8)Using Marxist categories, fully explain the problem of the transformation of values into prices of production, mention the role of capitalist competition and the organic composition of capital in explaining the deviation of values from prices of production.
Marxist theory of transformation of values into prices of production is generally the view that labor is the inherent amount of value. Marx explains that a determination of prices by quantitative methods compatibly fits with the theory of labor considered as imminent amount or measure of value. This is a factual view that it is about the nature of exchange value and not just the theoretical quantity of change of value within a capitalist economy. This view is elaborately explained by Marx in that competition is the systematic reason for reallocation of labor surplus in the capitalistic markets initiating uniformity in profits rating. The capitalistic organic composition is at all times dependent on two situations; first is the technical link in existence between means of production and labor power in place, and secondly is on the means of production. It is in assumption that the surplus value is of no change.
9) Explain why according to Marx there is a long term tendency in the profit rate to fall and which are the counteracting mechanism(s) that offset this tendency.
The general process that transforms commodity-value to price or prices of production is the process of general profit rate formation. Marx makes it clear that this transformation is of necessity and must take at times of competition. The fall in profit rates is explained by Marx as the caused by inner grounded developing laws of capitalism. Marx declined the fall of profit rates due to increase of wages as purported by David Ricardo, he goes ahead and explains that, it is possible for agricultural commodities prices to fall due to increased productivity.
Marx then concludes that it the interior arrangements of capitalistic mode of production are of average ideal as it should. The counteracting factors in Marx argument are aimed at reversing the causal effects that drive the fall of profit rates. These factors then have an effect of raising profit rates; among them is the reduction of wages below the value of labor power and raising capital share in the capitalist economy.
10) Using or sketching Marx's scheme of reproduction, explain why productive imbalance between economic sectors can lead to economic crisis.
Marx’s schemes of reproduction explains the capitalists economic crises to be caused by production economic sectors imbalance in the sense that if the one part of economy produces more and the other consumer side consumes less or there exists under consumption then an economic crises may rise. Resources in this case are misused in producing what cannot be fully utilized or consumed as surplus will be in excess thus initiating a lowering of prices below critical conditions. In the process of economic adjustments prices will go up due to low production.
Works Cited
Barber, William J. A History of Economic Thought. Middletown, Conn: Wesleyan University Press, 2009. Print.
