In a message dated Sun, 24 Feb 2002 3:44:11 PM Eastern Standard Time, "Drewk"
<[EMAIL PROTECTED]> writes:
> 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
I love this. May I ask one simply question? What section of capital created the
question of the tranformation problem as a mathmatical question needing final
resolution? Of course is was the sector connected with banking historically. The rise
of specualtive capital has tranformed the transformation question - from the
standpoint of the bourgeoisie, into the lap of the non-specualting sector of capital.
From the standpoint of the lower sections of the proletariat the issue is watching the
price, price-cost modes of expression polarized and ones standard of living go to
hell.
The search for labatory purity is the road to . . . .
This is the same reason the economist could not figure out southern slavery as a
commodity producing society - cotton entered the world of exchange, in a slavery form.
Melvin P.
Peace.
