Archive for January, 2011

An example of the transformation of values into prices.

Here is a working-up of Marx’s ideas from Chapters 9 & 10 of Capital III. It is the first half of a response to Steve Keen’s absurd criticisms of Marx (don’t get me started!). It might be helpful in working through Chapters 9 & 10. Or not.

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Capital III. Chapter 9: Formation of a General Rate of Profit (Average Rate of Profit), and Transforamtion of Commodity Values into Prices of Production

Marx introduces the general rate of profit (p’), prices of production, cost-price plus the average profit (k + kp’), and average profit, the capital advanced indexed to the general rate of profit (Cp’), in this chapter.

The substantial move the he makes is the substitution of the inequality of surplus-value and profit for its equality: s = p —> s ≠ p. The substance of this chapter is the explanation and the consequences of this substitution

One of the historical consequences of this substitution has been the so called transformation problem, but it is interesting that Marx flags the désoeuvrement of his theory to the analysis of individual capitals, or to developing the analysis from the individual capitals (260), and that thinking about s and p only works from the level of the total social capital.

One direct consequence that Marx flags is that the determination of value is entirely displaced; and that this is the basis of the ideological representation of capital. Two other things of note. (1) he says that the determination of P’ goes on behind-their-backs (268) and (2) he introduces the notion of chance and accident to talk about the formation of P’, average profit, p, that refluxes to a capital is “in fact only accidentally determined” (272).

Continue reading ‘Capital III. Chapter 9: Formation of a General Rate of Profit (Average Rate of Profit), and Transforamtion of Commodity Values into Prices of Production’