I should say that the more I think about it, Fred's interpretation of what is happening in chapter 9 certainly has much to recommend it. For if Marx is indeed laying out one period in a realistic sequence, it is certainly untenable to assume that the inputs were actually bought at prices proportional to orin my shorthand <> value. Once Marx shows us upon completion of his second table that prices are not directly regulated by value at t + 1, we can assume that the inputs sold at t0 at market prices close to their prices of production. So if we had assumed before that the the prices paid directly for means of production and indirectly for wage goods at t0 were proportional to their values, we would be wrong--as Fred has been saying. As Fred eloquently puts it: "What changes is the EXPLANATION of this "given precondition". After the determination of prices of production, we have a more complete explanation of this "given precondition" than we did before. Before we assumed that the given cost price was proportional to the labor-values of the means of production and the means of subsistence. But now we can see that the cost price is also affected by the equalization of profit rates across industries. Therefore, if one assumed that the cost price is proportional to these labor-values, that would be "wrong". But the magnitude of the given cost price remains the same. And the magnitude of the surplus-value also remains the same, as the excess of the value of commodities over this given cost price." Perhaps what perhaps changes is that we have a two pronged, rather than single, explanation for price-value divergences. That is, a value of a commodity is (1) Lp + Lc. where Lp is the labor value of the means of production and Lc newly added value or current labor. Marx has been assuming a fixed value of money as a constant such that values are proportional to prices (3) (Lp + Lc)m <> P <> indicates proportionality Marx drops the constant and refers to Lp and Lc as value or V, which gives (4) V <> P Marx refers to P as "value price" But the price of production of a commodity is (5) k + kp k is cost price and p the average rate of profit. The price of production is not proportional (><) to commodity value (6) V >< k + kp Now what is forgotten is that there are TWO reasons for disproportionality (capital 3, p. 309). (a) because the average profit is added to the cost price of a commodity rather than surplus value contained in it (b) because the price of production of a commodity that diverges in this way from its value enters as an element into the cost price of other commodities, which means that a divergence from the value of the means of production consumed may already be contained in the cost price, quite part from the divergence that may arise for the commodity itself from the difference between average profit and surplus value. There is indeed a correction needed in terms of Marx's transformation tables. Marx had assumed that the price paid for the means of production in each period is proportional to the value which has been transferred from their use. In Marx's tableau he has equated that part of the cost price of a commodity paid for the used up means of production with the value of those means as used up and transferred to the final product. If this is what Marx is saying, it is not the inputs which have to be transformed or the cost price modified. It is the exact opposite!!! It is rather the output values which are wrong to the extent that value transferred from the used up means of production has been equated with the cost price of the used up means of production. Marx had assumed that the value transferred from the means of production in each period was the same as the price paid for those means in each period. But we cannot assume that the value transferred from the means of production is proportional the price paid for them--that is, the used up c column in his initial table distorts the value transferred to the final product by assuming it proportional to price paid for the used up means of production. So there are two reasons for price-value divergences: one based on the divergence between surplus value and profit and one based on the divergence between the price of the used up means and the value which has been transferred from those means. This brings me back however to my disagreement with Fred over how the value transferred from the means of production is determined.
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