Re 4258 Allin, Just to repeat my exceedingly simple basic point. It's not possible to determine the unit prices of production into which the inputs should be transformed. That's simply because last period's data are needed so we simply have no way of determining them; in reality they are simply a given precondition for the capitalists, exactly as Marx says. Let us say the total cost prices are modified from 675 to 693 after the inputs are transformed into their prices of production from last period. The 693 however is not determined on the basis of the data in this period as you had it; it just turns out to have been how much the input mp and wg sold above their value in the last period (implying of course that Div 3/luxury goods sold by the same amount below value in the last period). 693 is now a given precondition for the capitalists; total profit is now the same total value produced (875) less this 693, instead of 675. Total profit thus drops from 200 to 182. The profit rate at t+1 is also not as high as it could have been had the input mp and wg sold together at value or even below value while luxury goods sold above value in the previous period. It may be that when we work things out on the basis of these modified cost prices the unit input prices of production are not 5% greater than the unit output prices of production though productivity has risen 5% from t to t+1. My simple point is that there is no reason to expect that it would have to work out this way simply because physical productivity rose 5% *this* period. In fact I have given you a couple of reasons why it would probably not work out this way. We simply cannot determine a rule for interperiodic change in unit prices of production on the basis of data from a one period model. You were wrong to simply divide the unit output price of production by this period's productivity decrease (.95) in determining the unit input prices of production, thereby obliterating the need for any data from the previous period. It just can't be that simple. It's best to make a mental note that the cost price would be modified had the inputs sold at prices of production and that r and the krs at t+1 would be changed in some fairly insignificant ways as a result and then move on, though stopping to savor Marx's having turned Malthus' Ricardo critique upside down. Marx's transformation is as complete as it can get on the basis of a one period model, and that is all needed for his own theoretical purposes of which we should not lose sight. All the best, Rakesh
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