This is a continuation of my response to Andrew. This post is a response to
his Part II (2259).
My earlier posts about KM's interpretation of the transformation problem
were based on KM's previous papers, which are explicitly and emphatically
presented as an interpretation of Marx's transformation procedure. These
earlier papers assume simple reproduction (no growth) and no technological
change. I argue that Marx's theory of prices of production in Part 2 of
Vol. 3 also assumed no technological change, but did not assume simple
reproduction because this theory is a one-period analysis of the
distribution of surplus-value in long-run equilibrium, and thus does not
make any assumption about whether surplus-value is consumed or accumulated,
i.e. about whether there is simple reproduction or expanded reproduction
over time. But, in any case, it is clear that Marx did NOT assume
technological change and expanded reproduction in his theory of prices of
production.
My criticisms of KM's previous papers presented in my earlier posts included
the following points which are discussed by Andrew in (2259).
1. The fundamental givens that remain constant across periods of production
in the KM interpretation are the physical quantities of the technical
conditions of production and the real wage (as is the Sraffian
interpretation).
2. Constant capital and variable capital change across periods of
production because they are derived from the above given physical
quantities, not taken as given money-quantities, as I argue they are in
Marx's theory.
3. KM's interpretation across period of production lead to the same
quantitative results (prices of production and the rate of profit) as the
Sraffian interpretation.
4. The KM determination of prices of production and the rate of profit is
not "complete" in every period (as they have claimed) because in each
subsequent period the rates of profit across would be unequal without
further changes in the prices of production and rate of profit.
Andrew has replied in (2259) with a model that assumes expanded reproduction
and technological change. Therefore, this new model is fundamentally
different from their earlier models and from Marx's own determination of
prices of production in Part 2 of Vol. 3. These differences may well be
valid extensions of Marx's theory, but that is a separate question. I first
want to be clear about Marx's own theory of prices of production, and KM's
interpretation of Marx's theory in previous papers. My criticisms of these
earlier papers are not answered by presenting a completely different model.
I will now briefly comment on each of the above four points.
1. The assumption that physical quantities of the technical conditions and
the real wage remain constant across periods of production are crucial to
KM's earlier papers because one of the main purposes of these papers was to
refute Bortkiewitz's criticism that the conditions of simple reproduction
are violated by Marx's theory of prices of production. The following
passage from their 1988 C&C paper emphasizes this point:
The first circuit of money capital is now completed. For simple
reproduction to occur, each department must replace the precise quantities
of the specific use-values which have been used up in this period. (p. 74)
My criticism of the earlier papers that this is essentially the same as the
Sraffian interpretation is not answered by a completely new model that
assumes expanded reproduction and increases in physical quantities.
2. The conclusion that constant capital and variable capital are derived
from these given physical quantities follows from the logic of the KM
interpretation. The physical quantities of technical conditions and the
real wage remain constant, but the prices of these given physical quantities
change from period to period. Since constant capital and variable capital
are determined as the prices of these given physical quantities, constant
capital and variable capital will also change from period to period.
In (2259), Andrew poses the question with respect to his new model, which
includes technological change and expanded reproduction:
Here, clearly, constant capital will change from period to period, but
will it be because of the transformation or because of the increased
employment of means of production, or both?
So far as I can tell, Andrew does not answer this question in this post.
The implication of the question seems to be that the changes in constant
capital and variable capital are due to technological change in this new
model and not to the transformation process. But this does not answer my
criticism that in their earlier papers without technological change,
constant capital and variable capital change from period to period as a
result of the transformation process, because constant capital and variable
capital are derived from given technical conditions and the real wage, as in
the Sraffian interpretation.
3. Andrew acknowledged in a response to Riccardo (2095) that their
interpretation leads to the same prices of production and rate of profit in
the case of long-run equilibrium, or stationary prices. In my previous
post, I simply referred to Andrew's acknowledgment, without presenting a
model to demonstrate the point. For example, Andrew said:
Riccardo is right that if prices happen to be the stationary, simultaneist
prices, then all the TSS numbers (except for those dependent on the
"numeraire") are the same as the simultaneist/Sraffian numbers.
In other words, prices will converge to stationarity, the profit rate will
converge to the Sraffian rate, etc.
Andrew's new model does not alter this acknowledged fact - that their
earlier models lead to the same quantitative results as the Sraffian
interpretation.
4. Andrew seems to suggest that his new model also answers my earlier
criticisms that the KM interpretation of the transformation problem cannot
be "complete" in every period because the new model shows that "the
transformation needs to take place again each period." Andrew said:
This has been, inter alia, an answer to Fred's argument that the TSS
transformation is "incomplete," and needs to continue into subsequent
periods. Whether it is "complete" in each period is something I'll have to
address in a later post, but certainly in this illustration the
transformation needs to take place again each period...
Here, Andrew seems to be arguing that the transformation is indeed "not
complete" in every period ("needs to take place again each new period"),
which seems to be the opposite of what he and Alan have argued in previous
posts ("complete in every period"). In any case, this new model does not
answer my criticisms of their earlier papers.
CONCLUSION: Therefore, I conclude that my criticisms of KM's previous
papers still stand and are not answered by Andrew's post which presents a
completely new model which is fundamentally different from Marx's theory of
prices of production in Volume 3. I await a more direct response to these
criticisms.
In solidarity,
Fred