We emphasize the importance of competition and capital distribution across sectors in analyzing the transformation of values into production prices. There is a broad consensus the so-called fundamental Marxian equations (the sum of prices is equal to the sum of values and the sum of added values is equal to the sum of profits) are contradicting constraints of Karl Marx’s reproduction scheme (L. von Bortkiewicz).This conclusion, however, is erroneous and the generalized input transformation process is possible provided fluidity of capital flows across sector in a bilinear model. Codes JEL: B14, B24, B51