[OPE-L:1334] Re: A Problem w. Transformation

Gilbert Skillman (gskillman@mail.wesleyan.edu)
Wed, 6 Mar 1996 08:34:21 -0800

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I'd like to endorse Duncan's response in the following exchange:

> On Mon, 4 Mar 1996, John R. Ernst wrote:
> > Among the numerious problems I have in understanding
> > the transformation problem is the inclusion of all sectors
> > as one transforms values into prices of production. In
> > a letter to Engels, dated 4/30/1868, Marx states
> >
> > "Those branches of production which constitute natural
> > MONOPOLIES are excluded from this equalization process
> > even if their rate of profit is higher than the social rate. This
> > is important for the development of land rent."
> > (Emphasis is Marx's)
> >
> >
> >
> > Given that Marx, unlike many of his followers, recognized that
> > land was privately owned and hence rent could be either
> > absolute or differential or both, the usual manner of carrying out the
> > transformation procedure seems suspect in that it includes all
> > sectors. That is, to derive prices of production from values
> > one assumes a uniform rate of profit in all sectors even though
> > all sectors are not earning that same rate of profit.
> This raises a real, but, I think, answerable question. The issue is the
> theory of competition. You could find profit-rate equalizing prices on
> the hypothesis that capitalists equalized profit after rent payments
> (which would be consistent with Marx's occasional remarks including rent
> as part of the constant capital from the point of view of the individual
> capitalist). Land prices then capitalize the rent streams.

In a multi-asset word, one must keep clear *which* category of
(transformed) surplus value is being equalized across sectors.
Fluid and competitive markets for financial capital assure only that
rates of return to the latter will be equalized at the margin. But
these rates of return are net of rents to specialized factors which
will not in general be equalized.

[In light of the possibility of differential non-reproducible
productive assets, I believe that in order to avoid serious
inconsistencies socially necessary labor time should be defined at the
margin rather than in average terms, as indicated by the theory of pure
competition. But that's another question.]

In solidarity, Gil