Marx’s Logic in Capital and the ‘Transformation Problem’

One of the most important controversies over volume III of Capital is of course the ‘transformation problem’ — Marx’s theory of equal rates of profit and prices of production in part 2 of volume III. This chapter argues that the long and continuing controversy over the ‘transformation problem’ has not paid sufficient attention to the precise nature of Marx’s logical method. The most common interpretation today of Marx’s theory is based on the work of Bortkiewicz (1952), Seton (1957), Morishima (1973), Steedman (1977) and so on. This interpretation of Marx’s theory will be referred to here as the ‘neo-Ricardian’ interpretation. The logical method attributed to Marx’s theory by this interpretation is essentially the same as Sraffa’s theory, that is, the method of linear production theory. This chapter argues that the logical method of linear production theory differs in fundamental respects from Marx’s own logical method and that the neo-Ricardian criticisms of Marx’s theory do not apply to Marx’s theory, but instead are a misguided attempt to interpret Marx’s theory in terms of linear production theory.