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 --- from list marxism-international-AT-lists.village.virginia.edu ---
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