[OPE-L:5159] Re: Re: causes of changes in prices of production

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Tue Mar 13 2001 - 14:08:56 EST

Fred's criticism does not apply to my set of transformation equations 
which I have proposed to solve the problem which Bortkiewicz and 
Sweezy put to Marx's theory.  Again it seems clear to me that the 
problem to which Marx was admitting was not the inputs are in the 
form of values or direct prices (on this I agree with Fred and 
Alejandro) but rather that he had mistakenly assumed that value 
transferred from the means of production was exactly equal to the 
flow price of the machine as visible in the transformation tables.

The more profound mistake   to which Marx is confessing on that 
famous p. 265 is that in his construction of the tableaux he had thus 
treated value as if it were in principle observable and directly 
measurable. But this simply cannot be since in a private enterprise 
economy labor time relations are necessarily expressed in (and hidden 
by) fetishistic price categories.

As is probably clear to the participants here, my interpretation 
makes sense of Fred & Alejandro's evidence that for Marx the cost 
prices are already a given precondition in monetary form as well 
Allin's evidence of Marx's own recognition of a problem of double 
divergence. But neither side has yet thanked me for providing an 
interpretation in which each side's strong points are recognized,  Oh 
well, boo hoo.

At any rate,  even if one accepts that the inputs are in the form of 
direct prices (though Alejandro, Fred and Mattick jr are correct that 
this is a misinterpretation),  the transformation can be solved as 
long as one uses the correct definition of surplus value--Duncan has 
called my definition a "phenomological" one off list.

So far Allin has accused me of preserving the second equality (sum of 
surplus value=sum of profits) by means of a definitional "trick" and 
a "corrupted" translation. The only problem with these heavy charges 
has been that the textual evidence which Allin himself presented 
defined terms exactly as I have.

Moreover, I have shown that Allin's own definition of surplus value 
as the residual once the value of the inputs has been taken from the 
value of the output cannot have been Marx's own since it cannot fend 
off an adding up theory of price. As far as I can tell, Allin has 
never responded to this point. In fact, his only reply to this point 
has been to say that my definition of surplus value is even worse!

For it is obvious that once surplus value is the residual I say it is 
on the basis of Marx's corrupted and uncorrupted quotations,  then 
any modification of the cost prices on the basis of a price 
transformation of the inputs implies an inverse modification of the 
sum of surplus value. It then turns out to have been absurd that 
anyone could have thought there should be two invariance conditions 
in the transformation exercise or that two invariance conditions are 
needed to preserve both equalities. Sweezy himself recognized that it 
was perfectly legitimate to choose the other invariance condition 
(total direct price=total price of production) while maintaining the 
value of money as constant.

  And much like Winternitz this is what I have proposed (who was 
Winternitz?).  Allin and Andrew then argued that my approach had an 
obvious problem.  It would be possible if, c.b., the input prices of 
means of production were to be reduced by the transformation below 
their value that the sole source of surplus value would no longer be 
the newly added value by live labor. So the criticism shifted here 
from the charge that I could not maintain the second equality (which 
I do after all by the trick of using Marx's own definitions) to the 
charge that I would undermine the exploitation theory of surplus 

However, even in this freak case there is no damage to the 
exploitation theory of surplus value, for the additional surplus 
value in this practically irrelevant case derives entirely from live 
labor transferring *gratis* the value of the inputs to the outputs. 
Even in those cases where inputs can be bought below value, live 
labor remains the sole source of surplus value.

There is clear sign of the unscientific nature of the transformation 
problem debate that participants do not feel compelled to provide 
clear definition of surplus value or clear formulas for the 
determination and resolution of value. This allows for endless 

(1) def of sv: total value, as monetarily expressed, minus cost price
(2) det of v: Lmp + Lc => value
(3) res of v: value (as monetarily expressed) => k + s

=> means determination.

Fred however has clearly laid out his formula for value 
determination. He, along with Alan F, base their of definition of 
constant capital on a quote from TSVIII; I then reminded Fred that 
the very next line of that quote--which of course announces Allin's 
problem of double divergence--makes impossible the definition Fred 
and Alan have derived from this quote (and unfortunately for 
Alejandro there is no discussion of a capital of average composition 
in this section).

There has not yet been a persuasive reply to Allin's and my later 
criticism. Or even an attempt to account for why the very next line 
of that quote can't be squared with the interpretation Fred and Alan 
F make of it. Marx's expression for the determination of value is 
clearly captured in eq 2 above. On this Allin and I agree, I think.

It's absolutely horrible that in attempting to defend Marx's theory 
one has to beome immersed in scholastic disputation over definitions. 
But unless one has a clear set of definitions and formulas as 
above--and then defends them textually and theoretically--there is no 
point in either critiquing or defending Marx especially in regards to 
the transformation problem.

Yours, Rakesh

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