Academic journal article Capital & Class

Marx, the Labour Theory of Value and the Transformation Problem

Academic journal article Capital & Class

Marx, the Labour Theory of Value and the Transformation Problem

Article excerpt


[T]hat different lines of industry have different rates of profit, which correspond to differences in the organic composition of their capitals... [that] ... capitals of equal magnitude yield equal profits in equal periods, applies only to capitals of the same organic composition, even with the same rate of surplus-value. These statements hold good on the assumption which has been the basis of all our analyses so far, namely that the commodities are sold at their values. There is no doubt, on the other hand, that aside from unessential, incidental and mutually compensating distinctions, differences in the average rate of profit in the various branches of industry do not exist in reality, and could not exist without abolishing the entire system of capitalist production. It would seem, therefore, that here the theory of value is incompatible with the actual process, incompatible with the real phenomena of production, and that for this reason any attempt to understand these phenomena should be given up. (Marx, 1974 [1894]: 153)

In what follows, I consider what has come to be known as the 'transformation problem', which Marx discusses in Capital Volume III and elsewhere (Marx 1974 [1894]: 154-- 172). This article has four parts. In Part 1, I make some preliminary remarks about Marx's version of the labour theory of value, on the assumption that this is necessary for an understanding of the discussion of his views regarding the transformation problem. In Part 2,1 examine one way of thinking about Marx's understanding of the transformation problem, which is associated with a certain interpretation of the labour theory of value. On this view, what Marx says about the transformation problem is a contribution to a theory of prices, not values. This traditional reading is commonly held in the secondary literature and does have support from the primary sources. Indeed, it is dominant in Marx's own reflections on the subject.

In Part 3, I question the assumptions on which the traditional understanding of the transformation problem is based and suggest that if we attribute to Marx a different set of assumptions then the transformation problem, as it has been traditionally understood, does not arise. I also propose an alternative reading of Marx, according to which his reflections on the transformation problem are best seen as a contribution to a theory of value, not prices. They amount to a more detailed exposition of the labour theory of value, which Marx introduces to his readers in Capital Volume I, and of the notion of 'socially necessary labour-time'. Finally, in Part 4,1 point out some of the methodological issues which are raised by this alternative reading of Marx.

Part 1

Marx and the labour theory of value

Central to the labour theory of value, as Marx understands it, is the notion of 'social necessity'. When discussing this issue in Capital Volume I, Marx states that the value of a commodity is determined by the amount of 'socially necessary labour time' which goes into its production. This is, he says, the labour-time 'required to produce an article under the normal conditions of production, and with the average degree of skill and intensity of labour prevalent at the time in a given society' (Marx 1958 [1898/1865]: 422, 1974 [1867]: 46-47). In the case of the cotton industry, Marx (1989 [1861-1863]) states in his Economic Manuscript of1861-1863 that 'the quantity of labour by which, for example, [the value of] a yard of cotton is determined' is again 'not the quantity of labour it [actually] contains, the quantity the manufacturer expended upon it', but rather 'the average quantity with which all the cotton-manufacturers produce one yard of cotton for the market' (p. 428). It matters a great deal, therefore, what Marx means when he talks about average conditions of production.

Marx accepts that the amount of labour-time which actually goes into the production of a particular commodity could in principle differ from this average. …

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