[OPE-L:4483] adding up theories of price

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Wed Nov 08 2000 - 17:45:10 EST


Allin, Duncan and others,

Why no response to the simplest of my points:

Assuming a constant value of money and thus monetary expression of 
labor value, it cannot be allowed in Marxian theory that an increase 
in the costs of production of total commodity output whose value 
remains unchanged results in rising prices (of course relative prices 
may change; maybe even total prices will decrease if one follows 
Ricardo, but they cannot increase).

Since the completed transformation exercise aims to transform only 
the input prices, that is modify COST prices, while leaving the total 
value of the commodity input and output unchanged--these after are 
the conditions of the problem--the total output price cannot be 
allowed to change (assuming a constant monetary expression of labor 
value), meaning therefore that the mass of surplus value has to be 
modified in the opposite direction of cost price.

There is nothing other than surplus value to give upon the 
modification of cost price if total price cannot change.

If costs increase while prices remain constant, then what other than 
surplus value is there to give?

If C (output commodity value) remains constant as well as the 
monetary expression of labor value, it is simply not possible for an 
increase in costs (and the Bortkiewicz transformation of the inputs 
does nothing else to the inputs than change their price) to issue in 
greater values or higher prices on the assumption of a constant 
monetary expression of value.

This equation is therefore simply not possible.

(k + a) + s => C + a

Cost price has nothing to do with the formation of commodity 
value--Marx could not be more explicit--so the modification of costs, 
without any underlying change in the value of the inputs which of 
course is ruled out by assumption in the transformatin exercise, 
cannot have any effect on commodity value or its price (which is the 
monetary expression of commodity value, assumed to be constant in the 
course of analysis).


In terms of Marx's theory (here dependent on Ricardo's critique of 
Smith's adding up theory of price), it is only possible that if the 
value of the output as well as the monetary expression of labor time 
remains constant, any change in cost price results in the opposite 
change in surplus value:

C=> (k+a) + (s-a)

Will someone please explain to me how it has been thought possible 
for the last 100  years that surplus value could remain invariant as 
the cost prices for an output whose value and price (as the monetary 
expression of that value) are assumed to remain constant are modified 
by the transformation of the inputs?


Of course surplus value has to be modified, instead of held 
invariant: THE MASS OF SURPLUS VALUE WILL NOW BE THE INVARIANT TOTAL 
VALUE OR PRICE (WHICH AGAIN IS THE MONETARY EXPRESSION OF VALUE), 
LESS THE MODIFIED COST PRICES OR THE MODIFIED **PAID** (INDIRECT AND 
DIRECT) LABOR.

BUT THIS ALSO MEANS THAT SURPLUS VALUE STILL DERIVES ENTIRELY FROM 
*UNPAID* NEWLY PRODUCED VALUE BY LABOR. THERE IS THUS NOT A CHINK IN 
MARX'S EXPLOITATION THEORY.

MY INTERPRETATION DOES NOT WEAKEN IN THE LEAST THE MARXIST THESIS 
THAT APPROPRIATED PROFIT ORIGINATES IN UNPAID LABOR.

In the terms of bourgeois equilibrium theory, the transformation 
problem should always have been focused on whether it is possible to 
modify the cost prices in such a way that the resultant modified sum 
of surplus value still equals the sum of branch profits while inputs 
and outputs both have the form of prices of production.

This is no mere tautology or definitional trick (WHICH IS ALLIN'S 
ONLY SUBSTANTIVE CRITICISM OF MY CORRECT USE OF MARX'S CONCEPTS) 
because it is not immediately obvious that such a problem has a 
solution (it turns out the equations do not overdetermine the system) 
and the substantive changes caused by my transformation set of 
equations are also non obvious (the average rate of profit and 
relative prices of production do change).

In fact the 4 equations which I propose are harder to solve than 
Sweezy's since in his 3 equations one unknown and one equation are 
removed by arbitrarily stipulating that the mass of surplus value 
remain invariant.

In my opinion, the second great error of the transformation debate 
has been the postulation of surplus value as invariant; the first one 
of course is the absurd idea that because the inputs have to be 
transformed into the *form* of prices of production, they should be 
transformed via the use of simultaneous equations on the basis of 
data from one period of production alone into the quantitatively 
identical unit prices of production of the outputs.

Such a stricture simply kills time, sequence, dynamics and has our 
gaze turned on a purely imaginary self-replicating system.

all the best, Rakesh



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