[OPE-L:4523] Re: Marxist economists

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Wed Nov 15 2000 - 01:44:43 EST


Alejandro,

the responsibility for this situation is basically Sweezy's. 
Schumpeter eg consigned Bortkiewicz to a footnote and lauched various 
other sorties at the Marxian citadel. Howard and King seem to think 
that since Marxists were concerned with various other criticisms in 
many fields that Marxists were not scientific.

Only because Sweezy, as a Harvard professor (the importance of which 
should not be underestimated in the domination of the field by his 
text--i only lasted a year in that rotten institution),  made 
Bortkiewicz the center of  his book  did the terrain shift. Sweezy 
falsely thought Marx had assumed the same proportion of capital to 
labor across the economy in the formulation of his labor value theory 
of profit and price determination.  Sweezy then claimed that only 
Bortkiewicz's methods were appropriate after that assumption was 
relaxed;  B's set of equations do not require this assumption of a 
single economy wide OCC to solve for unknowns. So it was Sweezy who 
made Bortkiewicz arguably the greatest Marxist since Marx!

There has simply been too much acceptance of Bortkiewicz's 
formulation of how to go about transforming the inputs;  these 
implicit assumptions are at work in the non solutions as well.

Again those two assumptions have been:

(1) the inputs should be transformed into the same unit prices of 
production as the outputs (the anti successivist dogma which you have 
underlined); and

(2) the idea that while the total value of the commodity output 
should remain a fixed magnitude, the cost prices should be modified 
by a transformation of the inputs from simple prices to prices of 
production without allowing the mass of surplus value to be modified 
in the opposite direction.

Yet it should be perfectly obvious--though it has gone unremarked for 
one hundred years--that Marx himself would argue that if one is given 
a commodity output with a fixed magnitude of value, any increase in 
the  cost price alone (and this is exactly and only what 
Bortkiewicz-Sweezy-Cottrell-Foley's complete transformation does) 
cannot in itself lead to rising prices, as they all have it,  but 
rather diminished surplus value. Given a commodity output of fixed 
magnitude in value, a rise in paid labor obviously implies a fall in 
unpaid labor.

It has been part of the reign of error to reason that since in Marx's 
own incomplete transformation applied only to the outputs he holds 
the mass of surplus value invariant,  the mass of surplus value 
should then remain invariant when the procedure is "completed" by 
modifying cost price on a basis of the transformation of the inputs.

It is obviously not possible to keep the mass of surplus value fixed 
if one is now going to modify the cost price of a commodity whose 
value and price (its monetary expression) remains constant. Upon the 
transformation of the inputs, surplus value has to be modified if 
cost price and surplus value are to remain inversely related 
components of total value, instead of independently determined 
magnitudes which are simply added up to arrive at price.

Note how in the iteration which I propose every modification of cost 
price brought about by applying the output PV ratios on the inputs 
then leads immediately to an opposite modification of surplus value 
so that cost price and surplus value remain inversely related, 
resolved components of total value instead of independently 
determined magnitudes which are simply "added up" to yield price. One 
has to do it this way if one is to perform the iteration in terms of 
Marxian theory.

The actual determinants of commodity value are the value of the 
consumed means of production and newly produced value. They are 
already given as c and (v+s) in the original tableaux which are to be 
transformed; the sum of the prices of production has to remain 
determined by this total value since at no point in the 
transformation procedure is the indirect and direct labor embodied in 
the output being changed. There is indeed this one, and only this 
one, invariance condition

Now it is interesting that Sweezy does not settle on holding the mass 
of surplus value invariant because he thinks that is implied by 
Marx's theory of exploitation. He begins with what  is close to the 
correct equations (4 equations, 4 unknowns) if we are going to play 
the simultaneist game; then he says it's simpler if we simply assume 
Dept III produces the unit of account which we will by fiat keep at 
one. This then makes the mathematical problem more tractable, for now 
there are only three equations, three unknowns.

So it's mathematical convience that has Sweezy hold the mass of 
surplus value as invariant or set z at 1 in his terms.

Meek would later say that the mass of surplus value has to be held 
invariant to keep the theory of exploitation intact. But Sweezy does 
not say this. (Samuelson  seems to depend entirely on Sweezy and  a 
few essays by Meek, instead of his own readings of Marx.)

At any rate, Sweezy's choice has the effect of allowing prices to 
rise but he dismisses this as the inconsequential result of how the 
unit of account has been held at one. But the rate of profit is no 
longer the same, and he argues that this is what vitiates the labor 
theory of value.

As I have argued, the logical slippage is  earlier, and in my opinion 
so glaring that I am simply shocked that it has not yet been pointed 
out.

If one wants to follow Marx and modify cost price by including the 
inputs in the transformation procedure and then solve in terms of a 
single vector of equilibrium prices, then one has to allow for the 
mass of surplus value to be modified in inverse direction to the 
modification of cost price while still having the sum of branch 
profits determined by this modified sum of surplus value.

Any other set of equations--and I have proposed the correct set of 
equations on equilibrium assumptions for the first time--ensnares one 
in an adding up theory of price which at the very least cannot be 
said to be Marx's own. The mass of surplus value as an invariance 
condition in the complete transformation is the complete fabrication 
of Bortkiewicz and Sweezy; it is not possible to postulate this as 
derivative of Marx's own theory. It is in fact grossly antithetical 
to it.

  The confusion is so elemental and the errors in the transformation 
critique are so obvious that I can only interpret this as an effort 
to destroy Marx in a war in which non Marxists and Marxists and 
Ricardians have been complicit for one hundred years. But this is 
nothing to be wondered at, given the nature of Marx's own work: the 
most powerful missle ever fired at the head of the bourgeoisie.

The academic critique of Marx is so grossly unfair to Marx  that only 
a sociology of knowledge perspective will suffice in the treatment 
thereof. The scientistic image of that critique due to the use of 
high falutin algebra and Sweezy's Harvard imprimatur as proof of the 
critique's "veritas" are obviously key factors in the wide spread 
acceptance of the charge that Marx suffers from a fatal logical 
defect in his transformation procedure.

The tragedy of course is that the much finer 1939 textbook by William 
J Blake was eclipsed; Sweezy  claims however that his 1942 book was 
the only reasonably comprehensive textbook on Marxian economics 
available. Yet Blake's textbook had been reviewed in both Science and 
Science and (i believe) the top rank Journal of Political Economy (by 
UC Berkeley professor Carl Landauer whose two mammoth two volume 
study of European socialism includes an important defense of 
Grossmann against his critics, by the way). One can only assume that 
Sweezy considered Blake's textbook beneath acknowledgement. That's 
hard for someone like me to take since I once  autodidactically 
learned every word of Blake's 700 page textbook.

Yours, Rakesh



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