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The new interpretation (NI) offers a particular understanding of important problems in value theory, especially the value of money and labor power and the structure and dynamics of capitalist accumulation. The NI is to be welcomed for raising these issues but not for the way in which it has dealt with them. Above all, the NI falsely assumes that value is directly and immediately represented by money. The authors propose alternatives that emphasize the processes (mediations) through which value is expressed as price. They draw on an alternative methodology and understanding of money, the value of labor power, and production and circulation of capital in the context of accumulation.
10.1177/0486613403261091ARTICLEReview of Radical Political Economics / Winter 2004Fine et al. / Transforming the Transformation Problem
Transforming the Transformation
Problem: Why the “New
Interpretation” Is a Wrong Turning
Department of Economics, SOAS, University of London, Thornhaugh Street,
Russell Square, London WC1H 0XG, United Kingdom
Department of Economics, SOAS, University of London, Thornhaugh Street,
Russell Square, London WC1H 0XG, United Kingdom
Department of Development Studies, SOAS, University of London,
Thornhaugh Street, Russell Square, London WC1H 0XG, United Kingdom
Received Feb. 23, 2001; accepted Aug. 12, 2002
The new interpretation (NI) offers a particular understanding of important problems in value theory,
especially the value of money and labor power and the structure and dynamics of capitalist accumulation.
The NI is to be welcomed for raising these issues but not for the way in which it has dealt with them.
Above all, the NI falsely assumes that value is directly and immediately represented by money. The au-
thors propose alternatives that emphasize the processes (mediations) through which value is expressed as
price. They draw on an alternative methodology and understanding of money, the value of labor power,
and production and circulation of capital in the context of accumulation.
JEL classification: 020; 050
transformation problem; labor theory of value; labor power; value of money; Marxist theory of
1. Introduction
The new interpretation (NI), previously known as the new approach or new solution to
the transformation problem, has been the most striking development in Marxist value the-
Review of Radical Political Economics, Volume 36, No. 1, Winter 2004, 3-19
DOI: 10.1177/0486613403261091
© 2004 Union for Radical Political Economics
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ory during the past two decades.
The NI is inspired by the “Rubin school”;
it draws on so-
cial rather than technical relations and maintains that labor becomes abstract (and is social-
ized) only through the exchange of commodities with money. Therefore, money is the
immediate, direct, and exclusive expression of abstract labor. The NI takes this view one
step further, arguing that such representation of value by money prevails at the level of the
aggregate magnitudes of the capitalist economy.
This interpretation is appealing for those committed to value analysis for several rea-
sons. First, it has links with the previous value debates, especially through the Rubin school
and the transformation problem. Second, it is supportive of Marx, retaining value as an un-
derlying abstract and, in some respects, causal category. It preserves, with some modifica-
tion, key properties of Marx’s transformation (ever perceived to be the Achilles’s heel of
value theory), especially the aggregate equalities between price and value and between
profit and surplus value. Third, it seeks to put value theory on sound technical foundations,
which were perceived by many to have been shaken by “errors” in Marx’s transformation.
Fourth, it incorporates money into the analysis, where previously for the transformation
problem it had been notably absent, other than as a gold sector setting absolute prices. Fifth,
it has inspired concrete analyses, forging an empirical connection between Marx’s theory of
exploitation and profits and wages.
This article reviews the analytical foundations of the NI in order to clarify its method-
ological implications in the wider context of alternative approaches to Marx’s value theory.
This is not simply a disinterested service to the reader. We believe that the NI’s intention of
reasserting the social foundations of the labor theory of value, while disposing of the trans-
formation problem and deriving empirical macroeconomic results, is valuable. Neverthe-
less, the NI is highly questionable from perspectives other than that derived from Rubin.
This is demonstrated through detailed criticism of its structure and content, especially its
conceptualization of the value of money and the value of labor power and the sequencing
and dynamics of the capitalist economy.
We show, moreover, that the NI precludes consideration of a range of issues that are vi-
tal to radical political economy. That is not to suggest that the complex factors impinging on
value formation, for example, through accumulation and technical change, cannot be intro-
duced into the NI. They can, but only after aggregate value and price relations are posited
without reference to (the already assumed) value theory. Put differently, the NI collapses
the capitalist economy into a simple, two-level dialectic of value and price, mediated by
money. Further analytical progress could be achieved, such as developing an account of
capital as a structured and dynamic system of accumulation but only independently of the
NI’s own contribution. For the latter, one of the most complex outcomes, that is, price for-
mation, is already predetermined. Our general conclusion is that the NI is to be welcomed
for the issues that it raises but not for the manner in which it has dealt with them, for which
4 Review of Radical Political Economics / Winter 2004
1. Seminal contributions include Duménil (1980, 1983–4, 1984) and Foley (1982, 1983, 1986) and, at a later
stage, Lipietz (1982, 1983, 1984).
2. Rubin ([1927] 1978, [1928] 1975); see also Aglietta ([1976] 1979) and de Vroey (1982, 1985). For a cri
tique, see Saad-Filho (2002: chap. 2).
Authors’ Note: We would like to thank G. Duménil, D. Foley, C. Georges, S. Mohun, G. Mongiovi,
F. Moseley, and F. Thompson for reading and commenting on various drafts of this article. All errors are our re-
sponsibility. E-mail: (C. Lapavitsas).
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we offer alternatives. In each case, there is a difference in method, with our emphasis being
on the progressive dialectical movement from more abstract to more concrete and complex
economic categories, in contrast to the more immediate movement between value and price
in the NI.
This article is structured as follows. Section 2 presents a formal summary of the NI
demonstrating the significance for it of the labor expression of money (LEM), of reliance on
the net product, and of the peculiar definition of the value of labor power. Section 3 criti-
cizes the NI concept of the value of money, suggesting that it obscures the real processes un-
derlying determination of prices and the role of money. Section 4 critically reviews the NI
concept of the value of labor power and argues that NI (as well as Sraffian) views are insuf-
ficient to explain its determination. Section 5 reviews broader methodological issues sur-
rounding the NI, in terms of its capacity to contribute to an understanding of accumulation
and crises. Finally, section 6 offers a conclusion in terms of value theory as an alternative
rather than as a complement to the NI.
2. The NI: A Simple Formal Presentation
The NI, by virtue of its origins in the transformation debate, has been heavily associated
with elaborating the relationship between values and prices. But as is now fully recognized,
the NI is not concerned with individual values and prices. The point can be simply captured
by presenting the NI through a set of equations that are totally independent of individual
values and prices, with two exceptions: those of labor power and money.
Assume total profit, P; total net revenue (total revenue minus nonwage costs), R; money
wage rate, w; total amount of living labor, L; total surplus value, S; and the ratio L/R (the
LEM, symbolized below by m). Three equations follow immediately: profit is net revenue
minus wages, surplus value is living labor minus the value represented by wages, and the
value of net product equals living labor:
P = R wL (1)
S = L wLm (2)
Rm = L. (3)
Equation (3) implies that the labor equivalent of the money value of the net output
equals total living labor. Although this equation is a tautology, given the definition of m,
is taken by the NI to be the analogue of Marx’s proposition that total value equals total price
(though applied to net rather than gross output). Multiplying equation (1)bym and substi-
tuting for Rm from (3) gives
Pm = L wLm. (4)
Fine et al. / Transforming the Transformation Problem 5
3. To the best of our knowledge, such a simple formal presentation is novel within the literature since it
leaves aside sectoral equations. For the record, the original draft of this article preceded the more recent papers
of Foley (2000) and Duménil and Lévy (2000).
4. We thank Gary Mongiovi for pointing this out.
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In other words,
S = Pm. (5)
Profit is the money form of surplus value, as claimed by Marx’s other proposition. Thus, it
appears that value theory has been vindicated since both of Marx’s much-disputed propositions
in solving the transformation problem can be made to hold in a completely general framework.
The reason why the above presentation of the NI is simpler than others in the literature
(e.g., Lipietz 1982; Mohun 1994) is that it makes no reference to individual values, prices,
or production conditions, which are “an irrelevant detour” in specifying the analytical con-
tent of the NI. In other words, first, the NI is compatible with any set of pricing equations,
whether based on an equalized rate of profit or some other pricing principle, as long as these
satisfy (1) to (3). Despite this, much of the related literature is concerned with different pric-
ing models, and these can be generalizations of the Sraffian approach to take account of, for
example, joint production (Ehrbar 1989), imperfect competition (Reati 1986), and value-
price ratios for any pricing system (Szumski 1989, 1991).
Second, the NI does not involve a solution to the transformation problem, or, to put it an-
other way, it is compatible with any pricing solution. It is simply an “interpretation” whose
formal content is a tautology arising out of the way in which the LEM (or the value of
money) and the value of labor power have been defined. Here we appear to be pushing
against an open door as far as the proponents of the NI are concerned:
In the late 1970s Gerard Duménil and I, independently of each other suggested a reconstruc-
tion of Marx’s labor theory of value emphasizing the relation between money and labor
time that preserves the rigorous quantitative relation between paid and unpaid labor on the
one hand and the aggregate wage bill and aggregate gross profit ...ontheother. This ap-
proach was rather uninformatively described as the “New Solution” to the transformation
problem, and, after Duménil’s observation that it actually abolished the “transformation
problem” as such, and thus was not really a solution to anything, equally uninformatively as
the “New Interpretation.”
Similarly, Mohun (1994: 407), whose article offers a particularly clear presentation of
many of the issues, recognizes that “clearly there is an infinite number of conceivable price
systems compatible with this understanding of theory, each price system being a different
redistribution of labour-times, and each a price representation of abstract labour, or a form
of value.” Nevertheless, his own exposition descends to the level of individual values and
prices (if not production conditions) even though this is entirely unnecessary.
Despite being neutral with respect to pricing, the NI is not without economic content,
for it includes an implicit understanding of how the workings of the capitalist economy
should be analyzed (see section 5). In fact, our most telling methodological comment on the
NI is its immediate identification of production categories (labor and value) with those of
exchange (wages, profits, and money). This explains why Duménil (1984) has been so sav-
age in rejecting Lipietz’s (1984) suggestion that the NI is compatible with the Sraffian solu-
tion where the wage is based on a given bundle of goods.
As is apparent from equation (2),
6 Review of Radical Political Economics / Winter 2004
5. Foley (2000: 20); see also Duménil (1984: 347).
6. The same ferocity is also directed at Szumski (1991) by Duménil and Lévy (1991).
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the value represented by wages is derived from a monetary magnitude (subject to a conver-
sion factor, the LEM or value of money, see section 3). This is incompatible with the view
that the value represented by wages is given by the value of a certain bundle of goods, show-
ing that the NI has important implications for the understanding of the value of labor power
(see section 4). In short, as will be shown below, the NI is not analytically neutral in method
and theory. As such, it is open to criticism.
3. Value of Money
The definition of the value of money by the NI (the inverse of the LEM) provides a the-
oretical instrument for the ex post transformation of monetary quantities into value equiva-
lents, especially of wages into the value of labor power. This section shows that by defining
the value of money in this fashion, the NI precludes analysis of the process of determination
of the value of money and its interaction with other socioeconomic factors.
Traditionally, in Marxist analysis, a money commodity (e.g., gold) is assumed to exist,
whose unit value, λ
, is determined by the labor time socially necessary to produce it (other
forms of money are discussed below). The value of gold plays an essential role in express-
ing the abstract labor time embodied in output as price. However, unlike the LEM, the role
of gold in price formation is neither immediate nor direct but rather mediated by several
economic factors, two of which are especially important.
First, if we assume homogenized labor across the economy, the value of gold is deter-
mined by the material conditions of its production, including the value composition and
turnover rate of gold-producing capital.
Differences between the value composition, or
turnover rate, of the gold industry and of the averages for the economy create a discrepancy
between the intrinsic value of the monetary unit and its expression in circulation. For exam-
ple, if the value composition or turnover rate of gold-producing capital is above average,
commodity values are expressed in prices generally lower than those prevailing when value
composition and turnover rate are below average. Therefore, it is wrong to express com-
modity values directly as price by simply multiplying them individually by1/λ
; the value
of the money commodity does not operate identically with the LEM.
Second, two attributes of money in the sphere of exchange are fundamental to the way in
which it mediates the expression of value as price, its quantity (M) and velocity (V). If we
assume that the entire gross output is sold for money (no trade credit or financial transac-
tions), the relationship between the monetary aspects of exchange, the material and value
aspects of production, and the price aspects of exchange is given by
Fine et al. / Transforming the Transformation Problem 7
7. For discussion of the content and analytical significance of the differences between homogeneous, ab
stract, and normalized labor, see Saad-Filho (2002).
8. This is clearly explained by Foley (1982: 39–40). See also Lapavitsas (2000) and Saad-Filho (2002:
chap. 5 and 7).
9. Lapavitsas (1996, 2000); see also Lavoie (1986).
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where λ and p are the (1xn) value and price vectors, respectively, and x is the (nx1) gross
output vector.
Any interpretation of value theory must provide an explanation of the relationship be-
tween monetary and production factors in the expression of output value as price. Marx, as
is well known, rejects the quantity theory of money (QTM) on the grounds that the material
and value characteristics of production determine the monetary and price aspects of ex-
change. With velocity assumed fixed by institutional, historical, and geographical factors,
Marx presumes that the quantity of circulating gold is constantly readjusted, through hoard-
ing and dishoarding and the production of gold, to conform to the shifting material and
value characteristics of production, the latter also dictating changes in prices. Hoarding and
dishoarding are concrete ways in which money mediates the expression of the value of ag-
gregate output as price and allows it to occur in accordance with the material conditions of
production. If, for example, gross output rose, all else equal, the resulting increase in λx
would be expressed as an increase in px (p unchanged) through an increase in M, the latter
elicited from hoards. In contrast, for the QTM, a rise in x would lead to an increase in λx, but
there would be a fall in p exactly compensating the rise in x, since M would have remained
the same (no hoards supplying an increase).
This simple example shows that money’s functions and the institutional framework of
the monetary system are concrete ways in which money mediates the expression of value
into price for output as a whole. It is misleading to assume that money can express value as
price directly and without mediation: the monetary regime matters greatly, even under our
extraordinarily simplifying assumptions. In the example used above, if the monetary re-
gime allowed M to be appropriately adjusted, the increased λx would leave individual
prices unchanged; if, on the other hand, the monetary regime prevented M from changing,
individual prices would fall. The same value of output would be expressed as higher total
price in the former case and unchanged in the latter. Had we measured the LEM after the
event (assuming that net output behaved identically with gross), it would be unchanged in
the former but higher in the latter. But the difference would contribute nothing to our
understanding of the process of expressing value into price.
It also follows from equation (6) that there is a complex relationship between, on one
hand, the value of the money commodity, λ
, and, on the other, the ratio λx/px, that is, the
value commanded by units of money in exchange (which is exactly analogous to the LEM
in this context). Analyzing the relationship between these two values depends on assump-
tions made about money’s functions and the monetary regime. In the example above, when
the quantity theory approach is adopted, the value commanded by gold appears to rise while
value embodied in gold remains the same.
Such a disparity has important implications for
monetary theory. It means, for instance, that capitalists who happen to find themselves in
possession of large amounts of the money commodity, as well as capitalists who produce it,
make windfall gains, while capitalists with payment obligations make corresponding
losses. The characteristic conclusion drawn by the quantity theory in this case, namely, that
8 Review of Radical Political Economics / Winter 2004
10. Readers familiar with the history of economic thought will recognize here Ricardo’s ([1816] 1951) anal
ysis of the price implications of a rise in the volume of commodities in circulation. Since our presentation uses
vector terms, there are some inevitable problems of interpretation of expressions such as “rise in x or “rise in p.”
The economic conclusions are, however, clear.
11. As Marx ([1859] 1987: 403–9) pointed out in discussion of Ricardo’s analysis of the interaction of gold
and commodities in the sphere of exchange.
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there will be imports of the money commodity, can be understood as a particular resolution
for the disparity between these two values of money.
If, on the other hand, the quantity
theory is rejected, neither the value commanded by gold nor the value embodied in it ap-
pears to change. But for that to be the case, a very different functioning of the monetary sys-
tem and of its articulation with accumulation has to be postulated, one that relies on regular
money hoarding.
It is misleading to assume, as the NI does, that money directly expresses the value of
output as price and without mediation. As already noted for the above example, had we sim-
ply measured the LEM before and after the event (assuming that net output behaved identi-
cally with gross), it would be unchanged in one case but higher in the other. This calcula-
tion, based on the definition of the value of money simply as the value commanded by
money in circulation, detaches both money and its value from the monetary and financial
processes that link money to the general movement of capital accumulation. How deeply
unsatisfactory that is becomes obvious when noncommodity forms of money are consid-
ered, such as credit money and state fiat money. The functions of these forms of money in
and out of the sphere of circulation, especially hoarding, cannot be taken for granted but
must be analytically elaborated. Analogously, analysis ought to be undertaken of the mech-
anisms and institutions (the monetary regime) through which the circulating quantity of
these forms of money is determined, for which the NI is hardly useful.
The circulating quantity of state fiat money, for instance, retains an arbitrary element to
the extent that the state can manipulate it. In contrast, the quantity of credit money is deter-
mined largely through the operations of the credit system and their interaction with the pro-
cess of real capital accumulation (especially the advance and repayment of loans). Further-
more, given the proliferation of the forms of credit money, there could be differences of
determination of quantity among banknotes, deposits, bills of exchange, share trust ac-
counts, and so on. Thus, the processes and relations through which noncommodity forms of
money come to command value in circulation differ qualitatively for each of these forms, as
well as between each of them and commodity money (if one exists).
It is intuitive that such variations in the mediating role of money could have significant
implications for the expression of the value of output as price.
If the value commanded by
money in exchange depends on the functioning of the monetary regime, it is important to
establish its precise relationship with the value embodied in the money commodity (if one
exists). Divergences between the value commanded by money and the value embodied in
the money commodity, for example, are unlikely to be eliminated by purely monetary pro-
cesses. Sudden disruptions of exchange, monetary crises, recessions, and full-fledged eco-
nomic crises, in which the money commodity could play an important role as means of pay-
ment and means of hoarding, are some of the turbulent ways in which money in practice
mediates the expression of value as price.
Political economy ought to be able to account
for sudden and forcible realignments of the value of money. If the value of money is defined
Fine et al. / Transforming the Transformation Problem 9
12. For a full analysis of this process in terms of the intrinsic and the exchange value of the money commod-
ity, see Lapavitsas (1996, 2000).
13. A fuller analysis of these issues along lines suggested here can be found in Itoh and Lapavitsas (1999:
chap. 2); see also Lapavitsas (2000).
14. Marx’s ([1859] 1987: 391–417) analysis of pure price inflation can be interpreted in this way. He shows
that reconciliation between the value embodied in and the value commanded by money is neither a smooth nor
costless process. Moreover, it is a process that may have important distributive implications.
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in aggregate, as in the NI, it is a definition that must be discarded as soon as the real
processes of capitalist accumulation are addressed rather than set aside.
In this respect, the NI could not be more deficient. Foley (2000: 21–2) stated that
this definition of the monetary expression of labor time [MELT, the inverse of the
LEM] . . . does not depend on any assumption about the particular monetary system operat-
ing in the economy. In particular, it works well for a commodity money system like the gold
standard, or for state-credit based monetary systems like those of the late 20th century. This
point underlies the fact that the definition of the monetary expression of labor time in this
way does not commit us to any particular theory about the determination of the MELT . . .
[the] determining mechanisms are quite different, but in each case money can be viewed as
functioning (in part) to express labor time quantitatively.
This does not go beyond tautology, as is revealed to some extent by equations (1) through
(3) and is essentially orthogonal to value (as labor) theory. For the value of anything in
money can be expressed by the inverse of the unit of the quantity of money with which it is
priced. This sharply reveals the NI’s exclusion of the real processes that establish the money
form of value through hoarding, dishoarding, credit, and so forth. This separation of defini-
tion from determination is completely arbitrary, and the analytical power of the NI, in this
respect, is negligible. Moreover, introducing these more complex factors after the NI has al-
ready been laid out is equivalent to rubbing it out and starting again with a new LEM and
then doing the same as soon as an even more sophisticated approach is taken to the mone-
tary/financial system and its interaction with the accumulation and circulation of both
capital and commodities.
4. Value of Labor Power
We have shown, in section 2, that for the NI, the value of labor power is given by trans-
forming the monetary payment of wages through the LEM, while surplus value is the value
left over from living labor after the deduction of the value represented by wages. Alterna-
tively, the value of labor power is the workers’ share of the net product, while the rate of ex-
ploitation measures their inability to command the entire net product. This definition di-
verges from that traditional conception in which the value of labor power is given by the
value of a fixed bundle of wage goods, usually justified by reference to “social,
institutional, and historical” factors.
The difference between these two definitions is significant. They are usually seen as be-
ing mutually exclusive because they represent different ways of understanding how the
workers are remunerated.
The fixed bundle of wage goods represents the value of labor
10 Review of Radical Political Economics / Winter 2004
15. See Bellofiore (1989), Foley (1982), Gleicher (1989), Laibman (1982), Lipietz (1982), and Mohun
(1994). For Duménil (1984), the money approach to the value of labor power is essential for the new interpreta-
tion (NI), and it is incompatible with the Sraffian solution for prices. Duménil and Lévy (1991: 363) asserted
their position most clearly: “The rate of exploitation must be assessed in terms of redistribution value. The spe
cific bundle of commodities that workers buy from their wages is irrelevant. . . . The issue is that of the potential
purchasing power of their product, i.e., of the total net product which they created. This is equivalent to saying
that the rate of exploitation must be determined in nominal terms, whereas the conventional measure of exploi-
tation refers to labour originally embodied in the bundle of commodities that workers buy.”
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power in advance; in this case, the money wage is determined only after prices have been
established. This approach can be criticized on three grounds. First, it leaves unexplained
where the wage bundle comes from; how it changes with society, history, and custom; and
what happens if individual workers do not buy the standard bundle. Second, it implies that
labor power is the only commodity to be purchased at its value after the transformation,
which is unjustifiable theoretically. Third, it induces a conflation between the workers and
the goods they consume. In this case, it is arbitrary to suppose that workers are exploited be-
cause the model leads to identical results if corn, iron, or energy is considered to be
“exploited” in place of labor.
In contrast, the NI definition is ex post. The value commanded by labor power varies
with the price system, only grinding out a corresponding quantity of labor time after pro-
duction and exchange have been completed and prices and working-class consumption es-
tablished. This approach is seductive, both because it avoids the limitations of the tradi-
tional analysis and because it corresponds to actual processes in the capitalist economy,
specifically, that wage bargaining is undertaken in money terms. However, the NI defini-
tion is limited in two important ways. First, no direct account is taken of social and histori-
cal elements in the value of labor power, other than the shifting balance of forces between
capital and labor; for example, how does the money wage relate to the economic and social
reproduction of the workforce, of which the customary standard of living is one compo-
Second, the value represented by wages bears no relation to the value of the com-
modities consumed, given that prices and values diverge from one another.
These limitations arise because the NI leaves undefined the relationship between the
value of labor power and the value of other commodities. This raises the question of the
commodity character of labor power itself, with potentially destructive consequences for
value theory. Moreover, the NI cannot probe beyond one of the effects of exploitation, the
inability of the workers to purchase the entire net product.
This is the same aspect of ex-
ploitation emphasized by “Ricardian socialist” economists in the early nineteenth century
and derided by Marx as being an insufficient explanation of capitalist exploitation
(Saad-Filho 1993).
The analysis above shows that both interpretations are riddled with contradictions be-
cause they seek to translate the value of labor power directly into a concrete outcome. They
are, in fact, flat mirror images of one another, each failing in its own way to acknowledge
that the notion of value of labor power is not appropriately attached initially either to a
quantity of money or to a quantity of goods. The direct relationship between the value of la-
bor power and a quantity of either goods or money, in these approaches, precludes an ac-
count of how the value of labor power is determined except by external agency (nonmarket
custom or market wage conflict, for example). The special nature of the commodity labor
power, which is neither capitalistically produced nor reproduced directly, allows for both
Fine et al. / Transforming the Transformation Problem 11
16. See Wells (1992) for the idea that the value of labor power is ground out by a combination of the roles of
the state, households, and consumerism.
17. Foley (2000: 30) conceded this point: “Saad-Filho [1996] persuades me more by his criticism of the New
Interpretation for being excessively reductionist ...Ithink this criticism has some merit. For example, there may
be a real role for a concept of the value of labor power independent of the ex post realized wage share in a fully
developed Marxist theory.”
18. See Foley (1982: 42–43; 1986: 15).
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interpretations but neither for a choice nor a synthesis between them, as they are mutually
In our view, the value of labor power should be understood as a simple abstract concept;
as a value rather than as a use value or exchange value magnitude, whose more complex
form as money wages and commodity purchases is constructed out of the historically and
socially specific consequences of accumulation. Fine (1998a) has developed this under-
standing of the value of labor power in some detail in the context of labor market theory. Its
constituent elements are reported here insofar as they bear on the positions adopted around
the NI.
First, the value of labor power is neither a quantity of money nor goods but a quantity of
value. The value of labor power is determined at the aggregate level through the exchange
between capital and labor as a whole (i.e., as social classes), prior to the process of produc-
tion. This is because at the most abstract level, advancing the value of labor power is a pre-
condition for the production and realization of surplus value and, subsequently, the perfor-
mance of labor and exploitation in production. Second, one of the consequences of
accumulation is to raise the level of productivity through the production of relative surplus
value. This has two effects. It tends to raise the rate of surplus value and lower the value of
labor power (through providing wage goods with less value expended), but it also tends to
increase the commodities that can be purchased with a given value of labor power as wage
goods are cheapened. Thus, the accumulation of capital on the basis of a given value of la-
bor power tends both to redefine (lower) the value of labor power and (increase) the wage
So far, we might appear to be concerned with elementary propositions concerning the
sharing of productivity increases between capital and labor. But this is to jump to an out-
come, that is, more money or more consumption, without examining the processes by
which such outcomes are achieved, as is typical of the two unmediated approaches outlined
previously. Third, then, there is an issue that cannot be addressed by either of the mutually
exclusive standard approaches, namely, how do new customary standards become estab-
lished? A start can be made by recognizing that consumption norms are differentiated be-
tween distinct sections of the population. They are not an average as such, even with some
above and some below the norm. This norm is more appropriately understood in a more
complex way; for the levels and incidence of consumption are determined as the outcome of
continuing socioeconomic processes that grind out customary patterns of consumption.
Fourth, what those patterns are and how they are determined are very different from one
commodity to another. Food habits, housing, entertainment, and so on are not only differen-
tially consumed, but the patterns and levels of consumption are the consequences of very
different structures and processes of causation.
Nonetheless, each of these elements in the
wage bundle is subject to change as a consequence of accumulation, with the exact outcome
dependent on the complex determination of the value of labor power across these
constituent elements.
The previous paragraph can be seen as a critique of the wage bundle approach to the
value of labor power. It has its counterpart in the critique of the money approach. For the
value of labor power should not be seen as an average quantity of money, with some work-
12 Review of Radical Political Economics / Winter 2004
19. For a general argument along these lines, see Fine and Leopold (1993) and Fine (2002), and Fine,
Heasman, and Wright (1996) and Fine (1998b) in the specific context of food.
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ers paid more and some paid less. Rather, corresponding to the structure of employment,
there are established patterns of remuneration both within and across enterprises, sectors,
and occupations. The value of labor power is the basis on which the accumulation of capital
interacts with, and influences, such structures and payment systems and overall levels and
incidence of remuneration. Interaction and transformation occur through the socioeco-
nomic processes explained, for example, in Capital: deskilling, reskilling, collective labor,
formation of trade unions, and so on. The restructuring of labor markets, wages, and condi-
tions of service is the other aspect (apart from consumption) of the redefinition of the value
of labor power at a more complex level.
In sum, we claim that the value of labor power as a determinant of the price system can-
not be legitimately constructed independently of the contradictory tendencies associated
with the accumulation of capital, for which a complex analysis ranging over the dynamic
structures of both consumption and employment is a precondition. In a nutshell, the value of
labor power is an abstract category whose more complex and concrete reworking depends
on addressing the specific nature of different commodities and the differentiation of the
workforce. The NI, specifically, excises the mediation between the value of labor power
and prices. By posing the value of labor power as a level of wages, the NI is guilty of chaotic
abstraction in the ordering of concepts, as analysis moves between the spheres of produc-
tion and exchange (and from abstract value to differentiated workers, consumers, and ob-
jects of consumption). This is not a matter of the more complex variation of the value repre-
sented by wages around the value of labor power over time in accordance with, for example,
balance in the labor market. Rather, it reflects a direct identification of the rate of surplus
value with distributive shares between profits and wages rather than the dialectical building
up of such distributional shares out of the more abstract categories attached to production
and its shifting conditions with the accumulation of capital.
5. Structure, Sequence, and Dynamics
As is implicit in the analysis of the value of money and labor power, one of the key char-
acteristics of the NI is that it understands the capitalist economy in terms of a definite struc-
ture (production of value as opposed to its sale and purchase in exchange) and sequencing
of activity across those structures. While this might appear to be an elementary insight, it
opens up the important consequence that in contrast to most equilibrium approaches to the
transformation problem, especially the Sraffian, the determination of values and prices does
not take place simultaneously. For the NI, as was shown in section 4, the value of labor
power is determined in exchange only after production has taken place and after the money
wage and the value of money have also been determined.
Despite this important development for value analysis, the solution advanced by the NI
forces an analytical wedge between variable and constant capital. In the absence of techni-
cal change, the NI preserves the value of constant capital in the passage from production to
exchange, but the same is not true of variable capital. For the NI, the value of labor power is
transformed because it contributes living labor that has to be evaluated after the event
within exchange. Moseley (2000) has made this point the focus of his critique of the NI,
claiming that it represents a major logical inconsistency. According to him, if the LEM were
used to transform constant as well as variable capital, there would be no analytical problem
Fine et al. / Transforming the Transformation Problem 13
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with the NI and Marx’s own transformation procedure in Capital would be confirmed as
complete and consistent (312).
Foley (2000: 24) acknowledged this difficulty and attempted to bypass it by claiming
that he is not averse to using the LEM to render “the money flow of purchases of intermedi-
ate outputs . . . [into] the labor time equivalent of the flow of constant capital.” However, he
admits (24–5) that there is “no plausible interpretation of the labor time equivalent of the
constant capital or invested capital (since these measures will in general be equal neither to
the historical labor embodied in the means of production, nor to the labor that would be re-
quired to reproduce them with contemporary technology).”
The issue runs deeper than the (in)consistency of the NI. If only variable capital were
transformed through division by the LEM, the homogeneity of the labor expended during
production would provide a logical and real foundation for the analytical procedure adopted
by the NI. However, the NI would be open to charges of inconsistency. In contrast, if the re-
lease of dead labor during the same period were also transformed using the LEM, severe
problems would emerge despite Foley’s conciliatory statements. There is no logical or eco-
nomic reason for treating labors expended at different periods in the past, in the several vin-
tages of constant capital that have passed into the value of the current output, as immedi-
ately, directly, and generally equivalent with each other, as well as with labor expended in
the current period, via division by the ratio of the flow of living labor to the price of current
net output.
Deploying the LEM would completely disregard the real problems of achieving equiv-
alence between dead and living labor. This is one of the most profound problems of capital-
ist accumulation and an endless source of disruption, upset, and disequilibrium. Different
vintages of capital influence the competitiveness of capitalist enterprises and affect their
product price. Competition brings technical change, which leads to sudden readjustment of
capital values through the cheapening of their elements as well as “moral depreciation”
(Saad-Filho 2002: chap. 5). These forcible and violent changes of valuation of capital are
left entirely out of account when the value of constant capital is derived through the simple
division of the price of constant capital by a value “transformer.”
The NI’s analytical choice of operation on the net rather than gross product is a direct
consequence of its treatment of labor power. It claims that using the gross product would in-
volve double counting of constant capital on each occasion that it was passed through ex-
change from one producer to another (Duménil and Lévy 1991).
This is, however, simply
a red herring. For the double counting becomes an issue only because of the need for the NI
to define value and price in aggregate and confront them with one another in determining,
ex post, the value of money and the value of labor power. In that context, preventing double
counting requires that only living labor be counted.
Attention to the issue of double counting has, in some respects, been both misplaced
and misleading. For much more important than the technical issue of double counting for
unchanged values are the implications for the NI of changes in values during capital accu-
14 Review of Radical Political Economics / Winter 2004
20. “What is redistributed in the economy is the value created during each period, i.e. the value of the net
product of the period. In the aggregate, productive workers expend in a given period of time a certain amount of
labour which defines the added value during the period. This value is embodied in the net product of the period.
The redistribution of value . . . must be interpreted on this basis, and not on that of the gross product of the period
which leads to double-countings for inputs produced and consumed productively during the period or inherited
from previous periods” (Duménil and Lévy 1991: 363).
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mulation. In this case, the value of each commodity potentially changes in the passage from
the purchase of labor power to the sale of output. Both constant and variable capital are de-
valued as commodities become cheaper: whatever the value with which they enter the pro-
duction process, they leave with a different value. In this respect, there is no distinction be-
tween dead and living labor, although only living labor adds new value.
The misplaced focus on the choice between net rather than gross product is a symptom
of the NI’s approach to Marxist political economy. In general terms, the NI seeks to con-
front problems in economic theory to carry out empirical work. In contrast, we claim that
political economy ought to confront real processes to appropriate them in thought. At a
more specific level, the NI’s methodological stance has implications for the analysis of the
contradictions of accumulation. For the NI, structured and sequential reevaluation is al-
ready incorporated within what is effectively a static economy. Consequently, the dynamics
of accumulation can be added only by superimposition of transformed production condi-
tions. The result is liable to be either a form of dynamic Sraffianism or a resort to
post-Keynesianism: take one static model on the basis of given technology, confront it with
another, and speculate about their differences. Alternatively, take one model and change the
distribution of income, the state of expectations, or the structure of the banking system, and
imagine the consequences. Analyses of this type are insufficient to explain the complex and
contradictory tendencies attached to the accumulation of capital and how these are
represented in and through exchange.
Finally, the NI accepts that price is a relatively concrete expression of value. This car-
ries the implication that analysis is pitched at the level of many capitals in competition (al-
though the NI does not specify the nature of that competition). Nevertheless, across the NI,
there is a chaotic mixture of levels of abstraction. Some are pitched at the most concrete
level since they hold for each individual capital, while others are derived at the level of capi-
tal as a whole, but often for the totality of exchanges, which exists only at the most complex
These points can also be addressed from the perspective of appropriate abstraction in
the context of sequencing or moving over the circuit of capital. Equation (1) seems to imply
that for the NI, all forms of payment (sales, profits, and wages) can legitimately be treated as
if they were simultaneous (see below). This assumption may appear realistic for an individ-
ual capital, although the treatment of wage payments as simultaneous with commodity sales
is peculiar.
In addressing capital as a whole, however, the situation is more complicated
because the revenues of all sectors of the economy should not, in general, be treated as if
they were simultaneous. This assumption would, of course, involve a violent abstraction,
since individual industrial cycles are necessarily sequenced relative to one another. Simi-
larly, equation (3) not only splits out living labor alone as defining the value represented by
money, but it does so by collapsing what are necessarily sequenced labors into being simul-
Fine et al. / Transforming the Transformation Problem 15
21. See Marx (1981: 259–61). In other words, neither double counting nor the divergence of input values
from their prices can be used legitimately either for or against the NI. Proponents of the latter tend, however, to
seize the evidence that Marx recognized these issues as signifying his unwitting support (despite his unambigu-
ous and frequently repeated stance to the contrary).
22. For contributions in this vein, see Ernst (1982), Bellofiore (1989), and Naples (1989), whose sequenced
disequilibria, however, arise on the basis of given production conditions.
23. Note that the timing of payment is not so much at issue as the timing of the exchange. The purchase of la-
bor power must precede production even if payment is made with a lag (although only accidentally at the time of
selling the commodities produced).
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taneous. In the case of living labor, further abstraction is required to strip away the constant
capital that is also realized when commodities confront money.
The use of abstraction to render sequenced activities simultaneous is inevitable in any
theory and, as such, is not objectionable. However, the NI involves chaotic abstraction. It
moves seamlessly between value and price and surplus value and profit, without regard to
whether this conforms to the simultaneous movement from capital as a whole to individual
capitals. Specifically, capital as a whole is restored at the level of the price system whenever
this is convenient, even though the analysis has already moved to the more concrete level of
individual capitals. The method of abstraction is also highly simplified with direct media-
tion between value and price, without the filling in of the intervening processes of determi-
nation. It is precisely such chaotic leapfrogging in abstraction that leads to the absence of
the other considerations that we have brought to the fore: accumulation, technical change,
the complex forms and functions of money, and the social and historical determination of
the value of labor power (Gleicher 1989).
In sum, the NI brings macroeconomic processes to an abrupt halt once the value of la-
bor power has been defined through the wage revenue. In a capitalist economy, the value
represented by wage revenue is transformed once again after it has been spent. In other
words, the economy starts with production and ends with exchange before, presumably,
starting with production again. However, the NI disregards this transition. The problems
this creates are glossed over through reliance on aggregate static conditions, as in equations
(1) and (3), and in the lack of concern with the complexity of how values are transformed
into prices. As with other assumptions about which values get transformed, how, and when,
the exclusive focus of the NI on the passage from production to exchange is arbitrary. While
collapsing levels of abstraction across the value/price relationship, the NI fixes its sights on
a sociology of exploitation in which selective aspects of Marx’s procedure of transforma-
tion are subject to piecemeal (and arbitrary) survival.
6. Conclusion
Two important features of the NI have endeared it to its supporters. First, it appears to
offer support to Marx, albeit in a modified way given the direct mediation between value
and price and the substitution of net for gross product in the aggregate identity between
value and price. This only goes to show that appeal to Marx embodies a slippery rationale
and needs to be handled with considerable caution. Second, because of its understanding of
the value of labor power and the value of money, the NI allows, subject to data and concep-
tual refinement, for the immediate empirical measurement of Marxist categories not least
because the rate of surplus value is construed to be identical to the ratio of profits and
wages. However, once these measurements have taken place, it is far from clear what signif-
icance they have since they omit the contradictory processes by which the complex
categories give rise to the data.
This limitation arises because the NI deploys a notion of abstract and concrete, or es-
sence and form, which has only two layers: value as the essence and price as the form.
Translation between them is immediate and unproblematic since using the LEM assumes
that money represents value in a direct, unmediated, and ideally abstract manner, thus al-
lowing the derivation of macroeconomic relationships. The neutrality of equations (1) to (3)
16 Review of Radical Political Economics / Winter 2004
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with respect to price formation shows that the material structures, processes, and relations
through which value becomes price are largely irrelevant for the NI, except as far as quanti-
tative outcomes are concerned. It is as if the simple elaboration of the commodity form at
the beginning of Capital is sufficient to address wages and profits, without prior attention to
the production, distribution, and circulation of (surplus) value, technological change, con-
flicts over the labor process, and their influence on accumulation. In effect, the NI seems to
imply that the bulk of the three volumes of Capital are only marginally (and unsystemati-
cally) relevant for the analysis of how the social relations attached to labor become trans-
lated into price relations between commodities. However, to collapse the mediated expres-
sion of value as price into the simple division of the total hours worked over the price of the
total net product is to dissociate the formation of wages and profits from the complexity and
significance of the real processes involved. In a sense, the NI is a theory of the commodity
form applied directly to the wage-profit relationship, without otherwise elaborating the
laws of capitalist production.
The way in which prices are built up out of abstract labor is extremely complex and re-
quires a theory that appropriates that complexity. Constructing such a theory is not simply a
matter of gathering together all the factors involved. For they have to be ordered in relation
to one another, and the abstractions employed should be justified by demonstrating that
they correspond to material relations, structures, and processes, rather than being ideal ab-
stractions speculatively constructed in the mind. Consistency requires that the more com-
plex categories of thought reproduce the simpler categories at a more concrete level, rather
than undermining them.
For what is the point of a theory of value and price that takes no account of accumulation
and of shifting productivity? How do we know that the NI, with its emphasis on redistribu-
tion as the means by which value becomes price, is compatible with what are, arguably,
much more fundamental structures and processes within the capitalist system? While some
contributors to the NI literature seem to be uninterested in such questions, others tend to
presume that their approach is compatible with a full analysis of accumulation, although
such compatibility is rarely, if ever, demonstrated in practice. Such a conclusion is strik-
ingly illustrated by Duménil and Lévy (1993). Consideration of value theory is confined to
an appendix of just two pages that bears no relationship to the remainder of their book, de-
spite the coverage suggested by the title. In particular, their work includes the most abrupt
and peculiar of dialectics:
The transformation problem is not a problem of the derivation of prices of production from
values. The knowledge of values is not helpful in the computation of prices of production.
Actually, the relationship between values and prices is fully independent from the fact that
profit rates are equalized. (48)
In this case, Marx’s value theory is merely a sociology of exploitation:
This does not mean, however, that the labour theory of value is irrelevant to the analysis of
capitalism. On the contrary, it is crucial to the theory of exploitation. . . . The capitalist mode
of production is simply a new variant of a class society based on the appropriation of surplus
labour....Theconcept of value is, thus, a necessary component of the theory of exploita
tion under capitalism, whose analysis was a primary purpose of Marx’s work in Capital.
Fine et al. / Transforming the Transformation Problem 17
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No other purpose is demonstrated for value theory.
Instead, as in other works within the
NI, the dialectical mediation between value and price, which has been excised at the outset,
is reintroduced after the event. That can take the form of Sraffianism or the presumption that
institutional and historical factors or state policy determine the price vector or other eco-
nomic variables. The essentially exogenous nature of price determination allows more or
less arbitrary attachment of a variety of economic principles, on one hand, and the more or
less direct estimation of Marx’s aggregate value categories through national income
statistics and input-output data, on the other.
Although the NI represents an important advance over Sraffianism, in which price and
value are simultaneous concepts derived from conditions of production and distribution,
whatever advance has been made carries a heavy cost. While raising crucial issues for value
theory around the form of value, the value of labor power, the value of money, and the struc-
ture, sequencing, and dynamics of the capitalist economy, the NI resolves none of them.
Rather, it proceeds only by setting value theory aside and confining it to a (static) theory of
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... Ahora bien, la posición de Marx sobre la determinación del valor de la fuerza de trabajo fue defendida por otros autores marxistas (Mavroudeas, 2001;Fine;Lapavitsas;Saad-Filho, 2002;Saad-Filho, 2002). En su perspicaz crítica a la "Nueva Solución", Mavroudeas señala que la falla fundamental de este enfoque reside en su abstracción de las mediaciones que existen entre el tiempo de trabajo socialmente necesario para la reproducción de los trabajadores y el salario, borrando toda conexión entre el valor de los medios de subsistencia y el valor de la fuerza de trabajo. ...
... Ciertamente, por mucho que se la matice, esta definición no parece ser capaz de explicar, por ejemplo, cómo se determina la composición de la canasta, cómo y por qué cambia históricamente y por qué existen diferencias salariales dentro de la clase obrera (Fine, 1988, p. 180). Además, esta perspectiva conduce eventualmente a la cosificación de los obreros, conceptualizándolos como si fueran "esclavos, animales de trabajo [o] máquinas" y, de esta forma, tornando "arbitrario" el concepto mismo de "explotación" (Fine;Lapavitsas;Saad-Filho, 2002, p. 11). ...
... Para evitar caer en lo que consideran dos reduccionismos contrapuestos, estos autores proponen una tercera posición fundamentada inicialmente en que "el valor de la fuerza de trabajo no es ni una cantidad de dinero ni de bienes sino una cantidad de valor", estando esta cantidad determinada "a nivel agregado por medio del intercambio entre el capital y el trabajo como un todo (esto es, como clases sociales), con anterioridad al proceso de producción [de la mercancía que el obrero producirá bajo el comando del capitalista, agregado nuestro]" (Fine;Lapavitsas;Saad-Filho, 2002, p. 12). Aunque resulta correcto el señalamiento de que el valor de la fuerza de trabajo está determinado con anterioridad al proceso de producción que se abre con la compra de aquélla por el capitalista, con ello no se avanza más allá de lo que textualmente había señalado Marx en El Capital. ...
Full-text available
This article addresses the process of production of labour power with a view to re-examining Marx’s stance on the determination of the value of this ‘peculiar commodity’. In order to do so, the article critically reviews the main contributions which have called into question the Marxian analysis. It also offers an alternative argument that develops additional grounds for Marx’s explanation of the determination of the value of labour power by the socially necessary labour time required for its production. Lastly, the implications of this new perspective are illustrated through a discussion of the issues raised by the Marxist debate on domestic labour.
... The critics 8 do acknowledge the virtues of the NI (Fine et al. 2004;Saad-Filho 1996;Saad-Filho 2002: 43;Itoh 2005;180) and would probably agree that the NI is a block ahead, at least when it comes to the re-introduction of money. However, as Fine et al. (2004;4) emphatically state "the NI, is to be welcomed for the issues that it raises but not for the manner in which it has dealt with them". ...
... The critics 8 do acknowledge the virtues of the NI (Fine et al. 2004;Saad-Filho 1996;Saad-Filho 2002: 43;Itoh 2005;180) and would probably agree that the NI is a block ahead, at least when it comes to the re-introduction of money. However, as Fine et al. (2004;4) emphatically state "the NI, is to be welcomed for the issues that it raises but not for the manner in which it has dealt with them". The arena of criticism has already been established from the very beginning. ...
... The critics (Fine et al. 2004;Itoh 2005;Lapavitsas 2000;Saad-Filho 2002;Saad-Filho 1996) argue that any attempt to understand the mediation of money and the social mechanisms determining the value of money cannot be performed independently of the monetary regime. The architecture of the monetary regime and the corresponding institutions create an inherent complexity in the way that money mediates to express value. ...
The New Interpretation (NI) aspires to reframe the discussion surrounding important aspects of Marx's labor theory of value. Compared to Sraffian and other dual-system approaches, one of the advancements of the NI has been the re-introduction of money as an integral part of the transformation of values into prices. However, the definitional ex-post nature of the NI has attracted serious criticism from different Marxist thinkers who attack the NI as a wrong turning. This paper summarizes the NI framework and the existing criticisms of the monetary dimension and argues in favor of the existing but inherently difficult potentiality of reconciliation.
... My interpretation differs from those existing in literature because it is based on a simultaneous single dualistic system. 41 On the circular reasoning concerning the use of MELT in some interpretations of Marx's value theory see Fine, Lapavitsas, and Saad-Filho (2004), Kim (2010Kim ( , 2016, and Moseley (2016b). Mavroudeas (2001) observes that in the New Interpretation, the definition of the value of money results in a view similar to that of Adam Smith's labour-commanded. ...
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Contrary to the claims made by neoliberal governments and mainstream academics, this book argues that the huge increase in trade in recent decades has not made the world a fairer place: instead, the age of globalization has become a time of mass migration caused by increasing global inequality. The theory of unequal exchange challenges the free trade doctrine, claiming that transfers of value from poorer to richer countries are hidden behind apparently equivalent market transactions. Following a critical review of the existing approaches, the book proposes a general theory of unequal exchange in the light of an innovative reconstruction of Marx’s international law of value, in which money and exchange rates play a crucial role in decoupling value captured from value produced by different countries, even in perfectly competitive world markets. On this theoretical basis, the book provides an empirical analysis of the international transfers of value in both traditional trade and Global Value Chains. The resulting world mapping of unequal exchange shows the geographical hierarchy of capital global exploitation by revealing a world divided into two quite separate camps of donor and receiving countries, the former being the poorer countries and the latter the richer countries. This book is addressed to scholars and students of economics and social sciences, as well as activists of the North and the South, interested in a better understanding of the asymmetric power relations implied in global trade. It makes a significant contribution to the literature on political economy, trade, Marxism, international relations, and economic geography.
... 10 For example Sinha (1997). 11 For example Moseley (2000), Fine, Lapavitsas and Saad-Filho (2004) and Gontijo (2006). 12 For presentations of the TSSI by its proposers, see Kliman and Mc-Glone (1999), Freeman, Kliman and Wells (2004) and Kliman (2007 and King (1992), it started being developed in the 1980s, but it gained popularity only later. ...
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The controversy about the transformation problem of values into production prices can be understood as a long debate in the history of economic thought that departs from the law of value and arrives at the socialist planning. In order to defend this view, the paper distinguishes and describes three phases of the debate: the Engels Challenge from 1885 to 1906, the Traditional Transformation Problem from 1906 to 1971 and the Critique of Redundancy from 1971 onwards. It shows how the topic formally began and explains how each phase developed into the next. A table summarizing the main aspects of each phase is presented for illustration. Opposing the common idea that the controversy on the transformation problem does not advance, this paper argues that the debate originated from the challenge of the conciliation of the law of value with an equal average rate of profit, shows evolution in the long run because it forces Marxist and non-marxist economic schools to confront the quality side of value in theory and to develop abstract models of planned economy in practice.
This paper constructs a unified framework to evaluate the Marxian transformation models, where the exploitation rate is an endogenous variable determined within value and price of production systems. All different procedures are based on two different value‐price invariance equations. These could be chosen among either two aggregate product equations (gross or net output) or three capital invariant equations (total, variable or constant). Different combinations of invariance equations result in most Marxian solutions developed in recent decades. The solution does not imply that one model (prices) is logically prior to the other (values), but that in fact that the joint solution is needed.
The classical three-sector model of the economy: 1) “the means of production”, 2) “the goods for employees”, and 3) “the goods consumed by other economic agents” (“luxury goods”) is considered in matrix formulation. Each sector contains many industries producing the goods of these three kinds. The “transformation problem” in Marxian economics is considered in a three-sector model of the economy with simple production. The solution of this problem is based on the action of the statistical “laws of large numbers” (LLN) in the economy. The stylized facts about the economy of the United States indicate onto the existence of the following probability distributions: 1) the inverse power distribution for the elements of matrix of direct requirements and 2) the Gaussian distribution for the direct labor per the unit of goods. The action of the statistic “law of large numbers” guarantees the C-V-M matrix of the economy must be almost symmetric. The “labor value” and the “price of production” of the total product produced within each sector in this case are almost equal.
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Over recent years there have been extensive and dramatic changes in the world of food. Developments include biotechnology, large supermarkets, all-year round exotic fruits and vegetables, fast food, and ethnic restaurants. This book argues to study these phenomena requires an interdisciplinary approach from across the social sciences. Insights around the nature of food systems are explored and an argument is made for a number of propositions that build upon and reconstruct existing food systems theory. Food system theory is developed further by defending the system-of-provision approach. Applications of food system theory are presented for the UK sugar system, showing how it has shifted over time and how it is distinctive relative to other sugar producers. A critical examination is given of the application of standard neoclassical demand theory to the determination of diet, specifically assessing the evolution of its use empirically with UK National Food Survey (NFS) data. A technique for consumer durables is used to calculate from NFS data patterns of food purchase. Calculations are then given for food norms for a variety of meat products, class and food preferences, and dairy products by level of food expenditure. -from Authors
This book is a commanding assessment of labour market theory across the social sciences. It provides a radically original critique of labour market theory, which draws constructively but critically on existing literature. The work: * contributes to the debates on key issues in labour economics such as unemployment, gender, equal pay and the minimum theory * illustrates the policy implications in empirical studies * supplements existing orthodox labour market theory texts.