The transformation problem results from extending Marxs analysis to include reproduction. Existing resolutions assume equilibrium and accept Ricardo's conclusion that production conditions in basics determine the profit rate. But capitalism cannot be shown to reach a Neo-Ricardian equilibrium. And the Ricardian basics theory of the profit rate is either a physical-standard theory of the profit rate or a capital-productivity theory. Without equilibrium, Marns exploitation theory of the profit rate is consistent with capitalist pricing and implies that capitalism cannot achieve long-run equilibrium, and decentralized pricing behavior can generate nominal-price movements as well as equalizing profit rates.
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