technology (Re: Horowitz's center)

Rakesh Bhandari bhandari at phoenix.Princeton.EDU
Mon Mar 15 14:19:15 PST 1999

Oh hell, a big mistake. I had written to Roger:

>Of course that is true. The mass of surplus value rises though the rate of
>profit on ever larger investments tends to fall. As Kevin Brien notes in
>Marx, Reason and the Art of Freedom, Baran and Sweezy seem to have taken a
>rising mass of surplus value as proof of a declining rate of profit.

I meant they took a rising mass of SV as proof that the rate of profit does not fall.

Doug, as for value theory, I don't follow the debates among economists (though I should know more about the twist and turns since Samuelson's and Steedman's attacks in the 70s--it should be clear that I would rather read you, Brenner and James Galbraith than iterative and other new solutions which may just to speak to a certain obtuseness on my part); at any rate, I think this endless siliness about the transformation problem at this point requires a sociological explanation. Mattick Sr provided it as far as far as I can tell:

"The circulatory static conditions of simple reproduction bear a resemblance to bourgeois equilibrium theory--the main tool of bourgeois price theory. Marx's theory is thus aproached as if it were a sort of Walrasian equilibrium theory, whether looked upon from the viewpoint of value or that of price, and presumably accessible to mathematical treatment. As capital, by its nature is self expanding, Bortkiewcz's 'solution' has no connection with real capitalist world. It remains an intellectual exercise, which may excite mathematically inclined economists but is no substitute for economic analysis in which mathematics may serve for some purposes, as an aid to understanding, but never as a replica of real economic processes. "Just as Marx's reproduction schemata in the second volume of Capital do not claim to depict the concrete capitalist production and exchange process, so the transformation examples in the third volume do not profess to accomplish the impossible--namely, the actual transformation of definite prices--but serve merely as an insturment for the comprehension of the relations between values nad prices. Not searching for an equilibrium in terms of prices, Marx's mixture of values and rice relations suffices to illustrate the statement that prices and values will be altered through the competitive establishment of an average rate of profit. Whereas Marx's example of the transformation process has only an explanator function, Bortkiewicz aproaches the value relations as if they were acutally ascertainable in price relations...

"The concern with the 'transformation problem' thus rests upon a profound misunderstanding of Marx's value concept. In Marx's conception there is no transformation, except as a mental construction based on the social production relations that underlie the actual market price and market relations. Because the transformation of values into prices is a fact not of experience but of theory, the idea arose that the law of value is itself a mere fiction, though perhaps a necessary one, and not a real phenomenon. For Marx however the law of value is as real as capitalism itself, even though it manifests itself only in market and price relations. The fact that value relations are not observable does not imply that the *results* of the law are also unobservable, but only that they are experienced in other forms, in the various contradictions of capitalist reproduction and its crisis-ridden development."

Marxism: Last Refuge of the Bourgeoisie, p. 49

In terms of theory, I am much more interested in the sociologist Moishe Postone's brilliant reinterpretation of Marx's value theory in dynamic and phenomological terms. Postone builds on Grossmann, Korsch, Colletti, and Mattick. I know Andrew Kliman is skeptical of Postone's reinterpretation. Paul Samuelson on the other hand has never really developed a substantive critique beyond Bortkiewicz's (see his contribution to the Geoff Harcourt festschrift), and he after all was trying to solve the transformation problem. This speaks to the laughable sterility of bourgeois economics. Schumpeter's scattered critical comments on Marx's value theory amongst genuine insights into the nature of Marx's project are perhaps the last serious engagement with Marx by a bourgeois economist.

yours, rakesh

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