[OPE-L:8590] Re: RE: long term centers of gravity?

From: rakeshb@stanford.edu
Date: Wed Mar 12 2003 - 14:40:39 EST

Quoting mongiovg <mongiovg@stjohns.edu in 8587
Hi Gary, 
> 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 
> within a 
> particular historical stage of an economy's development, then 
> of 
> production will coincide with the solution to Sraffa's equations. I
> find 
> nothing in Marx that is inconsistent with these assumptions, and 
> that 
> supports it. 

As I have tried to say, there is even evidence in Ricardo which is 
inconsistent with these assumptios. 

 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.

Given the dynamism of capitalism, I find it more reasonable to 
assume that the inputs were produced under different technical 
conditions than the outputs are being produced. 

> 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 
> 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: 

Again: even if as a result of  the adjustment of market prices most 
sectors will not have made more or less than the average rate of 
profit over the long term, this in no way proves that there are unit 
equilibrium values or unit equilibrium prices of production which 
have remained stable over the long term and underneath the 
chaos of market prices. 

I argue in my paper
> that this 
> outcome occurs only as an arbitrary special case in their 
> 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 
> that will 
> cause a price to rise or fall. 

We can get back to the numeraire quesiton. But Marx has no need 
for the standard commodity because the purchasing power of gold 
cannot change as a result of a change in distribution. The whole 
Malthusian-Ricardian problematic has no meaning in the context 
of Marx's treatment of gold as Naples has pointed out and as Fred 
and I argued last year on this list. Sraffa's standard commodity 
solves a problem raised by Malthus in Ricardian economics. 
Whether Ricardo would have accepted it is another question 
raised of course by Peach. But Sraffa's solution simply has 
nothing to do with Marx. Marx of course assumes by fiat that the 
value of gold is fixed so as to ensure that all changes in price 
happen on the commodity side of the equation. 

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 
> technical change. Not very likely, in my view.

In fact it's impossible that viable technical change will result in 
FROP if one assumes that input=output prices. 

Yours, Rakesh

> Gary
> >===== Original Message From rakeshb@stanford.edu =====
> >I recently had a chance to read Gary M's critique of TSS and 
> >paper at his website on this topic.
> >
> >After reviewing the passages which they cite, I continue to find 
> >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 
> >the economy or most  industrial branches (excepting for 
> >natural monopolies)  making profits above or below the 
> >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 
> >less than the average rate of profit.
> >
> >
> >In adopting Smith's and Ricardo's ideas about natural price, 
> >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 
> >long term simply does NOT follow from the classicals' and 
> >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 
> >the long term.  Unit commodity values do not have to be stable
> >over the long term in order for market prices to gravitate 
> >prices of production such that the profit rate  tends to equalize
> >across most sectors over the long term. In fact there is no 
> >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) 
> >change. That Marx assumed constant values in his expanded
> >reproduction schemes just indicates their distance 
> >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 
> >suggests that Marx thought the value of the commodities 
> >constant over the long term. This is an assumption from neo
> >classical or equilibrium economics.     I have quoted even 
> >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 
> >Marx against the TSS breaking of the input=output price
> >assumption (Ernst, Carchedi, Freeman, Kliman).  I think there 
> >even less evidence from the real world of capitalist dynamics.
> >
> >Rakesh

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