>
>So say you have capitalists who have invested
>
> MP W
>I. 80 20
>II 70 30
>III 60 40
>
>Now each capitalist will want the same mass of profit on the money
>which he has invested--$100 in all cases.
>
>Now assume that each dollar purchases one worker. So in case I you
>have 20 workers, the second case 30 workers and the third case 40
>workers. So that would suggest that less labor has been expended in
>the first branch and that its commodity output thus embodies less
>labor than in the second branch and the third branch.
So just to clarify, let's say each worker not only transfers the value of the means of production to the output but also produces enough not only to cover her own costs (the W column) but to produce surplus value in equal amount (the SV column below) which will be embodied in the price (P) of the output.
That is to say each worker is exploited at 100%; each worker produces enough commodity value to more than double the wages (what Marx calls variable capital) which has been paid to hire her (it's the part of the capital invested which allows capitalists to increase or vary the value in circulation, that's why Marx calls wages for the hiring of productive worker variable capital).
So assuming that 100% rate of exploitation, then we'll get
MP W SV P I. 80 20 20 120 II 70 30 30 130 III 60 40 40 140
Now note that the rate of profit is higher in Branch III (40%) than Branch II (30%) or I (20%), so if value is determined by labor time, then the profit rate should not equalize. But it does have this observable tendency, so the labor theory of value cannot apply--so argued Malthus--to conditions in which as a result of industrial development, different branches have different relations between MP and W. The labor theory of value has no validity in a capitalist society, though it may have had some influence in a long primitive past, as Adam Smith suggested.
Marx laughed--even the best classical economists consigned the labor theory of value to a long past even though it only governs bourgeois society.
Then the rest of my previous post reads
>
>But if labor expended determines value, then the output of branch
>one should sell for less than branch two than branch three. But if
>that were the case, then capitalists would not be making equal
>profits on their investments. Capitalists would leave branch one and
>move to branch three where they could make bigger profits.
>
>In his debate with Ricardo, Malthus argued the observable
>equalisation of the profit rate runs counter to the determinatin of
>value by labor time since in advanced capitalist production the
>relation between means of production and labor hired would vary
>quite a bit, industry by industry.
>
>This is quick and VERY dirty; there are numerous careful expositions
>of the problem. If you want to understand and take a position in the
>debate, I urge you to do so.
>
>Rakesh
Marx provides a solution to this problem in Capital 3, chapter 9. There is then claimed to be a problem in Marx's solution; this is called the transformation problem. It is discussed by Sweezy and Foley, but I think they are wrong about what the problem is in Marx's solution.