[OPE-L:7555] Re: Re: Re: Re: Re: RE: Fred's remarks on Marx, Sraffa & Rents

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Tue Aug 27 2002 - 16:08:14 EDT

re 7552:

>Gil, the fact that, in a system of commodity money, the money commodity
>has no price and is a scarce precious metal is not a historical
>contingency, but a necessity due to the nature of money.  Marx did not
>discuss the money commodity in Part 2 of Volume 3 because the money
>commodity has no price of production and does not participate in the
>equalization of profit rates like other industries.

Yes, Marx's putative failure to discuss gold does not prove that he 
did not keep in mind the difficulties in changing "dimensions" from 
values to prices. There is in Marx's theory no pure value dimension 
anyways as you Fred have pointed out. Whether my analogies from 
quantum mechanics are dead on arrival or not, values only exist in 
their "necessary form of appearance" of price (Jairus Banaji), though 
the price form cannot but mis-represent value (Mattick Jr). As you 
show, this is the conclusion already reached in Capital, part I. 
The inputs in Capital III, part II then have to be already 
transformed if not into prices of production or market prices, then 
at least into simple or direct prices. And since the capital invested 
for the purchase of these money price-denominated inputs is already a 
given precondition (Alejandro Ramos Martinez), it makes no sense to 
call for a retroactive transformation of sum of money capital already 
invested! Capitalists cannot go back and change the sum of money 
capital already invested. As John Hicks picked up on the quasi 
Bergsonian insights of Shackle, time is not space--we cannot move to 
and fro in the space of time, but move ever forward in its 
irreversible flow.  The MEL is also a given precondition, unaffected 
and "unaffectable" by the transformation.  Ajit and Gil have been 
quite dismissive about what you Fred take as the givens--the cost 
prices, the MEL. But this is all perfectly sensible. It will be 
interesting to see whether Gil returns to his criticism of your 


Now the rest is old stuff which we have discussed ad nauseum.

My big disagreement with you and Alejandro is the nature of the 
mistake to which Marx is calling attention on p. 265 in KIII.

  I think Marx is saying that he himself made a mistake in writing up 
his tables because he assumed that one could infer the value 
transferred from the means of production from the the machine's flow 
price as recorded in the cost price. On the basis of KI quotes, you 
say these two "flows" are the same thing because the latter 
determines the former.  But once the value price proportionality 
assumption is dropped in KIII, the assumption embedded in the tables 
is no longer tenable.

Moreover, let's say Marx had assumed that each wage good has a labor 
value of one and allows for the employ of one worker. Well wage goods 
may have sold above or below their value we now know after the 
transformation is complete. If they sold above value, then the v in 
the cost price would not have allowed for the hire of as many workers 
and thus as high rate of exploitation as Marx assumed in 
transformation tables. If wage goods sold below value, then the v in 
the cost price would have allowed for the hire of more workers and 
thus a higher s/v than Marx assumed in his transformation tables. 
What the inverse transformation problem says then is that the 
problems are not in the failure to transform the inputs from values 
into prices but in terms of the assumptions Marx actually did make in 
his tables about  about value transferred and s/v as he moved from 
cost prices to output values and prices of production.

Ultimately value transferred and s/v cannot be known directly but 
only inferred from price data. In constructing his tables Marx made 
it seem as if such value related variables are something we can know 
directly and explicitly and enter into transformation tables.. That's 
the problem. Value magnitudes can never be known directly or 
explicitly, or even easily inferred from price data, including flow 
price data. This is fundamental to Marx's theory of fetishism.

As Mattick Jr puts it, that value can only be represented in money 
price does not mean that money price does not mis represent value. 
Representation is not necessarily mis-representation.

Now even if one grants that there is a need to complete the 
transformation--which I do not --the question then becomes whether 
the apparent divergence between the mass of surplus value and total 
profit does any damage to the Marxian bedrock thesis that unpaid 
living labor is the source of non wage income. Winternitz correctly 
reasoned that since neither the MEL nor the value of the total output 
could be affected by the transformation, the invariance condition in 
the spirit of the Marxian system is the equality between total value 
(or simple or direct) prices and prices of production.

So for me the question becomes whether there are compelling reasons 
why the apparent divergence between surplus value and profit is in 
fact to  be expected by Marxian theory.

And there are in fact two reasons:

1. Shaikh's analysis of surplus value in terms of its phenomenal 
forms of profit and revenue shows the divergence is not real.

2. My idea that Marx's critique of adding up theories of price 
implies the mass of surplus value itself has to change each time the 
cost prices are alone modified in an iterative transformation. For 
example if cost prices were to rise simply because the price of labor 
power increased with no change in the labor value of the output and 
the MEL, then it follows that surplus value has to decrease by the 
same magnitude in the opposite direction.

In a complete transformation only cost prices and output prices are 
being modified; there is no change in the labor value of the output 
and given a fixed monetary expression of labor time there can thus be 
no change in the price of the output from a complete transformation.

If after a complete transformation total profit seems to exceed 
surplus value--the possibility both Andrew K and Allin C put to 
me--this would not reveal that live labor was not the only source of 
non wage income; it would only mean that after a complete 
transformation the rate of exploitation had increased and/or  the 
price of the machine the value of which is transferred gratis by live 
labor was now below its value. Anyways in either case the real income 
of the capitalist class as composed of profit and revenue will not 
have changed...which only confirms Marx's argument that price-value 
disparities cannot themselves be the source of real gains in surplus 
value for the capitalist class as a whole.

There is simply no logical problem with Marx's transformation 
analysis even if one wrongly thinks it has to be completed by being 
extended to the inputs which as cost prices.  Marx's value theory 
does not break down with a complete transformation, though there is 
little sense to carry one out to its end  since surely the technical 
conditions would have changed before all the iterations required for 
the arrival at equilibrium could have been completed. The number of 
iterations needed reveals that the vector of equilibrium prices has 
no real function in a capitalist economy.

All this concern about whether Marxian theory passes the "equilibrium 
test" in "pure theoretical time" as does the neo Ricardian theory is 
proof of the colonization of the field by bourgeois economics, plain 
and simple (for such a colonizing effort see Meghnad Desai's comments 
on value price in his Revenge of Marx). The basic thrust of Mattick 
Sr's critical comments on Bortkiewicz in Marxism: last refuge of the 
bourgeoisie however is correct.

All the best, Rakesh

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