Re: [OPE-L] questions on the interpretation of labour values

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Mar 25 2007 - 12:47:20 EDT

>On Sat, 24 Mar 2007, Rakesh Bhandari wrote:
>>In my immediately previous and obviously unread posts I have
>>argued that this passage points not to the need for a
>>transformation of the inputs from values to prices of production
>>but for an inverse transformation--a correction of the
>>assumptions of the value transferred from the means of
>>production and the rate of surplus value in the transformation
>Rakesh, I don't really see how the "inverse transformation"
>differs from the "forward transformation", other than verbally. In
>each case, one is recognizing that if you write down a set of
>"prices" for inputs, you can't take these magnitudes as both
>(a) indicating the value transferred from inputs to output, and
>(b) indicating the price of the inputs as would enter into
>     the formation of a price of production for the output.

I take these magnitudes to indicate b, not a.

Marx takes the cost prices of commodities as a precondition--given,
unchangeable if you would only read the entire paragraph you quoted.

Yes by this paragraph Marx has changed our understanding of what had
determined the cost prices--we thought they had been determined by
the value of goods but now we see that they had to have been
determined (directly and indirectly) roughly by the prices of
production of goods. Here I agree with Fred and Alejandro, but then
our interpretation diverges.

Because Marx assumed that the constant capital outlay portion of the
cost price had been determined by the value of the used up means of
production he also assumed in his transformation tables that the
value transferred could be identified with the cost price of the

This assumption he says is wrong. But it's also irrelevant as the
value of any commodity is greater than its cost price, the value of
the commodity output of any branch is greater than the cost price of
those goods, and the total value of goods is greater than the total
cost price. Which means that  new value has been added, and it will
tend to be distributed according to an equal profit rate rule on the
basis of the given precondition of the cost prices. And for this
reason, among others, the value basis of economic magnitudes are
concealed. This is what Marx set out and did in fact establish.

He never says that he should have go back and transform the inputs
from values to prices of production. The input prices cannot be
changed after all; they are a given precondition.

He never admits to a need for an equilibrium theory of price in which
inputs and outputs are transformed simultaneously into the same
prices of production.

Equilibrium economists have forced Marx to admit this to justify
their epistemological and ontological assumptions. They are not

You would think the TSS folks are happy with my interpretation of
this most important passage but they cannot accept it because I, like
you, think the value transferred from the means of production is
determined not by the value of the money required to purchase them
but by their own value. That is, I, like you, think Marx clearly says
that prices of production and value diverge for two reasons. Since we
agree, I won't elaborate that point.

>Yet, it seems to me, that is just what Marx tries to do in his
>transformation arithmetic.  So there is a breakage to be fixed.
>I remain of the view (Shaikh, Morishima) that Marx's
>transformation should be seen as the first step in an iteration
>that would produce a consistent set of prices of production.

It's a dubious exercise not because one need not begin the iteration
with labor values but because there will never be enough time for the
iterations to reach equilibrium. But if one is forced to operate on
that terrain and accept the traditional TP, I think it shows how
prices of production could remain a function of value.

>>Marx never admitted the need for an equilibrium price theory in
>>which inputs and outputs are transformed into the same prices of
>He didn't use the phrase "equilibrium prices", but the concept of
>price of production depends on the notion of an equalized rate of
>profit, and that is surely an equilibrium idea -- in fact, an
>excessively strong one.

Yes but it's not the equilibrium idea of a timeless price, of the
inputs and outputs having the same prices of production. Ricardo
would not have accepted this aspect of equilibrium either.

>>He has been mis-read by equilibrium economists and in particular
>>by Bortkiewicz who wanted to do away with successivism for
>>simultaneism as Naples has argued.
>What's "successivism"?  I think questions of dynamics and
>temporality are a red herring in this context, not because they're
>not important, but because -- if we're discussing Marx -- his
>transformation procedure is purely logical and static.  Some
>people have attempted a dynamic analysis of the formation of
>prices of production (for example, Dumenil and Levy).  To do this
>you have to model inter-sectoral capital flows and the resulting
>shifts in supply (and face the tricky question of whether this is
>going to produce stable convergence on anything -- that has to be
>a derived result, not an assumption).  There's nothing of that
>sort in the passages from Marx that deal with the transformation
>in a quantitative manner.

Well if prices of production don't change in the course of production
and realization of commodities, when do they change?



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