Ajit Sinha wrote: > Tsoulfidis Lefteris wrote: > > > Ajit Sinha wrote: > > > > Many scholars have argued that the divergence of total profit from > > > > > total surplus value or the total prices of production from the > > > total value is not all that damaging for Marx's basic proposition > > > about exploitation, since it can be proven that positive profit is > > > possible if and only if there is positive surplus value (see > > > Wolfstetter, 1973; Morishima, 1973, Morishima and Catephores, > > > 1978). Recently Sinha (1991, 1996) has argued in favour of using > > > the condition that total value is equal to total prices of > > > production as an outside constraint on the system, given that > > > values are substance and it is neither created or destroyed in the > > > process of exchange. Moreover, the system must be put in a > > > balanced state since only in a balanced state the prices of > > > production could actualise. In this case, Morishima (1973) has > > > shown that Marx's average rate of profit will come out to be the > > > correct solution if there is zero consumption by the capitalists, > > > ie. all the surplus value is reinvested or accumulated. However, > > > this, in general, will not be true in the case of capitalists > > > consuming a part of the surplus value. Shaikh (1984) argued that > > > this happens because capitalists' consumption becomes part of the > > > revenue and falls out of the circuit of capital. Since we can > > > explain the divergence of prices of production from values as well > > > as the divergence of total profit from total surplus value on the > > > basis of the value analysis itself, the transformation problem > > > should be considered solved. > > > > > > Note: the reader should know that I'm not convinced with Shaikh's argument. The > > > point has been left uncriticized there. Ajit Sinha > > > > In my view the transformation problem (that you summarized in your posts) has been > > discussed extensively in the decades of 1970's and early 1980's and the solution > > proposed independently by Morishima (1973), Okishio (1973?!) and Shaikh (1973, > > 1977, 1984) deals with the issues of logical consistency and all that in (my view) > > a satisfactory way. In addition the solution by Shaikh (1984) includes also a > > discussion of the circuits of revenue and capital which present (besides the > > mathematical) a conceptual explanation of the possible divergence of total surplus > > value and profit. These two magnitudes normally are expected to differ from each > > other and only in the improbable case that there is no circuit of revenue (i.e. the > > economy expands along a von Neumann ray) the two totals equal to each other. I am > > very much interested in your critique to this thesis. > > ___________________________ > > I'm not sure whether the transformation problem has anything to do with what Shaikh > calls circuit of capital and circuit of revenue. In my opinion, the transformation > problem in the end boils down to whether the competitive rate of profits is equal to > Marx's S/(C+V). If this comes out to be true then Marx's main argument of chapter 9 > pretty much goes through. Most of the literature on the problem have shown that in > various situations this would be true, von Neumann ray is one of those situations. > However, it is also proven that in general it is not true. As I have explained in my > piece, a part of which you have quoted above, that the transformation problem is about > measuring the investment. I don't think that the problem has anything to do with what > the capitalists do with the outputs in their hand. Cheers, ajit sinha Thanks for your answer, it seems to me, however, that your critique is rather sympathetic to the solution to the TP advanced by the three authors at least more so than the "new approach". Now I want to make a few related points by way of questions: (1) What problems do you see in the circuits of capital and revenue? don't they arise logically from the distinction of productive/unproductive consumption? Is there any evidence in Marx against such a distinction? (2) What do you mean by competitive rate of profit? If you mean the uniform rate of profit in perfect competition I must say that such a concept is totally different from Marx's notion of the tendential equalization of interindustry profit rate. I agree though that S/(C+V) in value terms will differ in general from the rop in pop terms, the question however is _by how much_ ? In the usual numerical solutions of the TP the differences between the two rop is negligible or not? On the other hand the empirical evidence, that I know, shows that the two rates of profit are extremely close to each other. A result that, in my view, shows that the distinction between the circuits of capital and revenue is meaningful. (3) It seems to me that the question of time does not appear in the TP in ch. 9. Time and investment behavior appear in ch. 10 and after. The TP in ch. 9 is discussed purely in static terms and really constitutes an exercise in logic. If you want to include the question of investment behavior then you are asking an altogether different question. Such questions have been investigated in many papers and, to the extent that I know the literature, did not reach any conclusive results. It seems to me that it is extremely difficult to integrate the theory of value with the theory of effective demand. Lefteris Tsoulfidis
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