Transformation of Values Into Prices
Like Ricardo, Marx knew that relative labour values— in the above example—do not generally tally with relative competitive prices— in the same example. However, in the third volume of Capital he argued that competitive prices were obtained from his values through a transformation process, whereby capitalists redistributed among themselves the given aggregate surplus value of the system, in such a way as to bring about a tendency toward a more equal rate of profit between sectors of the economy. This happened because of the capitalists' tendency to shift their capital towards the sectors where it earned higher returns. As competition become fierce in a given sector, the rate of return comes down, while the opposite will happen in a sector with a low rate of return. Marx describes this process in detail in chapter 9 of Volume III.
Read more about this topic: Transformation Problem
Famous quotes containing the words transformation of, values and/or prices:
“If you say, Im for equal pay, thats a reform. But if you say. Im a feminist, thats ... a transformation of society.”
—Gloria Steinem (b. 1934)
“Today so much rebellion is aimless and demoralizing precisely because children have no values to challenge. Teenage rebellion is a testing process in which young people try out various values in order to make them their own. But during those years of trial, error, embarrassment, a child needs family standards to fall back on, reliable habits of thought and feeling that provide security and protection.”
—Neil Kurshan (20th century)
“The earth only has so much bounty to offer and inventing ever larger and more notional prices for that bounty does not change its real value.”
—Ben Elton (b. 1959)