Allin wrote in 4557: > > >I believe (subject to correction by Paul) that he and I share a >common view of the transformation issue. Namely, that Marx's >analysis is incomplete (the inputs not being transformed) and >that once it is completed Marx's "two equalities" don't hold in >general, but that this is not a very big deal since the rate of >profit is not equalized and market prices are as close to values >as to prices of production. The first equality states that total price is determined by the product of total value and the monetary expression of labor value. Since we are not going to change either term in the transformation exercise, the first equality is also an invariance condition: since the the number of hours necessary to produce the aggregate output and the value of money are unchanged in the transformation, the sum of simple prices should be set to equal to the sum of prices of production. Winternitz was correct that this proposition is obviously in the spirit of the Marxian system. The second equality states that the sum of surplus value determines the (maximum) sum of capitalists' profits. I argue that the second equality is indeed maintained if one uses Marx's definition of surplus value; however, not only do I argue that both equalities are not invariance conditions, I argue that it is grossly antithetical to Marxian theory to hold the sum of surplus value or profit invariant in a complete transformation exercise in which total price is held constant while cost price is modified on the basis of the transformation of the inputs. Allin makes no contact with my argument. Imre Lakatos defines the concept (I believe) of proof generated definitions. I could say that it is perfectly acceptable to choose definitions which preserve theorems. That is, in order to preserve the "second equality" or theorem that the sum of surplus vaue determines the sum of individual capitalists' profits, I could choose my iteration-generated definition of surplus value as total price minus cost price. But I am not going to say this because I did not choose a definition of surplus value so that theorem of the the determination of the sum of profit by the sum of surplus value would be preserved in a complete transformation. The definition of surplus value which I use derives from Marx's acceptance of Ricardo's critique of Smith's adding up theory of price. Allin seems not to have recognized this. > >By the way, Rakesh's new view seems to me substantively >indistinguishable from Bortkiewicz/Sweezy. There's nothing in >the B/S approach that _necessitates_ holding total profit = >total surplus value rather than total value = total price, as >Rakesh prefers. So hold total price = total value in the >transformation. Then, in general, total profit diverges from >total surplus value (as determined in the "original" table). >Rakesh seems to accept this result; he just wants to gloss it >differently from B/S, by saying that "total surplus value" >changes in the course of the transformation. You defined surplus value as total value or price minus the value of the inputs. On the basis of textual support which included your own putatively uncorrupted quotation, I define surplus value as total value or price minus cost price (dM= M' minus M). You suggested that Marx only held to the latter when he had assumed that the inputs sold at prices determined by value. Given your definition, surplus value and cost price cannot remain resolved, antagonistic components of total value but rather become (at least partially) independently determined magnitudes. You have glossed over my criticism. Ricardo allowed for the possibility of the price of wage goods rising due not only to their increased value as greater outlays of labor are needed for agricultural produce with the increasing cultivation of inferior lands but also to rising ground rent payments. Now as long as we are assuming that total value and the value of money remain constant, you would allow surplus value to be diminished only by the rise in the value of wage goods, not the rise in ground rent as well. To this only partially diminished surplus value you would then add on the increased cost price. So if we stick to your definition of surplus value--total value minus the value of the inputs--the sum of your (only partially modified) surplus value and (raised) cost price would in this case no longer be the total price, as determined as the product of the value of the output and the monetary expression of labor value both of which we are assuming to be constant. You are led to break the labor theory of value here. If we have price determined by your sum, then a rise in cost alone has not lead to diminished surplus value alone but rather to partially higher prices. That is, your definition leads you to accept Smith's adding up theory of price. This is grossly antithetical to Marx's theory. Your definition of surplus value cannot be accepted as Marx's. Moreover, your textual support is weak. However, once we accept the definition of surplus as total value or price minus cost price, it becomes obvious that any modification of cost price--whether it results from the rising value of the inputs or increased ground rent or the transformation of the inputs--implies an inverse change in the mass of surplus value as long as we are taking the value of the output and the value of money to be fixed magnitudes (which is exactly what Sweezy inititally did before he decided it was too mathematically complicated a problem). Once we accept the challenge of transforming the inputs in terms of a vector of equilibrium prices--which I am only doing for the purposes of argument--we have a more complicated problem at hand than B-S-M realized. The problem now is to have the mass of surplus value modified in inverse direction to the modification of cost price consequent upon the transormation of the inputs while at the same time having the sum of Dept profits determined by this (modified) mass of surplus value. If this can be done, then the second equality can be preserved. The first equality is already given by stipulation. This also means that there is no way to reduce the set of equations to three with three unknowns, as Sweezy had hoped for the purposes of mathematical tractability. I am happy to find however that the four equations which I propose are happily neither over- nor under-determined. Yours, Rakesh
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