Gary writes in 7368: > (c) I don't think it matters much for his account of >capitalism, in view of my interpretation of his value analysis as a substitute >for an unavailable simultaneous equation determination of the profit rate. The simultaneous equation determination assumes existence of an input-output matrix and the existence of a surplus for the magnitude of which there is simply no explanation. By focusing on value as a process rather than technical conditions as a given, one can keep focus on the objectification of alienated living labor in the commodity output which the simultaneous method simply takes as given. The neo Ricardian theory tells us that it is fine to focus on the alienation of labor in the production process and do studies thereof but that in the determination of the profit rate and relative prices there is nothing to be gained by understanding the surplus as nothing other than the materialization of unpaid living labor. So proponents of the simultaneous method will argue that for the purposes of determining the rate of profit and relative prices the surplus value objectified by alienated labor in the commodity output plays no role. Again: for this purpose of price and profit determination one can abstract from value as a process and value magnitudes. Not only--we are told-- because value is putatively rendered redundant by the ability to calculate on the basis of those technical condtions from which value magnitudes have to be derived but also because surplus value simply cannot have any relation to the mass of profit in a complete transformation. Yet Shaikh's and Gouverneur's respective iterations do show that the real magnitude of non wage income is determined before the formation of prices of production and determination of relative prices. That is, the mass of non wage income (or at least its feasible maximum) is not determined simultaneously with relative prices; moreover, in order for relative prices to be determined, the mass of surplus value has to be determined prior to the determination of relative prices. Simultaneous determination would seem to compromise the logical and causal priority historical materialism accords to production. Once price competition is allowed by allowing the iteration to be carried out, prices do indeed diverge from value prices or simple prices or direct prices or prices which are proportional to values, and the mass of profit seems to diverge from surplus value... but any divergence between profit and surplus value is compensated on the revenue side. This is Shaikh's brilliant point. The iteration only graphically confirms Marx's Capital I, ch 5 argument that price value deviations in themselves cannot be the source of any real gain in surplus value for the capitalist class as a whole. So in the analysis of capital-as-a-whole which is itself no less a real individual than a biological species is also a real individual we may as well abstract from price-value deviations. Marx retroactively confirms his having abstracted away from price value deviations in volume one with his volume 3 analysis. In fact if in the analysis of capital as a whole we do not abstract from price value deviations we can easily conflate those countertendencies that allow only a few individual capitals to stave off the fall in the rate of profit through favorable price value deviations from those countertendencies which do in fact serve to increase the mass of surplus value and thus raise the rate of profit for capital-as-a-whole--this has been a major point of Carchedi's very illuminating theory of unequal exchange. So for the purposes of the analysis of the historical limits of the capitalist system, the primary importance of Marx's price value analysis is his saving the value concept from recalcitrant market phenomena in order to use it in the analysis of the dynamics of capital as a whole. The culmination of Marx's value analysis was certainly not the transformation problem. Abstraction from price-value deviation thus makes Marx's theory a truer theory of the limits to capital than the bourgeois theory which is focused on relative prices could ever be. If one's object of investigation is the historical limits to the capitalist system--and Korsch makes an outstanding case that this is what Marx's value theory was intended to be--the real detour that leads to a cul de sac is relative or individual price theory in which Marx (given his real object of investigation) quite properly showed little interest. Of course I am also very sympathetic to Carchedi's argument that any equilibrium price theory is inimical to Marxian theory and contrary to capitalist reality itself. But I think Shaikh has developed a rather brilliant reply on the terrain of equilibrium economics. > The question >is whether, in following this procedure, Marx gave an erroneous explanation of >the profit rate. Completion of Marx's transformation--though my inverse transformation point is meant to indicate that such completion was not for what Marx himself was admitting the need--reveals that the real non wage income which capitalists enjoy can be determined by the exploitation of living labor alone. All the best, Rakesh > I think he did. The next question would be, well, why did he >make that mistake? I think the answer is that he didn't have at his disposal >the mathematical tools required to get it right. So in the end we are back to >the question of how is Marx's project related to Ricardo's.
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