Re: (OPE-L) Ajit's paper

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Tue Jun 01 2004 - 04:37:22 EDT

>But Rakesh! You have forgotten to tell us what is
>"value", which is the unknown in the system. We need
>to know what is this animal called "value", which is
>the unknown in the system, and what kind of a system
>is this?

SNALT labor time. Surplus value is unpaid labor time; surplus value
contains profit, rent, interest.

>>  is the mistake
>>  that Marx is claiming that he made in his
>>  transformation tables. By
>>  assuming that price was proportional to value, he
>>  assumed that he
>>  could determine from visible flow price data the
>>  value transferred;
>>  moreover, since wage goods could have sold above or
>>  below value, he
>>  had no way of knowing about much actual labor power
>>  the money wage
>>  could actually buy.
>But how would you know whether something is above or
>below value without knowing where is value?

Well yes this is the question. How is Marx's theory of value to be
verified or confirmed? How is the retroduction (Bhaskar) to value
relations to be validated? But Marx already answered that. He not
only deduced that value relations had to be expresed through exchange
value and that he therefore had to work out the mediations of that
expression, he was also able to explain the laws of motion on the
basis of his mediated theory of value.  For example the very fact
that capitalists are momentarily rewarded for introducing and forcing
upon others technical changes that reduce the average rate of profit
is explained exactly as the result of the mediations in and through
which value is expressed.

Marx's deduction is sounder than Bohm Bawerk's (only if there is a
common substance is it likely that exchange ratios would have some
stability; general use value is not a good candidate on simple
logical grounds as abstract labor--see Hilferding, Boudin, William J
Blake, Carchedi); Marx's deduction is retroactively validated
(Postone) by the real relations that he able to lay bare on the basis
thereof. Which includes intertemporal change in exchange ratios, as
Shaikh and others have argued.

  So the answer to my questions: the same way that Eddington confirmed
Einstein. Marx is validated by the real tendencies that he was able
to explain and predict--concentration, centralization, general
crises, structural limits to working class advance, eventual working
class retrogression, the breakdown of capitalist fraternity. Wassily
Leontief realized the towering superiority of Marx over all rivals.
Marx was ahead of his time; he was ahead of Menger's and Bohm
Bawerk's and Bernstein's and Tugan's time. Grossmann understood Marx
in his timeliness. Marx had not been understood until that point for
good materialist reasons.

  Even when Edward Wolff today explains the US profit spike in terms
of new low OCC branches, he is operating within Grossman's framework.
Grossman provides in one unified theory an explanation of why these
new branches could have increased general profitability.

On your particular point: first, it is not a question of knowing. It
is a question of why Marx's theory of surplus value is in fact
invalidated by the formation of an average rate of profit even with
inter and intra branch variance
in the composition of capital. Marx explains the seeming
incompatibility. YOu think the explanation is vitiated by the
transformation problem; I insist that Marx never admitted to having
failed to complete the transformation of the inputs from values or
simple prices to prices of production. Alejandro Ramos and Fred
Moseley are right about that. Marx's imprimatur to this so called
problem has been invented and repeated ad nauseum for more than
100years. Marx never said that this is what was wrong with his own
transformation tables (but he did say something was wrong--here I
disagree with Fred and Alejandro but everyone from Bortkiewicz to
Samuelson to Sinha has not understood what Marx said his actual
mistake was, but I have explained it to you:)). This traditional
transformation problem was invented by those who wanted to apply
simultaneous equations to Marx's theory.

Now back to verification: Grossmann argued that Marx's theory was
supported by imperial attempts to control trade with colonies in
which the OCC was low because this had the effect of raising the
average rate of profit in the imperialist country. So Marx's theory
was able to explain imperial virulence even as capitalism was
supposed to realize as the revisionists and Schumpeter thought a
Kantian perpetual peace.

Marx makes a hypothesis about how value is distributed. And that
hypothesis can then explain why low OCC branches may have raised the
rate of profit and why imperialism can become more violent even in
late stages of accumulation.

What more do you want? Arguments over which invariance condition to
maintain in a complete transformation which yields something of no
real interest--equilibrium prices.

Logic chopping over that is like logic chopping over angels on a
needle. Which is how the post Samuelson and Steedman debates in
Marxian value theory seem to almost everyone!

>Rakesh, do you really understand what you are saying?
>And I'm serious here.

Please specify what you do not understand.

>So what are the other determinants?

quantity of unpaid labor time appropriated at least in Carchedi's
sequential theory.

>But I had just said that Sraffa never said that prices
>in time (t-1) are the same as prices in time t. All he
>is saying is that the rate of profits is determined on
>the replacement costs of the used up capital. What is
>wrong about it? Cheers, ajit sinha

Well the rate of profit could be calculated that way; it could also
be calculated in terms of the historic costs of capital.

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