Re: [OPE-L] Marx on the 'maximum rate of profit'

From: Ian Wright (wrighti@ACM.ORG)
Date: Fri Nov 10 2006 - 12:29:13 EST

> But there is no transformation problem in the real world.

I agree. There is no transformation problem in theory either, even in
the much discussed case of realised uniform profits in a deterministic

> Obviously you are right when you say that labour has to be expended
> in producing capitalist consumption goods. Marx's reproduction schemes
> show this in department 3. It has already been accounted for there.

Yes everybody counts the direct labour used-up to produce the net
product, including capitalist consumption goods. But labour values are
not direct labour, in the modern context they are vertically
integrated labour costs. I am saying something a bit deeper when I
point out that the Sraffian formula fails to count the labour-embodied
in capitalist consumption goods as a real cost.

> Looked at another way this labour is indirectly represented in the
> surplus hours worked by workers in sectors 1 and 2. I don't see what
> advantages your accounting scheme has over that used in Capital II.

Why do you think my approach differs from Marx in Vol II? I have found
one quotation in TSV that suggests Marx would not count the
labour-embodied in capitalist consumption as a labour-cost that is
transferred to the product (don't have it to hand at the moment). But
the issue of what Marx really thought on this matter is not clear to
me, rather it is subtle and complex. According to Sraffians Marx's
approach in Capital II only holds under the special assumption of
proportionality between price and value. In my approach, Marx is
justified in using a MELT to translate between price and labour value
throughout all 3 volumes.

Sraffa completely ignores money-capital but Marx does not. He calls it
the "prime motor" of production. Yet his discussion of money-capital
in Vol II is in my view incomplete because he concentrates his
attention on metallic money. Sraffa cannot be taken too seriously as a
theorist of capitalist production principally because he ignores the
commodity money-capital. Rather he is a critic of the neoclassical
theory of value of his day. A side-effect of his failure to reduce the
commodity money-capital to its labour cost in his "reduction to dated
labour" formula is the neo-Ricardian critique of the Marxist theory of

> The danger of your approach is that
> 1. It makes capitalist consumption appear necessary.
> 2. It is redundant given the theory of surplus labour.

Regarding (1): Capitalist consumption is actual. But of course, the
given level is not necessary. Why do you think that counting the
labour used-up in the production of capitalist consumption as a cost
can justify a claim that a given level of capitalist consumption is

On (2): I'm sorry I don't understand you. Steedman claims that the LTV
is redundant because of the existence of a TP. F&M concede this point
in the context of deterministic models with a realised uniform profit
rate. But this neo-Ricardian critique is mistaken, even before
relaxing the requirements for conservation by moving to probabilistic

According to classical theory there are two kinds of price-value
divergences: (i) those due to out-of-equilibrium supply and demand
mismatches, and (ii) those due to profit-equalising prices, a factor
both in and out of equilibrium. My point is that (ii) is not real,
rather a conceptual problem inherited from the classical economists.

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