Re: [OPE-L] Marx on the equalisation of rates of surplus value

Date: Tue Mar 20 2007 - 07:57:46 EDT

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------------------------- Original Message ----------------------------
Subject: Re: [OPE-L] Marx on the equalisation of rates of surplus value
From:    "Rakesh Bhandari" <>
Date:    Tue, March 20, 2007 5:02 am

>Solow argues "there is no mechanism that
>can bring about that equalization". But Marx argues that there is, namely
>competition among workers, labour mobility and (presumably)
>juridical conventions or arbitrage - this point taken up by
Michio Morishima among others.
>The issue is discussed in some detail by John Weeks in his book
>"Capital and exploitation", Chapter 3, Section A., where he
>criticizes Morishima: "One cannot consider the equalisation
>of either profits or wages across capitals unless one has a prior
>explanation of to what level equalization will gravitate" (p. 68).
>He adds in a note that "It is a wellknown empirical
>generalisation for industrial capitalist countries that the
>variance in wage rates among industries increases in periods
>of "boom" and decreases when accumulation slows or becomes
>negative" (ibid.).

I don't get what you're saying, Jurriaan: since Marx's transformation
depends on a uniform s/v--you seem to be agreeing with Solow--it
cannot be carried out in boom periods when there is greater variance
in wage rates which implies a greater variance in rates of surplus
value across branches?!  So are you saying that the Marx's theory of
price and value could only in periods of bust? What's the point of

And I agreed in a follow up post (you don't mention it) that Marx
believed that there was a real tendency towards uniformity of s/v,
but all your quote says is that Marx thought s/v would tend towards
uniformity, not that it would ever be uniform. So for purposes of
calculation convenience he just assumes that it's uniform in his
transformation calculations. That it's never in fact that does not
undermine the logic of his transformation.

This whole line of criticism remains trivial as far as I can see.

The logic of Marx's transformation does not depend on a uniform s/v,
though indeed the question of dispersion of rates of s/v is indeed
interesting as I underlined in the body of my post with which you are
not concerned here.

You also write:

>Hi Rakesh,
>I'm sorry but I'll stick by what I said. Gary Mongiovi had written:
>>Hi. Solow criticized the assumption of equal rates of SV, on the ground
>>that there is no mechanism that can bring about that equalization. He
>>contrasted that case with the equalization of profit rates, which, in the
>>absence of impediments to the movement of capital, is brought about by
>>intersectoral capital flows.
>In your post "Sraffa's Contribution to Marxian Political Economy" dated 27
>February you replied that:
>"Solow's criticism is trivial, but I suppose his every utterance must be
>taken seriously.  Marx assumes equalized s/v for no reason other than
>convenience of calculation in his transformation. He also assumes in his
>calculations that the value transferred from the used up means of
>production is the same as the value of the money costs of the used up
>means of production. Both assumptions are false, and Marx knows it. But it
>also matters not to  the logic of his demonstration of why and how it is
>concealed that price remains a function of value."
>There you have it: you said "Marx assumes equalized s/v for no reason other
>than convenience of calculation in his transformation."
>What I've suggested is that Marx didn't assume "equalized s/v for no reason
>other than convenience of calculation", i.e. he had another reason, namely
>he believed that differences in s/v would as a long-term tendency be
>"balanced out by real or imaginary (conventional) grounds of
>compensation" and more specifically by competition among workers
>and labour mobility.

>You can of course say that "And I did not say that", but you
>did say it: "Marx assumes equalized s/v for no reason other than
>convenience of calculation in his transformation." It's there in black
>and white.
>However what's important here is not you denying what you previously
>said, but Solow's criticism.

And here is the follow up post in black and white

Date:         Wed, 28 Feb 2007 19:50:00 -0800
From:         Rakesh Bhandari <bhandari@BERKELEY.EDU>
Subject: Re: [OPE-L] questions on the interpretation of labour values

>Rakesh wrote: "Marx assumes equalized s/v for no reason other than
>convenience of calculation in his transformation."
>Another interpretation possible is arguably that Marx considered that his
>abstractive procedure was warranted, because the general long-run tendency
>in capitalism was towards the equalisation of rates of surplus-value across

Sure there is some tendency towards equalized s/v, but Marx makes
that assumption in the transformation tables for convenience of
calculation. Whether S/V equalizes matters not as to why
the redistribution of value conceals that price remains a function
of, is governed by value. If price did not generally remain a
function of value, society would not be able to allocate in
quantitative and qualitative terms social labor time so as to
reproduce itself, as any schoolchild can see upon reflection. The
question for Marx is why in the bustle of the marketplace  price
concealed that it was a function of value as it had to be--leading
Smith and others comfortably trapped on the surface of the
marketplace to abandon the labor theory of value for manifestly
illogical or absurd value theories (adding up theory is tautologous,
utility theory is metaphysical).

Having established that in spite of contrary appearances price do
indeed remain a function of value, Marx then shows that in responding
to price signals, capitalists unintentionally change the value
relations which change makes itself felt in the realm of prices and

Against this brilliant, dynamic theory the best the critics have been
able to do is drone on about a failure to transform the inputs
without the straightjacket of linear production theory or even worse
the falsity of the putative assumption about an equalized s/v.

And on it goes.


I also wrote the following about which you do not comment

  I granted that there  there is a real tendency towards a uniform s/v;
however,  not only pre-capitalist survivals will
interfere with it, and it's beside the point for
Marx's transformation tables.

Even if there obtains social uniform rate of
profit and rate of exploitation, price conceals
that it's a function of value. It would be even
more concealed  if say branches with a higher
than average s/v had lower than average profit
rates and visa versa. How long such disequilibria
could persist cannot be determined a priori; we
can discard the assumption that reality will
always soon catch up with the concept.

Nothing is lost even if the rate of s/v is not
perfectly uniform, and there is nothing in the
quote that you provide that shows Marx thought an
?equilibrium? uniform rate of s/v would ever be
actually realized. That was my point. He also
never thought the profit rate would ever be
actually equalized as strong as he perhaps
mistakenly thought the tendency towards such was.

Which is not to discount importance of analysis
of the tendency towards uniformity and dispersion
of s/v in contemporary capitalism with certain
sectors dependent on foreign undocumented labor,
other sectors highly dependent on skilled labor,
some sectors more dependent on wage rather than
salaried workers. The equalization of s/v may
express worker flight from certain especially
unpleasant sectors (say California agribusiness)
and motivate import of undocumented workers who
suffer at least in the medium term a higher than
average s/v as the value of their labor power is
for complex reasons lower than the average; a
reduced s/v in high skill branches may motivate
outsourcing to raise it over time to the social

There are obviously complex dynamics at work. It
could be that the dispersion of rates of
exploitation is still much reduced in "late
capitalism" compared to a capitalism adulterated
with pre-capitalist survivals.


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