[OPE-L:4419] Re: KM's interpretation of the TP

Ajit Sinh (ecas@cc.newcastle.edu.au)
Tue, 18 Mar 1997 00:22:48 -0800 (PST)

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At 11:08 AM 3/17/97 -0800, Andrew Kliman wrote:
>In response to Ajit's ope-l 4402:
>Ajit: "I mostly agree with Fred and Allin on their criticisms of Andrew
>Kliman and
>Ted McGlone and others who are following a similar approach to the
>transformation problem. Their approach has never made any sense to me."
>This is fine by me. The purpose of our work on this issue was not to develop
>something that made sense to Marx's critics, but to refute allegations that
>Marx's own transformation account was internally inconsistent, and that it had
>been proven to be inconsistent. We succeeded, and if the result doesn't make
>sense to Marx's critics, so be it. Actually, this is not surprising at all.
>His own transformation account, which ours replicates, never made sense to
>them. So why should ours make any more sense to them? The point, however, is
>that no one has proven inconsistency; they've just used this macho language
>instead of acknowledging that they couldn't make sense of what Marx was doing.

Why kick so much dust Andrew? Do you find yourself so much on the backfoot?
What evidence do you have to show that I'm a critic (read anti-Marxist) and
you are such a great defender of Marx? So let us stick to the point.
>Ajit: "The problem is simple: KM claim that the input prices are equivalent
>to value
>and the divergence between value and prices occur only in the outputs."
Andrew says:
>This is not what we claim. At best it is misleading. We do not claim that
>the prices of means of production and labor-power (or means of subsistence)
>employed as inputs are equivalnet to the values of means of production and
>labor-power (or means of subsistence).

Let me quote from K-M's 'The transformation non-problem':

"Hence, the initial input 'values' in Marx's illustration of the
transformation of 'value' into prices of production are actually sums of
money which, through the ideal presence of money, implicitly REPRESENT sums
of value." (p. 63)

"To illustrate this point, we must therefore begin (and indeed begin again
in each new period) with given input prices. These prices are money prices,
sums of money. As we noted in Section II A, the appearance of values as sums
of money and hence the existence of money (which possesses a definite value)
are necessarily presupposed. We assume that the value of money equals 1;
every number in our illustration therefore signifies both a price and an
amount of value." (p. 72)

Now, you tell me Andrew, what does it mean? On your assumption that "the
value of money equals 1", wouldn't your price figures be quantitatively
equal to value? But then you go all over the place, since you want to
quantitatively differentiate value from prices of production. I have tried
really hard to find out what you mean by value, but in vain! On your list of
letter representations for all the variables in your transformation
procedure, value simply does not figure! Yet you make incomprehensible
claims that in your solution total prices equal total value etc. Though you
have a term called LL, which does not figure in your 'transformation table'.
This LL is defined as "(price expression of) hours of living labour added;
generation of new value (not shown in table)." (p. 72). It is again
incomprehensible. But by looking at your table it seems you basically add
number of hours worked to the given amount of money investment, and
determine your non-represented output of total value. The fact of the matter
is that your assumption that "the value of money equals 1" is totally
arbitrary. Nowhere in the paper you have tried to give any reason for it,
though all your value figures depend on this arbitrary assumption. So tell
us how is value determined in your dialectical world? Can value be
quantified? If yes, then how do you arrive at certain quantity?

>Ajit: "Let us suppose the system is in simple reproduction schema, just for
>simlicity sake, and that nothing in the world changes from period zero to
>period one. In this case every reasonable person would think that the prices
>in period one would remain the same as the prices in period zero."
>Andrew says:
>Good. I guess I'm reasonable. I agree with this 100%. Note, however, that
>"nothing in the world" includes more than technical and real wage
>coefficients. It also includes input prices.

By the way, you didn't get the point. The point was that if all other
things, leaving prices out, remain constant from period zero to one, then
any reasonable person would expect prices to remain constant as well. Why?
because there is no reason for prices to change. Why? Because a reasonable
person would think that prices are DETERMINED by various other factors in
the world, and if they are all constant then there is no reason for prices
to change. You do not have to ASSUME that prices remain constant too. It
IMPLIES that prices would also remain constant.
>Ajit: "Now as KM claim that the prices in period zero is given, "we know it",
>then it is
>quite clear that in our hypothetical case we also know the prices in period
>one. No need for a theory of prices! This reveals the bankruptcy of KM

>Andrew says:
>Hogwash. In the first place, did or did not Marx's own account of the
>transformation take the constant and variable capital as given (as well as the
>results of the immediate process of production) in order then to compute
>production prices?
>Second, all dynamic results depend on initial conditions. If the system in
>question is an equilibrium system, then, as time approaches infinity, the
>particular initial condition will matter less and less to the quantitative
>results. But this is not true in general. Ever hear about sensitive
>dependence on initial conditions?
>Third, Ajit's notion of theory is quite mechanical. It is as if the only
>possible purpose of theory were to predict the magnitudes of things. What
>about a theory of what prices ARE? That's what Marx was doing in Ch. 9:
>definitizing the concept that prices and profits ARE forms of value and
>surplus-value and are limited by them in the aggregate.

Man! I didn't know I was so stupid. Haven't heard of nothing and come around
arguing with such mighty scholars! As a matter of fact, what you have said
is "hogwash" or rather throwing dust in peoples eyes. Marx of course takes
the VALUES OF constant and variable capital as given. As a matter of fact,
Marx's values can and are always determined independent of prices or prices
of production etc. That's the whole point of transformation. From given
value data, he wants to determine prices of production. Not from input prices.

If your theory is not interested in predicting, then what those numbers in
your table are doing? So tell us, what prices are? I searched for an
understanding of what values are in your paper, but in total vain!
>Ajit: "You cannot have a theory of prices when prices are determined by
>prices themselves, no matter whether you call one price "value" or whatever.
>To have a theory of prices, you must determine prices from some data other
>than prices."

>Andrew says:
>This is again a very mechanical concept of determination. Ever hear of
>self-determination? I realize that as an Althusserian you won't agree, but I
>am self-determining in that Kliman is determined by Kliman himself. Human
>beings make their own history, though of course not under conditions of their

Heard of nothing man! I told you already! So Kliman determines Kliman, and
so he can determine who is Marxist and who is not, and what Marx was really
doing. Let me quote Kliman himself: "The manner in which simultaneous
'solutions' obtain prices and the equilibrium rate of profit provides
additional evidence of this conflation of mathematical and conceptual
question. All relative prices are 'determined' within the price system,
without reference to the value 'system' which lies beside it. And, since
prices appear on both sides of the equations, the system is circular: prices
determine prices." (p. 66). It appears that you had not heard of
self-determination then Andrew! But more importantly, your critique of the
so-called simultaneous equation method suggests that you haven't understood
the first word of it. The system is nither circular nor prices determine
prices in the simultaneously equation framework. Prices are determined by
the given technological conditions, length of the working day, and real
wages. Your paper is full of meaningless criticisms of this nature of what
you call 'transformation problem' 'solutions' without specifically speaking
about any particular paper you are critiquing. What were the referees doing?

>Andrew continuies:
>Moreover, Ajit is ontologizing the value/price relation in a way that Marx did
I have no idea how one ontologizes value/price relation.
Andrew Continuies:
The issue for Marx was not that prices were dependent on values but
>values weren't dependent on prices, but that one cannot COMPREHEND prices
>without reference to values.
Andrew Continuies:
Of course, this makes no sense if one's notion
>of theory is just prediction of magnitudes, so Marx's concept gets
>"translated" into something he didn't say or mean. That he definitely did
>know that TODAY's values depend on PAST prices is clear from the several
>passages in which he notes that the capital-values advanced can differ from
>the values of means of production and subsistence.
Both Marx and yourself are quantifying value and prices of production. Now,
to some extent I understand what Marx is doing. But are you wasting our
time? Let's see some of those references you are talking about.
>Ajit: "Otherwise, your theory turns into 'check it out theory', ie. go
>out in the market and check it out what prices are prevailing--let's leave
>the question of which prices should we check out, since there are always too
>many different prices for the same commodities in this world."

>Anderw says:
>I do not understand what Ajit is trying to say here. It seems to presuppose
>his mechanistic concept of theory, but I still don't really understand it.
It basically is saying that your theory of prices is not a theory but boils
down to empirical observation of prices.
>My question for Ajit is this: since your own theory cannot make sense of what
>Marx was doing, in this case and many others, why not just call it "Sraffian"
>or "surplus approach" rather than attribute it to Marx?

It is not true that "my own theory cannot make sense of what Marx was
doing". I have a fairly good sense of what Marx was doing. But his doing was
a bit flawed--nothing fatal though. This post has already become quite long,
so I won't go into my interpretation of the transformation problem. By the
way, I'm right now finishing a paper critiquing Eatwell's solution by the
use of the 'standard commodity'. So I'm not as simple as you think. In any
case, for your information, Sraffa was a Marxist! The greatest Marxist
economist of the 20th century without any doubt. So get off your
anti-Sraffian horse, because it will not do any good to Marxism. Cheers,
ajit sinha