[OPE-L:4830] Re: Re: Re: Re: rent and the working class

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Sun Feb 04 2001 - 09:31:38 EST

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: ope-l@galaxy.csuchico.edu
> To: ope-l@galaxy.csuchico.edu
> 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

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


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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