transformation problem

James Miller jamiller at
Mon Oct 2 20:41:15 MDT 1995

This is in response to a posting from Rakesh Oct. 1
regarding the transformation problem and the law of
   In my previous posting I had argued that the
transformation problem described how the central price,
around with market prices of commodities fluctuated,
shifted from labor value to price of production with
the rise of the capitalist mode of production.
   I criticized those who, like Bortkiewicz, borrowed
the simple reproduction schemes from _Capital_, Vol.
II, as a format for "solving" the transformation
   Rakesh asks, " may be helpful to clarify what
the function exactly is of Marx's model of simple
reproduction. If they were not to function as a
theoretical guide to prices, then what is their
   Marx answers the question on the second page of
Chap. 20, Vol. II: "The question that confronts us
directly is this: How is the capital consumed in
production replaced in value out of the annual product
and how does the movement of this replacement intertwine
with the consumption of the surplus value by the
capitalists and of the wages by the laborers."
   The Chap. 20 schemas demonstrate the circulation
of the total social product, which is itself shown
as composed of constant capital, variable capital and
surplus value. The schemes indicate how circulation,
which functions only in accord with the spontaneous
operation of the law of value, works to ensure a stable
equilibrium of production and consumption, so that the
society can sustain itself year after year in the absence
of a plan for production.
   The necessity for Marx's discussion of simple repro-
duction and extended reproduction, is indicated in
Chap. 19, where the confusion introduced by Smith, and
unquestioned by Ricardo, is discussed. This confusion
deals with the failure to recognize constant capital.
   Rakesh then recalls the argument of Lukacs, which
apparently runs as follows: "Lukacs does not deny that
the commodity-form serves to dissolve pre-capitalist
relations, but he emphasizes that such dissolution is
not the same as the actual universalization of the
   Of course, such statements are indisputable. The
crumbling of the old is not the same as the propagation
of the new. This is a truism.
   Rakesh adds, "when Jim treats the law of value as
continuous and as continuosly modified throughout history,
does this not risk a a failure to specify this qualitative
change, the nature of which of course needs to be
   But all the "specification" you need is in Chap. 9
of _Capital_, Vol. III. This is what my argument is about.
Marx's analysis in that chapter was challenged by Sweezy,
Bortkiewicz and others. I briefly summarized the main
argument of Marx here in my previous postings, as a way
of introducing the topic. I then explained briefly why
I felt that Marx's position was correct as against Sweezy.
   It is true that my postings thus far have been
insufficient to fully explain the problem, but that's as
it should be. There are limits on the length and content
of subscription list postings. That is why I urged those
interested to read Marx, Sweezy and Bortkiewicz in my
previous posting. Once that reading is done, then it is
possible to have an informed discussion of the issues.
   I hope that something along these lines may emerge
as time goes on.
   Perhaps we will have better luck with the discussion
on the tendency of the rate of profit to fall. I'll have
something to say about that in the near future.

Jim Miller

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