Though Bortkiewicz's two papers were published in Polish in 1906-7, it came to international attention only when Sweezy presented Bortkiewicz's arguments in his famous book (Sweezy, 1942) and later published an English translation of his 1907 paper (in Sweezy ed. 1949). After this the first round of debate took over which invariance postulate between value and prices of production should be added to the system (see Laibman 1973-74, 1992 for a detailed discussion on various invariance postulates). Furthermore, Bortkiewicz had conducted the transformation debate within the system of simple reproduction schema (see simple reproduction). Winternitz (1948) argued that the transformation problem does not require the assumption of balanced relationship. And later Seton (1957) further generalised the formulation to n-commodity system where there is no reason to assume that "every physical commodity [is] not merely unequivocally identifiable as the product of one or other of these [sectors], but that its ultimate use in the economy [is] equally invariable and predetermined by its department of origin." (p. 150). Soon after this, in 1960, Sraffa, not intending to solve the transformation problem, presented a physical input-output system that simultaneously solved for the relative prices and the average rate of profit, given the real wage rate from outside the system. From Sraffa's physical input-output system, one could directly derive the commodity values as well as the solution for prices and the average rate of profit. This gave rise to the charge that the labour-value accounting is redundant for a theory of prices and distribution in a surplus approach framework (Steedman, 1976; see 'surplus approach economics'). Furthermore, it had been argued that the transformation of values to prices of production cannot be relied upon because there is no objective basis to the selection of one invariance postulate from many good candidates; as Seton had proclaimed "... and to that extent the transformation problem may be said to fall short of complete determinancy." (p. 153). Recently this charge has been put in a much friendlier terms. Garegnani (1991) has argued that Marx did not have the simultaneous equation method available to him, so in the absence of this tool Marx's method of deriving the average rate of profit was the best that could have been done. Much earlier, Eatwell (1974, 1975), relying on Garegnani's reading of Marx, had argued that Sraffa's discovery of the 'standard commodity'(see the 'standard commodity'), which was apparently developed to solve Ricardo's problem of the 'invariable measure of value', is also a solution to Marx's transformation problem. He argued that with the help of Sraffa's system and the 'standard commodity' one could derive the average rate of profit directly from the production conditions and the given rate of surplus value in the system, as Marx had attempted. Though the Sraffians have solved the problem of prices and distribution for the surplus approach economics, thereby vindicating Marx's basic theoretical framework, this has come at some price to Marxists. In the Sraffian approach the concept of labour-value of commodities becomes redundant. However, for Marx the concept of labour-value was essential; because on this basis he was able to divide the live labour-time spent in the production process between necessary and surplus labour-time, which showed that the source of all non-wage income lies in making the workers work for longer time than what was needed to reproduce their wages-- thereby revealing the exploitative nature of the capitalist system. Sraffians argue that Marx's notion of surplus value and exploitation can be upheld from the distributional point of view without having to use labour-time as the unit of measure for economic variables. They argue on the basis of the Lockeian property rights that since capitalists have no active role in production they have no right to a share in the net output. Thus the capitalists' share in the net output can be interpreted as exploitation of labour, and the degree of exploitation can be measured by the money value of the surplus product divided by the money value of the net product (see Hodgson 1982). Sinha (1991) has criticised the Sraffian notion of exploitation as non Marxist on the ground that it leaves the question of control of the means of production and the labour process out of sight. The net output is derived by deducting the used up means of production from the gross output. This deduction is not just a mathematical procedure but requires the physical replacement of the means of production, which raises the question: who controls the means of production? For whoever controls the means of production must also control the gross output for the required deduction to take place. Thus the notion of capitalist relation of production, which gives rise to capital's control over workers' time and hence exploitation as appropriation of labour-time in the process of production is more fundamental and prior a category than the notion of the right to appropriate a share in the net product. Marx himself had vehemently criticised the notion of exploitation based on income distribution in the 'Critique of the Gotha Program'. Many scholars have argued that the divergence of total profit from total surplus value or the total prices of production from the total value is not all that damaging for Marx's basic proposition about exploitation, since it can be proven that positive profit is possible if and only if there is positive surplus value (see Wolfstetter, 1973; Morishima, 1973, Morishima and Catephores, 1978). Recently Sinha (1991, 1996) has argued in favour of using the condition that total value is equal to total prices of production as an outside constraint on the system, given that values are substance and it is neither created or destroyed in the process of exchange. Moreover, the system must be put in a balanced state since only in a balanced state the prices of production could actualise. In this case, Morishima (1973) has shown that Marx's average rate of profit will come out to be the correct solution if there is zero consumption by the capitalists, ie. all the surplus value is reinvested or accumulated. However, this, in general, will not be true in the case of capitalists consuming a part of the surplus value. Shaikh (1984) argued that this happens because capitalists' consumption becomes part of the revenue and falls out of the circuit of capital. Since we can explain the divergence of prices of production from values as well as the divergence of total profit from total surplus value on the basis of the value analysis itself, the transformation problem should be considered solved. Note: the reader should know that I'm not convinced with Shaikh's argument. The point has been left uncriticized there. Ajit Sinha > Ajit in #3900: > > "First of all, the determination of what you call the "m" is the central > problem with Marx's transformation problem." > > What is your definition of "Marx's transformation problem"? It seems to me > that there is not an universal agreement about what is understood by this. > > Why is the determination of "m" the "central problem" of this... "problem"? > > "That's why assuming that the value of m is "given" can never be taken > as a solution to the problem, and particularly when it is added that not only > the real m is unknown but is unknowable." > > So, this problem would not belong to the realm of science? What is this, > then?? > > "This simply confirms the Steedman critique." > > Do you mean the "redundancy" issue here? > > Alejandro > > P.S. If you're very busy, you can perhaps post any of your writings (cited > in another post) regarding this matter. It's obvious that for people like > me it's really impossible to get a copy in another way.
This archive was generated by hypermail 2b29 : Tue Oct 31 2000 - 00:00:07 EST