# [OPE-L:4262] Part Two of Volume III of Capital

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Tue Oct 24 2000 - 14:26:31 EDT

```Re 4258

Allin,
Just to repeat my exceedingly simple basic point. It's not possible
to determine the unit prices of production into which the inputs
should be transformed.

That's simply because last period's data are needed so we simply have
no way of determining them; in reality they are simply a given
precondition for the capitalists, exactly as Marx says.

Let us say the total cost prices are  modified from 675 to 693 after
the inputs are transformed into their prices of production from last
period.  The 693 however is not determined on the basis of the data
in this period as you had it; it just turns out to have been how much
the input mp and wg sold above their value in the last period
(implying of course that Div 3/luxury goods sold by the same amount
below value in the last period).   693  is now a given precondition
for the capitalists; total profit is now the same total value
produced (875) less this 693, instead of 675. Total profit thus drops
from 200 to 182. The profit rate at t+1 is also not as high as it
could have been had the input mp and wg sold together  at value or
even below value while luxury goods sold above value in the previous
period.

It may be that when we work things out on the basis of these modified
cost prices the unit input prices of production are not 5% greater
than the unit output prices of production though productivity has
risen 5% from t to t+1.

My simple point is that there is no reason to expect that it would
have to work out this way simply because physical productivity rose
5% *this* period. In fact I have given you a couple of reasons why it
would probably not work out this way.

We simply cannot determine a rule for interperiodic change in unit
prices of production on the basis of data from a one period model.
You were wrong to simply divide the unit output price of production
by this period's productivity decrease (.95) in determining the unit
input prices of production, thereby obliterating the need for any
data from the previous period. It just can't be that simple.

It's best to make a mental note that the cost price would be modified
had the inputs sold at prices of production and that r and the krs at
t+1 would be changed in some fairly insignificant ways as a result
and then move on, though stopping to savor Marx's having turned
Malthus' Ricardo critique upside down.

Marx's transformation is as complete as it can get on the basis of a
one period model, and that is all needed for his own theoretical
purposes of which we should not lose sight.

All the best, Rakesh
```

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