[OPE-L:4632] Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Part of My Confusion ontheTransformation

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Thu Dec 07 2000 - 12:52:14 EST

re Allin's 4629

>On Wed, 6 Dec 2000, Rakesh Narpat Bhandari wrote:
>>  >You're right, in that fiat money is not a produced commodity and
>>  >doesn't participate in any equalization of the rate of profit,
>>  >unlike Marx's commodity money.
>>  Allin, Marx's commodity money is no more allowed to participate in
>>  the equalisation of profit rates in vol 3 than it is allowed to
>>  change its own value in vol I. The assumption that the value of money
>>  is constant is an assumption which underlies all three volumes of
>>  Capital.
>I think you're trading on a confusion here.  In one sense the
>value of (commodity) money doesn't change in the transformation,
>i.e. in the same sense that _no_ commodity values change in the
>transformation (the labour time required to produce them is not

You're right. In vol I the fictitious assumption of the the 
invariability of the value of money has to be introduced exactly 
because money is a commodity; Marx confines the analysis of  price 
changes to those effected on the commodity side of the exchange 

>   But that doesn't mean that the "monetary expression
>of value" remains constant, i.e. that the monetary unit
>continues to command in exchange the same amount of labour
>embodied (in other goods) as "before" the transformation.  That
>just can't be "assumed", if money itself is a commodity.

Well, let's assume that each monetary unit simply represents .5 labor 
hours. It remains fixed as it has throughout *Capital*

In Marx's transformation table this means that the money sums laid 
out as constant and variable capital represent in the aggregate 101 
labor hours and  55 hours, respectively.   And the total output 
represents 211 labor hours.

What Marx's transformation aims to show is that that  the  monetary 
units for which the outputs sell and thus the labor time they 
represent changes once we move from  prices proportional to values to 
prices of production. The point of the demonstration is not to 
determine the prices of the outputs but to demonstrate that while the 
second diverges from the first, the law of value still regulates 
prices though in indirect form..

In the analysis of this "problematic", Marx obviously has the unit of 
money command the same quantity  of labor for both the inputs and 
outputs and in both the simple price and price of production scheme. 
Since he is not offering a determinate theory of prices but rather 
demonstrating the possibility that the law of value can govern 
without directly regulating prices, I hardly see why you are so 
critical of the assumptions Marx has made regarding the constancy of 
the labor commanded by the unit of money. Do remember that Sweezy 
brought the unit of account into the transformation procedure not 
because he thought money finally had to be allowed to be variable but 
because it gave him an excuse to set dept 3's multiplier and simplify 
the mathematical problem.  Marx is not trying to tell us what prices 
will be after the transformation but rather to demonstrate that they 
do not have to be directly regulated by value for value to still 
regulate prices.

Now after the second table we see that the labor time which outputs 
come to represent cannot be equated with the labor time they actually 
embody. Industry 1 comes to count as one more labor hour, industry 
three nine less hours, and so forth.

  But we now can also see the mistake in Marx's own first table. He 
had assumed that labor time represented by the money needed to 
purchase means of production was proportional to the labor time 
embodied in the means of production and thus transferred from them to 
the final output. But the capitalists had to have bought means of 
production not at prices proportional to their own labor value  but 
the labor time they had come to represent after the equalisation of 
the profit rates.

It may be a plausible reading that Marx is saying that he has gone 
wrong in assuming that the value transferred from the means of 
production is proportional to price which the use of those means has 
cost the capitalist.

This would mean that Marx is not saying that inputs have to be 
transformed (the ground on which I have been trapped since 
Bortkiewicz, Sweezy and others say that the inputs are not 
transformed). It would mean that Fred is correct that Marx already 
assumed that the cost prices are a given precondition, already in the 
form of prices of production or market prices regulated by prices of 
production. The cost prices don't have to be transformed; however, 
there is still an important mistake in Marx's own transformation 
tables:  one needs to drop the assumption of a proportional relation 
between the cost price of the used up means of production and the 
value actually transferred from the means of production to the final 
product. But this is a correction of a fundamentally different sort 
than what the transformation debate has been about.
Do you find this a plausible reading of what Marx himself meant by 
how he had gone wrong?

Yours, Rakesh

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