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On Tue, 19 Sep 2000, Rakesh Bhandari wrote:
> 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.
OK, I can agree with that.
> >[Marx is] 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.
There's an important difference between the sorts of
complicating factors you cite here, and the one I was alluding
to. It is theoretically permissible for Marx to abstract from
the factors you cite, in order to concentrate on the issue at
hand, namely the divergence of price of production from value
due strictly to the equalization of the rate of profit. He can,
in effect, assume ceteris paribus. But he /can't/ legitimately
abstract from the deviation of price from value in the means of
production, since although that is "second order" it is an
inherent aspect of the mechanism under discussion.
> I argue that Marx was not interested at all in calculating
> prices. There is no need for a more powerful calculator for
> price determination....
> Marx urges us to keep all this in mind, but all these
> complications would be important [only] if Marx was trying
> to build a calcuator to determine prices.
It's all very well for Marx to urge us to "keep this stuff in
mind", but the problem is that he didn't in fact have a
theoretical means of taking the price-value divergence of the
means of production properly into account -- that is, he didn't
really know /what/ he was asking us to "keep in mind". And we
all know that once prices of production are iterated to
consistency the famous "two equalities" (aggregate price =
aggregate value, aggregate profit = aggregate surplus value)
cannot in general hold simultaneously. It's not just a matter
of "building a better calculator", it's a matter of the
coherence of Marx's claims regarding the transformation.
Allin Cottrell.
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