Hi Jurriaan, Jurriaan Bendien wrote: > The central idea in the transformation problem literature from > Bortciewicz onwards is, I think, that there is an "accounting > relationship" such that, by definition, total production prices equal > total values, and total surplus value equals total profit volume. > > These identities are supposed to hold by definition. .....
No. One may take total prices equals total values as a normalization condition, but then one can check whether total surplus value equals total profit volume. > > Once you have those identities, then you can perform all kinds of > mathematical operations and investigate equilibrium conditions. That is > what Bortciewicz liked to do. ...... Professor Ladislaus von Bortkiewicz demonstrated that the two conditions generally don't hold simultaneously. In the century since, this result has been repeated and refined by a number of other economists. > The intellectual challenge is, whether you can devise a model which > features all the characteristics, theorems and imperatives which Marx > mentions, but which also does not violate the mentioned consolidation > principle, and does not run into inconsistencies. ...... Marx held that price/value deviations resulted in a redistribution of surplus value among the capitalists, but left the basic conclusions from the theory of value in tact. That should be so was not so surprising, since volume I of "Capital" was not simply a logical deduction of things from first principles, but contained a tremendous amount of historical and factual material. It showed that this material was explained by the theory of value. But it also provided a huge amount of evidence for how capitalist operated. The transformation process illustrated in volume III of Capital aimed to show how the price/value deviations resulted in a redistribution of surplus value. Marx also indicated what additional features of capitalism were due to the tendency to the equalization of profits, while arguing that, in modern language, prices of production were basically just a perturbation on value. In making these arguments, Marx set forward a series of what I call "helper formulas". These are things such as that the total surplus value equals the total profits, when both are measured in financial terms. Similarly, the total constant capital should be the same in financial terms whether it is valuated at value or prices or production. Etc. > Any scenario in which the sum of prices does not equal the sum of > values, or where the sum of surplus values does not equal the sum of > profits is ruled out, ..... >From the time of Bortkiewicz and even before, it has been widely assumed by economists that all the helper formulas must be strictly true, or else it showed that profit can come from somewhere else than surplus value. Thus it was assumed that showing that these equalities didn't hold exactly would overthrow the theory of value and Marxist economics. So when Bortkiewicz and many subsequent economists showed that these equalities generally weren't precisely true, it was taken by some people to be a big deal. They put a great stress on this. They didn't care that these equalities were generally approximately true. The claim was that the logical system was inconsistent if they weren't exactly true. This involves a double error. It turns out that a closer look at how value and prices behave when there is an equalization of the rate of profit shows that a a certain discrepancy between total profits and total surplus value should exist not despite the theory of value, but *because* of it. If one uses the type economic model used by Prof. Bortkiewicz and those who followed in his wake, it turns out that total profit and total surplus value are equal in their material content and in their labor-content. They are not generally equal when measured financially, because the total profit reflects the price of production of the total goods bought by the profits, while the total surplus value reflects the value of the total goods bought by the profits. Since the goods bought by the profits are only part of the total production of the economy, the organic composition of the capital used to produce it will generally *not* be the same as the average organic composition for the whole society. Therefore the celebrated difference between the total profits and the total surplus value (a difference only in financial terms, but not in either material or value terms) is a simple consequence of the fact that there are price/value deviations due to the varying organic composition of products. It does not mean that profits come from anywhere but surplus value. It is no more or no less upsetting than that there is a price/value deviation in any particular commmodity. It is circular reasoning to say that this deviation refutes Marxist economics -- if one accepts that it is possible for this deviation to exist for individual commodities, then one cannot a priori rule out that it should exist for groups of commodities. So unless one assumed from the start that price/value deviation contradicted Marxist economics a priori, the deviation for the market-basket of goods bought with profits shouldn't be a contradiction of Marxist economics. I explain this in more detail in my article on the transformation problem, at http://www.communistvoice.org/45cTransformation1.html. ("On the non-naturalness of value: A defense of Marx and Engels on the transformation problem (part one)". The second part of the error is that a fascination with the exact formulas in this model replaced asking how big this deviation was, or how it varied over time in practice, and how it would affect economic calculation. Profits are spent on a wide arrange of commodities, from luxury goods to means of production to expand production. Therefore, for most complex economies, it's likely that the average organic composition of the goods bought by the total profits is similar to the average organic composition for the entire economy. Therefore, the price/value deviation for the total profits isn't likely to be very large. So the total surplus value is likely to be approximately the total profits. In fact, all of Marx's helper formulas are approximately true for complex economies, but not exactly true. Moreover, once one examines how the helper formulas have to modified, one sees that the modified formulas provide a firm basis for the basic conclusions that Marx was seeking to make. They actually strengthen the foundations of Marxist economics. Once it is seen that the theory of value doesn't require them to be exact, the refutation of Marxist economics from Bortkiewicz and others fades away. If one didn't recall the class reasons behind the urge to refute the theory of value, one might wonder how so many sophisticated economists could have been so intent on the details of mathematical calculations of economic models, that they forgot to look closely at the overall economic meaning of these models. But then again, this is an error that is still being made to this day. > What makes the transformation problem a "problem" is that purely logical > inconsistencies arise in the model of the production system, which > cannot be solved. ........ Three things made the transformation problem a "problem": 1) one was the belief that any deviation in the helper formulas refuted the law of value and showed that profits didn't have to be related to surplus value. 2) another was a misunderstanding of value. It was, and still is, a very widespread theory that it is deviations from value that cause the evils of capitalism. It isn't really realized that the law of value is the law of exploitation of labor and the law of devastation of the environment. It isn't realized that value and the labor-content are what Marx calls "non-natural" categories. The economic aim of communist revolution is to liberate the working class and all humanity form the law of value, not to perfect it. This, by the way, is the issue that comes up in the discussion of commodity fetishism. It is just impossible for some people to accept that this is debunking the fetishism of value, and not just of price. 3) Marx put forward the helper formulas in volume III. To correct them, is to correct a minor mathematical error of Marx's. ("Minor", because (a) the formulas are approximately true, and (b) the correction strengthens Marx's overall argument about the transformaton process.) > If that is true, then the whole value theory is redundant, because it > simply fails to achieve its explanatory or predictive objective from a > scientific point of view. We can just as well create a model in which > there are only prices, and which features all the structural > characteristics Marx mentions, and then explain price variables in terms > of other price variables. Ronald Meek already did this, long before > Steedman did. ....... But the correction of the helper formulas leaves unchanged the explanatory and predictive features of the theory of value. Also, I disagree that the Sraffans did create a model in which it is shown that one can do away with value. The Sraffan model assumes that one knows exactly what is being produced by each factory and enterprise, exactly how it is being produced, and exactly where they send the product. It's true that, if you know all this, you can forget about value. But that's because you can also forget about price. Who cares about price or money or commodity transactions, if you know beforehand that your factory or enterprise is being supplied with exactly what it needs, exactly how much to product, and exactly were to send the product? -- Joseph ----------------------------------- Joseph Green [email protected] ------------------------------------ _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
