Talk:Transformation problem

message: In the first chapter of The Capital, Book I, Marx wrote:
:"The total labor force of society, [...] is embodied in the sum total of the values of all commodities produced by that society"
Total labor force of society (Labor force, total): 3,288,561,934 workers in 2012 (source: World Bank)
Sum total of the values of all commodities produced by that society (GDP (PPP)): 99,396,280,511,216 International Dollars in 2012 (source: World Bank)
So:
> 3,3G workers working for one year = 99000G PPP$ (in 2012)
> 1 average worker working for one year = 30000 PPP$ (in 2012)
You can calculate the value of a commodity in quantity of work if you can calculate its price in purchasing power parity.
The better is the calculation of purchasing power parity, the better is the professional demographics assessment, the more accurate is the calculation of the amount of work in goods.
--Ascax (talk) 19:35, 15 December 2016 (UTC)
replies: text: The problem is about individual prices. As I note in the section immediately below, it is meaningless to say that total labour is equal to total prices.--Jack Upland (talk) 21:00, 15 December 2016 (UTC)
thread_title:  I do not understand the problem 

message: An unidentified user added this to the article, which more properly belongs here in the talk page:
"The claim in this sentence that the 'empirical' Marxists simply state that the transformation problem is irrelevant because there is a correspondence between prices and labor values is completely untrue. First, they do not claim that individual prices and labor values ever correspond but actually that individual prices and values of necessity never correspond. The correspondence they show is one of aggregate prices and aggregate value or aggregate profit and aggregate surplus value. It is not the empirical correspondence as such orrespondence in itself is not the claim, but the fact that the deviation of value from price or profit from surplus value is itself only explainable through Marx's labor theory of value (not Smith or Ricardo) - this deviation is NOT explainable either in Sraffian or Newhich they focus on, but the theoretical consistency of Marx's claim of value transfer in exchange with this correspondence. The coclassical traditions. This is actually the solution of the transformation problem, ironically the same solution of the labor commanded theory of value. The transformation problem is one of neoclassical theory, which they ignore because they choose to focus on fictional market equilibrium instead of the actual relationship between what profit should be in their theory (the aggregate costs of production, ie. the return to all factors) and what it really is in reality. There is no way to explain this in neoclassical theory, because neoclassical theory has no theory of value but a theory of prices; it is tautological to say that there are 'price transfers' on the market."
In fact, Cockshott, Shaikh, et al do indeed say that individual values and prices correspond highly. I will add some article references to that effect. James Haughton (talk) 12:59, 11 April 2011 (UTC)
replies: text: They must of necessity, because the claim that the aggregate amount of labour corresponds to aggregate prices is meaningless. One is measured in hours, the other in money.  The substance of the theory can only be meaningful if (at least at some point) there is a set relationship between hours and money across different individual instances.  This logic seems to escape people.--Jack Upland (talk) 08:42, 25 April 2011 (UTC)
thread_title:  Empirical Marxism 

message: I started the process by composing a header that I think is more accessible, more accurate and more balanced than the previous one.  The sentence structure may still be a bit too complicated and could stand some editing to make it clearer and more simply stated. Also the remaining exposition is still sorely in need of rework. I think Sraffa's appearance in the overview is a little premature. I don't want to diminish his contribution to the debate, but it was more of an inspiration to others both pro and con than a definite statement on his own part on the topic. Despite the use of linear algebra in the state of the art on this topic I think a simple thee sector numeric example would be more appropriate and more accessible for an ecnyclopedia article on the topic. Also the artilce as it stands focusses too much on the algebraic renditions that show a failure to transform and barely mentions any of the many more renditions that support the transformation. This is a serious NPOV problem from my POV. Finally, I'll try to update the References to include what i cited. --Cplot 06:05, 3 June 2006 (UTC)
replies: text: I agree that the introduction of Sraffa et. al. in the Overview section is premature. To resolve this, I'm moving those paragraphs into the "Implications" section. The logic of that section is a continuation of the argument started in the overview, and as such I think it more properly belongs there. I am also renaming that section from "Implications" to "Critics of the theory" for POV reasons. The previous title gives the article a tone of accepting these claimed proofs presented by Marx's critics. Ejrd1993 (talk) 00:20, 29 May 2011 (UTC)
thread_title:  Rework 

message: I may have gone overboard on adding references, but I want to drive home the point that there is an abundance of work on both sides of this issue. And I would even say that the thrust of the POV in the current discussion represents the minority opinon if there's any way to measure that. It certainly is not the majority opinion in the field and by no stretch of the imagination is it the sole proven position. Most of the work cited (espcecially that of Roberts, Mosely, Foley, Duménil and Lévy work through linear systems of equations, are often inspired by Sraffa's work and prove just as definitively that the trnasformation uphlds the law of value. What's more, I wanted to show how active this work is and not settled by Samuelson. If anything Samuelson restarted the whole debate, which for whatever reason lapsed sometime in the first part otf the 20th century. --Cplot 08:48, 4 June 2006 (UTC)
thread_title:  Updated References 

message: This appears to be a pretty cursory treatment of what counts as the single most decisive critique of Marxist value theory. If no-one objects, I'd like to submit a far more detailed treatment, with appropriate summaries. Adhib 09:57, 26 Feb 2004 (UTC)
replies: text: Please do. mydogategodshat 03:43, 27 Feb 2004 (UTC)
thread_title:  Previous Talk Header 

message: Dear Mario,
  are the basic tags for indicating maths.  Within these tags you use a T_E{}^X like description system.  See Help:Formula for the specific details.  To format a very common variable setting like Ab / Cd you use this:   {A_b \over C_d}   which displays like this:  {A_b \over C_d} 
I'll copy our discussion from my talk page to here later on, so we can talk it out.  Fifelfoo 23:07, 10 July 2005 (UTC)
thread_title:  Formatting Math 

message: Soon after the definition (unaltered from my text) you write: “The transformation problem comes into being when Marxist economics are used to predict opportunity costs. Within Capital Volume I states the relations of value between commodities, and the nature of the relations of production in a productive environment. Volume III describes the relationships between distributors of production. A solution to the transformation problem would unite Marx's statements regarding the structure of production with Marx's statements regarding the nature of distribution.”
As it stands, this appears to say that the “transformation” problem was not introduced by Marx himself. But this is just not true. Chapter 9 of Capital Volume III bears the title: “Formation of a General Rate of Profit (Average Rate of Profit) and Transformation of the Values of Commodities into Prices of Production”. Within it, you will find several tables, devoted to numerical examples, similar to my Table 2.
Hence, a more factual way to put things would perhaps be something like: “The transformation problem was formulated by Marx in Chapter 9 of Capital Volume III, where he also tried to solve it.”
If you want to add something specific about the role of this problem within Capital’s wider system, you might perhaps use Marx’ own words, taken from the same Chapter: “In Books I and II we dealt only with the  value of commodities. On the one hand, the  cost-price has now been singled out as a part of this value, and, on the other, the  price of production of commodities has been developed as its converted form.” In fact: “Without such deduction the general rate of profit (and consequently the price of production of commodities) remains a vague and senseless conception.” On the other hand: “The transformation of values into prices of production serves to obscure the basis for determining value itself” since “The actual difference of magnitude between profit and surplus-value — not merely between the rate of profit and the rate of surplus-value — in the various spheres of production now completely conceals the true nature and origin of profit not only from the capitalist, who has a special interest in deceiving himself on this score, but also from the labourer.” In Marx’ view, the solution of the “transformation” problem is then also the way to see through such concealment.
My only objection to this would be the introduction of the Marxian notion of cost-price, which is a really unnecessary complication, as it also requires some proper (and critical) explanation. Mario 8 July 2005 11:15 (UTC)
:I agree about the edits.  I haven't read Volume III (it having no impact, despite Marx's assertion about the transformation of value into money-price being a moment when I am deceived as to the nature of my exploitation) as like the Autonomists I find my exploitation at the moment of usurption of my work (and the control of that value) :).  I think your expressions, as quotes, should go in (I'll do it myself next edit) with a sentance to re-explain the quote (this is good style).Fifelfoo 00:34, 11 July 2005 (UTC)
replies: text: Thanks. I assume you have read my latest edits to the article and are referring to that. By the way, sorry I didn't wait longer for your reply. As to Volume III, I think you really should read it, before writing on its content. You'll see that the transformation of value Marx talks about there is not into money, but into (relative) prices, i.e., the same exchange ratios between commodities Marx started from in Chapter I of Volume I. It all goes back to that, the very beginning which I have now quoted in the article. As to the way you "feel your exploitation", I think I can see your point, but I do not believe it has any relevance for Marx' treansformation problem, seen from a NPV. For the rest, I'll wait to see your next edit, See you. Mario 01:37, 11 July 2005 (UTC)
thread_title:  Let’s start from the beginning. 

message: At the beginning of the third paragraph your edit reads: “It has been demonstrated to the satisfaction of most economists that a general solution to the transformation problem does not exist.”
Now, as it is still stated in the introductory paragraph of the article, the transformation problem is a mathematical one, concerning the existence of a set of functions with certain well-defined properties. So what you have written here amounts to something like: “It has been demonstrated to the satisfaction of most economists that 2 + 2 = 4”. This is slightly ridiculous but of course strictly true, since indeed most economists agree with that. However, it may be actually seriously misleading if it is taken to mean – as it well might – that the conclusion 2 + 2 = 4 is essentially subjective, so that any numerate non-economist (and even some economist) might disagree with it. Maths is not an opinion, as I am sure you agree.
My suggestion here would be just to revert to my original formulation: “It can be shown that, contrary to Marx’ opinion, such a general rule does not exist, so that his transformation problem has actually no solution, outside some very special and unrealistic cases.” This of course has the extra indication that Marx got his maths wrong (“contrary to Marx’ opinion”). Yet this is not only true, but the object of a later sub-section in the article. So why censor it?  Mario 8 July 2005 16:29 (UTC)
:Mathematical demonstrations depend on the quality of the demonstration.  For example 
:#{x \over 0} = i,
:#{x \over 0} = j, therefore
:#i = j!
:I have no capacity to follow Sraffa's proof, but until there's two sources attesting to Sraffa's proof which are themselves undisputed (appreciations and analysis of the demonstration, or two textbooks of PE holding Sraffa's demonstration as true) I can't follow the article asserting Sraffa's correctness.
:Merely stating 2 + 2 = 4 isn't sufficient, and some mathematicians spend a great deal of time exploring the basic nature of integer operations.
:As you noted later in the article there are disputants to Sraffa's demonstration, and I'm aware of Mandelian Marxist-activists who dispute Sraffa on this.
:My edit was one of caution where Sraffa's demonstration was only single sourced. Fifelfoo 00:34, 11 July 2005 (UTC)
replies: text: Oh, dear! As to "Sraffa's proof", I'm sure that if you tried you could really follow Sraffa's reasoning. You see, a truly technically proper proof of Sraffa's proposition involves some linear algebra, and has been given by other authors [see Samuelson (1971) and the references quoted there]. However Sraffa himself was a funny, old-fashioned chap, and believed in not using maths, but just ordinary discoursive logic, when explaining things to others. So his Chapter VI does not even mention eigen values. It's all pure verbal reasoning an intuition, and – with a little effort – you would certainly be able to follow it. But this was in 1960. Since then there have been scores of works with the proper maths in it. Just look at Samuelson (1971) and the bibliography at its end, if you don't trust me. Your Mandelian friends just don't know what they are talking about. As for me, I have never "noted earlier" that the proof is disputed (which, technically, it is not). I have only noticed – thanks to you – that some innocent people simply refuse to accept it, on non-mathematical grounds. Which brings me to my earlier attempt to distinguish between scholars and activists. On reflection, I agree with you that there is no objective way to trace an exact boundary – and so I have dropped the subject. Yet charlatans do exist, and this, I feel, is a macroscopic case in point. You don't write it into Wikipedia, of course. But you keep it in mind. Cheers. Mario 02:22, 11 July 2005 (UTC)
replies: text: Maybe we can paraphrase or summarise Sraffa's reasoning.  I'm reasonably conversant with Volume I, but I'm not going to be able follow a mathematical proof.  So if we can use a mathematical demonstration and follow it up with Sraffa's discursive logic that would be great.  I expect we can use Samuelson's bibliography (and Samuelson himself) to indicate the firm agreement around the demonstration.  Having some more graphs to indicate that the value => price-ratio issue is central would be good. Fifelfoo 02:27, 11 July 2005 (UTC)
replies: text: As I said in this article, the proof happens within a framework. This framework is an analytical structure called a linear production model. So what you propose is to write an article on linear production models. That is certainly a very good idea, and should be done, but it means writing a big, technically complex and separate article. Given time, I might have a try at it. Then the Transformation article could have a link to it. That would be great, but not for now. As things stand, we already have a special-case proof in the new Non-Transformation sub-section, which does not require Sraffa's result. I designed the "Smith plus arrows" little model precisely because it allows to side-step the "reduction" to dated quantities of labour. I think that for the time being that proof should be enough. We are not really asking our readers to take anything on faith. Yours Mario 03:57, 11 July 2005 (UTC)
thread_title:  Problem number 2. 

message: For FifelFoo: it's right as it's standing, as you can see solving from the previous expression. Mario 13:03, 12 July 2005 (UTC)
thread_title:  Solution for r 

message: Econometrics is a branch of statistics. It has to do with fitting relationships to observed economic data and the like. It has nothing to do with the subject of this article. --Mario 21:34, 12 July 2005 (UTC)
thread_title:  "Econometric" interpretations of Marx? 

message: The lead section was: "According to the conventional interpretation, in Karl Marx's Economics the transformation problem is the problem of finding a general rule (or set of functional relationships) to "transform" Marx’s "economic values" defined and used in Capital's Volume I into the "competitive prices" (or " prices of production") of Capital's Volume III. This specific problem is supposedly first mentioned by Marx himself in Chapter 9 of Capital's Volume III (a manuscript which Marx did not publish during his own life), where he also tried to solve it." Yet  Capital's Volume III was edited by Engels, and its Chapter 9 bears the title “Formation of a General Rate of Profit (Average Rate of Profit) and Transformation of the Values of Commodities into Prices of Production”. Presuming nobody really wants to accuse Engels of forgery, I have eliminated the bolded bits. --Mario 14:59, 14 July 2005 (UTC)
replies: text: I guess the point was that Vol III was a draft (as acknowledged by Engels and only lightly edited by him) and it's a bit rich to carry on about Marx's 'mistake' (essentially an oversimplification) without pointing this out.--Jack Upland 22:22, 21 January 2006 (UTC)
thread_title:  "Supposedly" ? 

message: I have noticed a new paragraph recently added to the article, which begins thus: "Some Marxian authors argue, in the tradition of Oskar Lange, that Marx's critics mistake the significance of his value theory, in good part because they operate with a "deformed" notion of prices, price formation, price aggregation, and the real use of prices." I would just like to point out that the prices relevant to the transfotmation problem, and dealt with in the article, are Marx's own prices of production, as defined and used by him in Capital's Volume III. This being so, the added bit on "deformed" prices in the transformation problem looks to me – with all due respect – as entirely nonsensical. Poor Lange cannot now defend himself, but that seems no excuse to libel him. I'll wait a few days, and if nobody provides some counter-argument I'll then delete the paragraph in question. --Mario 21:15, 23 July 2005 (UTC)
thread_title:  Which prices ? 

message: I happened to come across this paper by Fred Moseley (who's referenced in the article in what seems to be another argumentative context entirely, unless I'm quite confused), which describes and references at least two other ways of formalizing Marx's assertions about value that would have significant differences for the transformation problem.  While I'm no economist, and am not qualified to rewrite the article, it'd be nice if someone who's better prepared to deal with the terminology could check this out.  If I understand correctly, results would be different without the assumptions that "(1) the fundamental givens in Marx’s theory are assumed to be the physical quantities of the technical coefficients of production and the real wage and (2) the rate of profit is determined simultaneously with prices of production and both are derived from the above physical quantities." (from the linked paper)  I can't find, in the existing Wikipedia article, a specification of at what time each value is determined, or follow the argument well enough to deduce this, and so confirm that it indeed makes these assumptions.  
Why does this matter?  Well, Moseley argues that Marx doesn't make a logical error at all.  Even the existence of alternative interpretations makes the article's claim that "the modern mathematical proof that Marx's transformation problem has no general solution has never been formally questioned" misleading, at least.  And I do know that some modern Marxists deny, for example, that the rate of profit ought to be determined simultaneously with prices of production (Chris Harman, a British Trotskyist, in Explaining the Crisis, 1984, for one).
All I'm going to do is try to find a place to add a qualifying sentence, but a more thorough examination and possibly rewrite by someone with some formal economics education would be good.
:DKalkin, 12/7/05
Dear DKalkin, I'am sorry I only saw your enquiry just now and so did not reply earlier. 
It seems to me that your statement of Sraffa's "assumptions" reveals a rather basic misunderstanding. As far as I know, it is a generally accepted fact among economists that Sraffa's work, being static, has formally nothing to do with the determination of prices in the historical or causal sense. It is just a set of (timeless) conditions that prices must satisfy at any given point of time to be the "natural" prices Smith and Ricardo were talking about. Looked at this way, there is clearly no question of either "fundamental givens" or "simultaneity" of things.
Nevertheless, it may well be that some non-expert author has "interpreted" (or reinvented) Sraffa in the dynamic way you say, and/or maintained that Marx's production prices are not basically the same things as Ricardo's natural prices, or whatever. These would be classic "tiny minority" points of view, rather like flat-earth theories, 
Although the official Wiki policy on NPOV intimates that all such theories should be ignored, I would of course have no objection to their proper mention within the article. However, I just happen to have no personal knowledge of such extreme oddities, nor much interest in them, and so I'm clearly not the right person to do it.  Yours Mario 15:08, 14 January 2006 (UTC)
thread_title:  Non-Sraffian interpretations of Marx? 

message: While this is a well-written article, it does not conform to NPOV requirements. I have done some editing to partly rectify this. Controversially perhaps, I have toned down what I see as an attempt to rescue classical heroes like Adam Smith from being condemned along with Marx because their views were 'different'. If this is to be presented, it should occur on the LTV page, not here, and should be evidenced, not asserted. I have included some links to Marx's works, so anyone can read the original. The article asserted its tables were 'closely' 'similar' to Marx's work, but this is patently false and his algebra is nowhere near as complex as that!
Continuing POV problems include:
*The 'erasor algorithm', which is merely snide jibe.
*The straw-man imputation to Marx of the belief in a mathematical rigidity to the capitalist system - I've added some quotes to clear this up.
*The discussion of the historical relevance of LTV in which a sentence of Engels is attacked by a dozen footnotes. While it might be expressed in a neutral tone, the presentation goes against basic fairness. Prices in non-market economies is a complex and I believe much misunderstood topic anyway. Engels is merely giving historical grounding to Smith's deer and beaver fable, which the article endorses. This is of course different to merchant prices which are monopolistic in these societies.--Jack Upland 03:10, 23 January 2006 (UTC)
replies: text: I am not a political economist.  I TeXified most of the algebra so that it displays nicely on screen.  I know Marx wasn't heavy on the old algebra, but when face with screens full of ascii formulae, I just needed to beautify it.  If its relevent or not isn't my domain.  Fifelfoo 03:15, 23 January 2006 (UTC)
replies: text: I wasn't criticising the appearance of the algebra which is indeed beautiful. I was just justifying my removal of the phrases suggesting that the tables closely resembled Marx's text - and now any reader can check for themselves. In fact, the more I dig into this article the more it is revealed as an exercise in straw-man pedantry--Jack Upland 19:48, 23 January 2006 (UTC)
thread_title:  POV 

message: I've removed this from the main page to here since it may have pieces that could be rescued as part of a correct NPOV elaboration of what I wrote for the header. I know much time must have gone into this, but it just is so out of date and so misstated it just had to go.--Cplot 06:59, 11 June 2006 (UTC)
thread_title:  Old elaboration material 

message: It is very poor etiquette to transform an entire article without first discussing it on the article's discussion page — not even a little note here. I do think the topic needs much better treatement and I had invited those who prepared the previous versions to work togeteher with me to present the material that didn't violate wikipedia's NPOV pollicy. I think some of the main material in older versions could be rescued, but only after properly reflecting the current state of the art on this topic. --Cplot 19:29, 27 July 2006 (UTC)
replies: text: Frankly I think the original article could have been kept since, though it was objectionable in parts, it had a tendency to disappear up the black hole of its own pomposity.--Jack Upland 10:27, 28 July 2006 (UTC)
thread_title:  on the recent revert 

message: 1) The use of Sraffian's \sum_{n=0}^\infty notation seems a bit rich to me.  The beavers and dear algebra that follows expresses the same thing in a less bewilidering way, so why throw people off with the high-falootin' sigma symbol?  It's like calling the Rate of Profit the "first derivative of the profit magnitude"--just not necessary to confuse lay readers in this way.
2) Each of the input variables in the equation P_i = wl_i + (h + r) P_A a_i can be reduced to labor, which would make it possible to solve for P_i in terms of E_i.  Of course you can argue that these variables are not reducible to labor, but then you are moving off of Marx's turf and moving the goal posts somewhat, setting up a straw man, and so on.
PS- Let's try to avoid crude remarks.
--Rainercale 03:42, 5 May 2007 (UTC)
replies: text: What some see as crude, I see as truthful.--Jack Upland 10:24, 2 November 2007 (UTC)
thread_title:  2 Objections to the methematical rendering 

message: According to the I Ching, which philosophy is also known as Dualistic, or Dialectical Monism, every change has a Sense that is generated, can be understood and represented by means of couples of opposite and identical, different but complementary polar attributes.
This simple consideration is perfectly fit for the definition of the nature of economic value, where we have to deal with the following 6 relations, all intertwined, of identity and duality:
- Unity of the economic system and multiplicity of the firms that make it up.
- Physical transformation and social trasformation, also called production and  distribution.
- Labor and commodity, or creative value and material value and
- Production and consumption in the physical tranformation, and
- Commodity and price, or material value and exchange value and
- Buying and selling in the social transformation.
An economic system is a unit composed by a multiplicity of firms that produce and exchange commodities, therefore there are two kinds of change: physical transformation, or production, concerning the relationship between humans and physical world, and social transformation, regarding the distribution of the result of those physical transformations between the firms that produce them. This makes of the economic system an organic unit.
Since the two kind of transformation are different, their characteristics are independent and can and must be considered separately, but since one of them cannot exist without the other, they must also be considered in their oneness.
Every physical transformation is just but one event, and in this event there are  two elements, or values: labor and commodity, which are different and identical. Labor decides the Sense of the transformation according to a plan, a project, and is the essential, or creative value of the event, while the corresponding commodity, for its physical characteristics, is the material value, or use value of that transformation.
The gross product can be considered as a single commodity which use value is the quantified material life of the whole system, and its creative value the totality of labor. The use value of a commodity cannot be expressed as a mathematical fraction of the gross product’s use value, but its creative value is a fraction of the whole system’s quantity of time of labor.
Physical transformation occurs as a process that is in the same time consumption and production, which, once again, are opposite and identical. The identity-duality relation of consumption-production is generated by the relation labor-commodity, and the identity relationship between labor and product is as well a relationship of identity between labor and consumption.
Regarding physical transformation, these considerations don’t depend on distribution and are valid no matter what the commodities’ economic value will be.
Every firm yields the produced commodities to any other firm of the system in exchange for a quantity of commodities produced by them. Commodities are exchanged because they have different use values that satisfy different common needs, and a relation between different use values, as just said, cannot be expressed in quantitative mathematical terms. Indeed, a commodity is such not for its use value, but because it has a price, an economic value, which expresses the quantitative exchange relationship of every commodity with all the other commodities.
The relationship of identity between material value and economic value goes together with the relation of identity and duality of buying and selling, opposite and identical.
The price for which every single commodity is sold is also the price for which it is bought, and this is also true for the gross product. But while every commodity is exchanged with different commodities and their price change with distribution, the gross product is exchanged with itself, so that its price is constant and is the mathematical one, 1, the unity of the system, to which all prices refer as a fraction of.
Price expresses the quantitative relationship between unity and multiplicity, between every commodity and the gross product - or every firm and the whole system - and, consequently, between every single commodity.
These considerations about distribution are made without any reference to production, and regard the relative aspect of the economic value.
As creative value and exchange value refer to different changes, there is no reason for them to coincide, that is, the relation between quantity of labor of a firm and quantity of labor of the system, which is constant, normally is not equal to the fraction of the gross product that its price represents, which is variable.
In the negotiated exchange, a commodity is bought for its material value, while the quantity of labor spent to produce it is invisible and is only one of the many causes for the magnitude of price, which eventually is the real economic value.
But the commodity, or material value, belongs perfectly to both physical and social transformation, which imply each other through the whole system, where the creative value of the gross product is the totality of time of labor, which is constant for every possible distribution as well as its material and economic value are.
If the economic value is expressed in monetary terms, the whole price, Dt, of the commodities exchanged in a given period of time, or Gross Product, GP, is the representation of the totality of time of labor, Lt, that produces them:
Dt ≡ GP ≡ Lt
and the mathematical relation:
Dt = Lt
determines the absolute value of the currencies in terms of quantities of social labor.
Prices always represent precise quantities of time of quantified human existence, a fraction of the time of labor of the economic system, of the labor of each for the others, independently from the commodities’ material value and the way they are distributed, that is, whatever they are used as means of production or consumer goods, and however the magnitude of prices can vary in order to ensure the condition of balance (buying-selling identity) for different possible distributions.
For a complete formalization see: Absolute Prices
:This link doesn't work anymore. --Alex1011 (talk) 19:53, 22 May 2011 (UTC)
thread_title:  '''One - Positive - Yang''' 

message: According to Marx the objective value, or simply value, of a commodity is the quantity of labor spent to produce it. If a commodity is produced by using freely available natural elements, its value is just the quantity of time of live labor. If, instead, it is made by using other commodities, or means of production, its value is calculated as the sum of the quantity of live, or new labor, directly employed to produce that commodity, plus the quantity of labor previously spent to produce the used means of production, which value is considered as indirect, or dead, or crystallized, or embodied labor that transfers into the produced commodities.
In other words, the value of a commodity is calculated as a sum of live labor plus the supposed creative value -embodied labor- of commodities considered for their use value -means of production- but expressed by their economic value -in order to allow the variation of prices.
But a sum between time of labor and any of those three terms doesn't have mathematical sense and implies a series of problems and contradictions.
Following this conception of value, the representation of the economic activities of the considered period comprehends commodities that are different because produced in different periods of time, that is, the consumed means of production, produced in the previous period, and the commodities produced during the present period. For this reason, in order to maintain the distinction between the two of them one must suppose that production takes place all along the considered period, and distribution, instead, in an instant only at the end of that period and before the beginning of the next one.
But since commodities are of different periods, they remain diverse, and even if they had the same use value there is no reason to believe that the quantities of labor embodied and price of the consumed means of production are equal to those of the produced ones.
For this reason, when determining the embodied quantities of labor the problem is that while the quantity of live labor of the studied period is known, the quantity of labor embodied in the used means of production must be searched in the characteristics of the previous period, which is not represented.
In the determination of prices, the incongruence is that the distribution represented is not that of the produced commodities, which prices are under investigation, but that of the consumed means of production, produced and sold in the previous period, which values and prices therefore should be known, not unknown.
In order to study the variation of the characteristics of the system for a variation of distribution, therefore, it is also necessary to suppose that the economic system is static, that is, that in every period commodities are produced and exchanged in the same way, so that, as well as their material value, the price of the consumed commodities can be equal to the price of the produced ones.
In reality the economic activities are a constant flow where the two transformations take place contemporaneously; the commodities represented are only and all those produced and exchanged in the considered period of time, so that the price for which they are sold is necessarily the same for which they are bought and there is no need to consider the system as "static". The sign of equality is not between consumed commodities and produced commodities, but between buying and selling of the same commodities. The static-ness hypothesis forces upon the wrong framework the condition that is always true for the correct one.
In that conception the same representation is used to calculate both embodied labor and prices, overlapping and confusing physical transformation and social transformation.
Indeed, the quantity of labor embodied into the commodities cannot be "calculated" by means of considerations regarding only production because it depends on how the means of production are distributed, so that in reality it is distribution that is considered and represented.
In this situation, the classical theory of value establishes that the quantity of labor incorporated into the commodities coincides, or is precisely indicated, by the prices calculated in the representation of the socialistic distribution, not deformed by the existence of profit, that is, with the distribution where the net product - for the static-ness hypothesis composed only of final consumer goods - is distributed only as wage proportional to the quantities of labor.
In this case, since the quantity of labor embodied in the means of production produced is equal to the quantity of labor embodied into the means of production consumed, the value of the net product coincides with the totality of live labor, so that, as in a system where means of production don't exist, everyone receives from society a quantity of commodities that embody a quantity of social labor equal to the quantity of labor given to society by producing only one kind of commodity.
The identity between totality of live labor and net product value is justified by considering the consumer goods as the real (qualitative) end of the whole economic activity, and therefore, directly or indirectly, of the whole labor.
But if this were true, since in every period all the commodities, consumer goods and means of production, are consumed and reproduced, the quantity of labor embodied in the consumed commodities would be constantly superior than the quantity of labor that produces them all.
Though this absurdity is not recognized as such, other contradictions pop up when considering a variation of distribution.
A variation of distribution implies a variation of prices, which is explained as the effect of a redistribution of the value embodied into the commodities, but without changing the quantity of labor objectively embodied. But if the price of the net product is constant and coincides with the totality of live labor, a variation of all prices implies a variation of the gross product's price, which becomes bigger or smaller than the price calculated without profit, that is, than the quantity of labor objectively embodied.
This is recognized even by the classical economists as an unacceptable contradiction, known as the problem of transformation, which conceals the currencies' absolute value.
In reality, in the physical transformation the relation of identity between labor and commodity, or creative value (which is not embodied labor) and use value, is simple and direct, and comprehends both labor-production and labor-consumption identities, and doesn't depend on distribution.
And in the representation of distribution the sum is between the price of the final consumer goods and price of the means of production, or income and capital, where the income is proportional to the quantity of labor, but it is social labor, not that labor.
In every period of time, in order to exist, labor must use, even if in different ways, means of production and consumer goods, and it is employed in the same time in part for the production of means of production and in part for the production of consumer goods, therefore, even in a socialistic distribution, the quantity of social labor indicated by the price of the consumer goods received as salary is inferior than the quantity of labor given to the system. Both value and price of the gross product are constant, while for the net product creative value is constant and the economic value is variable.
Shoujen 06:20, 16 September 2007 (UTC)
thread_title:  '''Two - Negative - Yin''' 

message: Is it really necessary to have "Marxist views", "other Marxist views", "Mainstream Views" and "Marxist response"? Can't it just be Marxist views and mainstream views, or even better just "views"?  —Preceding unsigned comment added by 82.27.250.249 (talk) 19:19, 9 September 2008 (UTC)
thread_title:  So many views... 

message: No names, no cites, "Mainstream scholars[who?] question the assumption that the basic nature of capitalist production and distribution can be gleaned from unrealistic special cases."  Economics as a discipline functions out of the creation of special case models? Fifelfoo (talk) 02:07, 19 May 2009 (UTC)
thread_title:  On Mainstream Views 

message: At least as far as Marx is concerned, it would be questionable to use the example of hunting beavers and deer in discussing surplus value and profit, since without the buying and consumption of labor in capitalism there is neither surplus value nor profit in the sense Marx is discussing these.  The example might be interesting as a contrast to capitalist production, but it makes little sense to use this as the basis for the entire article.  It puts the reader on a path Marx is not on.  
Also, I completely agree with some comments above regarding the use of mathematics.  Quine spoke of the principle of shallow analysis - analyze only what is crucial to the point at hand, so as to not obfuscate things.  Use simple math when possible (as Marx did), no math at all when ordinary language suffices.  The use of variables is okay for a specialized article or for your private documents, but becomes difficult for the reader to keep straight (even one with good math skills).  Write to accommodate the educated reader, not the specialist.  Variables can be left out entirely or put in a footnote to remind people you are skilled in that area.  — Preceding unsigned comment added by 208.91.176.144 (talk) 03:30, 14 August 2013 (UTC)
replies: text: Yes, the discussion is skewed against Marx.  Hunting beavers and deer is a false presentation of the issue, what he called a "Robinsonade" after Robinson Crusoe, a presentation which takes the issue out of its socio-economic context. The mathematics is also misleading because it was not how Marx presented the problem, and it gives a false impression of the resolution.  The transformation problem only exists (at least in Marx's intrerpretation) because the real world does not strictly conform to a mathematical model.  Mathematics cannot confirm or deny this point.--Jack Upland (talk) 10:51, 18 June 2014 (UTC)
thread_title:  The examples of hunting beavers and deer do not involve surplus value or profit 

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thread_title:  External links modified 

message: The transformation problem referred to here has never been, and will continue to be, there. It is based on a misconception of the value-building process.
Typically, the value is defined by the following value formula:
W = c + v + s
c constant capital (here referred to as "dead labour")
v variable capital (here referred to as living labour)
s surplus value
But this statement is false. Working time does not lead directly to the formation of value, but during working time only conditions are created for possible value relationships. The process of value formation is therefore not described with
Raw materials + labour => Value => Sale of the goods with the value on the market - to, above or below value,
but with
Raw materials + labour => potential commodity, linked to an expected value in the form of the offer price => Offer of the goods on the market => when a buyer exchanges the goods by supplying a value equivalent, the value is formed as a social relationship. 
This only happens on the market, after the buyer acknowledges the results of the work as socially useful. The results of the work are recognized as socially useful only by exchanging for a value equivalent.
Marx describes this by the fact that only socially useful work is value-building work.
=== How can one recognize that work and thus working time do not lead directly to the value ===
Among other things, in two ways:
A) An umbrella manufacturer produces umbrellas. He can usually sell them at $40 each.
His son reads this article about transformation and recommends that his father shoud punch holes in the screen covering to increase value. This would increase working time and thus also increase the value of the umbrellas.
The father responds. But he has no success with it. He can only sell one umbrella to a comedian for $35.
The value does not come directly from working time, but the buyers first estimate the work results. Expenses will not be replaced by force. Only usually the buyers replace them with the purchase and then pay the expected surplus value. 
The results of the work are estimated on the market and the assessments cannot be produced.
B) The value formula specified in the article shows the same result: W = c + v + s.
As shown here, the formula is not correct. According to their usual interpretation, the value would be produced. But then Marx's statement that only socially useful work is value-building would be obsolete.
* There is no surplus value on the production side of the commodity company. It cannot be produced. 
The buyer pays for the surplus value on the market. Since the surplus value is part of the value, the value cannot exist before the surplus value, or not before it is clear that no surplus value is paid.
* If the entrepreneur does not succeed in obtaining surplus value from the buyer, then there will be no so-called "unpaid working time" (the part of the working time in which the surplus value is worked) in production – the entire working time will become then – and only then – necessary working time.
The value formula must therefore be adapted to the production side of the commodity company:
W|expected = c|cost factor; Replacement expected + v|cost factor; Replacement expected + s|expected.
Only on the market does the value come about when it is established whether the buyer pays for surplus value and, if so, to what extent. Consequently, the value formula for the market must also be adjusted:
W|real = c|replacing + v|replacing + s|real.
This formula shows that the value is not produced on the production side of the commodity company, but is allocated to the commodity on the market. 
* The surplus value only occurs if the buyer replaces c + v completely beforehand. 
* However, it replaces c +v only on the market and pays the surplus value there. Only the resulting value size is assigned to the commodity as a real value.
=== The value does not describe the production costs plus an expected added value, ===
but the amount of compensation of expenses plus real surplus value. Only by replacing the expenses (complete or incomplete) will the expenses be recognized as socially useful and thus as building value.
Thus, value is assigned as a social relationship in a similar way at the social level as the social relationship of property.
* If property is sold, the old property assignment does not have to be removed from the sales object and the new one does not have to be included in it. The assignment takes place at the social level.
* If a work product is not sold, no value has to be extracted from it or removed from it, because no one was ever assigned by the production in it or firmly. The value assignment is done at the social level. Only there value exists as well as property.
=== Value is a social relationship ===
Consequently, a transformation of values into prices is not a mathematical/physical task.
Value is a social relationship. Such a relationship is formed and works between people, a value ratio concrete between buyer and seller (buyers and sellers can be individuals or companies etc.). 
A social relationship exists between people, and must therefore also include subjective elements. As a relationship between people, however, it must also have an objective share.
The common value of buyer and seller, the selling price, reflects the real and objective value.
The subjective proportions of value were developed in the consciousness processes of buyers and sellers, they work there, but are brought by both beyond these to the social level - as an objective value. This is made visible and used there: sales contract, invoice, VAT, insurance, etc.
* Both buyers and sellers may have other subjective values for the goods in question. 
* However, these are not part of the value ratio, so they are not relevant to the value.
Also objectively recognizable is the migration of purchasing power (in the case of exchanging goods for money) from buyer to seller in the jointly agreed value amount and thus the loss of purchasing power in this size at the buyer as well as the gain in purchasing power at the seller – all objectively. The migration of purchasing power also reflects the objective value.
=== Values and money supply ===
* Furthermore, only the value of the commonly agreed value should be included in the total amount of all goods to be distributed economically, which in turn is the sum of money of all workers and other income earners. 
* It would not be helpful to put €11,000 into circulation for a commodity that trades at €10,000 but for which a value of €11,000 is calculated according to the transformation rules specified in the article.
* The scope of purchasing power available in the society should be consistent with the total amount of all goods subject to economic exchange and should not be additionally circulated for allegedly "values" calculated according to the transformation rules in the article.
=== Conclusion ===
Since the value does not exist on the production side of the commodity company (there is only one value of expectation), no value can be transformed into prices from there.
The value is created on the market - on the basis of the production results, but not mathematically derivable from them.
On the production side of the commodity company, only the expected value that is linked to the potential commodity as the offer price can be calculated. After the sale, the sales price, which reflects the real value, can be compared with the expected value. 
In the case of the unsaleable product, it will remain at the expected value until disposal. 
Note: I translated this text from German with the help of Google translator and reworked the translation.
=== Literature ===
*Karl Marx, Capital I
*Friedrich Engels: Karl Marx "To the Critique of Political Economy" (1859); in: MEW 13, p. 476
*Rainer Lippert: "Mit Marx zur Marktwirtschaft?" ("With Marx on the Market Economy?") Tectum Science Publisher 2017, ISBN 978-3-8288-3917-5
*Rainer Lippert: "Was ist falsch an der Arbeitswerttheorie? - Wie der Wert wirklich gebildet wird" ("What's wrong with the Labor Theory Value? - How the value is really formed"), Grin Verlag 2019, ISBN 9783668934580
Cheers RainerLiBln (talk) 18:56, 8 July 2019 (UTC)
thread_title: The transformation problem is just an apparent problem

message: *Karl Marx, Capital I
*Friedrich Engels: Karl Marx "To the Critique of Political Economy" (1859); in: MEW 13, p. 476
*Rainer Lippert: "Mit Marx zur Marktwirtschaft?" ("With Marx on the Market Economy?") Tectum Science Publisher 2017, ISBN 978-3-8288-3917-5
*Rainer Lippert: "Was ist falsch an der Arbeitswerttheorie? - Wie der Wert wirklich gebildet wird" ("What's wrong with the Labor Theory Value? - How the value is really formed"), Grin Verlag 2019, ISBN 9783668934580
Cheers RainerLiBln (talk) 18:56, 8 July 2019 (UTC)
thread_title:  Literature 

message: So I'm looking at this article again and right in the lead it's claimed that the transformation problem is about transforming values into prices. This isn't the case. The entire "problem" comes about due to Marx simply assuming that profit rates equalize, despite no evidence of this. Marx gets this notion from Ricardo. I think something to this effect should be stated right in the lead. That is, Marx' assumption that profit rate equalize despite differing OCC lead him to try to "transform" values such that profit rates do equalize. Amusingly this amounts to explaining prices through prices, something that Marx ridiculed bourgeois economists for doing.
According to Paul Cockshott (who cites Zachariah, Farjoun and Machover) the reason profit rates can't equalize is technical. That is, while capital might want to move out of high OCC industries into low OCC ones, those low OCC industries depend on the high OCC ones. High OCC industries like steel production can't be done away with, or capital would have done so already. Cockshott uses the example of oil tankers in this video, and points out you can't use an oil tanker to grow asparagus. A similar point is made in this video. Some relevant papers are A Shift From the Problematic of “Transformation” (doi:10.13169/worlrevipoliecon.12.4.0463), Does Marx Need to Transform? (doi:10.1007/978-1-349-26121-5_6) and Determinants of the average profit rate and the trajectory of capitalist economies (couldn't find a DOI).
If no one is opposed to rewording the lead I might do so in the near future. KetchupSalt (talk) 15:59, 11 May 2024 (UTC)
thread_title:  Rewording the lead? Transformation problem isn't about transformation