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In his 3826 Allin writes in response to me:
>This exchange seems to be generating more heat than light.
>Partly it is Ajit's fault, since as a matter of history of
>thought there can be no doubt that Marx sometimes used the term
>"cost price" precisely as Rakesh states.
>
>> In the transformation procedure Marx is not recognizing the
>> need to transform the inputs from values to prices. He
>> recognizes the need to modify cost price, not transform the
>> inputs from values to prices.
>
>This, on the other hand, strikes me as obscurantism on Rakesh's
>part. Why would Marx wish to "modify" cost price, other than to
>effect a transformation from values to prices?
Allin,
If you agree that cost price is already in money terms--that Marx defines
exactly in these terms--then cost price cannot be in values.
You are missing my criticism of Fred. Fred argues that since the inputs are
already in money terms--he is right--they don't have to be transformed. I
argue that while Fred is absolutely correct that the inputs are in money
terms, the money that Marx has his capitalists lay out is determined on the
assumption that means of production and wage goods sold at value. Once this
assumption is relaxed, then the cost price or the money sum laid out by
capitalists at the beginning of the circuit in the various branches has to
be modified. Unless it is modified, Marx cannot calculate the correct
average profit rate and prices of production.
He's trying to
>arrive at a correct account of the formation of price of
>production as a "transformed form" of value, and recognizes that
>a second-order complication is introduced by the fact that the
>prices of the means of production required to produce any given
>commodity will themselves embody a deviation from value. Only
>he didn't have the analytical apparatus needed to take account
>of this complication with full rigour.
Of course in order to determine the average rate of profit and prices of
production, Marx would also have to take into account differential turnover
times, depreciation schedules, deductions from the mass of surplus value
for interest and rent payments would also have to be considered.
Drawing from Korsch's crucial chapter on misunderstandings of the law of
value, I argue that Marx was not interested at all in calculating prices.
There is no need for a more powerful calculator for price determination.
To be sure, there are 'second-order' complications of which to take note:
If due to the equalisation of profit rates in the previous period, means of
production had sold above value, then the capitalist would have had to have
laid out more money than indicated in Marx's tableau. Visa versa if means
of production had sold below value. Or if the capitalist laid out the same
sum of money he could have then have purchased a greater or lesser quantity
of the means of production depending on whether means of production had
sold below or above value at the end of the previous period.
If wage goods sold above value, then workers would need a greater money sum
to reproduce themselves so the money laid out as variable capital would
have had to have been greater. Or if the capitalist did not lay out more
money as variable capital, then he would have been able to hire fewer
workers and thus the surplus value produced would be diminished. If wage
goods sold above value, then the capitalist would have had to have laid out
less money as variable capital or if he invested the same money sum, he
would have hired more workers and thus enjoyed a greater production of
surplus value.
Marx urges us to keep all this in mind, but all these complications would
be important if Marx was trying to build a calcuator to determine prices.
He was not. Let us recall the problem he was trying to solve, as
persuasively reconstructed by Ilyenkov.
Post ricardians had argued that value could be abstracted as the most
important of many many factors which determine price.
Yet Malthus and others had argued that as capital developed, the variance
in the ratio of capital/labor would only grow while capitals would claim an
average rate of profit in terms of their total money investment. So while
Ricardo had abstracted value as the most important factor, it seemed that
it would become a less important factor as capital developed. Marx agreed
that the Ricardian law of value could only be salvaged as a "forced
abstraction".
Now let us sidestep your statistical vindication of Ricardo's 93% labor
theory of value. It seems to me that what you are saying is that if Marx
had modern statistical technique, he would have realized that there is not
so much force in the Ricardian abstraction.
However, what Marx thought he had accomplished through the introduction of
conceptual mediations was an explanation of not only of how the law of
value did not conflict with the average rate of profit but also why the
average profit rate itself became the more important form of the law of
value, the more capital developed.
In order to demonstrate this, one need not determine the unit prices of the
inputs. This would only be necessary to calculate the correct average rate
of profit and prices of production, and that couldn't be done if all those
other complicating factors weren't taken into account either.
In short, Marx is not trying here to calculate the correct average rate of
profit but to show how and why its contradiction with the law of value can
be resovled without evasion or verbal trickery.
Considering all the complications would obscure how Marx turns the average
rate of profit from a factor additional to value in the determination of
prices to the basic form in which the law of value asserts itself. As
Mattick Jr has long pointed out, this is the point of the so called
transformation.
What I don't think you and Paul C recognize is that in order to turn upside
down the Malthus critique of the law of value, Marx shifts the terrain on
which the labory theory of value now defends itself.
As Mattick Jr has also shown, the law of value is no longer an explanation
for relative prices (or an apology for market society because it allows for
equal exchanges of labor against labor). I just don't see how testing for
the value determination of prices has anything to do with Marx's own theory
(see also Mattick Sr's chapter on the labor theory of value in his magnum
opus).
The law of value is revealed to govern bourgeois society through the
average rate of profit by means of which the capitalist class collectively
exploits the proletarian class. As I said to Ajit some time ago, Marx no
less inverts the word value than Darwin inverted the word 'variety'.
Variety goes from the key to Platonic metaphysics to the key to its
overturning: value goes from the foundation of the apology of bourgeois
society to the cornerstone of the socialist critique.
I have made efforts not to evade difficulties and write clearly as I can.
It seems to me however that you did not read my entire post before charging
me with obscurantism. This seems to me the best way to generate more heat
than light.
All the best, Rakesh
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