[OPE-L:5054] Re: Re: Centres of Gravity

From: Rakesh Narpat Bhandari (rakeshb@Stanford.EDU)
Date: Fri Feb 23 2001 - 13:06:27 EST

re 5043

>On Thu, 22 Feb 2001, Alan Freeman wrote:
>>  Fred says "Alan, I am still not completely clear just exactly what is your
>>  alternative interpretation of prices of production (and you don't tell us in
>>  this post)"
>>  My concern in the Copernicus post is that the term 'centre of gravity' has
>>  more than one possible meaning. We can resolve this very simply: Fred, in
>>  your view is this term unambiguous? You write as if it was: and that's my
>>  point.
>Alan, sure I am willing to consider alternative interpretations of "center
>of gravity".  That's why I asked for a clarification of your
>interpretation of prices of production.  So, please spell it out and let's
>discuss it. 

Marx's prices of production are not centers of gravity in the sense 
of long term equilibrium prices. As Marx argues in Capital 3, ch 10 
what becomes more effective over time is the capitalists' sense of 
their social power--their claim on society of an average rate of 
profit on their investments. As capital and labor become more mobile, 
they are able to collectively exert this specific power over society. 
But this says nothing about market prices  converging on new long 
term equilibrium prices. The tendency towards the equalisation of 
profit rates (and Marx himself underlines that it works in 
conjunction with ever renewed inequalities in the profit rate) is 
logically independent of any tendency towards the formation of long 
term equilibrium prices.

Prices of production are counterfactual prices--what the prices would 
have been in any one period had the profit rate equalized and demand 
equalled supply.

In each period prices will oscillate around what prices would have 
been had the profit rate equalized and demand equalled supply--that 
is, prices of production.
But there are many other factors working on prices, and following 
Korsch, I don't think Marx had any intention in descending into the 
world of actual market prices.

I will continue to learn from the exchanges between Andrew, Allin and 
Fred on the differences in method, and look forward to whether by 
taking the money wage as given (I can hear Ajit raising sharp 
objections to such a given), Fred can derive stationary prices other 
than those set once the technical conditions and real (or money) wage 
are established. From my perspective whether Fred's method proves to 
be substantively different than Sraffa's in the quantitative 
determination of stationary prices, it does not matter as to the 
critique of such a goal in the first place.

It is interesting that Fred seems to justify the use of stationary 
prices because they serve as real centers of gravity over the long 
term--an ontological justification, to use terms as Laibman has; 
while Duncan justifies the use of stationary prices because they 
allow for the simplest models--an epistemological justification which 
he gives in his review of Carchedi and Freeman, eds. Marx does indeed 
assume constant values on epistemological grounds in vol 2 (in both 
the study of the circuits of capital and reproduction).

But in the former case, Marx is assuming constant values just so he 
can lay out analytically the moments in the circuit (he of course 
himself underlines that revolutions in value do actually lead to 
grave disturbances in the circuit).  In the case of reproduction, 
Marx seems to be arguing much like in equilibrium theory that under 
specified conditions which help to render the problem cognitively 
tractable it is possible for expanded reproduction not to founder on 
a permanent consumption deficit.

Marx may be wrong on his own terms, as Paul Z argues; or as with 
equilibrium theory, the conditions may be so restrictive (annual 
turnover of fixed capital, uniform OCC, constant values, etc) that 
the demonstration may not even have heuristic value and leap into a 
Platonic, noumenal beyond.

  Andrew K seems to give good reasons why in the study of technical 
change, which is an inherently dynamic phenomenon, the 
epistemological assumption of constant value or stationary prices 
simply makes no sense. It doesn't make the problem cognitively 
tractable; it simply wipes away the problem of study.

Moreover, if we are studying the formation of prices of production, 
while underlining that they can and do change as a result of changes 
in productivity, it seems as John E was the first to argue (I think) 
that the assumption of stationary prices renders the concept of price 
of production irrelevant in specifically capitalist conditions since 
technical change is indeed continuous.

Andrew K and John E are both wrong I think in refusing to acknowledge 
that it was Grossmann who first posed the problem of continuous 
revolutions in value  in an important but neglected section of his 
magnum opus and in his dynamics book. I am still confused why John E 
rushed to defense of Andrew K's criticism of Grossmann since in his 
critique of simultaneous valuation John E said he was working in the 
tradition of Grossman.

Yours, Rakesh

This archive was generated by hypermail 2b30 : Thu Mar 01 2001 - 14:01:40 EST