I’m having a bit of trouble understanding the “transformation problem.” It is my impression that Marx’s value theory in Das Capital is contradictory when comparing volumes 1 and 3. This passage in Volume 3, Chapter 9 is especially confusing to me.
“The foregoing statements have at any rate modified the original assumption concerning the determination of the cost-price of commodities. We had originally assumed that the cost-price of a commodity equalled the value of the commodities consumed in its production. But for the buyer the price of production of a specific commodity is its cost-price, and may thus pass as cost-price into the prices of other commodities. Since the price of production may differ from the value of a commodity, it follows that the cost-price of a commodity containing this price of production of another commodity may also stand above or below that portion of its total value derived from the value of the means of production consumed by it. It is necessary to remember this modified significance of the cost-price, and to bear in mind that there is always the possibility of an error if the cost-price of a commodity in any particular sphere is identified with the value of the means of production consumed by it. Our present analysis does not necessitate a closer examination of this point.”
That entire Chapter 9 is a difficult read, and I’ve re-read it several times. Can anyone advise on this subject, or post a brief summary? I’m just a bit confused…
Old regurgitated economic fallacies. Marx didn’t grasp subjective value in economics (I don’t remember the years exactly, but I think Menger’s Principles of Economics probably was printed 10 years after Das Kapital). By the time volumes 2 and 3 came out economic science had already progressed a lot, and his theories on economics were already debunked.
Marx finished volume 1 in 1867. He Died in 1883, and Engels published volumes 2 and 3 in 1885, 1894. The third volume being 11 years after his death and nearly 30 years after volume 1 was complete.
I agree that the marginal revolution put a damper on Marx’s plans. Menger released Principles in 1871 which could explain why he labored the rest of his life to try to clear up his garbled theory of value.
However, I’m still looking for an overview of the transformation problem, which, in Marx’s lingo, I have having a difficult time of understanding.
Marx finished volume 1 in 1867. He Died in 1883, and Engels published volumes 2 and 3 in 1885, 1894. The third volume being 11 years after his death and nearly 30 years after volume 1 was complete.
Principles of Economics was published in 1871, Marx had already written volume 2 and 3 from what I remember, but didn’t publish them, and I’m pretty sure the reason being new, more firmly established, theories arising that were conflicting with his.
Here’s what I think he’s trying to say (and I’m no expert on Marx so you may want to get a second opinion on this): The cost of a commodity is the sum of the costs of the commodities consumed in its production. However, the cost of the factors of production is determined by the sum of the costs of THEIR components. You can trace this up all the way through the production process. At no point does the “true” value of the goods enter the equation. This means, under the capitalistic mode of production, a commodity’s price has no relationship to its value.
If I’m right this really goes to show Marx is smarter than we libertarians sometimes give him credit for. That sounds a LOT like the Austrian theory of price formation (All costs are ultimately based on relative utility/opprotunity cost).
It’s essentially the labour theory of value. If you go by this the value of the product is related to the amount of production put into the product, and instead is not based on the subjecitve use value, or marginal utility of a good. Marx uprooted his economics from Smith and Ricardo.