[OPE-L:4265] Re: Re: Part Two of Volume III of Capital

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Tue Oct 24 2000 - 18:20:12 EDT

>On Tue, 24 Oct 2000, Rakesh Narpat Bhandari wrote:
>>  Just to repeat my exceedingly simple basic point. It's not
>>  possible to determine the unit prices of production into
>>  which the inputs should be transformed.
>OK, I see where you're coming from on this.  The corollary is
>that there's no rational basis for maintaining that Marx's two
>equalities are preserved when the inputs are at taken at prices
>of production.

Why? Whatever the modified cost prices were, they are now a given precondition.

So let's take your final tableau
          c       v   profit    price
    I  245.00   85.56   95.33   425.88
   II  108.89  114.07   64.30   287.26
  III   54.44   85.56   40.37   180.37
Tot.  408.33  285.19  200.00   893.52

But if we had assumed that total price remain determined by total 
value (875) and broken the other equality,  we would have had (very 

           c       v   profit    price
    I  245.00   85.56   86.00   417.00
   II  108.89  114.07   58.00   281.00
  III   54.44   85.56   37.00   177.00
Tot.  408.33  285.19  181.00   875.00

1.14 unit input mp price of production, 357 natural units
1.11 unit output mp price of production,375 natural units

.997 unit input wg price of production, 286 natural units
.937 unit output wg price of production, 300 natural units

Now to prove the rationality of what Marx is theorizing, let's construct
a tableau for t+1-t+2 having taken the modified cost price data at t0 
as a given precondition.

We would take

1. the output prices of production of 417 (Div I) and 281 (Div II) 
and make them the totals for the c and v columns respectively.

2.  I have assumed more total labor will be absorbed in the following period.
At t+1 I assumed 29 worker years produced a total value of 875, let's 
say 30 worker years will now produce a total value 900 (it really 
should be about 905, but I did the quick calculation below at 900, 
sorry; it makes no difference).

3. Profit becomes 900-698 (cost price)=202

4. The profit rate is now 29%. It too has increased slightly.

5. Now the tedious task of changing the c and v for each branch at t+1 to t+2.
I did it very roughly; a lot of rounding in this set of calculations.

6. Profit calculated then at .29

           c       v   profit    price
    I  249.00   84.00   96.00   429.00
   II  112.00  112.00   65.00   289.00
  III   56.00   85.00   41.00   182.00
Tot.  417.00  281.00   202.0   900.00

Again the table implies quite reasonable interperiodic change in unit prices.

We now have 1.05x more natural units of mp and wg at t+2 than at t+1.

At t+2 the unit output price of production for mp is 1.07 and the 
unit output price of production for wg is .92. A few cents lower than 
at t+1.

The unit prices are not falling proportionately with the declines in 
unit values because the rate of profit is rising as well under these 
implicit assumptions of a fairly constant OCC with a rising s/V. the 
fall in c+v is being somewhat compensated for by the rise in s per 

Utterly plausible changes in the unit prices of production under such 

It seems to clearly logical and coherent enough to be considered a 
viable hypothesis of how the average rate of profit is being formed 
in each period.

It's not like I have been acting mad and talking about things like 
perfect foresight, fixed point theorems in commodity space, perfect 
future markets or input prices=output prices.

On the logic front, Marx seems to be doing just fine. On the respect 
to reality front, he is way out ahead.

All the best, Rakesh

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