I think we differ on the following points.
1. On the analytical significance of testing value theory in models of simple reproduction as did Bortkiewicz. Marx demonstrated that simple reproduction would be most unlikely under capitalist conditions. So why Marx's value theory has to hold in simple reproduction is not at all clear to me.
That the interdepartmental relations disclosed through analysis of simple reproduction would have to hold more or less in expanded reproduction in a closed capitalist economy does not mean that the capitalist economy can ever settle into simple reproduction (or arrive at static equilibrium). In fact Marx argues that it cannot.
2. Also we differ on the meaning of long term equilibrium
--is it a process through which differential rewards for those holding the same factors of production tend to be eliminated? E.g rate of profit tends to be equalized across branches --is it an ongoing process in which the most efficient techniques come to determine normal prices --is it an end state in which there is a set of efficiency prices in static equilibrium?
I see no evidence that Smith, Ricardo and especially Marx understood normal price or price of production or supply price as the third kind of thing. Competition for them was a dynamic process, not an end state. Which is a neo classical conception rather than classical conception.
3. I am wondering whether we can agree that Marx, rightly or wrongly, would have understood the Sraffian theory as crude material fetishism he ascribed to McCulloch. It seems useful to me to try to figure out what Marx would have thought about the physical conditions/surplus approach
John Eatwell writes
" ..The objective analysis which Sraffa sought he found in the surplus theories of Ricardo and Marx. The classical theory of value and distribution takes as its starting point quantities which are all, in principle, objectively measurable, and behind those quantities lie the objective characteristics of social institutions. There is no place for utility or disutility. For example, labor requires a given quantity of commodities as wages, and this must be replaced from the product. The wage is a set of physical magnitudes, its determination rooted in the character of contemporary society. It is not a measure of how the worker subjectively feels about working. Orthodox theory asks us to believe that real cost is the sum not only of the disutility of labor, but also of the subjective pain suffered by the capitalists, who must be induced to sacrifice their wealth to engage in the acquisition of profit." -- John Eatwell (1984). "Piero Sraffa: Seminal Economic Theorist", Science and Society, V. 48, N. 2 (Summer): 211-216."
Eatwell is free to laud this putative materialism, but it is important to see why Marx would not have.
In Theories of Surplus Value Marx writes:
"According to Hodgskin, circulating capital is nothing but the juxtaposition of the different kinds of social labour (coexisting labour) and accumulation is nothing but the amassing of the productive powers of social labour, so that the accumulation of the skill and knowledge (scientific power) of the workers themselves is the chief form of accumulation, and infinitely more important than the accumulation-which goes hand in hand with it and merely represents it-of the existing objective conditions of this accumulated activity. These objective conditions are only nominally accumulated and must be constantly produced anew and consumed anew. "Š productive capital and skilled labour are [Š] one." "Capital and a labouring population are precisely synonymous" ( [Hodgskin, Labour Defended against the Claims of Capital, London, 1825,] p. 33). These are simply further elaborations of Galiani's thesis: "Š The real wealth Š is man" (Della Moneta, Custodi. Parte Moderna, t. III, p. 229). The whole objective world, the "world of commodities", vanishes here as a mere aspect, as the merely passing activity, constantly performed anew, of socially producing men. Compare this "idealism" with the crude, material fetishism into which the Ricardian theory develops in the writings "of this incredible cobbler", McCulloch, where not only the difference between man and animal disappears but even the difference between a living organism and an inanimate object. And then let them say that as against the lofty idealism of bourgeois political economy, the proletarian opposition has been preaching a crude materialism directed exclusively towards the satisfaction of coarse appetites."
Two points here, the first one long the second short.
A. The Sraffian theory tries to remain fixated on the objective world, the world of commodities, the production of commodities by commodities. The Sraffians take get pride in this empiricism or thingism of wage goods and surplus goods (though of course the world is never frozen as it is in their equations). But in this economics we have fixed inputs transformed into fixed outputs on the basis of fixed technology. We have the whole objective world, the world of commodities, of things.
This reified world never vanishes for the Sraffians as a mere aspect of, as the merely passing activity, constantly performed anew, of socially producing men.
Marx would have described the Sraffian framework as a crude material fetishism closer to McCulloch than Ricardo! At the same time even though Sraffa tries to remain fixated on the world of commodities, he is forced to abandon the actual and changing world of commodities and retreat into a world where nothing changes, time is frozen--inputs and outputs are the same and technical conditions fixed.
So the theory aims to be materialist but fails to be so. It is in fact a Platonic escape from the real, material world. It can't allow for example product and process innovation, which Schumpeter showed to be the heartbeat of capitalism.
As Freeman and Giusanni have long emphasized, Sraffa's equations cannot be solved unless the "output" goods are assumed to be the same as the input "goods" in the standard system; moreover Sraffa must assume in his standard system that the output commodities have been produced with the same exact techniques as the input goods (otherwise input prices cannot equal output prices). That is, to get the mathematics to work he has to stick fast to things and eliminate time. The economy is conceived as having the same basket of goods on the input side as the output side, and it is assumed that they were produced in the same way!
This is not objective or materialist as Eatwell and Steedman loudly proclaim but a phantom world in which economists have become more comfortable than the real world. The net product is in fact not well described as a quantity of use values; that only reifies the actually objective and truly real unpaid labor time which can take and usually does take ever changing concrete forms.
In other words, Sraffa represents a step back from the classical economists whom Marx lauded in this rather amazing quote from his chapter on Richard Jones:
"The phantom of the world of goods fades away and it is seen to be simply a continually disappearing and continually reproduced objectivisation of human labour. All solid material wealth is only transitory materialisation of social labour, crystallisation of the production process whose measure is time, the measure of a movement itself."
The materialism and objectivity that Eatwell claims to have found in Sraffa was lost after Marx's encounter with the classicals. Sraffa did not recover it but tried to give it the final burial. Meek, Dobb and Steedman followed him.
B. as to the origins of surplus value the difference between the animate and the inanimate disappears in the Sraffian framework as the new money value added is attributed to animate or living labor and dead labor alike.
At any rate it's no surprise the Sraffians try to kill off the labor theory of value as part of Marx's discredited humanism.
This is the only way they can stay at the empiricistic level of the objective world of commodities, not see commodities as a mere aspect of, as the merely passing objectificaton of activity, constantly performed anew, of socially producing men.
4. I am hoping that we can agree that Marx, rightly or wrongly, would not have seen the need for the standard commodity as an invariable standard of value, for he understood the purchasing power of the real world numeraire, namely gold, to be fixed by its actual value, which he also understood or rather stipulated as fixed. As distributional changes could not affect the purchasing power of the numeraire commodity, distributional changes would thus have no effect on the size of the pie as measured in the numeraire. There is thus no need in Marx's theory for the standard commodity.
5. Marx never admitted to having failed to transform the inputs from values to prices of production. He admitted to an inverse transformation problem
6. I think we disagree on our understanding of transformation problem, which is an expression of a real contradiction between the law of value and the law of profit.