[OPE-L:4869] Re: Re: Re: Re: Re: Re: Re: rent and the working class

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Sat Feb 10 2001 - 14:16:38 EST

re 4865

I think your response founders on a single slippage: it does not 
follow that if one allows prices of production to change 
interperiodically that they have been conflated with market prices!

I agree with you that prices of production change only as a result of 
changes in the productivity of labor; this is exactly why they change 
interperiodically. Technical change is continuous, albeit uneven.

Marx's *Capital* is a study of the impact of the forces of production 
on the relations of production (Mattick, Sr 1959) or in other words 
the effects of rising labor productivity or declining unit values on 
the basic economic structure of society.

For this reason, Marx confines all price changes to changes in the 
value of commodities (Grossmann, 1929). For this reason, Marx assumes 
demand equals supply and the value of money remains constant; this 
ensures that all changes in price result from changes in value on the 
commodity side of the price equation.

Prices of production are those prices that would prevail in any ONE 
period had the profit rate been equalized and demand equalled supply. 
They are never the actual market prices that prevail simply because 
the profit rate never does perfectly equalize, demand and supply are 
never equal, adjustment processes of the sort which you describe are 
underway. However, even these theoretical prices of production are 
changing interperiodically DUE TO THE IMPACT OF RISING LABOR 

The theory of prices of production is meant to show that the 
equalisation of the profit rate does not undermine the value basis of 
prices; in fact it is meant to show that the the law of value 
regulates prices in the form of the average rate of profit (Mattick, 
Jr, 1981).

Prices of production thus change if changes in labor productivity in 
the system as a whole have been sufficient to change the average rate 
of profit; prices of production also change directly due to 
continuous depreciation of commodities themselves as a result of 
technical change (Korsch, 1938). The former kind of change usually 
asserts itself in the long run; manifest changes in prices of 
production in the shorter term should be attributed to a decline in 
the unit values of the commodities themselves. Marx follows Ricardo 

But prices of production are changing interperiodically; they are not 
the same at t1, t3, t5, etc..

To take your example: let's say that there is a technical change in 
Branch A between t0 and t1. Now you argue that it will take some time 
for the market price to adjust to the new price of production 
established at t1. But in your interpretation at some point--let's 
say t6 and t7--the price of production of A will be equal as it 
settles down into its new price of production which had been 
established as far back as t1. But this is highly unreasonable. It 
now only assumes that advances in labor productivity in Branch A are 
not continuous orinterperiodic; it also assumes that there are no 
advances in labor productivity in any other branch until t7, for a 
change in labor productivity anywhere else would be sufficient to 
change prices of production all around and the price of production of 
A at t3, t5...

Moreover, I think you have undercut the criticism of the use of 
linear production theory in the formalization of Marx. If the system 
is settling down into a state where unit input prices of production 
are equal to unit output prices of production, why not use the 
timeless technique of simultaneous equations? The superiority of 
Marx's theory lies in its resistance to such formalization (Mattick, 
Jr, 1981)

Yours, Rakesh

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