Sorry Rakesh, But I regard this particular argument of Marx's: "As Fred says, the macro magnitudes are determined prior to, and are determinative of, the micro magnitudes of the rate of profit and the prices of production (see also Blake, 1939; Mattick, 1983)." (for once I can't quickly locate the original by Marx, but I do know it) as one of the greatest kludges he ever attempted to pull. That capitalism, which is inherently a competitive class system, should somehow operate as a true collective of capitalists as to the division of surplus-value, I regard as pure nonsense. I'll leave it to Allin or Paul (if any of them have the energy) to delve into your arithmetic below. Steve At 11:56 PM 10/29/2000 -0800, you wrote: >>On Sun, 29 Oct 2000, Andrew_Kliman wrote: >> >>> The following, which Steve Keen wrote in OPE-L 4349, is false: >>> >>> "The TSS approach to this is to dismiss consideration of a state in which >>> rates of [technical] change equal zero, and provide numerical examples >>> where the twin propositions above cannot be contradicted. >> >>I think you have to cut Steve a little slack here, given that he >>was engaging with Rakesh, whose special version of TSS (if it is >>a version of TSS; maybe it isn't) does insist upon technical >>change as a condition of maintaining Marx's two equalities... >>except that it turns out that technical change is not in fact >>sufficient to do the trick... (I feel saner since I withdrew >>from that debate.) >> >>Allin. > >I am not sure why you don't think it did the trick. > >But let's play the game of simple reproduction. Let me ask that you >or Steve consider this one last reply before finally withdrawing; of >course if your sanity is at stake, please ignore this. Of course I >have already suggested this repsonse to you in private >correspondence, so you can voice the same objection which you have >already expressed. > >take the traditional approach to the problem. No technical change at all! > > The only difference is that I am keeping one invariance condition: >the total value/price remains the same in the unmodified and modified >scheme. > > The changing of the price of the inputs should have no effect on >the *value of the means of production consumed* in the ouput or the >new value added by labor since we are maintaining the same number of >workers (the quantity of wage goods used as inputs to hire workers is >not changed by the transformation of the price of the input wage >goods). > >So total value/price remains 875 after the transforming of the inputs. > >The initial value table for Bortkiewicz-Sweezy-Cottrell: > > c v s value > I 225.00 90.00 60.00 375.00 > II 100.00 120.00 80.00 300.00 > III 50.00 90.00 60.00 200.00 >Tot. 375.00 300.00 200.00 875.00 > >A transformed scheme with a uniform profit rate in simple reproduction will be > >(1) 225x+90y+r(225x+90y)=225x+100x+50x >(2) 100x+120y+r(100x+120y)=90y+120y+90y >(3) 50x+90y+r(50x+90y)=r(225x+90y)+r(100x+120y)+r(50x+90y) >(4) 875- (225x+100x+50x+90y+120y+90y)=r(225x+90y)+r(100x+90y)+r(50x+90y) > >That is, the first three equations set the system in simple reproduction. > >but here's my innovation: > >The fourth equation says that the mass of surplus value [total value-(modified) > total cost price] does not equal but DETERMINES WHAT THE BRANCH PROFITS ADD UP > TO. > >This is the meaning of the second equality: the mass of surplus value >determines the sum of the branch profits. This is the macro part of >Marx's value theory. > > >As Fred says, the macro magnitudes are determined prior to, and are >determinative of, the micro magnitudes of the rate of profit and the >prices of production (see also Blake, 1939; Mattick, 1983). > >The iteration now follows as such: > > >Marx's first-step transformation takes the given total s >and distributes it in proportion to (c+v). Thus: > > c v profit price pvratio > I 225.00 90.00 93.33 408.33 1.0889 > II 100.00 120.00 65.19 285.19 0.9506 > III 50.00 90.00 41.48 181.48 0.9074 >Tot. 375.00 300.00 200.00 875.00 1.0000 > > >Keeping total value/price the same (875), we apply the PV ratios to the inputs > > c v profit price pvratio > I 245.00 85.56 86.60 417. 1.112 > II 108.89 114.07 58.41 281 .9379 > III 54.44 85.56 36.68 177 .885 >Tot. 408.33 285.19 181.5 875 1.0 > >Then, following your lead, we keep iterating until we arrive at >simple reproduction or the equilibrium state in which the economists >are so interested (how would I solve the above equations >simultaneoulsy? I don't have time for 45 or so iterations nor the >computer skills to write the algorithm.) > > It is obvious that the mass of surplus value and the average rate of >profit will have changed from the value scheme. Only the total in the >value/price column will remain the same (875). > >The break with the Bortkiewicz-Sweezy-Cottrell tradition here is in >the so called equality I have decided to break. Unlike them, I am >keeping the total value/price sum the same in the unmodified and >modified schemes (875). > >*I do not understand the second equality to be an invariance >condition, so I am not breaking it.* > > >So even if we transform the inputs into the same prices of production >as the outputs (if this is the kind of thing one has to do to solve >the transformation problem), one can still get a modified scheme in >simple reproduction (if this is what has to be demonstrated to >silence the critics). > >Total value remains the same (875), and the sum of surplus value >(total value- total cost price) DETERMINES the sum of the branch >profits. > >In the iteration, this is simply done by modifying the inputs on the >basis of the PV output ratios and then subtracting the sum of these >new modified inputs from total value/price of 875. This gives the >bottom of the total profit column, which is then divided by the >modified cost prices to yield r (average rate of profit) which is >then applied to the modified cost prices in each branch to generate >new branch prices of production and PV ratios which are again applied >to the inputs. This is continued until the system settles into simple >reproduction. > > >If we hadn't modified the inputs, we would have gone wrong in the >determination of the rate of profit and the prices of production. >Marx was right about this. > >My simple solution can only be had if we maintain the second equality >as I define it. So not only have I maintained both equalities. I have >shown why they must be maintained in order to carry out the >transformation in an iterative manner. > >I know that I have defined the second equality in a radically >different manner than all commentators on the transformation problem. >But this seems to me exactly what Marx meant by the sum of the branch >profits being determined by the mass of surplus value. > >If we want to stick to simple reproduction/equilibrium prices, then >the entire transformation debate has been conducted on a >misunderstanding of the meaning of second equality, which is >correctly expressed in equation (4) > >The only way to defeat my argument is to show that I have >misinterpreted what Marx meant by the sum of surplus value equaling >the sum of the profits in the different branches. Was it meant as >invariance condition between the unmodified and modified scheme or >is the mass of surplus value determined after the modified cost >prices have been subtracted from total value? > >If it's the former, the transformation problem remains; if it's the >latter, then I have presented a reasonable solution of the >transformation problem under the static conditions which resemble >general equilibrium theory. Of course I think such a solution is of >absolutely no real interest in the understanding of capital anyway. > >All the best, Rakesh > > > > > > > > Dr. Steve Keen Senior Lecturer Economics & Finance University of Western Sydney Macarthur Building 11 Room 30, Goldsmith Avenue, Campbelltown PO Box 555 Campbelltown NSW 2560 Australia s.keen@uws.edu.au 61 2 4620-3016 Fax 61 2 4626-6683 Home 02 9558-8018 Mobile 0409 716 088 Home Page: http://bus.macarthur.uws.edu.au/steve-keen/
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