[OPE-L:4925] Re: Re: Re: Re: Re: Re: Re: Re: rent and the working class

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Fri Feb 16 2001 - 23:38:12 EST

On Sat, 10 Feb 2001, Rakesh Narpat Bhandari wrote:

> 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.

Rakesh, sorry for my delayed response.  It's been a busy week.

I am glad that you agree that prices of production change ONLY as
a result of changes in the productivity of labor.  

But what you don't seem to understand is that, if that is true, then input
prices must be equal to output prices (i.e. both input prices and output
prices are long-run average prices.  Because if input prices are not equal
to output prices, then prices of production will continue to change in
subsequent periods (in order to equalize profit rates) EVEN THOUGH THERE
IS NO CHANGE IN THE PRODUCTIVITY OF LABOR - as in the first 13 periods in
Andrew and Ted's 14 (1988) article.  This is another cause of changes in
prices of production (input prices not equal to output prices), without
changes in the productivity of labor, which is contrary to Marx's
theory.  Do you see this?  Or if you disagree with this for some reason,
please explain.  

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

I certainly agree that prices of production may be chaning
interperiodically.  I think you have misunderstood me here.  See below.

> 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 
> 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...

I am not sure what you mean by the emphasized "the price of production of
A will be equal ... "   Equal to what?  Do you mean that the market price
of A will eventually be equal to its price of production (in the absence
of further technical change)?  If not, then please explain what you
mean.  If so, this is not what I am arguing.  I am not arguing that there
will be no further technical change until the market price becomes equal
to the new price of production.  I only argue that the new price of 
production becomes the new center of gravity toward which market
prices gravitate.  If there is further technical change before the market
price reaches the new price of production, then there will be a newer
price of production, which will become the newer center of gravity,
etc.  But each time the price of production changes, input prices will
continue to be equal to output prices.  Otherwise, there would further
changes in prices of production, even if there is no further change in the
productivity of labor, as explained above.  

I look forward to further discussion.


P.S.  Rakesh, thank you very much for your articulation of my
interpretation in response to Andrew in several posts this week.  You are
correct.  With his corn-corn model in terms of physical quantities, Andrew
is asking me to determine prices of production with a method that I have
explicitly and vehemently rejected.  

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