>Hi Rakesh, > >I want to respond to what you have called your "main point" in your >critique of my interpretation of Marx's theory. You seem to think that, >according to my interpretation, the magnitude of the cost price will >change as a result of the transformation of values into prices of >production. This change of the cost price necessitates a choice between >two "invariance conditions": either total value = total price of >production or total surplus-value = total profit. You argue for the >former condition, and argue that the latter condition implies an "adding >up" theory of value (i.e. that an increase in the cost price causes an >increase in total price). Fred, I know you are not interested in this, but let me defend myself with amendment. (1) Total price = total value x E (2) Total value =Total price/E Following Gouverneur, E is the monetary expression of labor value. At no point in the transformation do we change the hours necessary to produce the aggregate output. so there can be no doubt about this invariance condition sum of simple prices/E1 = sum of prices of production/E2 Any solution which does not maintain this is not in the spirit of the Marxian system. I don't think the new solution maintains this invariance condition, so I would reject it as an interpretation of Marx. I have assumed for the reasons that Grossman gave that value of money/monetary expression of labor value is held constant by Marx so that E1 = E2. It seems to me that in ch 9 Marx assumes that the unit of account remains an hour of labor time, so this would allow us to set the sum of simple prices equal to the sum of the prices of production, as Sweezy initially did and Winternitz did. But this is not necessary. In the Bortkiewicz-Sweezy solution E rises. Sweezy is correct that the reason the price sums are not equal is simply because of a change in the value of the unit of account. Sweezy argues that the problem arises because of the change in ratio of surplus value to cost price or r. In their transformation cost price rises because the two depts together which produce the inputs for the system as a whole have a higher average OCC than the third dept; the equalisation of the profit rate thus raises the prices of Dept I and II's ouputs and thus the prices of the inputs and the cost prices in the system as a whole. Allin is correct that I am giving a different gloss to their solution. I argue that the labor theory of value itself implies that if cost price rises relative to the total, then surplus value must fall relative to the total. So the fall in the rate of profit does no damage to the labor theory of value. If for example after the transformation, total price had to be resolved entirely into the raised cost price, leaving nothing for surplus value, then the transformation procedure would have collapsed upon completion. But the point is that paid (indirect and direct) labor or cost price remains less than total value or price after the complete transformation; total profit remains derived entirely from unpaid labor. There is not a chink in the theory of exploitation. Yours, Rakesh
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