This is a reply to Charles Brown's pen-l 22901. (I hope to
respond to Tom Walker's question in pen-l 22893 soon.)
Charles asked me
"Is it your position that the 'transformation problem' is a bit of
a misnomer, because Marx's point was that prices deviating
unsystematically from value is what capitalism must do because of
exploitation ? So, that from the Marxist standpoint the failure to
find a mathematical functional relationship between value and
price is a confirmation of Marx, not a 'problem' for Marx's theory
?
"The law of value is like a 'state' law. It is the violation of it
by prices that results in crisis as a 'punishment' for being out
of line with value proportions, the law."
I agree with a lot of what you say, Charles. But, no, this isn't
really my position. My position is that
(a) the "transformation problem" is a NON-EXISTENT "problem,"
because
(b) the allegation of internal inconsistency in Marx's account of
the transformation (of commodity values into prices of production)
has never been proven, and
(c) indeed the alleged proof of internal inconsistency has been
disproved.
I'll substantiate this below. But first, let me continue with
your question.
Certainly, *one* point of Marx's was that "prices deviating
unsystematically from value is what capitalism must do" -- because
of exploitation, and because of other things. One of these other
things is that, owing to competition, businesses that exploit a
lot of workers do not tend to rake in a higher profit per dollar
invested than businesses that exploit few workers. Marx's account
of the transformation in Ch. 9 of Vol. III of _Capital_ deals
specifically and only with this latter issue.
Thus, I fully agree with your statement that, according to Marx's
theory, "the violation of [the law of value] by prices ... results
in crisis as a 'punishment' for being out of line with value
proportions ...." I also think this is a very important issue.
However, this issue is not dealt with in Marx's account of the
transformation in Ch. 9. Ch. 9 doesn't deal with the
relationship of prices to values *in general*, but only with the
relationship of *prices of production* to values. (Prices of
production are hypothetical prices that would result in equal
profit rates.)
You suggest that there's been a "failure to find a mathematical
functional relationship between value and price." I agree that a
function relating values to prices *in general* is an
impossibility -- prices can differ from values in all sorts of
ways and for all sorts of reasons. But, again, Ch. 9 deals only
with the relationship of values to prices of production, and it
isn't the case that no functional relationship between values and
prices of production has been found. In Ch. 9, Marx himself
presented a precise functional relationship between them.
He didn't regard deviations of prices of production from values as
any confirmation of the law of value. Indeed he recognized that
the deviations *appear* to violate the law. What he regarded as a
confirming the law of value was precisely the functional
relationship between prices of production and values that he
presented in Ch. 9.
Their functional relationship is such that, *notwithstanding* the
fact that prices of production deviate from values in any
particular industry, there is no deviation at the economy-wide
level. Total price equals total value; total profit equals total
surplus-value; and the level of the general (economy-wide) rate of
profit is not affected by the fact that commodities exchange at
prices which differ from values. Thus, it remains the case that,
as he had said earlier in _Capital_, the level of the general rate
of profit is determined in production, before exchange and
independently of exchange. It depends only on the amount of
surplus-value that capital has succeeded in pumping out of the
workers, as well as the amount of capital-value invested in
production.
These equalities between price and value magnitudes, not any
deviations between prices of production and values, are what Marx
regarded as confirming the law of value -- in the context of Ch.
9. (I agree that, in a different context, the punishment of
backward producers for producing at higher-than-average value is
another confirmation of the law of value.)
Now the problem, of course, is that Marx's precise mathematical
relationship between prices of production and values was declared
invalid, owing to an alleged internal inconsistency. His account
of the transformation was thus deemed in need of "correction," and
the "corrected" procedures all imply, in one way or another, that
the law of value does NOT hold true in reality; Marx's equalities
cannot all be true, if one accepts the "corrections."
Now keep in mind that the *only* rationale for "correcting"
Marx -- the only rationale for claiming that there's a
"transformation problem" -- is the allegation that his own account
of the transformation is *internally inconsistent*. To
substantiate this claim, his critics must do more than present an
alternative theory or even criticize Marx's theory. They must
show that Marx's conclusions fail to follow from his own
premises.
Only one person ever tried to show this, and he was wrong. I'm
referring to a 1907 paper by Ladislaus von Bortkiewicz.
Bortkiewicz recognized that, in Marx's account of the
transformation, the per-unit prices of inputs differ from the
per-unit prices of outputs. E.g., the price of a hammer used in
the year's production differs from the price of a replacement
hammer produced at year's end. There's nothing "logically
incoherent" about that, and Bortkiewicz DID NOT claim that there
was. What he tried to prove (on pp. 8-9 of his "Value and Price
in the Marxian System," _International Economic Papers No. 2) was
that, if the inputs have one set of prices while the outputs have
another, the economy will not be able to reproduce itself
physically -- Marx's transformation procedure creates a spurious
breakdown of the reproduction process.
Immediately after Bortkiewicz supposedly proved this, he declared
that "We have thus proved that we would involve ourselves in
internal contradictions by deducing prices [of production] from
values in the way in which this is done by Marx" (p.9). This
alleged demonstration is, to this day, THE SOLE basis for the
charge that Marx's account of the transformation is internally
inconsistent, and the sole basis for the allegation that it's
internal inconsistency has been proven.
Bortkiewicz was wrong. Several examples have demonstrated that
the economy can reproduce itself physically, under the conditions
Bortkiewicz specified, even if input and output prices differ.
The first of these examples is contained in Andrew Kliman and Ted
McGlone, "The Transformation Non-Problem and the
Non-Transformation Problem," _Capital and Class_ No. 35, 1988. A
few similar examples have since appeared in other places.
These examples disprove Bortkiewicz's claim that Marx's account
leads to a spurious breakdown of the economy. They thereby
disprove Bortkiewicz's claim that he proved that Marx's account
was internally inconsistent. In 13 years, *no one* has challenged
these facts.
What they have tried to do is to suppress the facts. We now face
discussion after discussion in which the author alleges that
there's a "transformation problem," but never mentions what Marx's
supposed internal inconsistency actually was. Much less does the
author mention that the alleged proof of internal inconsistency
has been disproved. We now face discussion after discussion in
which the author completely misrepresents what the alleged
"problem" was that supposedly required Bortkiewicz's "correction."
We now face discussion after discussion in which the author tries
to divert attention away from the internal inconsistency issue --
by criticizing other people's interpretations -- as if the logical
coherence of Marx's OWN account of the transformation had never
been at issue, and/or as if the issue had been its fruitfulness
rather than its internal consistency.
There is only one, very partial, exception to this that I know
about. In a recent issue of _Science and Society_, David Laibman
("Rhetoric and Substance in Value Theory", Vol, 64, No. 3, p. 323)
concedes that �Reproduction equilibrium exists between periods� in
one of the Kliman/McGlone examples -- i.e., a spurious breakdown
of reproduction does not occur -- even though input and output
prices differ. But Laibman fails to point out that this means
that Bortkiewicz's proof has been refuted. He also fails to point
out that there is therefore no basis for the claim that Marx's
account is internally inconsistent and therefore there is no need
to "correct" it.
Why is none of this acknowledged? I have become convinced it is
because Marx's Marxian and Sraffian critics want to be able to
propound theories that differ radically from his (which, by
itself, would be fine) WHILE AT THE SAME TIME posing as his
inheritors of his project. They want to have their cake and eat
it too.
This strategy could not succeed if Marx's OWN theories, in their
original form, were allowed to exist as a viable alternative to
his critics' theories. There is only one way that the critics can
portray themselves as inheritors. They *must* make it seem that
Marx's own theories, in their original form, are illegitimate.
Not just wrong -- they don't want to come out and say that they
*disagree* with his views -- but untenable on logical grounds, and
therefore in need of "correction" by the valiant Marxian and
Sraffian inheritors of Marx. Is it their fault if the "corrected"
versions of his theories contradict his at almost every turn, and
with respect to some really important issues (which the
"transformation problem" per se is definitely not)?
That is why they will not and cannot openly acknowledge that
Bortkiewicz's proof is false, nor that they have no other basis
for their continuing allegations of internal inconsistency and
error. These are the facts nonetheless. Marx's account of the
transformation is internally coherent. It stands in need of no
"correction." Inasmuch as the Marxist and Sraffian economists�
revisions of his theories contradict his own results, they are not
corrections -- again, no corrections are needed -- but simply
contrary theories. The exclusion of Marx�s theories in their
original form is not a justifiable attempt to weed out error --
again, no error has been demonstrated -- but plain censorship.
I agree, and have always agreed, with those who say that
discussion of the alleged "transformation problem" is a complete
waste of time and valuable energy. To the extent I have discussed
it -- and I've hardly done so for many years -- my whole purpose
has been to destroy the false myth that there's a problem, and
thus to make space for important things. (See the 1988 paper
cited above, in which Ted McGlone and I say exactly this.) But
subsequent events have unfortunately made me realize that this is
not the whole story. Something more pernicious than time-wasting
is also at work. The false myth of the "transformation problem"
serves as a key weapon in an ideological attack against Marx's
body of ideas.
It is one thing to allege internal inconsistency when internal
inconsistency has been proved. To allege it when the charge of
internal inconsistency has been disproved, and the disproof has
stood the test of time -- that is an ideological attack. It
functions to prevent Marx's ideas, in their original form, from
gaining a hearing in classrooms, in popular publications, and in
scholarly journals, including journals of radical economics.
J'accuse.
Andrew Kliman
