re Allin's 4629 >On Wed, 6 Dec 2000, Rakesh Narpat Bhandari wrote: > >> >You're right, in that fiat money is not a produced commodity and >> >doesn't participate in any equalization of the rate of profit, >> >unlike Marx's commodity money. >> >> Allin, Marx's commodity money is no more allowed to participate in >> the equalisation of profit rates in vol 3 than it is allowed to >> change its own value in vol I. The assumption that the value of money >> is constant is an assumption which underlies all three volumes of >> Capital. > >I think you're trading on a confusion here. In one sense the >value of (commodity) money doesn't change in the transformation, >i.e. in the same sense that _no_ commodity values change in the >transformation (the labour time required to produce them is not >altered). You're right. In vol I the fictitious assumption of the the invariability of the value of money has to be introduced exactly because money is a commodity; Marx confines the analysis of price changes to those effected on the commodity side of the exchange relation. > But that doesn't mean that the "monetary expression >of value" remains constant, i.e. that the monetary unit >continues to command in exchange the same amount of labour >embodied (in other goods) as "before" the transformation. That >just can't be "assumed", if money itself is a commodity. Well, let's assume that each monetary unit simply represents .5 labor hours. It remains fixed as it has throughout *Capital* In Marx's transformation table this means that the money sums laid out as constant and variable capital represent in the aggregate 101 labor hours and 55 hours, respectively. And the total output represents 211 labor hours. What Marx's transformation aims to show is that that the monetary units for which the outputs sell and thus the labor time they represent changes once we move from prices proportional to values to prices of production. The point of the demonstration is not to determine the prices of the outputs but to demonstrate that while the second diverges from the first, the law of value still regulates prices though in indirect form.. In the analysis of this "problematic", Marx obviously has the unit of money command the same quantity of labor for both the inputs and outputs and in both the simple price and price of production scheme. Since he is not offering a determinate theory of prices but rather demonstrating the possibility that the law of value can govern without directly regulating prices, I hardly see why you are so critical of the assumptions Marx has made regarding the constancy of the labor commanded by the unit of money. Do remember that Sweezy brought the unit of account into the transformation procedure not because he thought money finally had to be allowed to be variable but because it gave him an excuse to set dept 3's multiplier and simplify the mathematical problem. Marx is not trying to tell us what prices will be after the transformation but rather to demonstrate that they do not have to be directly regulated by value for value to still regulate prices. Now after the second table we see that the labor time which outputs come to represent cannot be equated with the labor time they actually embody. Industry 1 comes to count as one more labor hour, industry three nine less hours, and so forth. But we now can also see the mistake in Marx's own first table. He had assumed that labor time represented by the money needed to purchase means of production was proportional to the labor time embodied in the means of production and thus transferred from them to the final output. But the capitalists had to have bought means of production not at prices proportional to their own labor value but the labor time they had come to represent after the equalisation of the profit rates. It may be a plausible reading that Marx is saying that he has gone wrong in assuming that the value transferred from the means of production is proportional to price which the use of those means has cost the capitalist. This would mean that Marx is not saying that inputs have to be transformed (the ground on which I have been trapped since Bortkiewicz, Sweezy and others say that the inputs are not transformed). It would mean that Fred is correct that Marx already assumed that the cost prices are a given precondition, already in the form of prices of production or market prices regulated by prices of production. The cost prices don't have to be transformed; however, there is still an important mistake in Marx's own transformation tables: one needs to drop the assumption of a proportional relation between the cost price of the used up means of production and the value actually transferred from the means of production to the final product. But this is a correction of a fundamentally different sort than what the transformation debate has been about. Do you find this a plausible reading of what Marx himself meant by how he had gone wrong? Yours, Rakesh
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