File spoon-archives/marxism-international.archive/marxism-international_1997/97-02-08.012, message 80


Date: Fri, 07 Feb 1997 18:12:28 +0000
From: MA Jones <majones-AT-netcomuk.co.uk>
Subject: M-I: Transformation problem


The Transformation Problem. 

This is exactly what Lou Proyect is right to be afraid of debate 
about value degenerating into.

This is another of the legacies, unintended certainly, of Engels's 
work as the intellectual executor of Marx. A baleful consequence of 
the way Engels compiled from Marx's notes a volume II and III of 
"Capital" which Marx never intended and which unquestionably 
would never have been published by him in this form.

The red herring of the Problem of Transforming Values into Prices 
is one of the fishy things which leaked out of Engels' editing of 
Capital and was sniffed out at once by eager-beaver detractors. It 
has been a kind of Rubicon within our movement ever since. 

Now Justin, entirely predictably, plans to recycle the whole damn 
empty thing. A million books have been published from the time of 
Hilferding and Bohm-Bawerk to the Japanese transformationists, 
Uno, Yamamoto and Yokoyama, who were actually among the 
cleverest transformators. Their dismal fate (they failed on all counts) 
should stand as a warning to lesser imitators.

It was all a complete and utter waste of time. None of these 
bourgeois critics found the alleged Achilles heel of Marxism -- the 
Transformation problem -- or had a better stab at it than Bohm-
Bawerk, who was among the first to try. And nor will Justin. The 
house of Marx still stands, and will stand. 

The Transformation Problem (TP) is actually anti-Marxism's foot 
inside the front door. Bohm-Bawerk believed that unless the TP 
could be solved, there was no 'closure' to the 'Marxian system'. If 
values cannot be transformed into prices, he thought, then the 
'system' is metaphysical and fits reality only where it touches, like 
ptolemaic cosmogony. Bohm-Bawerk is interesting because he was 
honest, bright and had actually read Marx before talking about him. 
His failure to destroy Marx's central achievement is therefore all the 
more encouraging. 

Bohm-Bawerk wrote: 'The Theory of Value stands, as it were, in the 
centre of the entire doctrine of political economy'. Once 'a labour 
theory of value' is conceded, Marx's conclusions about surplus 
value, exploitation and the class struggle follow inexorably (I draw 
here on an article by Geoff Kay). That is why the TP is allegedly 
important. Either Marxism or neo-classicism; either bourgeois 
rationality or proletarian rationality. Either capitalism or socialism.

That is the stake, according to Bohm-Bawerk. He thought he'd 
proved the TP has no solution and Marxism therefore no closure. In 
particular he argued that Capital vol III, where prices of production 
and realisation, and lots of other kinds of price, are discussed, 
contradicted the prime assertion of Capital Vol I: the value of 
commodities is determined by the amount of (abstract) labour 
socially necessary for their production.

When Justin says 'there is no solution' to the TP he announces his 
agreement with Bohm-Bawerk: that Marxian value-theory is just a 
'hypothesis', and what's more, one that can probably be disproven -- 
and certainly not proven. It is a short step from here to arguing that 
the concept of value is entirely redundant, theoretically and even 
politically. All that matters is to explain relative prices. This can be 
done without resort to a notion of value at all. Marxists who start to 
be seduced by this line of reasoning, soon discover that the TP has 
become the problem of rescuing Marxism from its own lack of 
contact with the real world. Many good chaps have been lost to us 
this way. Others lusted to be lost and are now professors.

In fact this position -- all that matters is relative prices -- is the
basis 
of neo-classical economics for whom 'the whole thing [value theory] 
is, analytically considered, a great fuss about nothing' (Joan 
Robinson).

Many heroic but misguided Marxists who did not have tenure and 
were not even paid for their trouble, expended their energies trying 
to prove Bohm-Bawerk, Robinson and the rest wrong and that 
actually there is (has to be, must be) some way to connect value-
magnitudes to real-world relative prices. They did not notice that the 
professors they were arguing with had all the time in the world to 
chirrup emptily away since they did have tenure and lived 
comfortable lives. I blame Hilferding for this tendency (as he is to 
blame for so many other poor legacies he left). It was Hilferding 
who first took Bohm-Bawerk seriously.

Redefining value theory as a problem of relative prices is convenient 
for anti-Marxists like Justin for another reason: it reduces the whole 
debate to a wrangle about simple commodity production and 
whether or not Marx assumed equal exchange as implicit within a 
society of simple commodity production (and thence of capitalism, 
its logical and historical successor).  

(I will come back to what Marx thought about equal exchange in a 
minute, because it has obvious implications for that coterminous 
gang of time-wasters, the *market-socialists*).

Redefining value as a question about relative prices enables people 
like Justin to ignore *altogether* the key thrust of Marx's critique of 
political economy: that the reality behind the appearance of 
commodities exchanging at their values/prices, is something else, 
namely the overall process of capitalist production. That is the level 
which defines the historical nature of capitalist society. It is not the 
production of commodities which is the goal of capitalism, but the 
production of capital, and that can only take place as a total social 
process: it is the level of capital-in-general which defines 
capitalism, which is the essence behind the appearance. And at this 
level there is no equal exchange. 

The exchange between capital (in general) and labour (the w/c) is 
unequal. It is here, too, the problem of scarcity asserts itself with 
Marxism. This is not of course how the problem of scarcity asserts 
itself within neo-classicism or Bohm-Bawerk, who eclectically said 
that the scarcity of a commodity *also* determines its price and that 
prices diverge from values because of the alleged effect of such 
things as 'gifts of nature'. 

Marx's position from start to finish is plainly that only the amount 
of embodied socially-necessary labour determines the magnitude of 
the value of a commodity, and only the existence within them of 
(congealed) labour makes commodities commensurable, since any 
act of commensuration requires the presence of a common property 
within the objects compared. And use-values have no common 
properties except being products of labour.

But Marx does have a concept of scarcity.

In Marx, scarcity in capitalism is simply the absence of realisable 
surplus-value (this is why crises take the paradoxical form of 'over' 
production). Crises are solved by shocks in which large capitals are 
liquidated, capital is freed to flow to new sectors, devalorised 
capitals disappear and with that their dragging effect on the overall 
profit rate, and finally a new temporary equilibrium is created. The 
scarcity is overcome.

It should be noted that the creation of a working class whose 
members are owners of undifferentiated labour-power which they 
are free to sell for the going rate, is one of the last things to appear 
in capitalist society historically-speaking. This is also reflected in 
the construction of Marx's "Capital", where the analysis of surplus-
value appears already in chapter 4 of vol I and the analysis of the 
wage and labour-power qua commodity only begins in chapter 6. 
>From the beginning, capital imposes upon the wage its equality to 
the value of labour-power and not to the value labour-power 
produces in the labour process of production. 

When capitalism emerges from simple commodity producing 
society, money has already taken root as the universal equivalent. 
The use-value of the commodity, money, is to measure magnitudes 
of value (of socially-necessary labour) embodied in other 
commodities. As value, commodities are indistinguishable from one 
another except in respect to their size. Money, the value-form, 
confirms this insofar as sums differ from each other only as 
magnitudes. 

In the simple circulation of commodities, C-M-C, money is purely 
the medium of exchange. In capitalism, it is not commodities but 
money which is circulated and any individual commodity is only a 
fragment, an atom, of the total social capital. The use-value of 
money is now not merely its role as measure of value-magnitudes 
but as the bearer of value, and the social process now becomes M-
C-M1. A sum of money, M, is exchanged for a larger sum M1 (M-
prime). 

Note: following the logic of Marx's own narrative, the starting-point 
is the individual commodity. Marx analysed the properties which 
made it commensurable with others (for which he has been 
condemned as Aristotelian, but even an Aristotelian search for 
'qualities' seems preferable to the voodoo of neo-classicism, where 
prices do not commensurate anything at all; but in any case, Marx 
was not an Aristotelian, and I should like to nail that canard too, en 
passant: the key to Marx's search for 'abstract, socially-necessary 
labour' lies in the money-form of value itself. Both logically and 
historically, money emerged from a mass of other commodities to 
take its special place. It is just because money is *also* a 
commodity and not an arbitrary device, that it is able to stand as the 
universal equivalent, and if there was not common property to be 
commensurated then money too could not exist).

The use-value of labour-power -- to be the creator of all value 
including surplus-value -- is also unique, like the use-value of 
money (to act as measure of value-magnitudes). Competition 
between capitals drives the price of the commodity, labour-power, 
down to its value (i.e., the labour embodied in it, or required to 
reproduce it). Because value has only a quantitative nature capital is 
forced by competition to drive the wage below not merely the value 
produced by labour, but to the lowest level possible, namely the 
actual value of labour-power. 

This is important! Because if this were not so, if the wage fluctuated 
*arbitrarily* above (or below) the value of labour-power, then not 
merely would surplus-value become an arbitrary category, and 
actually a non-existent one; but the whole of Marx's analysis would 
indeed break down, as Bohm-Bawerk assumed. Then there would be 
no connection between values and prices. But then, also, there 
would be no price for anything and commodity exchange would also 
collapse, would cease to exist in reality or as a concept. 

It is also the case that these basic economic existents -- the money-
form of value, commodity-exchange, and value as embodied 
socially-necessary labour time -- are not transhistorical concepts; 
they unfolded historically from early beginnings in which money, 
for example, only emerged over protracted periods of time, for e.g. 
by the commensuration of 'gifts' in Homeric Greece to one standard 
commodity (all Ulysses' gifts that he makes and receives, be they 
women or wine or gold, are subject to a mental calculation of their 
worth in terms of 'so many oxen' Check it out!). 

Only in capitalism do these historical categories and their attendant 
concepts fully appear in the light of day and only by reference to 
surplus-value. So that there is in fact (according to Marx) no such 
thing as equal exchange. That is only an appearance-form of the 
underlying process of capital accumulation. Market-socialists please 
note.

The attempt to convert values into prices mathematically is doomed 
to failure not only because the complexity and chaos of the system 
precludes it but also because it is in any case a forlorn and hopeless 
task, equivalent to measuring the motions of celestial bodies by 
reference to a stationary earth.

Marxian value theory stands confirmed by the failure of Bohm-
Bawerk's criticism, in "Karl Marx and the Close of His System", 
which was perhaps the most far-reaching attack on it from within 
bourgeois economics. The debate about the Transformation problem 
permits a restatement of the essentials of value theory. It however
serves no other purpose that I can see.
	

-- 
Regards,
Mark Jones
majones-AT-netcomuk.co.uk
http://www.netcomuk.co.uk/~majones/index.htm


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