The So-Called “Transformation Problem” Revisited

Abstract

This chapter on the “transformation problem between labor values and prices of production”1 shows that Lipietz’s analysis of the Marxist transformation procedure represents but a simple, though useful reinterpretation of obvious mathematical consequences of a standard Sraffa model – by making appropriate use of its known degrees of freedom. Labor values are not involved in this new interpretation of conventional prices of production. A proposal is therefore made how the role of labor values can be investigated further in such a framework, from the perspective of Marx’s “Capital” and on the basis of Lipietz’s theorem and its reinterpretation of the “value of labor power”. Our additions to Lipietz’ definitional procedures suggest that important labor value aggregates such as the average value rate of profit and the value rate of exploitation may be of use in analyzing the systematic consequences of changes in the sphere of capitalist production, while the effects of the actual price dynamics that drive these changes (not yet accounted for by total labor costs) may be unsystematic and may therefore represent distortions of secondary importance. The issues considered here will be further investigated in the next chapters where also Marx’s (1954, p. 48) view that labor values are measures of labor productivity, and thus also important in their own right, is explored from the perspective of Richard Stone’s System of National Accounts. From this perspective, labor values concern the accounting side of an economy, constructed from the observed dynamics of nominal magnitudes in order to understand in a conventional way or in a Marxian sense what is going on behind the surface of nominal magnitudes.