From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Thu Jan 26 2006 - 14:30:38 EST
Ian Wright wrote: "If value-theory fails in this special case -- then why should it scale up to your more realistic situations? One contribution of the TSS approach is to argue that this special case is irrelevant. I am not so sure." That's a fair comment, but I am a bit hesitant answering it because, beyond drafting a few notes, I haven't finally decided on what the answer is, and although both TSS and simultaneism highlight important implications of Marx's argument, neither of them is fully satisfactory in my way of thinking. I want to reread Bortciewicz's original argument as well. Perhaps I shouldn't write about this, if I haven't had the time to prepare the full argument on this, but what I was responding to mainly was the idea implied by Rakesh that Marx's product values must be (real or ideal) prices, and I don't think they are. I would say that there could even be a case, where total values produced are *not* proportional or equal to total production prices. As far as I can see, the transformation problem was really Ricardo's problem. As Engels summarises in his Preface to Cap. Vol. 2, "In actual fact, equal capitals, regardless of how much or how little labour is employed by them, on average produce equal yields in equal times. Here, there is therefore a contradiction of the law of value which had been noticed by Ricardo himself, but which his school was unable to reconcile. Rodbertus likewise could not, although he noted this contradiction." That was the problem that Marx tried to solve in Cap. Vol. 3. He had already noted its existence in the Grundrisse manuscript, or even earlier. What has value? The products of human labor. This allows us to say that some products are objectively worth more, others less, according to their real production cost, that their use will be economised, and that value relations exist between them. How does this value manifest itself in trade (exchange) however? Through money-prices, real or ideal. Does that mean values are really identical with real or ideal prices? No, precisely because value and value relations exist *independently* of exchange, and because price relations can express values more or less accurately, or not at all. Depending on what prices are fetched, goods may indeed exchange in a way completely contrary to their objective value relation measured in quantities of labour effort. What is the significance of this theoretical system of co-existing value relations and price relations anyway? Basically, I would say, to express the societal process whereby production and demand adjust to each other, such that comparative product-values still regulate (set limits for) prices, in a situation where producing enterprises are under pressure to (or aim to) maximise productivity and minimise costs, *quite irrespective* of what exactly the ruling market prices for their output happen to be, to maximise their own profit income and maintain their market position, with all the implications that has for the social organisation of production. What are called "market forces", really refer to the objective value relations, imperfectly reflected in the evolution of real prices. But what is the point of defining successive ideal or real price-forms, expressing the value of products in exchange, isn't this all unnecessarily complicated? I think what Marx intended here, was to sketch a economic process of price formation and price dynamics in markets, in a way consistent with the idea that the law of value continues to regulate the expansion and contraction of branches of production, via the entry and exit of capital among them, guided by profitability considerations, in a many-faceted competitive process pivoted on the maximum production and realisation of surplus-value. It's therefore not an exercise in comparative statics. The formation of prices of production and market values is supposed to mirror the development of an increasingly sophisticated market trade, in which more and more inputs and outputs of production are priced goods, i.e. the transition from simple commodity production to capitalist commodity production. Unfortunately, Marx did not examine the whole notion of prices more thoroughly, distinguishing clearly between qualitatively different kinds of prices. The math is no doubt important (though Bortciewicz's math is fairly simple) but I am obviously more concerned with the concepts and assumptions, i.e. what exactly I have to measure and equate, if at all, and why. Yes, you can devise a model of simple reproduction in a closed economy where sectors trade at production prices assuming the two famous identities, and maybe the account balances, or it doesn't - a creative mathematician (which I did not get to be) can usually find a way to formalise a problem so that it permits of a solution, if the problem is stated in a valid way. Point however I think is, that - capitalist production as a whole is inherently *not* simple production, but expanded reproduction, and it can exist only as expanded reproduction. Capital cannot exist for any great length of time if it reaps zero return, indeed it is almost tautological to say that capital is "value seeking value-augmentation", even when a business operates at a loss. - Capitalism does not progress to balanced economic development, but is perpetually imbalanced economic development - and it is precisely the imbalances of supply and demand that explain the economic behaviour of market actors. The reproduction schemes aimed to show dynamically that the whole of production can be organised through the circulation of capital, without immediately collapsing, creating relatively stable new relations of production, a new type of society which can withstand all sorts of market fluctuations. But I don't think the schemes necessarily imply any particular equilibrium condition. So long as workers produce more capital, the system will stay intact (other than in wars, disasters, etc.). - the levelling-out of profit rates is a process, occurring in the course of time time, which happens only where there is genuine open competition among enterprises. If this is true, then what exactly is the "special case" a "special case" of? Jurriaan
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