Among the numerious problems I have in understanding
the transformation problem is the inclusion of all sectors
as one transforms values into prices of production. In
a letter to Engels, dated 4/30/1868, Marx states
"Those branches of production which constitute natural
MONOPOLIES are excluded from this equalization process
even if their rate of profit is higher than the social rate. This
is important for the development of land rent."
(Emphasis is Marx's)
Given that Marx, unlike many of his followers, recognized that
land was privately owned and hence rent could be either
absolute or differential or both, the usual manner of carrying out the
transformation procedure seems suspect in that it includes all
sectors. That is, to derive prices of production from values
one assumes a uniform rate of profit in all sectors even though
all sectors are not earning that same rate of profit.
John