Labor Specialization and the Transformation Problem

An extended formal model of value and price is constructed that includes within it "specialized labor" according to occupation, and therefore variations in real wage rates between workers. A "classical Marxist" approach is taken, and the "new approach" of Dumenil, Foley and Lipietz is criticized. It is demonstrated that the "fundamental theorem" as usually stated only applies to a simple model in which the wage-good rate is assumed to be uniform across occupations. In the context of the more complex model introduced, negative rates of exploitation associated with certain occupations and/or negative rates of surplus value associated with certain industries are shown to be be compatible with a viable capitalist economy. Nonetheless, it remains the cs I &a capitalist economy is viable only if the class of workers as a whole generates more value than iyreates)he fundamental model thereby is modified, but not gainsaid.