Transformation Problem Unraveled
Publisher: Against the Current
Date Written: 01/07/2018
Year Published: 2018
Resource Type: Article
Cx Number: CX23387
Review of "Money and Totality: A Macro-Monetary Interpretation of Marxs Logic in Capital
and the End of the 'Transformation Problem'" by Fred Moseley. Burkett provides a summary of the details of Moseley's theory.
Anyone familiar with the literature on Marx's Capital knows about the "transformation problem." The "problem" here is Marx's purported failure to develop a consistent theory of long-run equilibrium prices on the basis of his labor theory of value. The standard interpretation, dating from the work of Ladislaus von Bortkiewicz in 1906-7, says that in deriving "prices of production" that equalize profit rates across industries, Marx forgot to transform input values into prices of production.
Once Marx's derivation is corrected by simultaneous pricing of the inputs, so the story goes, it is no longer true that the sum of prices = the sum of values and that total profit = total surplus value; only one of these two equalities can hold, but not both. Moreover, under the corrected transformation the aggregate or average rate of profit in price terms is not regulated by the value rate of profit, and the latter becomes redundant....
Fred Moseley's book, the culmination of his research over two decades, is a radical departure and a real breakthrough. Moseley finds both the standard interpretation of the transformation problem and the usual Marxist responses, to be fundamentally defective in four basic, interrelated respects, involving: (1) the primary purpose of Marxs analysis; (2) the method Marx employs in Capital; (3) the fundamental importance of money in Marx's analysis; (4) the proper criteria for evaluating alternative interpretations of Marxs theory, including his theory of prices of production.
Moseleys synthetic, logical and textually-based consideration of these four issues leads inexorably to the conclusion that the transformation problem is actually a non-problem. Marx did not "neglect" to transform the inputs from values into prices of production; in reality such a transformation of input costs is not necessary or appropriate given Marxs method of analysis.