# [OPE-L:7350] Re: RE: Re: interpreting Marx's texts

From: Diego (diego.guerrero@cps.ucm.es)
Date: Thu Jun 06 2002 - 12:45:47 EDT

```Gary:
> Obviously this is a huge issue, so let me make a small point.  The
terminology
> of "simultaneous" versus "prior" is perhaps a little  misleading here.
The
> simultaneous equation formulations of Marx's value theory don't take a
stance
> on the temporal priority of determination: they simply maintain that if
the
> real wage is given the profit rate cannot be explained INDEPENDENTLY of
prices
> of production. If one accepts this proposition then there are two options
for
> reading Marx: either (i) the rate of profit he has in mind is an
altogether
> different entity from what is traditionally understood by the normal rate
of
> profit: he's talking about a different concept from the one Smith and
Ricardo
> had in mind when they referred to the profit rate; or (ii) Marx's
explanation
> of the profit rate, if he means by "profit rate" what Smith and Ricardo
meant,
> is incorrect.
>
> Gary
>
>

Diego:
I agree in that the simultaneous equations formulation does not mean to
forget the dynamical approach. Let's me put an example. We can have
declining costs of production if we depict a curve cost with respect to real
time. But if we cut in a moment of this period we can imagine a typical U
cost curve (with respecto to Q, the firm's output). An U curve is not a
mistake per se. Which is a mistake is interpret it as something relating to
time. From this point of view, in real time we would have in fact a
succesion of different U curves each one of them below the previous one (in
general).

Likewise, a simultaneous equations formulation gives us the values at moment
t. The subsequent moment will give us different values (moment t+1). But due
to the greater complication of dynamical formulations, anybody interested in
a dymanic approach may and should be interested in the simpler approach
offered by static methods (as a first step).

I disagree with you in the second part of your paragraph. The real wage you
seem to have in mind is not the actual "real wage", but a kind of wage
deflacted with theoretical production prices. As you have to accept
therefore a difference between actual and normal rates of profit, why do not
you accept another difference between the direct-price-rate of profit and
the production-price-rate of profit, with the former acting as the regulator
of the latter? This is one of the reasons why Marx is above Smith and
Ricardo.