[OPE-L:4982] Comments on 3 recent debates

From: Allin Cottrell (cottrell@wfu.edu)
Date: Mon Feb 19 2001 - 23:39:59 EST

A few comments on matters recently debated.

1. Price of production and technological change.

I'm with Fred in that I don't see simultaneous equations as evil: I
think they can provide some useful information, even if in fact
technical change is going on more or less continuously.  But I find
Fred's specific argument against Drewk a bit scholastic.  The "smoking
gun" (OK, not Fred's phrase) is a set of quotations showing that Marx
held that prices of production change _only if_ there's a change in
labour productivity somewhere in the system, or if the wage changes.
But Drewk's tables show prices of production changing period by period
even when there's no change in technology or the wage, therefore Drewk
is inconsistent with Marx.  Well, suppose we change the example.
Keynes held (this is a simplification, of course) that aggregate
output changes _only if_ there's a change in autonomous expenditure.
We bump up investment (I) at some time t and let the multiplier go.
On some interpretations of the multiplier we'll find aggregate output
changing for many periods after the change in I, as GDP converges
towards the new equilibrium.  Can we immediately deduce that this is
inconsistent with Keynes's concept?  Surely not: it's a secondary
matter whether the shift to the new equilibrium GDP occurs in one
period (instantaneous multiplier) or takes several periods.

Similarly, Drewk's changing prices of production converge (ceteris
paribus) to the ones found via the method of simultaneous equations.
Drewk's prices of production are analogous to the multi-period
multiplier.  Change in these prices is _triggered_ by a change in
technology or the wage (and I think _only_ by such things, though I
certainly wouldn't claim to speak for Drewk), but the change is spun
out over time.  So I don't see much force in the smoking gun.

2. Two sources of discrepancy between values and prices of production.

Rakesh and Fred were working at this one not so long ago.  There's a
real problem of inconsistency in Marx's statements here.  We have
statements, highlighted by Alejandro and Fred, where Marx says (I
paraphrase): "value = cost-price plus surplus value; price of
production = cost-price plus profit". The Marx manuscript brought
forward by Alejandro puts this in algebraic notation, giving it added
definiteness.  But we also have statements where Marx says (again, I
paraphrase; the quotations are well known): "There are two reasons for
divergence between values and prices of production: (1) the price of
the means of production employed in the production of the given
product differs from the value of those means of production, and (2)
the profit realized in the sale of the product differs from the
surplus value embodied in that product."

I'll refer to the first sort of quotations as the "cost-price plus"
statements, and to the second sort of quotations as the "double
divergence" statements.  These two sorts of statements sometimes occur
in close proximity in the texts of Marx that we have available to us.

The obvious problem is that if "cost-price plus" is a proper statement
of Marx's view then "double divergence" is nonsense: there is one and
only one source of divergence between price of production and value,
namely the discrepancy between surplus value and (equalized) profit.

It's certainly tempting to suppose that one or other of the sets of
statements in Marx must be "not really what he meant to say"
(otherwise his views were flat-out incoherent).  My preferred
interpretation is that "cost-price plus" was not really what he meant
-- or at least, that these statements only hold good on the assumption
that the means of production (inputs) were purchased at prices equal
to their values.  I do _not_ claim that it's clear from context that
whenever Marx issued a "cost-price plus" statement he was in fact
assuming that input prices were equal to input values (rather, I think
there is a degree of inconsistency in the text -- although of course
it's a text that Marx never prepared for publication).

I prefer this interpretation, despite its problems, because the
alternative is worse, namely that Marx was just gibbering when he made
his "double divergence" statements.  I haven't seen a rationalization
of these statements, from the proponents of "cost-price plus", that
makes any sense to me.

3. Copernican revolutions

It seems to me egregious hubris for the champions of any new theory
(or new interpretation of an old theory) to describe their own work as
a "Copernican Revolution".  Let future intellectual historians judge
whether such phrases are applicable.  As a practical matter, nobody is
able to hasten the day when his own theory is so acclaimed by others,
by so advertising it himself.

Allin Cottrell.

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