Here Schumpeter clearly recognizes that the value price transformation is not to be solved by the simulataneous equations of neo ricardian linear production theory, though he then goes on to recommend Bortkiewiecz. The transformation is a movement from a macro economic magnitude to the microeconomic level of relative prices, though I agree with both Korsch's comments in his Karl Marx and Mattick Sr's in Marx and Keynes that Marx had no real interest in an exact price theory (Marx had a clear sense of why this was impossible). This understanding of the so called transformation as a logical movement in the level of abstraction from total surplus value on the mass of capital to the relative prices of commodities has been developed by Fred Moseley in each of the three recent volumes he has edited from Humanities Press on Marx's method and was anticipated by Paul Mattick Jr whose analysis of the value price relation is in my opinion the best introduction for the tyro and non-economist (the 1981 essay was reprinted in the International Journal of Political Economy in the early 1990s). In short, the transformation is not a study of simple reproduction and its conditions, a la Bortkiewiecz. It is a logical reconstruction that prices at the microeconomic level require the determination of the average rate of profit for their explanation and that the latter can only be explained by reference to the unobservable magnitude of total surplus value at the macroeconomic level. And it would be silly to dismiss the existence of total surplus value on account of its unobservability just as it was ridiculous for a positivist like Pearson to so doubt the existence of genes.
Now Andrew disagrees with Moseley and Mattick, Jr.
There are all kinds of other Marxian critiques of the neo-Ricardian method: that by reducing value to exchange value, that is the focus on determination of prices required to carry out the inter industrial exchanges required for economic reproduction, the neo Ricardians only provide a snapshot picture of the economy and thus eliminate capital--that is, self-expanding value as a process in actual historical time-- from the scene; that the neo-Ricardians are oblivious to the dynamics of intra-branch competition, hidden by their input-output matrices, which induces the very sort of technical change by which downward pressure on the rate of profit is exerted (Shaikh);that the neo-Ricardians have no real theory of money and that their concept of a physical surplus is incoherent (see issues of the International Journal of Political Economy from the early 1990s, esp. Giusanni)); that their
metaphysical reduction of economic studies to exchange relations leads them to ignore how the valorization process, that is the self expansion of value, brings about the continuous transformation of the actual, physical production process (entry of women and children into production, the taylorisation and intensification of labor, the globalization of production) and revolutionary changes in the metabolic relations between humanity and nature (that is, the neo-ricardians have no real theory of actual structural change, much less of epochs within capitalism, despite the best efforts of Pasinetti, as even a sympathetic critic as Donald Harris has underlined).
My feeling about Schumpeter is that he is absolutely the most important bourgeois economist. His vision of the industrial process as one of creative destruction is one of only a few great theories of the nature of this epoch in history (of course I would include the Grossmann-Mattick theory of breakdown and, just for kicks, the Unabomber critique of large scale technological systems).
One very important study of Schumpeter is Wolfgang Stolper's biography wherein he gently but in no uncertain terms critiques the efforts of recent economists to "model" Schumpeterian dynamics. Schumpeter has suffered epigones as well. (I have read a lot of Schumpeter if anyone wants to continue this thread).
Of course Schumpeter was a reactionary. So?
best rakesh