[OPE-L:8587] RE: long term centers of gravity?

From: mongiovg (mongiovg@stjohns.edu)
Date: Wed Mar 12 2003 - 13:17:23 EST

Hi. I certainly never asserted that the values (that is, prices) of 
commodities don't change over time.  Nor, for that matter, do neoclassical 
economists claim that. Obviously prices do change over time. But if you accept 
the claim that market prices gravitate toward price of production, then you 
need a theory of the latter, and to my knowledge the only satisfactory 
explanations of prices of production entail the use of the the long-period 
method. If one takes as the living standard of workers and the technical 
conditions of production (socially necessary labor, in Marx) as given within a 
particular historical stage of an economy's development, then prices of 
production will coincide with the solution to Sraffa's equations. I find 
nothing in Marx that is inconsistent with these assumptions, and much that 
supports it.  Indeed, the very concept of socially necessary labor presumes 
that the technical conditions of production are given within the context of 
the discussion of the determination of relative values: Marx is talking about 
what Joan Robinson called blueprints.

If all you're claiming is that Marx never supposed prices to be constant over 
time, well, yes, I agree. But nobody else does supposes that either. None of 
this amounts to a credible defense of the TSS approach, which, as far as I can 
see, DENIES that profit rates tend to equalize: I argue in my paper that this 
outcome occurs only as an arbitrary special case in their framework.

As to the possibility of all prices falling over time, I guess a Sraffian 
would ask "Falling in terms of what?" Unless you specify the numeraire, 
there's no way to gauge whether technical change in this sector or that will 
cause a price to rise or fall. To ensure a falling rate of profit, the price 
of the wage bundle would have to fall relative to the price of labor power, 
and it would have to do so by a large enough magnitude to 
more-than-counterbalance the cost reductions achieved by labor-saving 
technical change. Not very likely, in my view.


>===== Original Message From rakeshb@stanford.edu =====
>I recently had a chance to read Gary M's critique of TSS and Fred's
>paper at his website on this topic.
>After reviewing the passages which they cite, I continue to find no
>evidence that Marx believed  that the value of commodities
>remained stable over the long term. To be sure, Marx clearly
>believed that there were powerful forces against  most sectors of
>the economy or most  industrial branches (excepting for example
>natural monopolies)  making profits above or below the average
>over the long term.  I believe that this is all Marx meant by the idea
>of market prices gravitating prices of production over the long term,
>i.e., the idea that in most cases no sector will make much more or
>less than the average rate of profit.
>In adopting Smith's and Ricardo's ideas about natural price, Marx
>was thus accepting only their vision of the competitive equalization
>of profit rates over most sectors of the economy over time.
>However, the claim that unit commodity values are stable over the
>long term simply does NOT follow from the classicals' and Marx's
>recognition that in most cases (Fred and I both have discussed
>exceptions such as the gold industry) a sector's or industrial
>branch's profit rate will tend to converge towards the average over
>the long term.  Unit commodity values do not have to be stable
>over the long term in order for market prices to gravitate towards
>prices of production such that the profit rate  tends to equalize
>across most sectors over the long term. In fact there is no reason
>why the latter could not obtain with unit values falling (as they in
>fact do) at different rates in different sectors or branches as a
>result of the unevenness of continuous (or inteperiodic) technical
>change. That Marx assumed constant values in his expanded
>reproduction schemes just indicates their distance (Grossmann
>was the first to recognize) from an actual diachronic theory of
>capitalist dynamics, not the extent to which Marx had committed
>himself to the idea of equiibrium values.
>I don't think a single passage cited by Gary or Fred however even
>suggests that Marx thought the value of the commodities remained
>constant over the long term. This is an assumption from neo
>classical or equilibrium economics.     I have quoted even Ricardo
>saying that the value of commodities is changing daily! Marx was a
>less dynamic thinker than Ricardo?!
>As far as I can tell, neither Fred nor Gary has cited evidence from
>Marx against the TSS breaking of the input=output price
>assumption (Ernst, Carchedi, Freeman, Kliman).  I think there is
>even less evidence from the real world of capitalist dynamics.

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