The Transformation Problem Was Not Something Karl Marx Overlooked! & Other Topics: HISTORY OF ECONOMIC THOUGHT (& Metholodology, & Philosophy

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Marx stuck to his guns on the theoretical adequacy of the labor theory of value. Plus he recognized the role of competition in equalizing profit rates. This contradiction was not because he was unaware of the “transformation problem”: he was very aware of it, and in fact slagged Ricardo for not seeing it sufficiently clearly. “Economic theory” is a very strange beast—it has to be wrong, or else your map is the size of the territory, and hence is useless; but it cannot be too wrong, or else it is useless, but in a different way… My view is that the question “What did Karl Marx think about the transformation problem?” is undefined. It is not just that the position of the entity “Karl Marx” changed as that entity traversed its space-time world line. It is that at every moment in time the entity was somewhat confused and was always finding its mind pulled in different directions. In my view, the quick short thumbnail mostly right things to grasp on this question are these:(a) Karl Marx was well-aware of the “transformation problem”.(b) Karl Marx did not think that it was a very important problem—it was second-order corrections because average cost prices seen in the market were “mostly” and were close to socially-necessary average-quality labor-values.(c) Karl Marx thought the key was that profit originated as surplus value—and the labor theory of value was the right sharp knife to open that oyster.(d) Karl Marx thought that because profit was “really” surplus value, the way to analyze the category of profit was (i) to look at its origins in labor exploitation, and then (ii) tr…