[OPE-L:4354] Re: Re: 'natural price'

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Sun Oct 29 2000 - 12:56:49 EST

>1) Marx is saying in the footnote (just prior to chapter 6, Vol. 1)
>that over the 'long period of time' there is an 'average price' that is
>'ultimately' determined by value.

Yes, he says that over the long term a merchant or a mfg cannot count 
on selling above value in order to secure the formation of capital.

>  He explicitly makes clear that
>value does not equal average price - he clearly has in mind prices
>of production.

Yes, and the value he cannot count on selling above is already 
suggested here to be the modified form of production price.

But this does not mean that the unit price of production is not 
itself exhibiting a tendency to fall over time.

You missed my point that Marx has not yet introduced the production 
process by means of which a permanent tendency towards a decline in 
unit values is indeed achieved. If Marx could have introduced this at 
this point, it would have only strengthened his argument that outputs 
(assuming a constant value of money) cannot over the long run be sold 
at inflated prices in order to secure the formation of capital. The 
outputs have to simply embody more value than the inputs though how 
this happens through the circulation of commodities is the puzzle of 
this chapter.

As has already been discussed at length, Marx later says that the 
outputs have to embody sufficiently greater value that the moral 
depreciation of the inputs which they embody does not so reduce the 
value they represent that the formation of capital is undermined. 
Moral depreciation is the result of the continuous decline in unit 
values; Marx cannot introduce this phenomenon in this footnote at 
this point.

I would think it obvious that any case for Marx's commitment to long 
term unit stationary prices of production would be based on a. more 
than a footnote where Marx is trying to constrict the possible 
explanations for increase in value and b. vol 3 chapters where Marx 
uses the language of Smith and Ricardo to carry out an immanent 

How is it possible to think Marx believed in a phenomenon such as 
long term or stationary unit prices of production when a. he 
announces at the start of capital the inverse movmenet of unit value 
and use value, b. the lays bare and how why the production process is 
continuously revolutionized, c. he develops the concept of release of 
capital, d. he develops the concept of moral depreciation, e. he 
analyzes how as unit values decline and the mass of use values grows, 
capital is continously able to absorb more surplus labor.

Again, I think it's a mistake to read Marx's commitment to long term 
natural prices or long term centers of gravity based on one footnote 
when much of his theory has not even been developed yet.

>Moreover, he mentions Smith and Ricardo in just this
>context without any qualification regarding their centre of gravity

True but center of gravity is not the term used. Natural price is. In 
my reading Marx corrects the concept in two ways when he is done.

1. Natural price is a transformed form of value. Ricardo failed to 
allow for how natural prices do conflict with his law of value; he 
was thus unable to understand the mediations by which value 
determined economic magnitudes. For Marx to introduce such 
mediations, he cannot be constrained by the world of observed 
behavior and theorize on the basis of unobserved entities, e.g., the 
mass of surplus value which has no direct referent in the world of 
bourgeois practice.

2. there are no *absolute* long term centers of gravity due to a 
permanent tendency for unit values to drop. the stability in 
*relative* value can obscure the continuous reduction in unit values. 
By holding the value of money constant in the rigorous thought 
experiment which is the 3 volumes of capital, Marx is able to clearly 
differentiate between absolute and relative value. The classicals 
failed here as well. A long term stability in natural price in 
relative terms in no way implies stability in absolute terms.

>  I'm not sure how much stronger textual evidence you can

See above.

>I am doubtful as to the validity of this 'empirical average' notion but I
>can't read the footnote any other way. I would be quite happy to
>drop any idea that this 'regulating price' exhibits stability over
>periods of months and years.

have to differentiate between stability in relative and absolute 
terms. The classicals failed to do this rigorously.

>- One thing that maybe throwing our discussion is your, to my
>mind, strange notion that Walrasian equilibrium and Ricardian /
>Smithian 'natural prices' have a great deal in common. I'm no
>historian of economic thought but I would have thought the two are
>entirely distinct. I'm certain that modern day 'general equilibrium'
>prices are completely different to Smith and Ricardo's natural
>prices. Eg. there is absolutely nothing in standard general
>equilibrium analysis to tell us the relation of it's exchange ratios to
>reality. And the whole GE thing does seem irredeemably static.

Excellent question. In a recent excellent piece in the History of 
Political Economy Mark Blaug argues that Sraffa has misinterpreted 
Ricardo due to the baleful influence of general equilibrium theory.

>On a different matter:
>My interpretation of Ilyenkov is a minority one. But let me just say
>that my interpretation is at odds with your 'successive
>approximations' reading of 'Capital'. Ilyenkov sees Marx as
>'developing' the law of value. This is an immanent development not
>an ongoing setting and relaxing of arbitrary assumptions. I mention
>this because you often invoke Ilyenkov re the transformation
>problem (and don't get me wrong, I am delighted that you do, even
>if I don't agree with your interpretation).

I have invoked him regarding his reconstruction of the 
Malthus/Ricardo debate. malthus was correct in his critique of 
Ricardo that the more capital develops,
the more the exception (the average rate of profit) becomes the rule, 
the more the rule (direct value determination) becomes the exception. 
Marx tried to show that the more capital develops (the greater the 
capital and labor mobility), the more the average rate of profit 
itself becomes the FORM in which the law of value asserts itself. I 
do not think Ilyenkov would disagree that Marx's hypothesis not only 
required logical development but pertained to the real developmental 
tendencies of capital.

All the best, Rakesh

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