Marx’s Forgotten Transformation Solution: The Transformation of Values into Prices of Production in Marx’s Grundrisse and Maksakovsky’s The Capitalist Cycle

Abstract

This article explains that in the Grundrisse Marx considered that the discontinuity in his transformation procedure was no logical inconsistency, but a necessary feature of the disproportionate transition to capitalist production dominated by the accumulation of fixed capital. Pavel Maksakovsky, a Soviet Red Professor in the 1920s, developed a theory of ‘conjuncture’ which probably discovered this discontinuity independently. Marx’s solution to the transformation problem in Capital III did not emphasize this discontinuity. It was criticized by von Bortkiewicz as mathematically flawed and so logically inconsistent and false. Maksakovsky showed that the discontinuity was a necessary part of the transition from values to prices of production. This explanation has been almost totally ignored in the debate on the transformation problem.