The transformation of exploitation into profit: A sticky point in Marxist economics
Channel: Nathan Hill
Date: 2021-12-01

This talk presents my own current understanding of the so-called 'transformation problem'. In volume one of Kapital, Marx presents exploitation ('surplus value') as the source of capitalist profit. Although it is easy to show that this is true at the macroeconomic level, there is no direct correlation between how much a firm exploits its workers and its measured profits. In volume three of Kapital, Marx attempted to derive profit from exploitation mathematically. His solution is now universally agreed not to work. Thereafter, many efforts have been made to solve the problem also taking a highly formalized and mathematical approach. Instead, I apply Anwar Shaik's discussion of 'regulating capitals' to present (what I hope is) a simple and intuitive explanation of the transformation problem that remains consistent with Marx' approach. This solution relies in particular on the distinction between concrete labor and socially necessary abstract labor.

A talk given at University College Cork on 23 November 2021.

00:00:00 Introduction
00:01:55 Different economic schools
00:03:39 Labor theory of value - first pass
00:08:52 Concrete labor and abstract labor
00:13:15 Regulating conditions of production
00:16:14 Regulating capitals
00:17:29 Labor theory of value - second pass
00:19:30 Exploitation and the profit rate
00:22:49 Divergence of profit rates within an industry
00:29:43 Convergence of profit across industries 
00:35:04 Transformation problem
00:37:06 Transformation of value into price in everyday life
00:41:44 Questions
00:42:47 But wages are often above the value of labor power?
00:43:57 What is the relationship between the LTV and marginal utility?
00:45:35 What is the place of branding in this analysis?