From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Tue Aug 27 2002 - 16:08:14 EDT
re 7552: > >Gil, the fact that, in a system of commodity money, the money commodity >has no price and is a scarce precious metal is not a historical >contingency, but a necessity due to the nature of money. Marx did not >discuss the money commodity in Part 2 of Volume 3 because the money >commodity has no price of production and does not participate in the >equalization of profit rates like other industries. > >Comradely, >Fred Yes, Marx's putative failure to discuss gold does not prove that he did not keep in mind the difficulties in changing "dimensions" from values to prices. There is in Marx's theory no pure value dimension anyways as you Fred have pointed out. Whether my analogies from quantum mechanics are dead on arrival or not, values only exist in their "necessary form of appearance" of price (Jairus Banaji), though the price form cannot but mis-represent value (Mattick Jr). As you show, this is the conclusion already reached in Capital, part I. The inputs in Capital III, part II then have to be already transformed if not into prices of production or market prices, then at least into simple or direct prices. And since the capital invested for the purchase of these money price-denominated inputs is already a given precondition (Alejandro Ramos Martinez), it makes no sense to call for a retroactive transformation of sum of money capital already invested! Capitalists cannot go back and change the sum of money capital already invested. As John Hicks picked up on the quasi Bergsonian insights of Shackle, time is not space--we cannot move to and fro in the space of time, but move ever forward in its irreversible flow. The MEL is also a given precondition, unaffected and "unaffectable" by the transformation. Ajit and Gil have been quite dismissive about what you Fred take as the givens--the cost prices, the MEL. But this is all perfectly sensible. It will be interesting to see whether Gil returns to his criticism of your givens. ___________ Now the rest is old stuff which we have discussed ad nauseum. My big disagreement with you and Alejandro is the nature of the mistake to which Marx is calling attention on p. 265 in KIII. I think Marx is saying that he himself made a mistake in writing up his tables because he assumed that one could infer the value transferred from the means of production from the the machine's flow price as recorded in the cost price. On the basis of KI quotes, you say these two "flows" are the same thing because the latter determines the former. But once the value price proportionality assumption is dropped in KIII, the assumption embedded in the tables is no longer tenable. Moreover, let's say Marx had assumed that each wage good has a labor value of one and allows for the employ of one worker. Well wage goods may have sold above or below their value we now know after the transformation is complete. If they sold above value, then the v in the cost price would not have allowed for the hire of as many workers and thus as high rate of exploitation as Marx assumed in transformation tables. If wage goods sold below value, then the v in the cost price would have allowed for the hire of more workers and thus a higher s/v than Marx assumed in his transformation tables. What the inverse transformation problem says then is that the problems are not in the failure to transform the inputs from values into prices but in terms of the assumptions Marx actually did make in his tables about about value transferred and s/v as he moved from cost prices to output values and prices of production. Ultimately value transferred and s/v cannot be known directly but only inferred from price data. In constructing his tables Marx made it seem as if such value related variables are something we can know directly and explicitly and enter into transformation tables.. That's the problem. Value magnitudes can never be known directly or explicitly, or even easily inferred from price data, including flow price data. This is fundamental to Marx's theory of fetishism. As Mattick Jr puts it, that value can only be represented in money price does not mean that money price does not mis represent value. Representation is not necessarily mis-representation. Now even if one grants that there is a need to complete the transformation--which I do not --the question then becomes whether the apparent divergence between the mass of surplus value and total profit does any damage to the Marxian bedrock thesis that unpaid living labor is the source of non wage income. Winternitz correctly reasoned that since neither the MEL nor the value of the total output could be affected by the transformation, the invariance condition in the spirit of the Marxian system is the equality between total value (or simple or direct) prices and prices of production. So for me the question becomes whether there are compelling reasons why the apparent divergence between surplus value and profit is in fact to be expected by Marxian theory. And there are in fact two reasons: 1. Shaikh's analysis of surplus value in terms of its phenomenal forms of profit and revenue shows the divergence is not real. 2. My idea that Marx's critique of adding up theories of price implies the mass of surplus value itself has to change each time the cost prices are alone modified in an iterative transformation. For example if cost prices were to rise simply because the price of labor power increased with no change in the labor value of the output and the MEL, then it follows that surplus value has to decrease by the same magnitude in the opposite direction. In a complete transformation only cost prices and output prices are being modified; there is no change in the labor value of the output and given a fixed monetary expression of labor time there can thus be no change in the price of the output from a complete transformation. If after a complete transformation total profit seems to exceed surplus value--the possibility both Andrew K and Allin C put to me--this would not reveal that live labor was not the only source of non wage income; it would only mean that after a complete transformation the rate of exploitation had increased and/or the price of the machine the value of which is transferred gratis by live labor was now below its value. Anyways in either case the real income of the capitalist class as composed of profit and revenue will not have changed...which only confirms Marx's argument that price-value disparities cannot themselves be the source of real gains in surplus value for the capitalist class as a whole. There is simply no logical problem with Marx's transformation analysis even if one wrongly thinks it has to be completed by being extended to the inputs which as cost prices. Marx's value theory does not break down with a complete transformation, though there is little sense to carry one out to its end since surely the technical conditions would have changed before all the iterations required for the arrival at equilibrium could have been completed. The number of iterations needed reveals that the vector of equilibrium prices has no real function in a capitalist economy. All this concern about whether Marxian theory passes the "equilibrium test" in "pure theoretical time" as does the neo Ricardian theory is proof of the colonization of the field by bourgeois economics, plain and simple (for such a colonizing effort see Meghnad Desai's comments on value price in his Revenge of Marx). The basic thrust of Mattick Sr's critical comments on Bortkiewicz in Marxism: last refuge of the bourgeoisie however is correct. All the best, Rakesh
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