re 4551 >On Mon, 20 Nov 2000, you wrote: >> >I would like to raise a new topic. >> >> That's fine, Paul C. But do note that for decades now critics like >> you have been accusing Marx of having suffered from a fatal logical >> defect to which only obscurantists can remain blind. This is a >> serious charge which has been made with absolute arrogance. >> > >I would ask you to retract that or find some publication of mine >where I have made such an accusation against Marx. The only >publication that I have on the transformation problem says that >it is probably a non-problem because market prices are as >close to untransformed values as they are to prices of production. Paul C, I am sorry to have assumed that you shared Allin C's assessment that though Marx's transformation procedure logically collapses upon the inclusion of the inputs, the labor theory of value still holds empirical validity in direct or untransformed or "Ricardian" terms, i.e., in the ability of embodied labor coefficients to account for market prices. Of course this whole debate began with Allin C's defense of the Bortkiewicz-Sweezy findings. I have obviously made a mistake in thinking that you agreed with Allin. So I retract my statement that you too agree that Marx's transformation procedure breaks down due to a logical defect. I have objected to the way in which Allin C carried out the iteration on two grounds: the idea that the inputs can be transformed in terms of the output PV ratios and the idea that the mass of surplus value should remain invariant. I'll repeat the latter criticism here. If surplus value and cost price are to remain inversely related components of total value, it is not possible to hold one invariant while the other is being changed if total value is taken as fixed (assuming a constant value of money or that the unit of account remains an hour of labour.). So the Meek-Cottrell idea that Marxian theory stipulates that the mass of surplus value has to be held invariant only applies when the transformation is done exclusively on the outputs. Since the complete transformation is more complicated than the one Marx completed, it needs more than the two steps which Allin proposes. I have argued that in Marxian terms the iteration requires nine steps, which do assure at every step that the mass of surplus value is derived entirely from unpaid labor and that the mass of profits at the completion of each iteration has been determined by the mass of surplus value. Moreover, it is in the very nature of the iterative method that the final equilibrium prices of production have indeed been derived from the initial value data alone. I understand the iteration which I propose then to be full a vindication of Marx's positive theory: the mass of surplus value has to be determined before the average rate of profit is formed out of competition in each new iteration; the mass of surplus value derives entirely from unpaid labor; the final price data have been derived from the value data; upon the inclusion of the inputs the average rate of profit and prices of production do indeed change, substantiating Marx's intuition that it is possible to go wrong if cost price is left unmodified; cost price and surplus value at all times remain inversely related, resolved components of total value. Allin has objected that I have kept the mass of surplus value = mass of profit by definition. But the point is that by doing so, one has a determinate course for the iteration which does indeed succeed in that one arrives at a vector of equilibrium prices which allows for positive rate of profit. That is, by keeping the second equality, there is no collapse of Marx's transformation procedure. The academy's attempt to throw Marx's value out of the game of explanatory power solely on the grounds of a logical defect is shown to be unjustifiable. Yours, Rakesh
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