the sectors, say productivity of labor has doubled 
>in all the
>sectors. This would mean a great change for society as a whole. However, the
>monetary prices or the relative prices of the commodities will not show any
>change because the production conditions of all of them have changed 
>in the same
>proportion and in the same direction. This statement may not be precicely
>correct, but for the general kind of argument Marx is trying to make 
>here, it is
>perfectly fine. This, however, has nothing to do with the 
>transformation problem
>or your problem.

If the price index is to reflect such changes, the value of money has 
to be fixed. The labor values in Marx's original tableau have already 
been multiplied by this fixed value of money; the simples output 
prices are proportional to values. In Marx's own second tableau he 
has changed neither the value of the output nor the monetary 
expression of labor value. This of course is why in his own 
incomplete transformation the sum of prices of production is set 
equal to the sum of simple prices in the first tableau.

>This is simply mumbo-jumbo.

Why? If there are no constant reference points, the theorist is 
forced to invent them.

>I don't have to rewrite my Ph.D. again for you. Everybody knows that 
>taking one
>commodity as the money commodity and putting its price multiplier equal to one
>solves the prices of production problem.

Dept 3 is not the money commodity for Sweezy; it is a luxury sector 
in which gold is produced. He goes through extraordinary mental 
gymnastics to set the multiplier for the whole sector as one.

Sweezy also gives no reason to set the multiplier at one and abandon 
his earlier four equation system other than mathematical tractability 
(I agree with Winternitz on total price as the invariance condition 

>  But it in general does not satisfy
>Marx's two invariant conditions.

It is just a dogma that there should be two invariance conditions in 
a complete transformation procedure (just like it is a dogma that the 
inputs should be transformed into the same unit prices of production 
as the outputs). But you refuse to make contact with my argument on 
these points.

>Moreover, it has nothing to do with your
>invariability of the 'monetary expression of value'.

It refers to what?

Yours, Rakesh

>Then Marx was an idiot, according to you!

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