Editing Transformation problem (section)

{{Short description|Pricing problem in Marxism}}
{{About|the transformation problem in economics|the transformation problem in group theory|Conjugacy problem}}
{{Multiple issues|
{{more footnotes needed|date=October 2014}}
{{original research|date=July 2020}}
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{{Marxian economics|expanded=Topics}}

In 20th-century discussions of [[Karl Marx]]'s [[Marxian economics|economics]], the '''transformation problem''' is the problem of finding a general rule by which to transform the "values" of commodities (based on their socially necessary labour content, according to his [[labour theory of value]]) into the "competitive prices" of the marketplace. This problem was first introduced by Marxist economist [[Conrad Schmidt (economist)|Conrad Schmidt]]<ref>{{Cite book |last=Böhm-Bawerk |first=Eugen |title=Karl Marx and the Close of his System |year=1896 |publisher=CreateSpace Independent Publishing Platform |isbn=978-1466347687 |language=en}}</ref> and later dealt with by Marx in chapter 9 of the draft of [[Capital, Volume III|volume 3 of ''Capital'']]. The essential difficulty was this: given that Marx derived profit, in the form of [[surplus value]], from direct labour inputs, and that the ratio of direct labour input to capital input varied widely between commodities, how could he reconcile this with a tendency toward an average rate of profit on all capital invested among industries, if such a tendency (as predicted by Marx and Ricardo) exists?