Monday, March 2, 2015

He's Baaack! Karl Marx And The Transformation Problem

The annual Eastern Economic Association meetings ended yesterday in New York.  On Saturday a session on Marx's transformation problem drew an audience of roughly 70 people, with talks by Anwar Shaikh and Duncan Foley, both of the New School, Fred Moseley of Mount Holyoke, with comments by David Laibman, formerly of Brooklyn College and longtime editor of Science and Society, the longest running (since the 30s) scholarly Marxist journal in the US.  Besides the unexpectedly large crowd, there was news.

One piece of news coming from Moseley is that Karl Marx is about to have a fresh publication in the English language, his original manuscript for Volume III of Capital, which was only published in German in the 1990s.  I think it is coming from Routledge and has an introduction by Fred.  This is the volume in which the famous transformation problem from labor values to market prices first appeared, with many arguing that it was his inability to resolve this that kept Marx from publishing it in his lifetime, with the version posthumously published being edited by Friedrich Engels.  According to Moseley, most of the changes involve ordering of topics, but apparently Engels left some things out, incluidng at least one tableau.  It is not clear this new edition will resolve the transformation problem, although Fred, who has a new book on the subject himself coming out, thinks that it is solvable as a matter of definition.  As it is, perhaps this new publication will help Marx hold his lead as the all time most cited economist according to Google Scholar (which notes that he does not have an available email address) at 208,688, still ahead of Andrei Shleifer at 196,355,

Both Shaikh, who also has a book coming out on the subject, in his case from Oxford University Press, and Foley, do not seem to think the problem is so easily resolved, but that one must look at the role of money and monetary prices and accounts.  Shaikh seems to think that looking at financial transfers is the way to get at the problem through complicated financial system by tracking the distribution of the surplus values.  Foley emphasized the role of labor mobility in his remarks, as well as economies of scale, not the usual thrust, but also working through the monetary system.

Laibman seemed unhappy with all of them as well as with the temporal sequence system approach put forward some years ago by Ernst, Kliman, McGlone, Freeman, and others (not represented among the speakers), which he described as "mush."  That one involves prices simply constantly changing, which is how the problem gets resolved.   Both their approach and that of Foley stress complex dynamics.  Laibman hopes for a static theoretical model that somehow reconciles the whole thing, admitting he does not have the answer how to do this and not seeming to go along with Moseley's apparent solution.

So, why do we see two new books on this coming out now, well, three counting the English translation of Marx's old Volume III (which I have long thought was his most interesting and important work, and certainly the one most relevant to modern discussions, particularly of macroeconomics, although Moseley claims it is about microeconomics while the other two volumes are macoeconomics)?  The answer I suspect is the big splash made by Piketty with his Capital in the Twenty-First Century last year.  The title clearly genuflects to Marx and Piketty fully acknowledges that, even as his own analysis is not specifically Marxian and quite neoclassical in his theory at least, although he clearly takes Marx's concerns seriously.  In any case, the old boy seems to be back, even if the transformation problem may not yet be clearly resolved.

Barkley Rosser


Fred Moseley informs me that it will be probably another year before the Marx Volume III appears.  It and his book (sorry, no title) will be published by Brill.  One can get his quite long Introduction to it that lays out the differences between the two volumes, from him at

From Anwar Shaikh I have that the title of his book is Capitalism: Real Competition, Turbulent Dynamics, and Global Crises, and will be out this fall from Oxford University Press.

Further Update:  Anwar Shaikh has informed me that his book does not deal with the transformation problem.  He did  speak about that issue during the session, however, focusing on the role of transfers in bringing about the allocation of the surplus values.  Hopefully, at least I have not misrepresented that.

Further Update (3/6):  Have received message from David Laibman, who saw this due to commentary on the marxism list about this post.  He says that I did not do too bad a job of summarizing what was said at the session, but he does not like my use of "static" for his view, but rather that he thinks that "higher levels of abstraction" are appropriate.  His comment is long and detailed, so if you want to see it, go to the marxism list, please.  He also says that he would like to retract his characterization of TSSI as "mush," saying, "let sleeping dogs lie."


Nick Rowe said...

What's wrong with the "Eraser Solution"?:

1. Write down the labour values
2. Erase them
3. Write down the prices of production. said...


An oldie but goodie...

Sandwichman said...

After all, Nick, it worked for the neoclassicals in the Cambridge Capital Controversy. Or how about calling in an imaginary auctioneer to tatonnement a solution?

Ian Wright said...

If I may wade in. It's actually very simple to prove that production-prices are proportional to real costs measured in labour time. So we can wave goodbye to Samuelson's eraser theorem. The difficulty is seeing that the classical theory is a special case. As someone said, "the difficulty lies not so much in developing new ideas as in escaping from old ones".

Paul Cockshott said...

The telling reason why you can not simply erase labour values is the 95% + correlation between integrated labour input and sectoral value outputs that Shaik and co-workers discovered. It has subsequently been confirmed. It has also been shown that there is no added predictive ability derivable from using prices of production. Moreover it is now well established that contra-Samuelson the rate of profit is higher in industries with a lower capital to labour ratio as one would expect from a naive labour theory.

Nick Rowe said...

Ian: interesting paper. But you lost me on page 40: "Measuring the cost of reproducing the very resource that serves as the measure of cost would be like measuring the height of a tree with a metre rod and including the length of the rod as part of the tree’s height."

If I believed in the wheat theory of value I would make the same argument on behalf of wheat.

The land theory of value could also be defended using your same arguments; the underlying land values are simply in a different category from prices of production. Human (and horse) labour is just congealed land. If land did not exist prior to humans (and horses), labour would not exist.

Nick Rowe said...

Paul: "Moreover it is now well established that contra-Samuelson the rate of profit is higher in industries with a lower capital to labour ratio as one would expect from a naive labour theory."

Interesting. But that's not just contra-*Samuelson*, that's contra-*pretty much everyone, including Marx*, isn't it?

What happened to the forces of competition that tended to equalise the rate of profit across industries? Why don't profit-maximising capitalists flood into those industries with a higher organic composition of capital, driving down the rate of profit there?

Sandwichman said...

Ian and Nick:

Might that page 40 be like Samuelson's "same yardstick fallacy"?

"Our money-metric gives us, so to speak, diminishing returns to any subset of goods not on the Ernst Engel's income-consumption path; but when we adjust all goods optimally to extra income, it gives us, so to speak, constant returns to (income) scale! That is to say, the money-metric marginal utility of income is constant at unity. For how could it be otherwise? If you are measuring utility by money, it must remain constant with respect to money: a yardstick cannot change in terms of itself."

Denis Drew said...

Not sure if I know what is being discussed here but when I see the phrase :"value of labor' I automatically revert to: labor is worth the max that labor is capable of squeezing out of the consumer -- as long as not insulated from the consumer by what I call the two-tier market typical in the US where (unorganized and as often as not organized) labor only gets paid in relation to other labor. I call the latter the "subsistence plus" labor market. Every bit of extra value (to capital) above the bottom is rewarded with just enough to catch just as many fish as needed.

The only proven way to get full labor pressure through to the consumer decision -- the only way to avoid the race to the two-tier bottom -- is centralized bargaining (Germany, Denmark).

All this may have an exploitative sound vis-a-vis the consumer -- but maxing labor pressure on the consumer means that pure consumer preference rules the output of the physical economy -- rather than the "accident" of cheap prices as brought about playing off poorly paid laborers against others.

Ian Wright said...

Nick: "If I believed in the wheat theory of value I would make the same argument on behalf of wheat."

You are right. As Ricardo once said, "Labour says Mr. Malthus never varies in itself, a day's labour is always worth a day's labour, therefore labour is invariable and a good measure of value. In this way I might prove that no commodity ever varied and therefore that any one was equally applicable as a measure of value ..."

Ricardo, of course, immediately dismisses this possibility since he believes labour costs cannot be an invariable standard.

In my paper I show that labour costs are an invariable standard. But, as Ricardo understood, this result immediately establishes that any real costs, measured in any commodity units, are also an invariable standard.

So it makes sense to raise the question of why labour is special, as opposed to wheat, horses or land etc.

At this point the Shaikh-like results that Paul mentions (which show the unreasonable empirical effectiveness of Marx's volume 1 theory of value) are relevant, since they indicate that labour is special in the sense it is the cause of value (i.e., profit, in general, is higher in sectors with lower capital to labour ratios).

Lots more could be said here, of course.

Ian Wright said...


Samuelson does seem to be discussing similar metrological issues, albeit in the marginalist paradigm.

Sandwichman said...

I don't profess to any expertise on the transformation problem, per se, but I found Rob Bryer's accounting convention argument compelling.

Bryer argues that the capitalists solve the transformation problem by pursuing 'standard or target costs', and they do it in the reverse direction of what the economists are looking for -- that is they resolve a general rate of profit into prices of production that ultimately measure the money value of socially necessary labour time. Such a procedure is consistent with Marx's emphasis on human agency, as expressed by such observations as "The concept of capital implies the capitalist."

This might be more accurately described as a value (or valuation) theory of labour rather than a labour theory of value. said...

Well, supposedly Ricardo at one point said that he believed in a "93% labor theory of value." If he knew about Shaikh's work, maybe he would make that 95%.

Owen Paine said...

The infamous TP !

That way madness lies

Let's first determine why resolving this alleged problem
Is worth more and more sheets of TP printed on TP

A theory of Exploitation under perfect competition
Requires LTV to be valid

The dialectical relation between deep down exchange values
And surface market prices
requires a coherent Transformation narrative

Narrative not mechanism

Now what of the steps here


Following the Franklin take on cutting
Any great noetic Gordian knot

We hold this truth to be self evident

Social Labor
specifically SNALT

is the source
if not the final form
Of exchange values
In Any complete system of commodity production

Resolution of the TP ?

A coherent narrative. ...

Ie the proof is only in the historical totality
Much like the claims of prophetic truths

Radically historical sciences
Like economics or linguistic

Can not contain their first movers
Only assume them and proceed coherently
or regress ad infinitum

Owen Paine said...


Congrats to wright for his magic trick

Cap consumption as a cost of production
Ie they are anti analogues
of luxury goods

But given your trick

have u indeed established
the TP is a figment of category error

alas my hunch
madness still lies out there
even as one more weightless stone
is rolled aside

Sandwichman said...

Of course you realize, Owen, that EVEN IF there WAS a transformation problem and
EVEN IF it could be conclusively shown that Karl Marx solved it unequivocally on page 312 of volume III, it would not make a rat's ass worth of difference to the loyal Böhm-Bawerkians.

They have their faith.

Paul Cockshott said...

Whether it is contra marx or contra the interpretations of him that became standard is a moot point. Marx states that industries with high organic composition do not earn the normal rate of profit but only the rate of interest, giving railways as an example.

john c. halasz said...

Umm,,,Barkley, I think you misstated what thew transformation problem is about. It's not a matter of converting labor-values into monetary cost-prices. It's about converting both from the simple case where the "organic composition of capital", (which is not the same as capital-intensity, but might be the same as labor-intensity), is the same across sectors to the actual case where it persistently differs across sectors, so as to preserve the general tendency for the rate of profit to be equal across sectors in competitive markets. said...

Gee, John, I never knew that before! Gosh, I only published papers on the Cambridge capital theory controversies over 30 years ago because I thought that the organic composition was equal everywhere and that an equalization of the rate of exploitation would automatically tranlate over into a competitive equilibrium equalization of the rate of profit. Without your bringing this up, John, I would never have had any idea whatsoever about this. Thanks.

john c. halasz said...

Hey Barkley, you don't have to be sarcastic. This is what you wrote:

"This is the volume in which the famous transformation problem from labor values to market prices first appeared,"

It seems to reproduce the misunderstanding that gave rise to the whole "transformation problem" controversy, proving that Marx must be wrong because inconsistent, in the first place. Once it is understood that it is not about converting labor-values into market cost-prices, then much of the urgency of the problem, whatever its "solution", disappears.

Sandwichman said...

I see that Nick Rowe, who was so quick with the eraser on the transformation pseudo-problem, has yet to enlighten us about how the monumental Eugen von Bohm-Bawerk achieved his immaculate transformation from 10 units of labour pain cost to 12 units of hare opportunity cost. Is it that abstinence makes the heart grow fonder?

"What our fish really cost us now is not the positive labour-pain expressed by the number 10 — for this we should have undergone at any rate — but the negative loss of an enjoyment which we might have had, indicated by the number 12."

Magpie said...

@Herr Professor Doktor Rowe

Paul: "Moreover it is now well established that contra-Samuelson the rate of profit is higher in industries with a lower capital to labour ratio as one would expect from a naive labour theory."

Interesting. But that's not just contra-*Samuelson*, that's contra-*pretty much everyone, including Marx*, isn't it?


Maybe Marx can answer that comment:

"The hypothetical series drawn up at the beginning of this chapter ..."

[This series:
[If c = 50, and v = 100, then p' = 100/150 = 66 2/3%;
[c = 100, and v = 100, then p' = 100/200 = 50%;
[c = 200, and v = 100, then p' = 100/300 = 33 1/3;
[c = 300, and v = 100, then p' = 100/400 = 25%;
[c = 400, and v = 100, then p' = 100/500 = 20%.

" ... expresses, therefore, the actual tendency of capitalist production. This mode of production produces a progressive relative decrease of the variable capital [i.e. v: wages] as compared to the constant capital [i.e. c: physical assets], and consequently a continuously rising organic composition of the total capital. The immediate result of this is that the rate of surplus-value, at the same, or even a rising, degree of labour exploitation, is represented by a continually falling general rate of profit [i.e. p]."

Although Marx is speaking of the mode of production in general, the idea seems reducible to particular firms.


So, no. That's *not* pretty much contra *Marx*. It may be contra *pretty much everyone", but not contra Marx, which I suppose was Paul Cockshott's point.

You are welcome.

Magpie said...

Sorry, where it says:

"Although Marx is speaking of the mode of production in general, the idea seems reducible to particular FIRMS."

It should say:

"Although Marx is speaking of the mode of production in general, the idea seems reducible to particular INDUSTRIES." said...

Oh dear, I have offended JCH with my sarcasm. Of course I should not make fun of somebody who just happens to be the person above all others who knows just precisely what the transformation problem is all about. Without doubt, all those people who think (or thought) that it might be at least partly connected to a failure of the LTV to explain market prices are (and were) just complete and total boobies. Shame on them. Without doubt, Marx never intended the labor theory of value to have any explanatory power whatsoever regarding actual market prices. It was always the farthest thing from his mind, clearly.

john c. halasz said...


Cut the crap. My remark was an editorial correction, not a denunciation of your entire life's work. And sometimes your reading comprehension is remarkably skittish. I did not imply that you were unaware of the problem of equal vs. sectorally differing OCC, as your first response implied. But you did seem to state that it was a matter of converting labor-values into monetary cost-prices, rather than converting both between the two cases in a consistent way. The former understanding is a neo-classical misreading which gave rise to the whole controversy by claiming that Marx could perform the transformation and thereby was inconsistent and could be dismissed as a whole.

john c. halasz said...

Cont. In vol. 1 Marx ignored the OCC issue because the main point there was to show the source of profits in the extraction of surplus-labor-value, when all commodities are exchanged at equivalent values. Naively, since labor-value is extracted off-market at production sites, though under pressure of market competition, that would seem naively to imply that more labor intensive, thus likely less productive, sectors extract more surplus-value and thus would be more profitable. Vol. 3 corrects that misconception by applying a transformation procedure to both values and prices to account for the actual case of different sectoral OCCs. Obviously cost-prices are the "appearances" on the basis of which actual business decisions are made. What Marx has to show is that values and prices can be correlated and transformed in a consistent and coherent manner, preserving 3 aggregate equalities: total value = total prices, total surplus-value = total profits, and the value rate-of-profit = the money rate of profit.

john c. halasz said...

Cont. Boehm-Bawerk claimed that Vol. 1 and Vol.3 contradicted each other. Bortkiewicz followed up mwith a close examination of the transformation procedure. claiming all 3 equalities couldn't hold simultaneously, thereby proving Marx' overall theory was inconsistent and giving rise to the controversy and subsequent attempts at solutions to the problem. But Bortkiewicz brought neo-classical assumptions into his reading, re-normalizing each production period as at equilibrium pricesn which assumption Marx apparently didn't make, accusing him of double counting as well as inconsistency and leaving the impression that the whole point was to convert values into prices rather than to correlate them.

john c. halasz said...

Cont. Since the 1980's there have been several interpretations of the transformation problem by sympathetic economist, which claim that Marx procedure is coherent and preserves the 3 equalities. I'm only familiar with the TSS guys, but I don't really care exactly which interpretation is the uniquely correct one. But obviously a solution would imply a complex account of industrial price formation which redistributes surplus-value between sectors. (The exact mechanisms aren't detailed, but oligopolistic concentration and financial operations would be likely candidates). Marx was relatively unconcerned with the whole transformation problem, because he wasn't concerned with establishing production prices at any given time, which are constantly changing anyway, but rather was focused on the accumulating disequilibria that lead to crises. This is not to claim that Marx' LTV, whatever it does or is supposed to do, is somehow uniquely true, only that it's not simply incoherent. And, in fact, Marx never sought to prove LTV. Rather he simply assumed it, as a truism or at most a kind of phenomenological fact, and only sought to work it out in a fully coherent and complete way, which it took him 3 volumes to do.

Is that clear enough for you, Barkley? I never claimed any unique expertise in the matter and only referred to what is or ought to be common knowledge. It's your own rather arrogant, hysterical and projective discursive conduction that is the source of the trouble here. said...

What is clear, John,is that you profess to know what Marx was and was not "concerned" with. Just exactly how did you obtain this knowledge, please? Do you communicate with him via an ouija board? YOu may find this offensive as well as sarcastic, but this is what you are coming across as with this simple-minded lecturing.

So, I did not lay it all out in my post, which was very superficial, but in his paper for the talk Moseley lists five different approaches to understanding the TP, one of which is the TSS one, which Laibman was the only one there to mention, only to criticize it. At least three of the others were represented.

There have also been at least two more views mentioned here, the neoclassical Samuelson "eraser" view, and the Bohm-Bawerk view brought up by Sandwichman. And then there is the von Bortkiewicz view, which you have brought up, which brings the number of views up to 8.

But, somehow or other you are the one who knows what Marx really meant. Congratulations.

Sandwichman said...

Barkley, you are out of line.

Leaving aside who is right and who is wrong, in the discussion on this thread, you were the one who raised the stakes from disagreement to invective. This isn't right-wing talk radio, you know.

Or maybe it is. said...

Oh, you're probably right, S-man. I grant that John has now agreed that he "never claimed any unique expertise." And he proceeded to demonstrate that fact by stating that Marx took three volumes to do it, when supposedly Marx considered en masse the three books of the Theories of Surplus Value to be the "fourth volume of Capital."

But, hey, in the future when I am "editorially corrected" by such a wise and knowledgeable person, I shall endeavor to avoid coming on as "arrogant, hysterical, and projective," and I shall certainly especially endeavor to "cut the crap," when instructed to do so by someone who clearly did not "raise the stakes from disagreement to invective."

Sandwichman said...

Thank you, Barkley. I don't want to have to become 'Mr. Civility" around here. said...

Tbhis will probably be my last comment on this post, given my update from David Laibman. I'll keep this short and sweet.

So, John, you, apparently supported by the highly civil Sandwichman, think that it is "neoclassical" and needing "editorial correction" to claim that at least part of the TP has to do with the relation between labor values and market prices. There is a very long list of Marxist economists who have thought that, but, hey, you are the one who knows what "Marx really intended."

Anyway, you also said you have studied the TSSI, which Laibman does not like. In the 2004 volume about it edited by Freeman, Kliman, and Wells, I was the first on the back cover saying nice thigns about it, including "This is clearly the definitive volume on controversies over Marxian value theory available at this time."

Anyway, I shall simply note that one of the things that advocates of the TSSI argued for it was precisely that it provides a way to establish the linkage between labor values and market prices.

Sandwichman said...

"apparently supported by the highly civil Sandwichman"

The first part of this is is not correct. I offered no opinion on John's argument. I have not studied the matter. The second part -- that I am highly civil -- goes without saying.

Sandwichman said...

For the record, I am probably closer to Paine on this: "that way madness lies." Long ago, Thorstein Veblen argued that Marx's analysis was unassailably consistent and coherent -- from within his own metaphysics. Where the transformation problem arises is in the non-conformity of Marx's perspective with Bohm-Bawerk's Austrian marginalist assumptions. Well, duh.

Look, Marx's German syntax is also inconsistent with the rules of English grammar. You might get any number of "translations" by Marxist economists but no translation will be BOTH 100% faithful to what Marx wrote and perfect English grammar.

So count me among the "are you fcking kidding me?" crowd. "Mainstream" economists routinely make up shit about Luddites and lumps of labor and "Say's Law" and opportunity costs and we're supposed to take them seriously, seriously when they get all huffy about a supposed transformation problem? When you throw that rock, all I can hear is the shattering glass from your glass houses. It's an Inside Job.

Sandwichman said...


Now there is a ripe one!

Sandwichman said...

By the way, here is how Eugen Böhm-Bawerk solved the abstinence theory of value's transformation problem:

1. Write down the number "10" for the pain cost of labour.
2. Erase.
3. Write down the number "12" for the opportunity cost of not consuming hares.

No, seriously... Setting aside the metaphysical question of the "exchange rate" between units of pain cost and units of opportunity cost, it is clear that the number 12 is larger than the number 10. Isn't that enough? Why, it's positively MONUMENTAL!

john c. halasz said...

"What is clear, John,is that you profess to know what Marx was and was not "concerned" with. Just exactly how did you obtain this knowledge, please? Do you communicate with him via an ouija board?"

Umm... it's not any claim to absolute knowledge and dead certainty. It's an interpretation, like any other such account. But just because everything is a matter of interpretation, it doesn't follow that all interpretations are equally valid. Those that seek to take account of the matter at hand as accurately and fully as possible, initially in the texts own conceptual terms, are far more likely to hold than those that seek to impose some formal analytic criterion from without, without considering the differences in frameworks. And yes, I do have some background in these matters, not just concerning the "transformation problem", but having read Hegel (and Kant) in addition to Marx and later thinkers, whereby I think I can reasonably make some relevant connections. I don't need a ouija board to obtain the "final and unique truth. Quite frankly, Barkley, you're coming across not just as hysterically authoritarian and witlessly bullying, but as a philosophical primitive or illiterate, relying on foundationalist conceptions of knowledge and certainty that have long since been criticized confuted and outmoded.

john c. halasz said...

"simple-minded lecturing."

So I must be a simpleton, because I lack any august credentials, which alone permit secret access to the cognoscenti. I was simply laying out my understanding of the matter in a clear and concise a way as I could must. That is ordinary reasonable discursive conduct. Your manner is just abusiveness. (I broke it up into 4 parts because I know there is a character count limit here, but I don't know when it hits).

john c. halasz said...

Your mention of Vol. 4 is a red herring, as it consists in papers Marx wrote commenting on prior economic writers. It's the 3 vols. that present the "complete" working out of his LTV, patterned on Hegel's Logic.

Nor is finger-counting the number of interpretations meaningful. It was with Bortkiewicz' interpretation that the controversy over the "transformation problem" began, with some Marxists or Marx interpreters taking the bait and others refusing the gambit. But there are those interpretations that hold that the controversy was entirely about a pseudo-problem (rather in the manner of Wittgenstein), and that the actual problem and its solution are not such a big deal. Regardless of the "correct" solution, I'm of the latter view.

BTW in the late 1960's William Baumol wrote a short paper, taking issue with Sammuelson's dismissive "solution". I take it he was partly a labor economist, but well accepted in the "mainstream", but he didn't seem to think that Marx was so unreasonable, nor that the alleged problem was such a big deal, nor unsolvable.

john c. halasz said...

"to claim that at least part of the TP has to do with the relation between labor values and market prices."

And once again you distort what I actually wrote: that the actual transformation problem wasn't about the conversion of labor-values into cost-prices, (which is the "problem" that B. effectively invented, in claiming that Marx was inconsistent and that, since cost-prices are really the decisive basis, labor values are redundant), but of the conversion of both between the special case of equal OCC and the actual case of sectorally differing OCCs, such that the relation between values and prices is conserved in the transformation procedure. That is precisely not a claim that there is no relation between values and prices.

So why maintain and conserve the distinction between values and prices? Well, for one thing, money and price-formation are part of the matter to be explained and explaining nominal prices in terms of nominal prices is not only tautological, but tends to result in static equilibrium models. Whereas Marx was interested in capturing long-run dynamic disequilibrium resulting in crises, and the divergences between value and price is a key part of that explanation. He wasn't, after all, writing a manual for businessmen, nor a recipe book for policy-makers, but projecting a map for working-class revolution.

john c. halasz said...

I have no desire to conserve any orthodoxy. I don't think you can take Marx out of his box, wind him up, and he's ready to go. Since Marx wrote, there has not only been to much water (and blood) under the bridge, but advances (and regressions) in formalisms, social theory and philosophy that need to be taken into account. But I still think his work remains of heuristic value in the current situation, even if his basic project can only be retrieved in somewhat deconstructed form. But if Marxist economists are still quibbling over what the uniquely "correct" solution to the transformation problem is, then maybe they are just indulging in academic scholasticism amongst a narrow coterie and really should move on.

On the other hand, the hissy-fit you threw here, Barkley, was simply poor discursive conduct, er, unbecoming.

Sandwichman said...


Enough. Now you are just provoking Barkley. Regardless of whether or not he sinned, he is not going to repent. Do you have Marx's birth certificate to prove he wasn't born in Kenya? I didn't think so. And even if you did, you can't prove it isn't a forgery.


I hope you have the good sense to realize that both of you have had your say, neither of you is making any progress in persuading the other and all of the rest of us are only morbidly amused and slightly embarrassed at the spectacle. said...

Oh dear. Here I had said my last comment was probably my last, and I had made no response to John's several comments, not having anything to say to them. And then you pop in to tell both of us to STFU, Tom. Was that really necessary? Given that on the intellectual front you have sided with him and with invective, frankly, you are not a reasonable referee but a participant, and, frankly, one who is now clearly out of line, sorry to use your own line on you.

And now, I really will have nothing further to add here, irrespective of what either of you or anybody else might add to this thread.

Sandwichman said...

"Given that on the intellectual front you have sided with him and with invective..."


stewarjt said...

It's worth pointing out that Marx never used the term labor values. The transformation is from direct prices or prices proportional to values to prices of production. Shaikh accurately describes the transformation as a change from one form of value, direct prices to a more complex form of value, prices of production.

There should be some kind of filter that prevents dilettantes from commenting on Marx's transformation procedure.

Ian Wright said...

@stewarjt You say, "direct prices or prices proportional to values". The "values" you refer to here are often called "labour values" simply for clarity. Both terms refer to Marx's concept of the quantity of labour time socially necessary to produce a commodity.

Ian Wright said...

@john It's a myth that all this started with the baddie Bortkiewicz. Marx's transformation problem is part of the same cluster of problems first recognized by the classical authors themselves; e.g., Smith's restriction of the labour theory to pre-civilized times, Ricardo's struggle to find an invariable measure of value and final adoption of an approximate measure, and Marx's proposal of the transformation, a proposal that Marx himself immediately self-critiques, warning of "the possibility of an error", in volume 3 of capital due to his assumption that input prices are proportional to labour-values (rather than being production prices not proportional to labour-values). Too many pronouncements on the transformation problem fail to explicitly link Marx's problematic to the overall classical problematic, especially Ricardo's problem of an invariable measure, as Marx himself in fact did (in volume 4 of Capital).

stewarjt said...


You're precisely the type of goofball I'm talking about. Labor values are labor times. Again, Marx NEVER uses the term "labor values." It's a term that people who don't really understand Marx's methodology use.

The direct prices I'm referring to are PRICES proportional to VALUES. Value is a social property that attaches to use values because of the value social relation. Value is a congelation of abstract labor embodied in a use value, thus causing it to acquire the social form of a commodity. This is Marx, not some bowlderized version of him. If you doubt this, please re-read Volume 1, Chapter 1, Section IV and try to comprehend it this time.

Last the "problem" Marx refers to is that the direct prices of means of production and labor power both have to be transformed into prices of production as Shaikh does in his article "Marx’s Theory of Value and the ‘Transformation Problem’" published in 1977. Try and keep up, 'kay?

Sandwichman said...

Sigh. What I want to know is how many angels can do the tango on the head of a pin.

Ian Wright said...

@stewarjt Er ... can you point out where I claim that Marx uses the expression "labour values"? I was merely indicating that nothing of substance follows from your complaint about the use of the term "labour values" simply because it's well-established shorthand for precisely what you are referring to as "values".

I understand Anwar Shaikh's work very well, and have referenced his seminal contributions many times. For example, are you aware that Shaikh rejects aspects of Marx's transformation in his article, in the sense he rejects the possibility that Marx's aggregate equalities can obtain in natural price equilibrium? Shaikh also explains why the equalities cannot hold.

For what it's worth I think you would make your points more effectively if you drop your intemperate tone. Debate should be an opportunity for mutual learning, not trading insults, don't you think?

john c. halasz said...

Yes, the most important thing is that Marx be kept away from the prying eyes of the hoi polloi. He belongs solely to the sacred precincts of technical economics.

Ian Wright:

Yes, Marx was intent on solving a problem that Ricardo recognized, but struggled with: if all commodities exchange at equivalent values, then where does profit come from? And the "transformation problem" is a culminating part of Marx' critique of Ricardan LTV. with "cost-prices of production" being the rough equivalent of Ricardan "natural prices". But whether Marx expressed uncertainty and a sense of error with respect to his "solution", rather than just warning of the possibility misunderstanding it is part of the dispute, focusing on the interpretation of a few textual passages.

Here's Moseley responding to Laibman:

stewarjt said...

@Ian Wright. I'm wholly unconcerned about your feelings. I care much more about the plight of unemployed workers. If you don't want to engage, then don't.

Please point out where I accused you of using the term "labor values?" Could you please explain (see? politeness!) how labor values rather than labor times clarifies anything in Capital? I'm waiting...

Shaikh makes the methodological point that Marx's conceptual structure is interlocked and interdependent. Each concept makes its presence felt and the same goes with its absence. Plus, Marx clearly states that economic categories or concepts are theoretical expressions of social relations. Thus, value is a social relation and an one of Capital's economic concepts. Therefore, there's simply no theoretical space in Marxian economics for a made up concept such as labor values.

We both know how Shaikh resolves the twin requirements issue. It's worth pointing out that Marx was aware of this issue as he indicated in Theories of Surplus Value when addressing rent.

Marx's methodology overcomes Ricardo's theoretical and methodological problems regarding labor times and prices of production. This is precisely why one can't leap directly from labor times to prices of production (or the opposite) without the dialectical development or intermediate steps - that among other aspects - is unique to Marx's methodology.

Ian Wright said...

@stewarjt Your concern for the plight of unemployed workers is duly noted. Truly, you must be a genuine and committed Marxist, unlike myself, who is merely an employed worker not worthy of your care and consideration.

If you recall, in your previous post, you suggested I was "precisely the kind of goofball" that uses the term "labour values" despite Marx never using that term. You can jog your memory by reading your own post above.

But no-one in this thread claimed that Marx used the term "labour values". So you are tilting at windmills.

Many people use the term "labour values", rather than "value", because, for example, Ricardo uses the term "value" in a sense quite different from Marx. So the modifier introduces some precision, and minimizes confusion.

Marx proposes three aggregate equalities between labour values and production prices, not two. And that is why Shaikh rejects aspects of Marx's transformation.

Feel free to plant your flag on Shaikh's work. But please be aware that Shaikh does not maintain Marx's three aggregate equalities, and in fact explicitly states, contra Marx, that the relationship between labour values and production prices must be approximate in principle. This is not Marx's theory.

(Of course, no bad thing in itself. I merely point it out in case you feel that caring for unemployed workers and defending every statement of Marx somehow go together).

stewarjt said...

@Ian Wright. Now you're going off on self-righteous rants and attacking straw men. I'm staying on point. I'm sorry, when people die because they don't have work, food, housing and medical care, it hits me more than hurting someone's inflated ego.

Please refresh my memory. I know two of the equalities that have to hold in any transformation from direct prices to prices of production. What is the third?

Please point out where I accused anyone of asserting that Marx used the term labor values.

And then you go and use the term labor values. I guess you don't realize that labor values are labor times and there can be no way there's an equality between labor times and direct prices.

Please cite the work and the pages where Shaikh argues that "the relationship between labor values and production prices must be approximate in principle." And what, exactly what is that supposed to mean?

I disagree wholeheartedly that labor values adds precision. You completely ignore the methodological points I make and go on your merry way.

Ian Wright said...

stewartjt writes: "I know two of the equalities that have to hold in any transformation from direct prices to prices of production. What is the third?"

Marx states three aggregate equalities in Vol. 3 of Capital: (1) the money profit-rate equals the labour-value profit-rate, (2) total money profits equal total surplus-value, and (3) the price of the total social product equals the sum of its labour-value.

stewartjt writes: "I guess you don't realize that labor values are labor times and there can be no way there's an equality between labor times and direct prices."

Shaikh defines "direct prices" as proportional to labour values.
Marx explicitly assumes the proportionality of labour values and prices in Volume 1 of Capital.

stewartjt writes: "Please cite the work and the pages where Shaikh argues that "the relationship between labor values and production prices must be approximate in principle." And what, exactly what is that supposed to mean?"

Shaikh repeatedly states the approximate relationship in his paper "The transformation from Marx to Sraffa" in the collection "Ricardo, Marx, Sraffa" published in 1984. The whole paper (which I must stress is an absolute classic) is devoted to a theoretical and empirical analysis of the magnitude of the quantitative deviation between labour-values and production prices. E.g., Shaikh writes, in his conclusion, that: "it is a well-known mathematical result that the transformation from direct prices (prices proportional to [labour]-values) to prices of production will in general cause the transformed rate of profit to deviate from the overall [labour]-value rate of profit. To the critics of Marx, this difference implies a break, a complete divorce of any inner connection." He then goes on to argue that his analysis nonetheless shows that "how and why such a difference can exist, but also how and why its effects are strictly limited."

So Shaikh here explicitly rejects one of Marx's three equalities, and therefore Marx's theory that production prices are conservatively (not approximately!) transformed labour-values. Instead, Shaikh endorses a Ricardian approximate labour theory of value. E.g., p74 he writes: "the above result tells us that almost 92% of the changes in ... prices of production are explained by changes in calculated [labour]-values. This is Ricardo with vengeance -- the very Ricardo scorned for over a century for having a so-called '93% theory' of prices of production!"

Ian Wright said...

@john Thanks for the link to Fred Moseley's discussion of Marx's talk of the "possibility of an error". I'm interested in Fred's work, and intend to dig a little deeper, when I get the opportunity.

I'm aware that those passages of Marx are contested. E.g., the TSSI school also supply a different interpretation. I've studied their work more closely. said...

Well, I said I would post no further, but this is my thread, so I can cry if I want to, and there have been quite a few more comments since I last posted, leaving some loose ends I think I should clean up now, hopefully with no further rantings.

1) You are welcome, Ian, although I am Barkley Rosser and not "@john," even if my uni insists on using my first name for all my email messages.

2) I am the person at fault at the beginning of the post for saying the TP was about "labor values" not going easily to market prices. I did this to keep it short for the long post, knowing as Ian has said that there has been a large lit where people have used that phrase consciously as a shortened version of "socially necessary labor time required to produce..." I did not say Marx ever used the phrase.

3) Declaring that nobody should use the phrase because Marx did not makes about as much sense as declaring that one should not use the term "evolution" when discussing Darwinian theory because he did not use it in The Origin of Species or The Descent of Man. He always called it "natural selection."

4) Anwar Shaikh has read this thread, and his only comment was to me privately to correct my initially incorrect remark about his forthcoming book (which looks very interesting nevertheless). In his remarks he complained that Fred Moseley had not quoted any of his papers since the 1977 one.

That is all for me, folks, and hopefully for this thread.

Barkley Rosser

stewarjt said...

@Ian Wright. First, where, exactly where did Marx explicitly write that the direct prices profit rate must equal the price of production profit rate after his transformation of direct prices into prices of production?

Second, you answered a question of your own choosing. I asked where Shaikh writes the relationship between LABOR VALUES "it is a well-known mathematical result that the transformation from direct prices (prices proportional to [labour]-values) to prices of production..." Do you think it's fair to insinuate [labour] into the sentence when it's not there in the original? My question referred to the use of the term labor values. You answer by inserting it into a Shaikh quote where he didn't use it! Wow!

I suppose you didn't realize that the following supports my position, not yours. "stewartjt writes: "I guess you don't realize that labor values are labor times and there can be no way there's an equality between labor times and direct prices." How can an amount of labor time equal any price of any kind? Where there is commensurability, there must be equality. "Exchange,” he [Aristotle] says, “cannot take place without equality, and equality not without commensurability". I'm not arguing there's an exchange here, only that prices and labor times aren't in any way the same.

Shaikh defines "direct prices" as proportional to labour values.
Marx explicitly assumes the proportionality of labour values and prices in Volume 1 of Capital." Writing that direct prices are proportional to labor times ("values") isn't any way the same are arguing that labor times and direct prices are the same. How did you miss that?

You admit by what you quote that Shaikh didn't argue that the relationship between direct prices and prices of production is approximate. Here you set up a straw man and then attack it. Shaikh argues prices of production are the transforms of direct prices.

One of Shaikh's points is that when direct prices are transformed into prices of production that total direct profits (surplus value expressed in terms of money) will not in general be equal to profits corresponding to prices of production because of the transfer of value out of the circuit of capital and into the circuit of capitalist revenue. It's worth pointing out that your three equalities hold in Maximum Expanded Reproduction where all profits are reinvested, if capitalists could live on air.