# [OPE-L:4412] 2 equalities, one invariance condition

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Thu Nov 02 2000 - 10:54:40 EST

```Once cost prices are modified, capitalists will first take from total
value what is needed to cover their modified cost prices. This
changes the sum of surplus value which is available for
redistribution in terms of a uniform profit rate; however, this
modified mass of surplus value still determines the sum of branch
profits. This maintainence of the second equality is given in the
equation system which I propose.

I have not in any way  relaxed the value determination of the profit
rate simply because after the modification of cost prices, the
magnitude of the surplus value in terms of which branch profits is
determined has changed (surplus value after all is total value minus
cost price).

For example, in my equation system the sum of surplus value is first
*modified* on the left hand side by subtracting from total value the
new input/cost prices; I then have this modified mass of surplus
value determine the right side of the sum of branch profits (assumed
to be distributed uniformly).

In the iterative method this logical sequence is even clearer, so the
iterative method is superior for demonstrating the point.

After the modification of cost prices through the application of
output PV ratios on the inputs, we are left with a different sum of
surplus value which is now total value, less than this modified cost
price.

In Gouverneur's iteration it is in fact this modified sum of surplus
value, divided by modified cost prices, that determines in an
asymmetric, macro manner first the average price rate of profit and
then each branch's profits in price terms. After each iteration the
mass of branch profits is equal to the mass of surplus value.

It is simply a fallacy, implied by Sweezy and Allin,  that if
throughout the transformation (or iteration) one does not maintain as
invariant the profit rate or the sum of surplus value derived from
the unmodified so called value scheme,  one necessarily undermines
Marx's macro, asymmetric theory of value determination of economic
magnitudes or breaks one of the two equalities.

But...after no single step in Gouverneur's (or my proposed 9 step)
iteration is the sum of profits not determined by the modified sum of
surplus value; at no point has any other data than the original so
called value magnitudes been used to determine economic magnitudes
(this is brilliantly implied by the iterative method!);  at no point
do the prices of production exceed the the system's total value which
should not indeed change since we are only changing the outward price
appearance of the system, not the direct and indirect labor which the
commodity output embodies.

So the equality of the sum of surplus value and sum of branch profits
does not imply that sum of surplus value or profit rate should remain
invariant as do total value/price.  Nor it is implied that if they do
not remain invariant that Marx's macro, asymmetric, value theoretic
determination of price phenomena has in any way been undermined.

The iteration does no harm to Marx's value theory while
substantiating his intuition that one will go wrong in the
determination of the profit rate and prices of production if the cost
prices are left unmodified.

My equilibrium solution to the transformation problem is simply the slogan:

*2 equalities means 2 invariance conditions. Not!*

my other non equilibrium slogan was:

*the inputs and outputs at identical prices of production? What kind
of static shit is that?!*

I have t-shirts for sale. Only 10% more for both slogans on the
front, with a beautiful picture of an arm and hammer busting an
armchair on the back.

Yours, Rakesh

ps there is another one in the making: it has the faces of
Bortkiewicz, Sweezy, Samuelson, Sraffa, Steedman and written below
them--

"The Transformation Problem: A Great Comedy of Error."

If you order now, you can have your t shirt before the next
conference of that oxymoron of Marxist economists. All proceeds will
go to aid war veterans seizing back their land in Zimbabwe.
```

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