[OPE-L:7370] Re: RE: Re: interpreting Marx; a reply to Fred

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Sun Jun 09 2002 - 21:56:01 EDT

Gary writes in 7368:

>  (c) I don't think it matters much for his account of
>capitalism, in view of my interpretation of his value analysis as a substitute
>for an unavailable simultaneous equation determination of the profit rate.

The simultaneous equation determination assumes existence of an 
input-output matrix and the existence of a surplus for the magnitude 
of which there is simply no explanation.

By focusing on value as a process rather than technical conditions as 
a given, one can keep focus on the objectification of alienated 
living labor in the commodity output which the simultaneous method 
simply takes as given.

The neo Ricardian theory tells us that it is fine to focus on the 
alienation of labor in the production process and do studies thereof 
but that in the determination of the profit rate and relative prices 
there is nothing to be gained by understanding the surplus as nothing 
other than the materialization of unpaid living labor.

So proponents of the simultaneous method will argue that for the 
purposes of determining the rate of profit and relative prices the 
surplus value objectified by alienated labor in the commodity output 
plays no role. Again:  for this purpose of price and profit 
determination one can abstract from value as a process and value 

Not only--we are told-- because value is putatively rendered 
redundant by the ability to calculate on the basis of those technical 
condtions from which value magnitudes have to be derived but also 
because surplus value simply cannot have any relation to the mass of 
profit in a complete transformation.

Yet Shaikh's and Gouverneur's respective iterations do show that the 
real magnitude of non wage income  is determined before the formation 
of prices of production and determination of relative prices. That 
is, the mass of non wage income (or at least its feasible maximum) is 
not determined simultaneously with relative prices; moreover, in 
order for relative prices to be determined, the mass of surplus value 
has to be determined prior to the determination of relative prices. 
Simultaneous determination would seem to compromise the logical and 
causal priority historical materialism accords to production.

  Once price competition is allowed by allowing the iteration to be 
carried out,   prices do indeed diverge from value prices or simple 
prices or direct prices or prices which are proportional to values, 
and the mass of profit seems to diverge from surplus value... but any 
divergence between profit and surplus value is compensated on the 
revenue side. This is Shaikh's brilliant point.  The iteration only 
graphically confirms Marx's Capital I, ch 5 argument that price value 
deviations in themselves cannot be the source of any real gain in 
surplus value for the capitalist class as a whole.

So in the analysis of capital-as-a-whole which is itself no less a 
real individual than a biological species is also a real individual 
we may as well abstract from price-value deviations. Marx 
retroactively confirms his having abstracted away from price value 
deviations in volume one with his volume 3 analysis.

In fact if in the analysis of capital as a whole we do not abstract 
from price value deviations we can easily conflate those 
countertendencies that allow only a few individual capitals to stave 
off the fall in the rate of profit through favorable price value 
deviations from those countertendencies which do in fact serve to 
increase the mass of surplus value and thus raise the rate of profit 
for capital-as-a-whole--this has been a major point of Carchedi's 
very illuminating theory of unequal exchange.

So for the purposes of the analysis of the historical limits of the 
capitalist system, the primary importance of Marx's price value 
analysis is his saving the value concept from recalcitrant market 
phenomena in order to use it in the analysis of the dynamics of 
capital as a whole. The culmination of Marx's value analysis was 
certainly not the transformation problem.

Abstraction from price-value deviation thus makes Marx's theory a 
truer theory of the limits to capital than the bourgeois theory which 
is focused on relative prices could ever be.

If one's object of investigation is the historical limits to the 
capitalist system--and Korsch makes an outstanding case that this is 
what Marx's value theory was intended to be--the real detour that 
leads to a cul de sac is relative or individual price theory in which 
Marx (given his real object of investigation) quite properly showed 
little interest.

Of course I am also very sympathetic to Carchedi's argument that any 
equilibrium price theory is inimical to Marxian theory and contrary 
to capitalist reality itself.

But I think Shaikh has developed a rather brilliant reply on the 
terrain of equilibrium economics.

>   The question
>is whether, in following this procedure, Marx gave an erroneous explanation of
>the profit rate.

Completion of Marx's transformation--though my inverse transformation 
point is meant to indicate that such completion was not for what Marx 
himself was admitting the need--reveals that the real non wage income 
which capitalists enjoy can be determined by the exploitation of 
living labor alone.

All the best, Rakesh

>   I think he did. The next question would be, well, why did he
>make that mistake?  I think the answer is that he didn't have at his disposal
>the mathematical tools required to get it right.  So in the end we are back to
>the question of how is Marx's project related to Ricardo's.

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