Controllability, Observability, Regularity, and the so-called Problem of Transforming Values into Prices of Production

This paper specifies and interprets those direct relations which exist between the dual concepts of complete controllabil-ity/observability (Kalman, 1960), on the one hand, and the con-cept of the regular technique of production (Schefold, 1971), on the other. Specifically, it shows, first, that there is a certain dynamic system for determining labour values, which is connected with the usual system for determining prices of production (à la Sraffa, 1960, Part I) via the z-(Laplace) transform, and, second, that the said system of values is completely controllable when and only when the system of production prices is regular. In view of the above, it could be considered that the z-(Laplace) transform constitutes the solution to the – suitably reformulated – Marxian ‘problem of transforming values into prices of production’. However, on the basis of an economic interpretation of the z-(Laplace) transform, this paper shows, ultimately, not only that such a consideration is erroneous, but also that the supposed ‘problem’ is devoid of economic meaning.