[OPE-L:8613] Re: long term centers of gravity?

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Fri Mar 14 2003 - 11:27:35 EST

Hi Rakesh,

Thanks for your responses.  I think I understand better what you are
saying.  And I think we don't disagree as much as it might seem.

1.  You seem to interpret my use of the term "long-run" center-of-gravity
prices to mean that these prices do not change for "long periods of
time".  But that is not what I mean by "long-run".  I just mean that
center-of-gravity prices CHANGE LESS FREQUENTLY than actual market
prices.  Actual market prices are short-run prices that generally change
every period, with the fluctuations of supply and demand.  Center-of-gravity 
prices change only when there is a change in the productivity of labor (or
the real wage), which occurs less frequently, at least in most
industries.  In other words, long-run center-of-gravity prices change as a
result of FUNDAMENTAL causes and less frequently, and short-run market
prices change as a result of ACCIDENTAL causes and more frequently.  
I explain this in my paper on p. 3.

Maybe the term "long-run" is misleading, and maybe I should drop it, but
that is what I mean.  I do not mean that "long-run" center-of-gravity
prices do not change over long-periods of time (although that may
sometimes be the case).  

Eatwell expresses a similar definition of "long-term" in the New Palgrave: 
" `Long-period' does not mean a long period of time, but rather determined
by the dominant forces of the system."  

2.  We may have a possible disagreement over how fast productivity changes
in individual industries, and thus how often center-of-gravity prices
change, but that is not fundamental.  You seem to suggest that
productivity is changing in all industries all the time.  I agree that, in
the economy as a whole, productivity is changing all the time, but not in
all industries at the same time.  There is probably a wide range of rates
of productivity change across industries - with some industries with more
frequent productivity change and other industries with less frequent.  In
the 19th century, when Marx was writing, the rate of productivity change
was probably slower than it is today.

However, this question of how often center-of-gravity prices change has no
bearing on the concept of center-of-gravity prices itself.  
Center-of-gravity prices are still prices that change only due to
the fundamental cause of productivity change.  If productivity changes
fairly frequently, and therefore center-of-gravity prices change fairly
frequently, it is still true that center-of-gravity prices are prices that
change only due to the fundamental cause of productivity change.  More
frequent productivity change certainly does NOT mean that there is ANOTHER
CAUSE of changes of center-of-gravity prices - because input prices are
not equal to output prices, as in the TSS interpretation.

3.  It was not Allin , but John Ernst, who attempted to rescue KM's
interpretation of the transformation problem with the argument of "lagged
adjustment".  John argued that, although KM explicitly assume constant
technology in their period of analysis, it is possible that technology
changed before their period 0, and thus that the changes in prices of
production during their periods of analysis are the lagged effects of this
earlier technological change.  

But there is nothing like this "lagged adjustment" in Marx's texts.  Marx
argued that when productivity changes, then the price of production would
change in that period.  There is nothing about a one-time change of
technology simultaneously in all industries setting off a series of
subsequent changes in prices of production in later periods, while
productivity remains constant.

KM's articles are about the transformation of values into prices of
production, with productivity assumed constant.  To then later argue that
this transformation of values into prices of production was set off by a
prior change of technology is bizarre, and has nothing to do with Marx's
theory of prices of production.

4.  I think you misinterpret Carchedi.  You say:

"I am not interested in defending KM's version but rather (major
aspects of) Carchedi's which you do not accept though Carchedi
has prices of production for the inputs which differ from prices of
production for the output for the sole reason that the productivity of
labor changes interperiodically."

I am not sure what you mean by "interperiodically"?  Between periods?  In
any case, Carchedi assumes that when productivity changes in the
production of an input within a given period, then the value transferred
to the price of the output in that period will be the new price of the
input, not the old price of the input, as in the TSS
interpretation.  Carchedi says:

"The value of A going into the value of B is not the value at which A has
been bought at t1, but the value A has at time t2.  If, in this period, A
has become either cheaper or more expensive, the value of B will
accordingly be either reduced or increased."  (Frontiers of Political
Economy, p. 93)

In other words, the value transferred from A to B is revalued in that
period as a result of productivity change in the production of A.  I agree
with Carchedi.  This is what I have been arguing all along.  And this is
different from the TSS interpretation on this crucial point.  

I have to run now, but I look forward to your response and to further


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