From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Fri Mar 23 2007 - 12:55:03 EDT
Fred, You take M as given. But--to ask a question I asked four or five years ago--how do we know that the market prices of the constant capital and wage goods bought directly and indirectly with that initial M were governed by or indeed could have been governed by the same prices of productions that you derive via your sequential, "monetary-macro" method predicated on the labor theory of value? At any rate, I agree that the transformation problem is not well understood as one from C-P-C' to M-C-P-C-M'. Marxists are also blamed for the real contradictions of capitalist production. Commodity production only becomes generalized if commodity production is generally capitalist production. But the general mediation of the social relations of production via commodities requires that the law of value governs commodity prices if society is to allocate its labor in such quantitative and qualitative terms that reproduction of society is possible while capitalist production yields some tendency towards an equalization of the profit rate once capital markets and a market in formally free wage labor are developed. This real contradiction manifests itself it in prices of production which while concealing the law of value also expresses the fact that the working class is exploited as a supra-individual subject. In other words, what critics take to be the logical contradiction between the law of value in Capital I and price of production in Capital III is the theoretical expression of the real contradictions of capitalist production. Geoffrey Pilling states this well in his book on Marx's Capital. While the law of value and law of the equalization of the profit rate are in objective contradiction, the first is the dominant tendency in the dynamic course of capital accumulation as underlined by its ability to account for changes in exchange ratios over time (it's not Ricardo's 93% Labor Theory of Value that Marx accepts per se but his proposition that the law of value successfully accounts for inter-periodic changes in exchange ratios) and in the periodic, crisis inducing shortage of surplus value vis a vis the already accumulated capital (Grossman, Mattick). Rakesh
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