On Tue, 30 Jan 2001, Rakesh Narpat Bhandari wrote: > Date: Tue, 30 Jan 2001 11:27:00 -0800 > From: Rakesh Narpat Bhandari <rakeshb@Stanford.EDU> > Reply-To: firstname.lastname@example.org > To: email@example.com > Subject: [OPE-L:4814] Re: Re: Re: rent and the working class > > > > >Allin, I argue that the quantities of money-capital that are taken as > >given are long-run average prices. It is assumed that the economy is in > >long-run equilibrium (i.e. equal profit rates across industries) and that > >prices are long-run average prices, i.e. prices of production. Therefore, > >these quantities of money-capital that are taken as given are not affected > >by the deviations of market prices from prices of production. > > Fred, > here is another disagreement. I was convinced by Andrew K on this > issue. I don't think Marx thinks there is a real tendency towards > stationary prices in the long term. There is a powerful tendency > towards the equalisation of profit rates along with a > counter-tendency for the search for surplus profit (Grossmann, > Mandel). Marx is perfectly justified in abstracting from the latter > in his study of prices of production. But in the analysis of the > tendency towards the equalisation of profit rates, I do not read Marx > committing himself to the real existence of any tendency for the > system to settle down into a set of stationary prices, i.e., unit > input prices = unit output prices. As Paul Mattick Jr, John E, Andrew > K, Alan F and Mino Carchedi have all correctly argued, this > assumption should play no role in the formalisation of Marx's theory > of price which is thoroughly dynamic (see of course Korsch's chapter > on some misinterpretations of the law of value in his Karl Marx). > > I have quoted Ricardo himself saying that prices are changing on a > DAILY basis due to technical change, and in Vol 3, ch 9-10, Marx > himself says that only in the long term do prices of production > change due to definite changes in the average rate of profit itself, > while all other changes--that is, changes in prices of production in > the shorter term should be attributed to a change in the value of > commodities themselves. Marx's language here is in fact quite similar > to Ricardo's. In short, there are no long run average prices. Andrew > B has found exactly one quote from a footnote in Vol 1, ch 5 in > support of the claim that Marx believed that there was a real > tendency towards long term or stationary prices of production, but as > John Aschcroft would say the totality of the evidence is against him. > I haven't yet read Abelardo Marino Flores' piece "Market Price of > Production: A Structural Interpretation of Disequlibrium in the > Framework of the Law of Value" in International Journal of POlitical > Economy, vol 28, no 4: 82-118 > > All the best, Rakesh Yes, I argue that Marx's prices of production are "long-run center of gravity" prices, in the sense that they are prices that equalize profit rates across industries as a result of the transfer of capital and that they are the "centers of gravity" around which actual market prices fluctuate. I have written a paper (my 1999 IWGVT paper) in which I document all the passages in which Marx stated one way or another that this his prices of production were such "long-run center of gravity" prices. This paper is attached to this post (in Word and WordPerfect). Marx certainly acknowledged in some passages the real world obstacles to this equalization of profit rates. However, he always went on to say that these real obstacles are ignored at the abstract level of his theory of prices of production. Whether or not Marx believed that there was a real tendency in the real world toward the equalization of profit rates is a separate issue from whether or not Marx's concept of price of production assumed at a high level of abstraction that there is such a tendency, such that prices of production are "long-run center of gravity" prices. Marx also explicitly equated on at least three occasions his prices of production and Smith's and Ricardo's "natural prices" (in an 1862 letter to Engels, SC: 122; at the end of Chapter 10 of Volume 3, C.III: 300; and in the 1865 lecture "Wages, Prices, and Profit"). Also, throughout Marx's discussion of Smith's and Ricardo's natural price in Volume 2 of TSV, he used their concept of natural price and his concept of price of production (or what he was then calling cost-price) interchangeably and synonymously. Smith and Ricardo's concept of "natural price", as explained by Smith in his Chapter 7 and repeated by Ricardo in his Chapter 4 ("In the seventh chapter of the Wealth of Nations, all that concerns this question is most ably treated"), is clearly a "long-run center of gravity" price, in the sense described above (prices that equalize profit rates across industries as a result of the transfer of capital and that are the "centers of gravity" around which actual market prices fluctuate). Therefore, Marx's prices of production are also long-run center of gravity prices in this sense. With regard to your second paragraph above: (1) Where is the passage that Ricardo says that prices change on a daily basis due to technological change? It is nonetheless true that Ricardo's theory is about "natural prices" that are considered to be long-run center of gravity prices, in the sense described above. (2) Marx's point in the discussions in Chapters 9 and 10 of causes of changes of prices of production is that both causes (changes in the rate of profit and changes in the cost price) are themselves ultimately caused by changes of values. However, it does not follow from the fact that changes in the value of the inputs happen in shorter periods of time that prices of production cannot be long-run center of gravity prices. So, Rakesh, I wish you (and Julian) would read my paper and let me know what you think of all the textual evidence presented therein. Thanks very much. Comradely, Fred P.S. I also hope we can get back sometime soon to our discussion of whether or not constant capital and variable capital are different in the determination of value and price of production in Marx's theory.
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