[OPE-L:4940] Re: Re: Re: Re: Re: Re: Re: Re: Re: rent and the working class

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Sat Feb 17 2001 - 06:58:12 EST

re 4925

>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.

Fred, I in fact don't see this.

You define prices of production as long run average prices. There is 
no such thing as long run average prices.

I define prices of production as those which would have obtained in 
any ONE period had the profit rate equalized and demand equalled 
supply. For me then price of production is a one period specific 

So we have, say, these three production periods in temporal sequence:

t0 => t1
         t2=> t3
                 t4=> t5

In my interpretation (which follows Carchedi) we are going to have 
different prices of production at t1, t3 and t5 because the 
productivity of labor changes in each successive period.

So the prices of production will not be the same at the beginning and 
end of the discrete periods--that is, at (t0 and t1) or (t2 and t3) 
or (t4 and t5). Thus  if one is given only a price free technical 
scheme for any one of these three  discrete periods (along with the 
real wage), she does not have sufficient data to calculate a set of 
prices of production for the inputs and the outputs unless she allows 
herself to stipulate the input and output unit prices production are 
identical on the grounds that there has been no change in the 
productivity of labor in this period compared to the previous period.

  Without this absurd assumption there is no way however to close the 
physicalist system even if the distributional issue is resolved. I 
just don't see why you would deny that Alan F, Carchedi and Andrew K 
are right about this. I would think that we share the theoretical 
tradition represented in the work of Grossmann (1941), Korsch (1938), 
Mattick Jr (1981) and Mattick, Sr (1983)--and I don't find in any of 
them support for your notion of prices of production as long term 
average prices.

Why we can't add your reasons for the rejection of the Sraffian 
system (re: monetary givens and macro determination) to their 
additional reason (re the static nature of the model)?

(In the real world, we of course can only do the opposite of what 
Marx did--that is we have price data for inputs, outputs and the 
profit rate from which we then attempt to infer the vcc and s/v. In 
Marx's transformation models, we are given the input price data, the 
value of the mp and s/v in order to calculate the prices of 
production of the outputs. But the real magnitude of v of mp and s/v 
of which we never have solid classical knowledge can only be inferred 
from the price data we have; it cannot be otherwise in a society in 
which our labor time is fetishistically represented by the prices of 

>   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.

Of course the prices of production at t1 and t2 or t3 and 4 are  the 
same. In that sense, the output price of production and input price 
of production are indeed equal only because at that point of time the 
same commodity product can
be described as either an output (of the previous period) or an input 
(of the present period).

>P.S.  Rakesh, thank you very much for your articulation of my

It's been my pleasure to learn from your interpretation. Glad I am 
indeed understanding some important elements of it.

Yours, Rakesh

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