**Next message:**Rakesh Narpat Bhandari: "[OPE-L:4506] Re: Re: What is Volume 1 about?"**Previous message:**Rakesh Narpat Bhandari: "[OPE-L:4504] Re: Re: What is Volume 1 about?"**In reply to:**Rakesh Narpat Bhandari: "[OPE-L:4504] Re: Re: What is Volume 1 about?"**Next in thread:**Rakesh Narpat Bhandari: "[OPE-L:4506] Re: Re: What is Volume 1 about?"**Messages sorted by:**[ date ] [ thread ] [ subject ] [ author ]

Almost everyone concedes that no complete transformation can maintain the sum of prices in the unmodified scheme equal to the sum of prices of production in the modified scheme *and* the sum of surplus value in the unmodified scheme equal to the sum of surplus value in the unmodified scheme. My wholly original argument has been that the labor theory of value itself implies that modification of cost price brought about by completing the transformation on the inputs should change the mass of surplus value in the modified scheme in the opposite direction of the modification of cost price. I argue that the idea of surplus value as an invariance condition is the invention of Bortkiewicz, Sweezy and Meek (who give different reasons for why the mass of surplus value should be invariant!). It is also not necessary for the mass of surplus value to remain invariant to ensure that surplus value is derived entirely from unpaid labor. If the modification of cost price means that surplus value is now total value minus modified cost price or paid direct and indirect labor, then surplus value still originates entirely in unpaid labor. The labor theory of value of course also implies that this modified sum of surplus value should then determine the sum of branch profits in the modified scheme. But this is given in the set of transformation equations which I propose. It is even clearer in the iteration which I have proposed. _______________ The initial value table: c v s value I 225.00 90.00 60.00 375.00 II 100.00 120.00 80.00 300.00 III 50.00 90.00 60.00 200.00 Tot. 375.00 300.00 200.00 875.00 Marx's first-step transformation takes the given total s and distributes it in proportion to (c+v). Thus: c v profit price pvratio I 225.00 90.00 93.33 408.33 1.0889 II 100.00 120.00 65.19 285.19 0.9506 III 50.00 90.00 41.48 181.48 0.9074 Tot. 375.00 300.00 200.00 875.00 1.0000 ___________________ Now what I am saying is simple. 1. Apply the PV ratios to the inputs. 2. Sum the new modified cost prices, the new totals in the c and v columns. 3. Subtract the total modified cost prices from the same total value of 875 4. Divide this sum of modified SURPLUS VALUE by the modified total cost prices, given in the second step, to arrive at r 5. Multiply the branch cost prices by this new r to arrive at branch profit. 6. Add each branch profit to each branch cost price to arrive at prices of production for each branch. 7. Determine new PV ratios on that basis. 8. Apply the PV ratios to the inputs. 9. Iterate until you arrive at equilibrium. That is, in each new iteration, the mass of surplus value is determined first in step 3 by substracting from total value the (modified) sum of paid direct and indirect labor, leaving of course the sum of unpaid labor as surplus value; then steps 4 and 5 ensure that the mass of profits will be equal to it. In each new iteration,the mass of surplus value has determined the sum of branch profits. And in each new iteration the sum of surplus value has derived entirely from unpaid labor. Allin followed Bortkiewicz and Sweezy in modifying the cost prices and then adding on the same old surplus value (200) so that a change in costs alone resulted in rising prices (1000, instead of 875). I argue that this is clear return to an adding up theory of price and that the labor theory of value itself implies that the sum of profit should move in inverse direction to the modification of cost price. Following Ricardo's critique of Smith, Marx argues that the value of a product is not determined by adding up wages, profit and rent. Rather he maintains that the size of a product's value--as determined by the quantity of (indirect and direct) labor expended in its production--is the *primary*, basic magnitude that then is resolved into or breaks down into cost price and surplus value. It is therefore obvious that once the entire magnitude (the value of the product) is given in advance as a fixed entity (being dependent on the quantity of labor needed to produce it), any increase in one of its parts (cost price) will invariably lead to a fall in the other (surplus value). [see II Rubin, A History of Economic Thought, p. 259) So since at no point in the completion of the transformation have we changed the indirect and direct labor embodied in the output, the sum of prices in the unmodified scheme (875) should remain equal to the sum of the prices of production. Which means of course that if cost price is modified upward, the sum of profit has to be modified downward, not held invariant as 100 years of dogma has insisted! all the best, RB

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