Abstract
As everyone nowadays knows, in Volume I of Capital Marx began by defining the ‘value’ of a commodity as the total quantity of labour which was normally required from first to last to produce it, and proceeded with his analysis on the provisional assumption that commodities would actually tend to sell on the market ‘at their values’ — i.e., at prices which were directly proportionate to the quantities of labour required to produce them. In particular, he retained this assumption in his famous analysis of surplus value in Parts III and IV of Volume I, in which he laid the theoretical foundations for his explanation of the origin, persistence, and level of capitalist profit.
This essay is essentially new, and embodies certain changes in my previously expressed views, although in some places it draws on material which I have already published elsewhere.
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Reference
Adam Smith, Wealth of Nations (edited by R. H. Campbell and A. S. Skinner, Oxford University Press, 1976), Vol. I, p. 330.
Works of David Ricardo, edited by P. Sraffa, Vol. I (Cambridge University Press, 1951), pp. 30–43.
Karl Marx, The Poverty of Philosophy (Martin Lawrence, London, n.d.), p. 41. These, Marx continues, are ‘the chief problems with which Ricardo is concerned’.
Karl Marx, A Contribution to the Critique of Political Economy ( Lawrence and Wishart, London, 1971 ), pp. 59–60.
Or, rather, the first recognizable formulation of these ideas which I have so far been able to find. It is at least possible that Marx’s notebooks of the early 1850s, which I have not read, may contain something relevant.
Karl Marx, Grundrisse (translated by M. Nicolaus, Penguin Books, London, 1973), pp. 435–6. The same ideas seem to be implied, although they are never very clearly expressed, at various points in a later section of the Grundrisse entitled ‘Capital as Fructiferous. Transformation of Surplus Value into Profit’ (pp. 745–78). See in particular p. 767, where Marx says that ‘the profit of the capitalist class, concretely expressed, can never be greater than the sum of the surplus value’.
Correspondence of Marx and Engels (translated by D. Torr, Lawrence and Wishart, London, 1936), pp. 129–33.
See the ‘Draft Plans for Parts I and III of Capital’ in Theories of Surplus Value, Part I (Foreign Languages Publishing House, Moscow, n.d.), pp. 401–3.
Necessary’ labour is the labour required to cover the worker’s wages; ‘surplus’ labour is the labour he performs over and above this. The ratio of ‘surplus’ to ‘necessary’ labour is frequently described by Marx as the ‘rate of surplus value’, or the ‘rate of exploitation’.
The figures in the table are those used by Marx, but I have slightly altered their order, and the headings under which they appear, for the sake of clarity. The quantities are expressed in terms of (Marxian) values, the unit being the labour-day.
The way in which Marx brings money into the picture here is especially to be noted, since in later formulations he quite often takes this aspect of the matter for granted. It is also interesting to find that there is no reference whatever in this letter to the question of whether, after the transformation, one can say that the law of value’ still remains operative.
Theories of Surplus Value, Part III (Lawrence and Wishart, London, 1972), pp. 167–8. The main text of Theories of Surplus Value was written by Marx between January 1862 and January 1863. The passage in question takes the form of a commentary on a statement by Samuel Bailey to the effect that the prices of finished commodities cannot be said to be determined by the quality of labour embodied in them because some of the inputs may be purchased at monopoly prices. There are a number of other passages in Theories of Surplus Value containing interesting comments on the ‘transformation problem’, but for reasons which will become clear later it will be convenient to postpone consideration of these until the next essay in this volume.
In a letter to Engels dated 27 June 1867. This letter is not included in the edition of the Correspondence referred to in 10, but will be found in Selected Correspondence of Marx and Engels ( Foreign Languages Publishing House, Moscow, n.d. ), pp. 229–31.
See, e.g., Capital, Vol. I (Foreign Languages Publishing House, Moscow, 1954), pp. 166, 216, and 220.
Correspondence of Marx and Engels (translated by D. Torr), pp. 240–5.
There is no discussion in this letter of the question of whether the law of value’ can be said to remain operative after the transformation; but in one place Marx does refer, in passing, to ‘the previously developed and still valid laws of value and of surplus value’ (my italics).
See, e.g., Capital, Vol. II (Foreign Languages Publishing House, Moscow, 1957), pp. 91 and 393.
Ibid., p. 216. The passage occurs in a chapter dealing with Ricardo’s theories of fixed and circulating capital.
It is in effect an amalgamation of the tables on pp. 153–5 of Vol. III of Capital, with some of the figures rearranged.
Ibid., p. 177. Cf. ibid., p. 838: ‘The level of the rate of profit is likewise a magnitude held within certain specific limits determined by the value of commodities.’
See, e.g., ibid., p. 170, 171, and 838–9.
The notion that ‘the deviations from the value which are embodied in the prices of produc- tion compensate one another’ is not very often to be found in Marx’s work prior to Vol. III of Capital. In Vol. III, it first appears on p. 155, immediately following the arithmetical tables which Marx uses to illustrate his argument. From these tables, Marx says, it will be seen that one of the consequences of the redistribution of the sum of the surplus values is that the deviations of prices from values (shown in column 8 of the table in my text) will cancel one another out, or, what amounts to the same thing, that the sum of the prices will be equal to the sum of the values. In three or four later passages in Vol. III (pp. 163, 170, 197–8, and 740), the latter notion takes on something of a life of its own: its causal link with the redistribution of the sum of the surplus values tends to be obscured, and it is formulated in terms which suggest that Marx believed it to have a general significance, quite independent of the particular method of transformation illustrated in his tables.
Capital, Vol. III, p. 159.
Cf., e.g., Correspondence of Marx and Engels (translated by D. Torr), p. 242.
Marx’s arithmetical illustration in Vol. III in fact comprehended five industries. I have reduced the number to three here partly for the sake of simplicity and partly in order to pave the way for my consideration below of the three-sector models employed by Bortkiewicz and Winternitz.
In this brief survey of Marx’s transformation procedure in Part II of Vol. III, I have made little reference either to Chapter X (in which Marx discusses, inter alia, the question of the ‘historical’ dimension of the transformation problem), or to Chapter XI (in which he discusses the problem of the divergence between yalues and prices in the particular form in which it was tackled by Ricardo). I shall be coming back to these questions in the two following essays.
A paper by Bortkiewicz entitled On the Correction of Marx’s Fundamental Theoretical Construction in the Third Volume of Capital, in which he put forward his solution, appears in English translation as the appendix to a volume edited by Paul Sweezy (Kelley, New York, 1949), the chief contents of which consist of the two works by Böhm-Bawerk and Hilferding which have just been referred to in the text.
Bortkiewicz, op. cit. (edited by Sweezy), p. 199.
These equations correspond to Bortkiewicz’s Equations (11), (12), and (13) in ibid., p. 202. For the sake of comparability, I have substituted my standard set of symbols for those used by Bortkiewicz.
Although it may not be immediately obvious, these equations correspond to Bortkiewicz’s Equations (19), (20), and (21) in ibid., p. 203.
Cf. pp. 109–10 above, where I suggested that Marx might have worked with a system of this type if he had been able (or willing) to give more attention to the problem.
Cf. Bortkiewicz, op. cit., p. 205: `That the total price exceeds the total value arises from the fact that Department III, from which the good serving as value and price measure is taken, has a relatively low organic composition of capital. But the fact that total profit is numerically identical with total surplus value is a consequence of the fact that the good used as value and price measure belongs to Department III.’ If Bortkiewicz had chosen his figures so that the organic composition of capital in Department III was equal to the social average, both total profit and total surplus value and total price and total value would of course have come out equal.
J. Winternitz, ‘Values and Prices: A Solution of the So-called Transformation Problem’, Economic Journal, 58, 1948, pp. 276–80.
Once again, for the sake of comparability with the other models considered in this essay, I have substituted my standard set of symbols for those used by Winternitz.
K. May, ‘Value and Price of Production: A Note on Winternitz’ Solution’, Economic Journal, 58, 1948, pp. 596–9.
K. May, op. cit., p. 598.
F. Seton, “The ‘Transformation Problem”‘, Review of Economic Studies, XXIV, pp. 149–60.
The inputs are assumed (as later with Sraffa) to include not only means of production but also the wage-goods consumed by the workers.
Cf. ibid., p. 151, note 1: “For algebraic convenience we define the ‘profit ratio’ as the ratio of profit to total value of output. Obviously it will be equal in all industries if and only if the Marxian ‘rate of profit’ (profit - total cost) is similarly equalized.”
I have made some slight alterations in the symbols and in the way in which the equations are formulated, once again for the sake of comparability.
As one might intuitively have expected from the analyses of the three-industry case considered above, pp. 110–15.
Seton, op. cit., p. 152.
Ibid., p. 160. Seton adds a caveat here to the effect that the same can certainly not be said of ‘the body of the underlying doctrine, without which the whole problem loses much of its substance and raison d’être’.
M. C. Howard and J. E. King, The Political Economy of Marx (Longman, Harlow, 1975), pp. 143–9. See also pp. 26–32 of the introduction by Howard and King to The Economics of Marx (Penguin Books, London, 1976), a volume of readings edited by them. The fact that I am critical of their attitude on the particular issue of the transformation problem does not mean that I am critical of these two books as a whole: on the contrary, I think very highly of them indeed.
i.e., that the ratio of total surplus value to total capital in the value system should be equal to the ratio of total profit to total capital in the price system.
I can find no textual evidence whatever, in Marx’s own writings, to suggest that this was in fact the important thing for him.
This approach was suggested by the discussion in Seton, op. cit., p. 150.
I revert here — once again for the sake of comparability — to the symbol r for the average rate of profit, and to the method of presenting the equations with which we started.
Mr David Laibman, in his article ‘Values and Prices of Production: The Political Economy of the Transformation Problem’ (Science and Society, Vol. XXXVII, 1973–4, pp. 404–36), has made a strong plea for accepting the rate of exploitation as the invariant linking the value and price systems. I have no ideological objection to this, but I cannot find an atom of evidence in Marx’s own writings that this was what he himself had in mind.
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Meek, R.L. (1977). A Plain Person’s Guide to the Transformation Problem. In: Smith, Marx, & After. Springer, Boston, MA. https://doi.org/10.1007/978-1-4899-7303-0_5
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