Thanks very much to Alan for his response (1905) to my post about the
Kliman-McGlone interpretation of the "transformation problem" (1850). However,
I don't think that Alan has responded to my main point. I do not doubt that
Kliman-McGlone, Alan, and other TSS adherents CLAIM that, according to their
interpretation, the transformation is complete after each period (although
this was not clear to me from the original KM (1988) article). But my
argument is that,
IN SPITE OF THIS CLAIM, the transformation process, as KM interpret it, is
NOT COMPLETE at the end of each period, and cannot be complete until prices
are "stationary".
My argument is: the transformation process involves (1) the equalization of
profit rates (2) that happens through the transformation of values into
prices of production. Therefore, this transformation process is COMPLETE
only when (1) no further equalization of profit rates occurs and (2) no
further transformation of prices of production occurs. In other words, the
transformation process is COMPLETE only when it STOPS from one period to the
next, i.e. when no further transformation is required in the next period. I
am assuming here that technology remains constant and that commodities sell
at their prices of production. I think that these were Marx's assumptions
in his discussions of the determination of prices of production. And I also
think that these are KM's assumptions in their published articles.
As argued in my previous post, these conditions are not satisfied after
periods 1 and 2 of KM's recent illustration of the transformation process.
Instead, in period 3, (and in periods 4, 5, etc.) further equalization of
profit rates and further transfomation of prices of production must take
place - because otherwise rates of profit will not be equal in these later
periods. Therefore, the transformation process cannot be complete after two
periods; the transformation must continue in subsequent periods.
I have also argued in my recent post that these conditions are fulfilled
only when rates of profit are equalized with input prices equal to output
prices, i.e. only when prices are "stationary". If this condition is
satisfied, then rates of profit will continue to be equal in subsequent
periods, and no further equalization of profit rates and transformation of
prices of production are necessary. Therefore, KM's transformation process
must continue in subsequent periods, but eventually will come to a stop when
prices are stationary. "Stationary" prices are thus understood to be, not
actual prices at any given moment in time, but the prices toward which
actual prices are tending, even if these stationary prices are never
actually reached.
This is the argument that I wish Alan and Andrew (and others) would respond
to: the transformation process, as KM interpret it, cannot be complete
after one or two periods because further transformation is required in
subsequent periods. It is complete only when no further transformation is
required.
Thanks,
Fred