I thank Fred for his careful reply (ope-l 2571) on the issue of transformation
of values into production prices.
Fred writes: "Marx's theory of prices of production is presented as a
transformation that takes place entirely within one period, in the sense that
if technology remained constant in the next period, the prices of production
and the rate of profit would also remain constant in the next period."
I think this is a nonsequiter. First, the part of the sentence that follows
"in the sense that" has *nothing* to do with the transformastion of values
into production prices. It concerns only prices of production and the
profit rate, not values. Second, this latter part of the sentence has
*nothing* to do, therefore, with whether the transformation takes place
within one period.
Again, Ted and I concur that Marx's transformation takes place in one
period, and we present it as such. Now, Fred doesn't think we do, and so
we're discussing this. But I don't think Fred's contuning comments that
"There is never a hint in all of Marx's writings that ... the transformation
process takes place over multiple periods" and "there is absolutely no
textual evidence for this multi-period interpretation of Marx's theory of
prices of production" help further the discussion. We don't find the lack
of evidence surprising, because we also think the transformation takes place
*completely* in one period. We don't think the lack of evidence tends to
discredit our interpretation, because we think we present the transformation
as complete in one period. The lack of evidence would only count against
our interpretation if Fred (or someone else) could show that our interpreta-
tion "requires" (whatever that means) multiple periods. That must be shown
*first*, and *independently* of any appeal to the text. Otherwise, it is
just a red herring. So I suggest we confine the discussion to whether or
not we illustrate the transformation as complete in one period.
Fred also writes that "There is never a hint in all of Marx's writings that
... the prices of production which are determined in his illustrations would
change further in subsequent periods as a result of the transformation
process alone. In contrast, according to KM's [Kliman and McGlone, not
Karl Marx] interpretation, ... the prices of production and the rate of
profit keep changing from period to period ... solely because of the
transformation of values into prices of production."
The first sentence is correct. The second is not. Fred is confusing two
wholly different issues, the transformation of values into production
prices and the inequality of input and output prices. In our interpretation,
the transformation does not cause (output) prices of production and the
profit rate to change from period to period. The inequality of input and
output prices, however, does. That is, even if technology does not change,
prices of production and the profit rate will still change over time if
input and output prices differ in magnitude.
To show that the transformation is not a cause of changes in the profit rate
and prices of production, I will show (first) that it is not sufficient
for the changes to occur and (second) that it is not necessary.
Not sufficient: it is possible that unit input prices do happen to equal
unit output prices. Then, if technology remains constant, the real wage
remains constant, and the extraction of living labor remains constant,
although unit values and unit production prices (of outputs) differ from
one another--there is a transformation--in the period in which unit input
prices equal unit output prices, the profit rate and prices of production
of subsequent periods will not change.
Example: Assume 2 Depts. with circulating capital only. Assume Dept. I
and Dept. II each employ 5 units of the product of Dept. I, and that
Dept. I produces 10 units. Assume that Dept. I employs 5 units of living
labor-power, Dept. II, 10 units; assume that each unit of labor-power
yields one unit of living-labor; and assume that each unit of labor-power
is paid 0.4 units of the product of Dept. II. Assume Dept. II produces
15 units. Assume that one $ = 1 labor-hour, and that the unit input price
of the products of Depts. I and II are $1.20 and $1.00, respectively. Then
we have the following transformation table:
C V S C+V+S Price profit rates of profit
"value" "price"
-- -- -- ----- ----- ------ ------- -------
6 2 3 11 12 4 .375 .500
6 4 6 16 15 5 .600 .500
-- -- -- ----- ----- ------ ------- -------
12 6 9 27 27 9 .500 .500
Here we have a transformation (C+V+S does not equal Price except for the
total social capital [bottom row]), but if the same technological and
real wage relations persist in subsequent periods, etc., the table of
subsequent periods will be identical to the one above. Hence, transformation
of values into production prices is not *sufficient* for changing prices of
production or a changing general profit rate.
Not necessary: Imagine the value compositions of capital are equal across
branches. Hence, there is no transformation. Yet even if technology is
not changing (nor is the real wage, etc.), input prices can differ from
output prices. How? Commodities might not sell at their production prices
(= values), but at market prices that differ from them, for a variety of
reasons (monopoly power, demand conditions, etc.) Moreover, *past* changes
in technology, real wages, and extraction of living labor can have persistent
effects that lead the input and output prices of the current period to
differ (especially when fixed capital is considered). So, even if there is
no transformation OF COMMODITY VALUES INTO PRODUCTION PRICES, input prices
can differ from output prices even given static technology, etc., and this
will cause changes in subsequent periods' production prices and general
profit rate.
Example: Again, 2 depts., $1 = 1 labor-hour, and each unit of labor-power
yields 1 hour of labor; and again, only circulating capital. Assume each
dept. uses 6 units of the product of Dept. I, which produces 12 units.
Assume each Dept. employs 60 units of labor-power, each paid 2/3 of a unit
of the product of Dept. II. Assume Dept. II produces 120 units. Assume
that the initial unit input prices are $11 and $0.90, respectively. Let
production under the same physical conditions, etc. take place for 2
consecutive periods:
C V S C+V+S Price Profit rates of profit
"value" "price"
--- --- -- ----- ----- ------ ------- -------
66 36 24 126 126 24 .253 .253
66 36 24 126 126 24 .253 .253
___ ___ __ ___ ___ -- ---- ----
132 72 48 252 252 48 .253 .253
63 42 18 123 123 18 .171 .171
63 42 18 123 123 18 .171 .171
--- --- -- --- --- -- ---- ----
126 84 36 246 246 36 .171 .171
In both periods, commodites exchange at their values = production prices.
There is no transformation. Technology, the real wage rate, and labor
extraction are identical in both periods. But input and output prices
differ, which leads the prices of production and profit rate to change
over time. (Again, the initial unit input price of Dept. I's commodity
is $11; its output price in that period is $10.50. In the 2d period,
its input price is $10.50 and its output price is $10.25. For Dept. II,
input and output prices are $0.90 and $1.05 in the first period; $1.05 and
$1.025 in the 2d period.) [Correction: all the profit rates in the 1st
period should be .235, not .253 .] So transformation is not *necessary*
for changing prices of production or general profit rate, even given
constant technology, etc.
If something is neither necessary nor sufficient for an event, it is not
a cause of the event. In our interpretation, therefore, the transformation
itself is NEVER a cause of changing production prices nor a changing profit
rate over time.
The inequality of input and output prices, however, is indeed a cause of
these changes. And on this issue there is considerable evidence that Marx
held that changes in input prices--for whatever reason--will affect the
general rate of profit. (And because the profit rate changes, so will
production prices.) Ch. 6 of Vol. III of _Capital_ is about precisely this.
So I disagree emphatically with Fred's claim that "in Marx's theory of prices
of production (which assumes technology constant), there is no reason for
input prices to continue to change from period to period. AS LONG AS
TECHNOLOGY IS CONSTANT, THE INPUT PRICES WILL REMAIN THE SAME, AND SO WILL
THE PRICES OF PRODUCTION AND THE RATE OF PROFIT" [my emphasis]. I know of
absolutely no textual evidence for this claim. It is certainly no true in
reality, if by "prices of production" we mean prices which yield an equal
rate of profit on capital actually advanced. Moreover, it is certainly
not true in reality that changes in input prices will have no effect on
the general profit rate--if by "general profit rate" we mean a rate of
return on capital advanced, and not some mythical simultaneist retroactive
revaluation concoction. BTW, that Marx argued (in Ch. 6 of Vol. III) that
a change in input prices *for whatever reason* would affect the general
profit rate is clear and very strong evidence that he was thinking of the
rate of return on capital actually advanced, and that he was therefore
no simultaneist!
Andrew Kliman