What transformation problem? 3 of 3

I know that many of you are clamoring for more videos on crisis theory. This video began as a minor tangent to my crisis series and ballooned into a major project, taking up way more time than I expected. I hope to return to crisis theory soon. In the meantime, this video should be helpful for those interested in the relation of value to price and the debate around this issue.

Full Text can be read at: http://kapitalism101.wordpress.com/what-transformation-problem/

math supplement:
http://kapitalism101.wordpress.com/transformation-math-supplement/

Bibliography

Reclaiming Marxs Capital by Andrew Kliman

One System or Two? The transformation of values into prices of production vs. the transformation problem a paper by Andrew Kliman and McGlone. This available on Klimans website: http://akliman.squarespace.com/

Marxs Theory of Value and the Transformation Problem- an essay by Anwar Shaikh from the book The Subtle Anatomy of Capitalism ed. Jesse Schwartz

Limits to Capital by David Harvey

Das Kapital vol. 3 Karl Marx

Category:

Education

Tags:

• bortkiewicz
• into
• karl
• marx
• of
• price
• prices
• problem
• production
• transformation
• value
• values
• walras

[marxian00]

I have one simple question,

What is the difference between the prices of production and K the cost price? Is not k the price of production in the capitalist mindset of thinking?

[brendanmcooney]

@marxian00

The price of production is cost-price plus surplus value created in production. By "price of production" marx doesn't mean the cost of buying the materials of production and labor. He uses "cost price" for that.

[morganofconnaught]

Damn 500 char limit!

Maybe I just didn't see it in your videos, but I really don't see this mentioned in them. And to me, this geometric process is critical to any grasp of capitalism. Are we in a disagreement here? It struck me (your corn example in video above), of how it wasn't mentioned that corn seed -> corn is another geometric process i.e. reproduction. Reproduction and the division of labour basically *are* agriculture and industry, in of themselves they explain the growth in capitalism

[brendanmcooney]

I don't understand your point. The corn seed example here is a simplified example meant to illustrate a narrow point: that value can only be understood temporally. It's not a model of an entire economy reproducing and expanding itself. Marx has such a model which is called "expanded reproduction". Yes the division of labor is part of the theory of value, as I've mentioned in several vids. W/o value there would be no way of apportioning labor between different tasks.

[morganofconnaught]

Frankly, I have a lot of difficulty grasping why you think in certain ways, not specifically yourself, but the worldview of Marxism you're trying to explain. I don't think this is as a result of faulty machinery on my part or yours, I expect that our ideas about value are so fundamentally detached that there is little resolution.

Example: I cannot fathom where the division of labour fits into your ideas about value. To me, it is the most important thing of all, but I've yet to hear it mentioned

[brendanmcooney]

The theory of value is all about the division of labor. You must be misunderstanding something. Demand is constantly changing. Production technology is constantly changing. Thus the amount of labor required to do different jobs and the demand for the products of those jobs is constantly changing. In a market economy the only mechanism for the apportioning of labor between different tasks is commodity exchange. Hence commodities become bearers of value which signal shifts in labor between sectors

[JFMJJ]

Another one of the smartest vids on YouTube. Good work.

[CitizenCindy]

"Manifest der Kommunistischen Partei" and a number of other writings by Marx and Engels do propose a number of basic ground rules for communism: "a solution with what to replace capitalism." As for the Soviet Union, it may have started out in accordance with a Leninist interpretation of Marx, but it descended into Stalinism, something quite different from Leninism, after 1924.

[Magicwillnz]

Excellent video. How did Okishio's theorem fit into this? I thought he was the man who supposedly "disproved" Marx's Law of Value.

[MajorRoy]

@bernd9000 As an example: In the glut you would produce 10 apples for 1 hours work, in the drought you would produce 1 apple. In the glut the value of apples is 1/10 of an hour, while in the drought it would be 1 hour.

Another thing to consider is that not all work is useful, ie if there is no demand for something (its use value is "zero"), then the work will not produce value.

[bernd9000]

@ about 7:30 in the video

"When a supply shrinks its value rises..." isn't the value - i.e. defined as the average time of labour required - independent of this? in case it required more intense work in a drought, the value would rise indeed. but if there is simply more or less of something that doesn't influence its value right away, does it? the value at which it is exchanged (and therefore its price) might change, but not its value. am i right or wrong? thx for the videos!!

[SteelCityEcologist]

That was great.

[morganofconnaught]

The way I see things is as follows:

no doubt you're familiar with adam smith's pin manufacture as an example, well investors give the owners money to purchase raw supplies/tools/human labour etc. Then the division of labour increases dramatically as it's a geometric process. The market demand is reached at some point, there is an upper limit, but the business and investors all profit by their mutual cooperation. The geometric nature of average stock returns comes from the division of labour.