[OPE-L:3688] Re: Re: Re: Re: Re: cost-price

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Thu Aug 17 2000 - 09:25:21 EDT

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 By "cost price" one conflates the two
>concepts of cost and price, and the logical meaning of it, as the
>literature has
>accepted, turns out to be a theory of price that says that the "price" is
>determined by its "cost".

Ajit, I am not quite sure what you are getting at here.

So I'll just go back to the logic of Marx's Capital. Let's consider the
effects of a 20 0rop in wages (remember how Marx chides the Ricardians for
not only being obsessed with relative values as affected by wage changes
but also for only considering the effects of wage rises).

Now of course it is no problem as long as we are assuming that the money
price paid for the means of production equals the value of those means
consumed in the commodity to construct an average industry such that after
the wage drop the profit appropriated remains equal to the value produced
within that industry.

I take it that above you are referring to this kind of paradox, however:
That exactly those industries in which the cost price would seem to be most
decreased by wage setbacks may now have to buy more expensive inputs due to
the postive effects of wage wage losses on the relative values of capital
industries' outputs that the relative cost price borne by labor intensive
industries may actually rise from a wage setback.

So the cost price of a commodity cannot be determined independently of
output prices once we consider distributional changes in the context of an
input-output system?

 Marx clearly understood that there could be complex feedback effects from
distributional changes. For example he notes in the penultimate chapter of
Capital 3, chap 11:

"If the rise or fall in wages results from a change in the value of the
necessary means of subsistence, the only modifications of the process
analyzed above occurs when the commodities whose price changes serve
increase or lessen the variable capital aslo enter as constituent elements
into the constant capital and hnece simply do not affect wages. But in so
far they do only affect wages, the above argument contains all that is to
be said."

But this does not say that cost price is determined by prices. That is,
before the wage drop, there is a set of cost prices for the industries at
T0. For Marx each cost price is a datum, a given precondition. This is not
by the fact that in the next period T2 there will be a new set of cost
prices as the result of the price changes at T1 brought about by the
distributional shift. Moreover at period T2 not only will there be a new
set of cost prices, the technical conditions in each industry should change
as well as a result of the reconfiguration of relative values (that is,
marginal producers should be added and substracted from the various

That is, once we understand Marx's logic in vol 3 as sequential (Carchedi),
then cost price cannot be determined by prices. It would simply be the
fallacy of backward causation.

Yours, Rakesh

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