Total Surplus Value Research Articles

On the transformation of values into prices of production apropos of Moseley’s Money and Totality

Mosely’s book provides a vantage point for a critical analysis of the ‘transformation problem’, as it questions the dominant conceptions that reduce the methodological debate to a matter of constructing systems of equations; at the same time, it shares with them the reduction of the methodological question to a matter of interpreting Marx’s texts. Moseley interprets ‘Capital’ as a logical representation composed of a macro theory and a micro theory. The article starts by showing how this approach mutilates the organic unity between social capital and individual capitals. Consequently, focus is placed on Moseley’s presupposition of values as if they were given in prices of production to explain the determination of these same prices, as well as on his exclusion of gold’s exchangeability as a product of capital from the transformation process. The article extends the methodological analysis to the above-mentioned prevailing conceptions and their ideological basis. Next, it shows how they coincide with Moseley’s in the logical inconsistency of assuming that the value of total variable capital and total surplus value appear unchanged in prices of production, although the organic compositions of the spheres that produce their material content differ from the social average. At this point, the real issue is brought forward: it is not about interpreting Marx’s texts in search of a ‘given’ or an ‘invariance postulate’ to construct a model that satisfies them; the point is to follow Marx’s methodological proposal to reproduce by way of thought the concrete determinations that make values take the complete form of prices of production of a certain magnitude. Finally, the article follows this path to demonstrate how, even if the value contents of total variable capital and total surplus value remain quantitatively unchanged, the prices of production in which they necessarily take form will quantitatively differ from those value contents.

A Critique of Moseley's Money and Totality

In his macro-monetary interpretation of Marx's theory of value, Fred Moseley claims that Marx's prices of production should be considered as the long-run equilibrium condition of capital reproduction under the assumption of given technology and given capital distribution. Moseley's methodological interpretation depends on the claim that the general rate of profit is completely predetermined in the first two volumes of Capital. I argue to the contrary that though Moseley shows the inadequacy of the Standard Interpretation, he fails to provide a convincing description of Marx's category of prices of production. The production of the new total value and total surplus-value cannot be considered as simply determined by the initial conditions of production; if we want to describe how prices of production are formed and the role they play in the social reproduction of capital, we should recognize that in social reproduction this process develops temporally through an intertwined relation between the production, circulation and distribution.

A critique of Shaikh’s two interpretations of Marx’s ‘transformation problem’

Abstract It is argued in this paper that Shaikh has presented two different interpretations of the transformation problem in his works. In his influential 1977 paper, he presented an “iterative” interpretation in which there is a transfer of value between departments in the economy; and in a series of papers in the 1980s and in his recent book, he presented a different interpretation in which there is a transfer of value between firms in Department 3 and capitalist households. An important common feature of these two different interpretations is that total profit is not equal to total surplus-value. The two interpretations present different explanations of this divergence, which are examined in detail in this paper. It is argued that there is no textual evidence whatsoever to support Shaikh’s second interpretation. A few comparisons will also be made to my “macro-monetary” interpretation of Marx theory according to which there is no transformation problem in Marx’s theory and total profit is always equal to total surplus-value.

The transformation of values into prices on the basis of random systems revisited: reply to my commentators

This paper defends The Transformation of Values into Prices on the Basis of Random Systems, published in EIER, by answering to the Comments made in the same journal by Professors Mori, Morioka and Yamazaki. The clarifications mainly concern the justification of the randomness assumptions, the conditions needed to obtain the equality of total profit with total surplus value in the simplified one-industry system and the invariance of the results to changes in the units of measurement.

The Labor Theory of Value and Sraffa's Standard Commodity With Markup Pricing

This article demonstrates relationships that are transparent in Sraffa’s standard system hold even when relative rates of profit vary persistently among industries. Even with such variations, total constant capital, total variable capital, total surplus value, and the rate of profits are unaltered by evaluation at labor values and at prices of production in Sraffa’s standard system. These results buttress those who see in the standard commodity a solution for Marx’s so-called transformation problem.

The transformation of values into prices on the basis of random systems revisited

The paper first defends the importance of the transformation of values into prices on the basis of textual analysis against those who believe that Marxian economics can dispense with prices of production and should be built on values and market prices only, or that the theory of the forms of value matters just for commodities, not for capital, or that one should only have prices of production, forgetting about values. It is shown that P = M is the lynchpin of the Marxian system, regarding the theory of the forms of value as well as the theories of exploitation and accumulation. Second, two proofs of the equality of the mass of profits P and total surplus value M are presented on the basis of random systems. This transformation is compared with Sraffa’s use of the standard commodity for the transformation of values into prices. The third part concerns the interpretation of these results in the light of the fact that Marxian economics hinges on P = M, but that the assumption of random systems is more narrow than the conditions regarded as necessary by Marx or Engels and broader than modern critics, from Bortkiewicz to Sraffa, thought.

The transformation problem under positive rank one input matrices: on a new approach by Schefold

Recently, Schefold proposed a new approach to the transformation problem consisting of two contentions. One is that input matrices of large-scale economies can be approximated by positive rank one matrices. The second is that additional original assumptions about the relationship among input coefficients, labor coefficients, gross outputs, and surplus outputs can establish the equality of the total profits and total surplus value under a numeraire equalizing the total production prices and total value. The purpose of this study is to critically examine the second part of Schefold’s argument. First, we will confirm that it is an attempt to give plausible grounds to a condition that has been known as sufficient for the successful solution of the transformation problem but considered to hold only by chance. Next, we will indicate that, except for a supposition about the rank of input matrices, his key assumptions depend on the measurement units of each product. Because this dependence implies that these assumptions hold only when measurement units fill particular conditions, it naturally casts a serious doubt on the generality of the analysis based on them. While it is possible to combine these assumptions into a unit-independent form, such a reformulation deprives them of the meaning attached to their original form. Thus, in spite of its unique viewpoint, Schefold’s new approach does not succeed in bringing the value system closer to the production price system.

A Continuation of the Debate over Money and Totality

This paper is a reply to David Laibman's latest paper critical of my 2016 book Money and Totality: A Macro-Monetary Interpretation of Marx's Logic in Capital and the End of the “Transformation Problem.” This paper responds to the following points: did I misstate Laibman's position in my previous paper?; the logical priority of the production of surplus-value over the distribution of surplus-value (i.e., the prior determination of the total surplus-value); different starting points: quantities of money capital (Marx) vs. quantities of physical inputs and outputs (Sraffa); is Marx's theory “monetary”?; and (most importantly) is my interpretation of Marx's theory logically incoherent? I argue that Laibman's criticism of logical incoherence is based on the usual fundamental misinterpretation of Marx's transformation of values into prices of production—as a transformation from one set of micro prices (the values of individual commodities) to another set of micro prices (the prices of production of individual commodities). To the contrary, I argue that the logic of Marx's transformation is from macro total price to micro individual prices of production and that this macro-to-micro transformation is logically coherent, so there is no transformation problem in Marx's theory of prices of production.

The labour theory of value, and the double transformation problem

If there is a “transformation” from direct prices (w) into production prices (p), it should be a second one from production prices into market prices (m). Market prices are the great oblivion of the whole literature on the labour theory of value (LTV) and the Transformation Problem (TP). When these prices are taken seriously into consideration, one needs to deal with three equations of values-prices, not two, and market prices must appear in the right side of all of them. As a consequence, the conventional expressions of values and prices become wrong included those of the New Interpretation (NI) and the Temporal Single System (TSS). As a further result, all Marxian totals—the total value of the output and the total surplus-value, among others—remain invariable through both transformations, and there is just one single rate of surplus-value and one single rate of profit. The “temporal” equations used by the TSS are also misguided since time should be treated in another way according to which the static equations are compatible with a dynamic approach. Lastly, a summarized history of the historical debate on this issue helps to see that this approach, as the most general one, can shelter as particular cases the prevailing views.

The profit rate: where and how much did it fall? Did it recover? (USA 1948-2000)

The decline of the profit rate since World War II, up to the early 1980s, is now widely acknowledged, and a new upward trend has been identified. This study presents new computations of profit rates using a definition like that used by Marx in Volume III of Capital, where profits correspond to total surplus-value, as well as a definition of the rate of profit that impacts individual firms, taking account of interest, taxes, and inventories. We show that both the level and trend of a specific group of industries (such as Railroads), called Highly Capital Intensive Industries, whose capital-labor ratio is very large, are totally different from that of other industries. (Their profit rate is very low and did not decline.) When these industries are removed from the data set, the downward trend of the profit rate and the limited recovery can be more clearly observed. Overall, between 1948 and 1982, the profit rate was divided by a coefficient ranging between 2 and 7, depending on the sector and definition of the profit rate. The profit rate in 2000 is still only half of its value in 1948. Finally, we show that the decline of the productivity of capital was the main factor in the fall of the profit rate, though the decline of the share of profits also contributed to this evolution.

The profit rate: where and how much did it fall? Did it recover? (USA 1948–2000)

The decline of the profit rate since World War II, up to the early 1980s, is now widely acknowledged, and a new upward trend has been identified. This study presents new computations of profit rates using a definition like that used by Marx in Volume III of Capital, where profits correspond to total surplus-value, as well as a definition of the rate of profit that impacts individual firms, taking account of interest, taxes, and inventories. We show that both the level and trend of a specific group of industries (such as Railroads), called Highly Capital Intensive Industries, whose capital–labor ratio is very large, are totally different from that of other industries. (Their profit rate is very low and did not decline.) When these industries are removed from the data set, the downward trend of the profit rate and the limited recovery can be more clearly observed. Overall, between 1948 and 1982, the profit rate was divided by a coefficient ranging between 2 and 7, depending on the sector and definition of the profit rate. The profit rate in 2000 is still only half of its value in 1948. Finally, we show that the decline of the productivity of capital was the main factor in the fall of the profit rate, though the decline of the share of profits also contributed to this evolution.

The development of Marx's theory of the distribution of surplus-value in the Manuscript of 1861-63

It has been discovered in recent years that Marx wrote four drafts of Capital, not just two (the Grundrisse and Capital), as was previously thought. The second draft is the Manuscript of 1861-63 in which Marx developed for the first time his theory of the distribution of the total surplus-value into individual parts (equal rates of profit, commercial profit, interest, and rent) that would later be the content of Volume 3 of Capital. This paper reviews how Marx developed his theory of the distribution of surplus-value in the Manuscript of 1861-63.

Standard commodities and the transformation problem

In recent work on the transformation problem, Abraham-Frois and Berrebi (AFB) examined Marx’s famous «double equality», that is, «total price = total value» and «total profit = total surplus value». AFB’s main theorem was the following : the double equality is possible if and only if the gross output corresponds to a Miyao standard commodity. A simple counterexample shows that the «only if» is wrong. The «if» is correct, and it is possible to give a shorter and more general proof than AFB.