The productive powers of labour and the redundant transformation to prices of production: A Marx-immanent critique and reconstruction

The famous Marxian ‘transformation problem’ originated from a research manuscript written by Marx in 1864/65, from which Engels assembled Capital III (1894). Unequal capital compositions, equal rates of surplus-value and equal rates of profit among different sectors are posited, and reconciled using the problematic concept of ‘prices of production’. Yet the assumption of equal rates of surplus-value is at odds with the subsequent text of Capital I (1867), where Marx presents various determinants of the rate of surplus-value, and connects productive powers of labour diverging between sectors with divergent value-generating potencies of labour. Given the other determinants, diverging rates of surplus-value then result. Marx disregarded these productive power differentials when he originally formulated his transformation. In a reconstruction, building on Capital I, this omission is rectified. It makes prices of production and hence the dual account systems redundant. The transformation problem then evaporates.