>On Sun, 29 Oct 2000, Andrew_Kliman wrote:
>
>> The following, which Steve Keen wrote in OPE-L 4349, is false:
>>
>> "The TSS approach to this is to dismiss consideration of a state in which
>> rates of [technical] change equal zero, and provide numerical examples
>> where the twin propositions above cannot be contradicted.
>
>I think you have to cut Steve a little slack here, given that he
>was engaging with Rakesh, whose special version of TSS (if it is
>a version of TSS; maybe it isn't) does insist upon technical
>change as a condition of maintaining Marx's two equalities...
>except that it turns out that technical change is not in fact
>sufficient to do the trick... (I feel saner since I withdrew
>from that debate.)
>
>Allin.
I am not sure why you don't think it did the trick.
But let's play the game of simple reproduction. Let me ask that you
or Steve consider this one last reply before finally withdrawing; of
course if your sanity is at stake, please ignore this. Of course I
have already suggested this repsonse to you in private
correspondence, so you can voice the same objection which you have
already expressed.
take the traditional approach to the problem. No technical change at all!
The only difference is that I am keeping one invariance condition:
the total value/price remains the same in the unmodified and modified
scheme.
The changing of the price of the inputs should have no effect on
the *value of the means of production consumed* in the ouput or the
new value added by labor since we are maintaining the same number of
workers (the quantity of wage goods used as inputs to hire workers is
not changed by the transformation of the price of the input wage
goods).
So total value/price remains 875 after the transforming of the inputs.
The initial value table for Bortkiewicz-Sweezy-Cottrell:
c v s value
I 225.00 90.00 60.00 375.00
II 100.00 120.00 80.00 300.00
III 50.00 90.00 60.00 200.00
Tot. 375.00 300.00 200.00 875.00
A transformed scheme with a uniform profit rate in simple reproduction will be
(1) 225x+90y+r(225x+90y)=225x+100x+50x
(2) 100x+120y+r(100x+120y)=90y+120y+90y
(3) 50x+90y+r(50x+90y)=r(225x+90y)+r(100x+120y)+r(50x+90y)
(4) 875- (225x+100x+50x+90y+120y+90y)=r(225x+90y)+r(100x+90y)+r(50x+90y)
That is, the first three equations set the system in simple reproduction.
but here's my innovation:
The fourth equation says that the mass of surplus value [total value-(modified)
total cost price] does not equal but DETERMINES WHAT THE BRANCH PROFITS ADD UP
TO.
This is the meaning of the second equality: the mass of surplus value
determines the sum of the branch profits. This is the macro part of
Marx's value theory.
As Fred says, the macro magnitudes are determined prior to, and are
determinative of, the micro magnitudes of the rate of profit and the
prices of production (see also Blake, 1939; Mattick, 1983).
The iteration now follows as such:
Marx's first-step transformation takes the given total s
and distributes it in proportion to (c+v). Thus:
c v profit price pvratio
I 225.00 90.00 93.33 408.33 1.0889
II 100.00 120.00 65.19 285.19 0.9506
III 50.00 90.00 41.48 181.48 0.9074
Tot. 375.00 300.00 200.00 875.00 1.0000
Keeping total value/price the same (875), we apply the PV ratios to the inputs
c v profit price pvratio
I 245.00 85.56 86.60 417. 1.112
II 108.89 114.07 58.41 281 .9379
III 54.44 85.56 36.68 177 .885
Tot. 408.33 285.19 181.5 875 1.0
Then, following your lead, we keep iterating until we arrive at
simple reproduction or the equilibrium state in which the economists
are so interested (how would I solve the above equations
simultaneoulsy? I don't have time for 45 or so iterations nor the
computer skills to write the algorithm.)
It is obvious that the mass of surplus value and the average rate of
profit will have changed from the value scheme. Only the total in the
value/price column will remain the same (875).
The break with the Bortkiewicz-Sweezy-Cottrell tradition here is in
the so called equality I have decided to break. Unlike them, I am
keeping the total value/price sum the same in the unmodified and
modified schemes (875).
*I do not understand the second equality to be an invariance
condition, so I am not breaking it.*
So even if we transform the inputs into the same prices of production
as the outputs (if this is the kind of thing one has to do to solve
the transformation problem), one can still get a modified scheme in
simple reproduction (if this is what has to be demonstrated to
silence the critics).
Total value remains the same (875), and the sum of surplus value
(total value- total cost price) DETERMINES the sum of the branch
profits.
In the iteration, this is simply done by modifying the inputs on the
basis of the PV output ratios and then subtracting the sum of these
new modified inputs from total value/price of 875. This gives the
bottom of the total profit column, which is then divided by the
modified cost prices to yield r (average rate of profit) which is
then applied to the modified cost prices in each branch to generate
new branch prices of production and PV ratios which are again applied
to the inputs. This is continued until the system settles into simple
reproduction.
If we hadn't modified the inputs, we would have gone wrong in the
determination of the rate of profit and the prices of production.
Marx was right about this.
My simple solution can only be had if we maintain the second equality
as I define it. So not only have I maintained both equalities. I have
shown why they must be maintained in order to carry out the
transformation in an iterative manner.
I know that I have defined the second equality in a radically
different manner than all commentators on the transformation problem.
But this seems to me exactly what Marx meant by the sum of the branch
profits being determined by the mass of surplus value.
If we want to stick to simple reproduction/equilibrium prices, then
the entire transformation debate has been conducted on a
misunderstanding of the meaning of second equality, which is
correctly expressed in equation (4)
The only way to defeat my argument is to show that I have
misinterpreted what Marx meant by the sum of surplus value equaling
the sum of the profits in the different branches. Was it meant as
invariance condition between the unmodified and modified scheme or
is the mass of surplus value determined after the modified cost
prices have been subtracted from total value?
If it's the former, the transformation problem remains; if it's the
latter, then I have presented a reasonable solution of the
transformation problem under the static conditions which resemble
general equilibrium theory. Of course I think such a solution is of
absolutely no real interest in the understanding of capital anyway.
All the best, Rakesh
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