# [OPE-L:929] Re: the "transformation problem"

akliman@acl.nyit.edu (akliman@acl.nyit.edu)
Fri, 2 Feb 1996 11:51:49 -0800

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Paul Cockshott has asked me to elaborate on my statement that what is involved
is the stationary price issue is nothing less than whether value is determined
by labor-time.

Let's take the similar example I referred to earlier (TSV III, 77-79). Torrens
says, if a farmer lays out 100 qtrs. of corn and 120 are produced, profit is
20 qtrs (and this implies a profit rate of 20%). Marx objects that the value
of the 100 qtrs. can be greater than that of the 120 qtrs. (which would imply
a negative profit rate).

What is at issue is first this: what is the necessary condition for Marx to
be right? Answer: the value of input corn and output corn must not be
determined simultaneously. Whether one measures value in labor-time, in
money, in corn itself (as numeraire), or in calories, etc. does not matter,
if input and output values are simultaneously determined, then 100 qtrs. of
corn will always be worth 5/6 of 120 qtrs.

What is also at issue is: what are the necessary conditions for value to
be deterimed by labor-time? I don't presume to know all of them, but one
is clearly that input and output values are not simultaneously determined.
If determination is simultaneous, the profit rate will always be 20 0n
Torrens' example, no matter how much living labor is extracted, or what
fraction of the 100 qtrs. are real wage outlays, etc!

No matter how value is being *measured*, then, what determines the magnitude
of the profit rate is the ratio of corn output to corn advanced. One can
always give 3 quantities of corn labor-time or money names and rechristen
them as s, c, and v, but the relations between them don't change. And if
value is not being *determined* in any real sense when it comes to the level
of the profit rate, it isn't being determined by labor-time in any other
real sense (even though total value and surplus-value need a unit of
measurement, unlike the profit rate) in other respects.

Now, none of this has anything to do with this being a 1-sector example.
Imagine a second sector, imagine even that it produces the money-
commodity. If it uses only corn and living labor to produce, and the
cornganic :-) compostion of capital and rate of exploitation are the same
as in corn production, the above results will not change--the profit
rate will be determined *solely* by the ratio of corn output to corn

Now, letting cornganic compositions vary, etc., can muddy up the results
a bit, so that it looks like labor extraction matters. But first of all,
it is a strange kind of Marxian value theory that REQUIRES price-value
deviations in order to have anything significant determined by labor-time.
And second of all, not much really changes--this is the real import of
the Okishio theorem: technical and real wage coefficients alone determine
the profit rate, just as in a corn model. So no matter how much employment
falls, the profit rate must rise as long as the output/input ratio,
measured at given prices, rises in some basic sector.

But when value is determined temporally, then it becomes *possible* for it
to be determined by labor-time. Output values (and prices) can FALL
relative to input values (and prices)--which cannot happen when determination
is simultaneous. And so it becomes *possible* for the output/input ratio
to rise due to higher labor productivity but, instead of this giving a
higher profit rate, the profit rate falls because the rise in productivity
causes the output values to fall sufficiently.

Andrew Kliman