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Gil, thanks for your messages. I don't have time for a full response, but

below is a quick response to one key point.

On Mon, 3 Jul 2000, Gil Skillman wrote:

*> The necessary inconsistencies in Marx's account are readily seen.
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*> First, grant that, for the purposes of Ch. 9 in V. III, constant and
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*> variable capital are represented in their price-form rather than their
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*> value form; that is, they've *already* been transformed from the value
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*> terms by which they were defined in V. I to the cost terms by which
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*> capitalists actually experience them. Next, grant that capitalist
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*> competition will equate the *rate of exploitation* across sectors,
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*> i.e. ensure that
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*>
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*> (1) Si/Vi = e for all i,
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*>
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*> where Si is surplus value in sector i, Vi is variable capital in sector i,
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*> and e is the constant rate of exploitation across sectors.
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*>
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*> Now in light of these two givens, the "product values" in the first table
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*> (p. 255) must be understood as *product prices* under a system of
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*> capitalist competition that ensures equal rates of exploitation. There's
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*> no other coherent way to interpret them, since constant and variable
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*> capital are in price-form by assumption, and capitalist competition--which
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*> is based on prices, not values--equalizes the rate of exploitation by
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*> assumption. This dictates in turn that for each sector i,
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*>
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*> (2) Ci + Vi(1+e) = Pi for all i,
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*>
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*> where Ci is the price-form of constant capital in sector i and Pi is the
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*> commodity price in sector i following from the conditions stated above.
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*>
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*> But next Marx asserts that capitalist competition must *also* equate the
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*> rates of profit across sectors. If Ci and Vi are interpreted as *already*
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*> transformed into their price-form, per Fred and the passage quoted above,
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*> this means that
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*>
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*> (3) Si/(Ci +Vi) = r for all i,
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*>
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*> where r is the economy-wide rate of profit induced by capitalist competition.
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*>
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*> But since this is a consequence of capitalist competition, enacted in the
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*> price-world, it must then be that (ignoring, by Marx's stipulation at the
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*> beginning of the chapter, any complications from unequal rates of
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*> depreciation of constant capital goods)
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*>
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*> (4) (Ci + Vi)(1+r) = Pi for all i.
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*>
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*> Here, the Pi are "officially" the sectoral "prices of production" as Marx
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*> defines them on p. 257. *If* we accept, however, that constant and
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*> variable capital inputs have already been transformed into their price-form
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*> (a transformation that Marx fails to demonstrate), then the Pi's must
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*> simultaneously satisfy equations (2) and (4). It is readily shown that
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*> this is only possible if organic compositions are identical across sectors,
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*> which of course *contradicts* Marx's original stipulation. There's no way
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*> around this other than denying that capitalist competition equates sectoral
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*> rates of exploitation (or something similar) or denying that the constant
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*> and variable capital inputs were "really" transformed.
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*>
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*> On the other hand, if we *don't* require that capitalism satisfies (2) and
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*> (4) in the price world--that is, if we give up on the notion that
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*> capitalist competition (and thus capitalist prices, N.B.) equates the rate
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*> of exploitation, then Marx's aggregate equalities fail to hold.
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*>
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*> So necessarily *either* Marx's "transformation" is in error, or the central
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*> conclusion of his "transformation" is erroneous. Either way, Marx's
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*> analysis of the "transformation" includes a fundamental error.
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*>
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*> Gil
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*>
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*>
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There is no contradiction between equations (2) and (4) if equation (2) is

understood to apply to the economy as a whole (i.e. to capital in

general), as I have argued in several papers. Equation (2) (or an

equation similar to it in my papers) determines the total amount of

surplus-value and the rate of profit, which then is taken as given in

the determination of individual prices of production in equation (4).

Comradely,

Fred

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