re Ajit's 4618 > >That is why every sensible person on this planet thinks that Marx has a >transformation problem. It is simply theoretically illegitimate to hold the >value of money constant. I don't have as much stamina as Rakesh to go on with >this ad nauseam. So most likely i won't say anything on this for sometime. >Cheers, ajit sinha I didn't know every sensible person has an opinion on the transformation problem. The value of money obviously has to be, and is, constant in Marx's transformation. In Marx's transformation tables, money is invested as constant and variable capital at t0; means of production and means of subsistence (indirectly) are purchased. Their prices are assumed to be proportional to their labor values; that is their labor values * the constant of the monetary expression of labor time. The constant is often dropped in relations of proportionality so we are left with price <> value. Marx himself calls such prices "value prices" (Capital 3. p.275) The invested money sums comprise the cost prices (k) of the commodities. In the first table (p. 256) we then have at t + 1 value prices which exceed the cost prices at t0. If Marx has not assumed the value of money as constant, then this difference could be explained by a change in the value of money. Marx simply rules that out by holding the value of money constant. I do not understand why you find this unreasonable. Marx then transforms the simple prices at t+1 into the form of prices of production in a manner that demonstrates that the law of value regulates prices, albeit in an indirect manner. While Marx allows commodities to exchange in the form of prices of production at t + 1, he has assumed that the (input) commodities sold at value prices t - 1. That is, Marx has assumed that the prices of the commodities consumed in production were proportional to their respective labor values. Marx has been making this assumption since vol 1. If Marx had allowed commodities to sell at t-1 at prices of production, the cost prices at t0 would have been modified. We cannot tell how commodity prices of production would have deviated at t-1 from value prices. It is no solution at all to suppose that we have a fixed and unchanging input-output matrix so that we can assume fantastically and arbitrarily that unit prices of production are the same for the inputs and the outputs. This formalisation is utterly destructive of Marx's own theoretical project. It makes no sense even in terms of Ricardo's own dynamic understanding of the accumulation process: "alterations in the quantity of labour necessary to produce commodities are a DAILY occurence. Every improvement in machinery, in tools, in builidngs, in raising the raw material saves labour, and enables us to produce the commodity to which the improvement is applied with more facility, and consequently its value alters." (principles, p. 36, Sraffa's ed; my emphasis). So let us say that the cost prices have to be modified but since we recognize the reality of continuous change in commodity value, we cannot make the fantastic assumption that we have the same unit prices of production at t-1 as t+1. So all we can say--and all Marx to his credit did say--is that our first tableau would have to begin with k', instead of k. What does this mean? Well first to fill in the surplus value columns we would subtract the respective final simple prices from the modified k'; a modification in cost price does not change the indirect and direct labor embodied in the output and, since we are assuming a constant value of money, its price--so the simple prices remain the same as we begin with modified cost prices in a new first table. So taking the modified cost prices from the same respective final simple prices, now we have a new column of s'. The rate of exploitation may not be perfectly uniform in terms of surplus value over the money laid out on wages, but each worker is still assumed to add the same value to the final product per labor hour--that's Marx's crucial assumption. After the modification of cost price, that final value may now be resolved in such a way that once the modified replacement costs of c is covered, the ratio of the residual s to the modified v will not be identical in each industry though it will remain very close. But it is not this ratio which capitalists tend to directly equalize by their profit maximizing behavior; their behavior directly leads them to equalize p/k. And we will allow such a result to obtain. That's it. Now we simply go about the transformation in the same way Marx did. We now will have k' + k'p' as the prices of production in a new second table. This results in a minor modification of little quantitative significance and no theoretical importance that it is no wonder that Marx did not 'complete' his transformation procedure. As I have been saying, it turns to the sociology of knowledge to explain how this has been made into a fatal logical defect of Marx's value theory. I submit that only a revolutionary theory would be subjected to such unfair treatment, though of course, Ajit, you take these critics, you included, to be utterly sensible. Yours, Rakesh
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