[OPE-L:4632] Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Part of My Confusion ontheTransformation

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Thu Dec 07 2000 - 12:52:14 EST

```re Allin's 4629

>On Wed, 6 Dec 2000, Rakesh Narpat Bhandari wrote:
>
>>  >You're right, in that fiat money is not a produced commodity and
>>  >doesn't participate in any equalization of the rate of profit,
>>  >unlike Marx's commodity money.
>>
>>  Allin, Marx's commodity money is no more allowed to participate in
>>  the equalisation of profit rates in vol 3 than it is allowed to
>>  change its own value in vol I. The assumption that the value of money
>>  is constant is an assumption which underlies all three volumes of
>>  Capital.
>
>I think you're trading on a confusion here.  In one sense the
>value of (commodity) money doesn't change in the transformation,
>i.e. in the same sense that _no_ commodity values change in the
>transformation (the labour time required to produce them is not
>altered).

You're right. In vol I the fictitious assumption of the the
invariability of the value of money has to be introduced exactly
because money is a commodity; Marx confines the analysis of  price
changes to those effected on the commodity side of the exchange
relation.

>   But that doesn't mean that the "monetary expression
>of value" remains constant, i.e. that the monetary unit
>continues to command in exchange the same amount of labour
>embodied (in other goods) as "before" the transformation.  That
>just can't be "assumed", if money itself is a commodity.

Well, let's assume that each monetary unit simply represents .5 labor
hours. It remains fixed as it has throughout *Capital*

In Marx's transformation table this means that the money sums laid
out as constant and variable capital represent in the aggregate 101
labor hours and  55 hours, respectively.   And the total output
represents 211 labor hours.

What Marx's transformation aims to show is that that  the  monetary
units for which the outputs sell and thus the labor time they
represent changes once we move from  prices proportional to values to
prices of production. The point of the demonstration is not to
determine the prices of the outputs but to demonstrate that while the
second diverges from the first, the law of value still regulates
prices though in indirect form..

In the analysis of this "problematic", Marx obviously has the unit of
money command the same quantity  of labor for both the inputs and
outputs and in both the simple price and price of production scheme.
Since he is not offering a determinate theory of prices but rather
demonstrating the possibility that the law of value can govern
without directly regulating prices, I hardly see why you are so
critical of the assumptions Marx has made regarding the constancy of
the labor commanded by the unit of money. Do remember that Sweezy
brought the unit of account into the transformation procedure not
because he thought money finally had to be allowed to be variable but
because it gave him an excuse to set dept 3's multiplier and simplify
the mathematical problem.  Marx is not trying to tell us what prices
will be after the transformation but rather to demonstrate that they
do not have to be directly regulated by value for value to still
regulate prices.

Now after the second table we see that the labor time which outputs
come to represent cannot be equated with the labor time they actually
embody. Industry 1 comes to count as one more labor hour, industry
three nine less hours, and so forth.

But we now can also see the mistake in Marx's own first table. He
had assumed that labor time represented by the money needed to
purchase means of production was proportional to the labor time
embodied in the means of production and thus transferred from them to
the final output. But the capitalists had to have bought means of
production not at prices proportional to their own labor value  but
the labor time they had come to represent after the equalisation of
the profit rates.

It may be a plausible reading that Marx is saying that he has gone
wrong in assuming that the value transferred from the means of
production is proportional to price which the use of those means has
cost the capitalist.

This would mean that Marx is not saying that inputs have to be
transformed (the ground on which I have been trapped since
Bortkiewicz, Sweezy and others say that the inputs are not
transformed). It would mean that Fred is correct that Marx already
assumed that the cost prices are a given precondition, already in the
form of prices of production or market prices regulated by prices of
production. The cost prices don't have to be transformed; however,
there is still an important mistake in Marx's own transformation
tables:  one needs to drop the assumption of a proportional relation
between the cost price of the used up means of production and the
value actually transferred from the means of production to the final
product. But this is a correction of a fundamentally different sort
than what the transformation debate has been about.
Do you find this a plausible reading of what Marx himself meant by
how he had gone wrong?

Yours, Rakesh
```

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