[OPE-L:4623] Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Part of MyConfusion ontheTransformation

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Wed Dec 06 2000 - 17:10:37 EST

re Ajit's 4618

>That is why every sensible person on this planet thinks that Marx has a
>transformation problem. It is simply theoretically illegitimate to hold the
>value of money constant. I don't have as much stamina as Rakesh to go on with
>this ad nauseam. So most likely i won't say anything on this for sometime.
>Cheers, ajit sinha

I didn't know every sensible person has an opinion on the 
transformation problem.

The value of money obviously has to be, and is, constant in Marx's 

In Marx's transformation tables, money is invested as constant and 
variable capital at t0; means of production and means of subsistence 
(indirectly) are purchased. Their prices are assumed to be 
proportional to their labor values; that is their labor values * the 
constant of the monetary expression of labor time.

The constant is often dropped in relations of proportionality so we 
are left with price <> value. Marx himself calls such prices "value 
prices" (Capital 3. p.275)

The invested money sums comprise the cost prices (k) of the 
commodities.  In the first table (p. 256)  we then have at t + 1 
value prices which exceed the cost prices at t0.  If Marx has not 
assumed the value of money as constant, then this difference could be 
explained by a change in the value of money. Marx simply rules that 
out by holding the value of money constant. I do not understand why 
you find this unreasonable.

Marx then transforms the simple prices at t+1 into the form of prices 
of production in a manner that demonstrates that the law of value 
regulates prices, albeit in an indirect manner.

  While Marx allows commodities to exchange in the form of prices of 
production at t + 1, he has assumed that the (input) commodities sold 
at value prices  t - 1. That is, Marx has assumed that the prices of 
the commodities consumed in production were proportional to their 
respective labor values. Marx has been making this assumption since 
vol 1.

If Marx had allowed commodities to sell at t-1 at prices of 
production, the cost prices at t0 would have been modified.

We cannot tell how commodity prices of production would have deviated 
at t-1 from value prices.

It is no solution at all to suppose that we have a fixed and 
unchanging input-output matrix so that we can assume fantastically 
and arbitrarily that unit prices of production are the  same for the 
inputs and the outputs. This formalisation is utterly destructive of 
Marx's own theoretical project. It makes no sense even in terms of 
Ricardo's own dynamic understanding of the accumulation process: 
"alterations in the quantity of labour necessary to produce 
commodities are a DAILY occurence. Every improvement in machinery, in 
tools, in builidngs, in raising the raw material saves labour, and 
enables us to produce the commodity to which the improvement is 
applied with more facility, and consequently its value alters." 
(principles, p. 36, Sraffa's ed; my emphasis).

So let us say that the cost prices have to be modified but since we 
recognize the reality of continuous change in commodity value, we 
cannot  make the fantastic assumption that we have the same unit 
prices of production at t-1 as t+1.

  So all we can say--and all Marx to his credit did say--is that our 
first tableau would have to begin with  k', instead of k. What does 
this mean?

Well first to fill in the surplus value columns we would subtract the 
respective final simple prices from the modified k'; a modification 
in cost price does not change the indirect and direct labor embodied 
in the  output and, since we are assuming a constant value of money, 
its price--so the simple prices remain the same as we begin with 
modified cost prices in a new first table.

  So taking the modified cost prices from the same respective final 
simple prices, now we have a new column of s'. The rate of 
exploitation may not be perfectly uniform in terms of surplus value 
over the money laid out on wages, but each worker is still assumed to 
add the same value to the final product per labor hour--that's Marx's 
crucial assumption.

  After the modification of cost price, that final value may now  be 
resolved in such a way that once the modified replacement costs of c 
is covered, the ratio of  the residual s to the modified v will not 
be identical in each industry though it will remain very close.  But 
it is not this ratio which capitalists tend to directly equalize by 
their profit maximizing behavior; their behavior directly leads them 
to equalize p/k. And we will allow such a result to obtain.

That's it. Now we simply go about the transformation in the same way 
Marx did. We now will have k' + k'p' as the prices of production in a 
new second table.

This results in a minor modification of little quantitative 
significance and no theoretical importance that it is no wonder that 
Marx did not 'complete' his transformation procedure. As I have been 
saying, it turns to the sociology of knowledge to explain how this 
has been made into a fatal logical defect of Marx's value theory. I 
submit that only a revolutionary theory would be subjected to such 
unfair treatment, though of course, Ajit, you take these critics, you 
included, to be utterly sensible.

Yours, Rakesh

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