Re Steve's 4189 >No Rakesh, that wasn't what I was saying. > >A more technical statement of my frustration with your approach is that you >appeal to a system which, if stated in the form of dynamic equations, would >have more unknowns than equations. So--to repeat myself for the umpteenth time--you *arbitrarily* remove one of the equations by making input prices the same as output prices? Such closure of the system, save one distributive variable, is worse than no solution at all. You have no way of reasonable closing your system either, save the extra economic resolution of distributive shares. You have to make believe that equilibrium or simple reproduction or long term centers of gravity are reasonable assumptions to hold in the analysis of a dynamic capitalist economy. You have also missed my point that one simply cannot *determine* the input unit prices of production on the basis of the one period transformation tableau given that Marx had to have assumed that the input mp and wg sold at value (he had not yet derived the category of price of production); however, one need not determine them to grasp Marx's value theoretic determination of the profit rate or resolution of the contradiction between the principle of the average rate of profit and the law of value. Marx was not interested in *determining* the unit prices of the inputs or the outputs. He never said that the input prices of production are to be transformed into the ouput prices of production, conveniently removing one of the equations for you. The ks and thus the krs can and do remain unknown, strictly speaking, in his transformation exercise but Marx still turns the Malthus critique upside down. Marx is not after a price theory here. It is only because you have failed to understand what Marx intended to demonstrate that you think the transformation tableau is incomplete without a unique determination of prices. How many times have I said that neither the ks nor the krs need to be determined, strictly speaking, for Marx's value theoretic determination of the average rate of profit to be a perfectly logical hypothesis? The explanandum of value theory is no longer relative prices or equilibrium prices in particular. Now you seem to be say that I can make prices anything I want on the input and output side to allow for the possibility of a value theoretic determination of the profit rate. This seems to be your argument. But again I replied to you long ago. The change in prices of production, r, s/v, total price/value can be constrained, reasonable and utterly realistic if one views Marx's transformation tableau as one period in a sequence or if one modifies a simple reproduction scheme into one period in such a sequence. Note my exchange with Allin. I am not appealing to any-thing or any argument. It is a perfectly plausible that the average rate of profit in a dynamic capitalist system could be determined on the basis of the labor theory of value. > In such a system, anything argument is >possible--even, for example, that capital is the only source of value and >labour only maintains its value input. Do note that Marx's transformation tableau is meant to demonstrate how the law of value governs bourgeois society though to the individual entrepreneur capital seems as much the source of value as labor. So I am not following the point you are making. But of course it is possible to construct a model in which the average rate of profit is not determined in accordance with the labor theory of value. The Sraffian model is one such example. What falsifiable predictions does this theory yield? And what falsifiable predictions does the Marxian method yield? I don't think the absence of a fatal *logical* error in Marx's value theory confirms or verifies it. It only allows it to be tested for explanatory power. This is what one hundred years of bourgeois criticism, voiced by mainstream and radical economists alike, has tried to prevent. You are not interested in tests for the falsification of Marx's value theory. You want Marx's value theory ruled out even before we get to the verification/confirmation/falsification stage on the grounds of a fatal logical error. And please Steve would you refrain from complaining about discussion of the logical criticism of Marx's value theory when you have just finished a book in which such criticism is developed at length. Again the powers of projection on this list are truly astounding. All the best, Rakesh
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